Disliked{quote} You keep getting mixed up. I said Carmine not Angelo. Have a good day..Ignored
Of course you will not do that since you live in Quebec. So prove me wrong and call me on your cellphone.
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Most popular money management method. 7 replies
Disliked{quote} You keep getting mixed up. I said Carmine not Angelo. Have a good day..Ignored
Disliked{quote} For me one and the same. So to show me you are not them how about you call me from Detroit at 514 247 0775 ? Of course you will not do that since you live in Quebec. So prove me wrong and call me on your cellphone.Ignored
Disliked{quote} Id like to speak to you, your phone is always off..why? I keep hearing your trying to avoid certain people that you owe money too..Ignored
To these we can add an addendum, and that is to reform the banking system so that there is no expansion of unbacked bank credit.
If the Chinese obeyed these rules to the letter, not only would their gold-backed currency lead to a quantum leap in the progress of its own economy, but given China’s undoubted economic power the yuan would become accepted as the foreign currency of choice for most of the world and it would encourage other nations to adopt similar gold exchange standards.
The proof is found in a nation of ten million which two hundred years ago in less than a century dominated technology and international trade, saw its population increase threefold as prosperity spread and life-expectancy increased, encouraged other nations to adopt gold standards, and by 1914 had built over 80% of the world’s shipping afloat. That small nation was the United Kingdom. Just think of the potential if China repeated the exercise.
Sound money works best with free markets
The impediments to the implementation of the sound money rules defined above are, however, substantial. It requires the relationship between the state and its people to be fundamentally reformed and instead of state control a laissez-faire philosophy must be adopted.
The whole point behind sound money is to remove it from state control so the temptation for inflationism, which is leading visibly to the destruction of the current global monetary system, is removed.
The money that people use for their current and deferred consumption is rightly their affair, and not the state’s. This is why every time the state takes control of money away from its people it eventually fails, and the monetary function returns to the metals trusted by people through millennia. Today, we face no less than this transformation, the return to the peoples’ money and the destruction of statist fiat currencies.
Of the world’s significant economies, China appears best able to plan for monetary reform. Even so, it will not be easy and requires the completion of the new capitalist mindset courageously introduced by Deng Xiaoping. Instead, under President Xi China has drifted away from Deng’s vision towards internal suppression and increasing state control. He must recognise that central planning in China has had its day and it is time to give his population its economic freedom.
If only he can recognise it, Xi’s vested interest now lies in that direction. It will not be easy, and there is no certainty he will grasp the opportunity. But if he decides to do so, it requires the following issues to be addressed.
The state and the economy
Being a burden upon it. the state must reduce its role in the economy to the barest minimum to absorb less than 20% of GDP, preferably even less than 10%.
Welfarism must be abandoned, or at least reduced until its financial burden on the state is minimal. In this respect, China is better placed than more mature advanced economies. The World Bank estimates China’s government spending in 2018 was 14.7% of GDP, which compares with the US’s 34%.
China scores highly in this respect.
Functions of the state to be restricted
In a sound-money free-market economy the basic state functions are to establish and administer laws to ensure certainty in contracts, to provide national defence and domestic law and order. China discriminates in her laws, is territorially ambitious with respect to Taiwan and the South China Sea, and internal policing is oppressive.
There is no sign of change in these regards, which affects international relations adversely. If China dropped its claims to Taiwan and respected Hong Kong’s independence, international relations would immediately improve. Persecution of the Uyghurs is indicative of a heavy-handed statist response to the threat of Moslem terrorism. In these respects, China scores badly and in a new sound-money regime would only gain significant influence with its trading partners if these attitudes were reformed.
Mercantilism must be abandoned
China adopts a mercantilist approach to economic management, which coupled with an iron-fist control over the population has had some successes. But it is one thing for a reforming government to take an impoverished population and provide a framework and monetary stimulation to lift it out of poverty and another to continue the process. In China’s case, anything was better than Mao and Deng seized the opportunity.
In its early stages a mercantilist approach can have obvious objectives, which leads to national capital being deployed with effect. But being based on monetary expansion, even then capital is misallocated through monetary distortion, which only becomes obvious later. As a continuing state policy, it leads eventually to substantial tribulations and inefficiencies, and China has had its share of these.
The error is to regard the state as capable of being fundamentally motivated by profit. A misleading precedent for mercantilists was the East India Company, which ran India as its fiefdom until the Indian Mutiny. But that was a company which was mandated to produce profits for shareholders.
A government is necessarily a bureaucracy, not suited to an entrepreneurial role. China will need to address the relationship between the state and its role in the economy if a yuan gold standard is to be freely accepted through trust and trade, and for the maximum benefit of its economy. In fairness, China is abandoning support for zombie companies, but it still tries to pick winners, so is hardly neutral.
Regulation must be abandoned, allowing the public to set the parameters of its own demand.
Originally the means of control adopted by fascist governments, widespread regulation of economic activities has become the standard of modern government policies. The assumption is that the consumer must be protected from avaricious businessmen. The result is cronyism.
Instead of suffering from the West’s cronyism, China promotes businesses on a purely nationalistic basis, a policy which has now backfired in a crony world. The exclusion of American technology from China’s “Made in China 2025” strategic plan has intensified American hostility and is undermining Chinese technology’s international business. This would not have happened if China had a non-interventionist policy towards her domestic market. That has to change.
Banking must be reformed
The Achilles’ heel of the West’s banking system is the fraudulent issue of bank credit, which is no different in principal from central bank inflationism. Even in the days of the gold standard the expansion of bank credit increased currency in circulation without being backed by gold. There were, in effect, two types of currency; fully backed gold substitutes and fiat currency the product of unbacked bank credit, but indistinguishable from each other in circulation.
The expansion and subsequent contractions in bank credit created a destructive cycle of bank lending, particularly following the 1844 Bank Charter Act in English law, which set the subsequent international standard. This must be stopped. In the case of China, most banking is provided by state-owned banks, so if the state is determined to maintain a sound yuan it should present few difficulties in eliminating bank credit expansion.
The provision of monetary capital must be backed by savings and it is for the market to establish a balance between immediate consumption and its deferral. And here, China is in the fortunate position of having a strong savings culture, unlike the US and UK along with most members of the eurozone, where after allowing for consumer credit saving hardly exists.
Accumulation of private wealth to be embraced
The replacement of unbacked bank credit expansion with genuine savings as the source of investment capital requires the state to take a positive view on the accumulation of private sector wealth. Being a young modern economy, in this regard China is better placed than nations with more mature economies and ingrained socialism, where wealth is regarded as a morally justified source of tax revenue.
Progressively increasing tax rates mitigate against the acquisition of wealth, and China will need to reform its income tax regime to a flat tax rate. Since government spending is under 15% of GDP, with a reasonable personal allowance a flat income tax of 20% should allow for a balanced budget and other taxes to be eliminated over time. State spending targeted to an eventual 10% rate of state spending relative to GDP would allow the income tax rate to be reduced and held to a 15% rate and the abolition of all other taxes.
Income tax should be applied at the same rate on all sources of income. To make income from savings tax-free is a distortion of the market. Post-war Japan and Germany made it easy to avoid tax on savings interest, and their economies became savings driven and highly successful. But in China’s case, where a very high savings rate already exists, not only is such a policy unnecessary, but it leads to unwelcome imbalances in foreign trade which so long as other fiat currencies exist are politically destabilising in the longer term.
Digital money
China is almost certain to be tempted to adopt a centralised cryptocurrency approach, a forerunner of which is reportedly in trials at the moment. It is thought by many that application of this technology may well find a place in a new form of gold substitute.
Other commentators suspect that China’s motivation is to maintain control over its citizens’ spending. If this is the case it would be a mistake, and at odds with an objective to maximise the nation’s economic potential for the benefit of its citizens by returning to free markets. However, state-issued crypto technology is too young at this stage to be relevant to the successful establishment of a gold substitute currency.
The return to sound money
So far, we have established that of all the major economic powers, China is well placed to adopt a durable gold exchange standard. The most significant hurdle is the Communist Party’s control freakery over its people. Under wise leadership, this can be addressed, more likely during a monetary crisis when political objectives can be radically changed, than at any other time.
Otherwise, China has sufficient bullion reserves and gold ownership is widespread in the population. Silver, which is more naturally the money of the people is also widely available for coinage. Furthermore, there is reason to hope that the state is not as beholden to the neo-Keynesian macroeconomic inflationism as are other leading nations.
We have established that it is not in China’s current geopolitical interest to introduce a gold standard that undermines or destroys the dollar. For this reason, China will only do so once it is clear that the dollar is in the early stages of an unavoidable inflationary collapse, and the risk of the yuan going down with it must be urgently addressed. An increasingly certain banking crisis, likely in the next month or so, and a reappraisal of the dollar’s prospects and the debt trap of rising interest rates being sprung on western governments is likely to determine timing.
To be successful in defending the yuan from the gathering global monetary crisis, when the decision is taken to go ahead the following announcements should be immediately made.
The markets can then set a gold exchange rate which will be adopted as the fixed rate of exchange for the yuan. The return of a monetary function to silver is likely to reduce the gold/silver ratio to 20 or perhaps less, and allowance should be made for a settled relationship between gold and silver that might take a little longer to establish on a lasting basis. Only then can silver coins return to circulation.
There can be little doubt that a move to a gold yuan will have a profound effect on remaining fiat currencies. As noted above, a short period of time between announcing these plans and their implementation will be required for markets to adjust.
It is likely that fiat currencies would face downward pressure on their purchasing power, and China must be seen to be protecting her own interests by returning to sound money and not deliberately undermining the dollar.
The consolidated perpetual loan has many advantages. It never has to be repaid. The coupon, reflecting gold’s rate of interest as well as issuer risk, could be set, at say 2%, and the conversion price set at 50 per notional 100 gold-yuan of the bond. Those prepared to back the Chinese government and its sound money regime would be rewarded for the risk by a running yield of 4%.
As the government’s rating improves with the success of the return to gold, the price would rise towards par, giving early investors a solid reward. The wealth creation for holders becomes a solid contribution to providing capital for a progressing economy.
Other nations, particularly those in Asia, are likely to follow China in implementing their own gold exchange standards, and all nations will be then faced with a stark choice: do they hang on to their welfare states and their growing difficulties in financing them, or do they stabilise their currencies? If China does adopt a proper gold exchange standard, she would neutralise all America’s geopolitical power, whether America follows suit or not.
And finally, China should cease to provide the statistics beloved of neo-Keynesian macroeconomists, for they only serve to provide reasons for state intervention.
When launching the hub, BIS General Manager Agustin Carstens spoke of ‘reshaping the financial landscape‘ following ‘the scars left by the financial crisis‘.
According to Carstens, now was the time to set about reforming the way that the central banking community operates.
When digging down into the BIS Innovation Hub, it becomes clear that at the core of the project is the creation of central bank digital currency (CBDC). In practice, this would mean the abolition of tangible assets such as banknotes and coins and see the creation of a new form of digital money issued by central banks.
Global payment systems are in the process of being reformed to accommodate the use of blockchain and distributed ledger technology, and central banks are now beginning to disseminate technological detail for how a CBDC could be issued.
As it stands, a volatile geopolitical climate, exacerbated by Covid-19 and the unproven fear that handling physical money could transmit the virus, is assisting the BIS in their ambitions for completely resetting how the general public will interact with central bank money over the coming years.
In a follow up article we will look specifically at what the World Economic Forum have termed ‘The Great Reset‘ and what exactly global planners are seeking to achieve.
The mob is the enemy of what’s best in you. Separate from it at the first opportunity.
Civilization is not a function of systems, it’s a function of what’s in us. We are the primaries; all systems, good bad or indifferent, are derivatives.
The great error of the democratic era, certainly true over my now-fairly-considerable lifetime, was that people believed Democracy would solve all their problems, and would by itself assure civilization. That was always an idolatrous dream. What matters is what we are as individual people.
No institution is to be taken as anything more than a blunt tool. The civilization we hold in ourselves is what holds the world in sanity, and nothing else can, no matter how it is advertised.
Grouping degrades human function. As individuals, we are magical creatures who can reverse entropy willfully. Within the group, we are a collection of pieces trying to feel powerful.
Being grouped degrades us and teaches us bad lessons. Standing as an individual makes us better, sometimes in spurts and sometimes slowly. Whatever exceptions and gray areas may exist, joining a crowd makes us worse. What makes us better is freedom of conscience, a recognition of human dignity, and a belief in our own efficacy.
Finally…
I want to make one statement very clearly, and I hope you remember it:
The people who marshal movements are taking advantage of human weaknesses.
And yes, many of them are aware of it. So step away from the crowd, cultivate your individual mind, and have civilization in yourself.
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“The financial system has been on the verge of collapse since September 2019 when we started Repos and QE. And since then it has only got worse. The coronavirus hit us at a time when the banking system was almost down and out.
We had enough problems saving the banks. But now we must save big corporations, small companies, individuals, local municipalities and states, the Federal State and this on top of rescuing a financial system which is deteriorating by the day. The whole system is leaking like a sieve and we are struggling to keep it all afloat.
Fortunately we have printing presses and that helps to keep it all going but only just. Our big fear is that the market will realise that all the money we are printing is worthless.
And it is of course but we can’t tell anyone. But if the world wakes up to this one day soon, the financial system could implode in a matter of days. And we would be totally helpless to stop it…”
Listen to the greatest Egon von Greyerz audio interview ever
by CLICKING HERE OR ON THE IMAGE BELOW.
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Yes, we know the world was in a similar situation in 2008, but with over $100 trillion more in debt and who knows how many additional $100s of trillions of derivatives plus a world economy disintegrating – it is now exponentially worse from a risk point of view.Praeterea censeo Carthaginem
esse delendam – Cato the Elder
3rd Punic War 149 – 146 BC
To these we can add an addendum, and that is to reform the banking system so that there is no expansion of unbacked bank credit.
If the Chinese obeyed these rules to the letter, not only would their gold-backed currency lead to a quantum leap in the progress of its own economy, but given China’s undoubted economic power the yuan would become accepted as the foreign currency of choice for most of the world and it would encourage other nations to adopt similar gold exchange standards.
The proof is found in a nation of ten million which two hundred years ago in less than a century dominated technology and international trade, saw its population increase threefold as prosperity spread and life-expectancy increased, encouraged other nations to adopt gold standards, and by 1914 had built over 80% of the world’s shipping afloat. That small nation was the United Kingdom. Just think of the potential if China repeated the exercise.
Sound money works best with free markets
The impediments to the implementation of the sound money rules defined above are, however, substantial. It requires the relationship between the state and its people to be fundamentally reformed and instead of state control a laissez-faire philosophy must be adopted.
The whole point behind sound money is to remove it from state control so the temptation for inflationism, which is leading visibly to the destruction of the current global monetary system, is removed.
The money that people use for their current and deferred consumption is rightly their affair, and not the state’s. This is why every time the state takes control of money away from its people it eventually fails, and the monetary function returns to the metals trusted by people through millennia. Today, we face no less than this transformation, the return to the peoples’ money and the destruction of statist fiat currencies.
Of the world’s significant economies, China appears best able to plan for monetary reform. Even so, it will not be easy and requires the completion of the new capitalist mindset courageously introduced by Deng Xiaoping. Instead, under President Xi China has drifted away from Deng’s vision towards internal suppression and increasing state control. He must recognise that central planning in China has had its day and it is time to give his population its economic freedom.
If only he can recognise it, Xi’s vested interest now lies in that direction. It will not be easy, and there is no certainty he will grasp the opportunity. But if he decides to do so, it requires the following issues to be addressed.
The state and the economy
Being a burden upon it. the state must reduce its role in the economy to the barest minimum to absorb less than 20% of GDP, preferably even less than 10%.
Welfarism must be abandoned, or at least reduced until its financial burden on the state is minimal. In this respect, China is better placed than more mature advanced economies. The World Bank estimates China’s government spending in 2018 was 14.7% of GDP, which compares with the US’s 34%.
China scores highly in this respect.
Functions of the state to be restricted
In a sound-money free-market economy the basic state functions are to establish and administer laws to ensure certainty in contracts, to provide national defence and domestic law and order. China discriminates in her laws, is territorially ambitious with respect to Taiwan and the South China Sea, and internal policing is oppressive.
There is no sign of change in these regards, which affects international relations adversely. If China dropped its claims to Taiwan and respected Hong Kong’s independence, international relations would immediately improve. Persecution of the Uyghurs is indicative of a heavy-handed statist response to the threat of Moslem terrorism. In these respects, China scores badly and in a new sound-money regime would only gain significant influence with its trading partners if these attitudes were reformed.
Mercantilism must be abandoned
China adopts a mercantilist approach to economic management, which coupled with an iron-fist control over the population has had some successes. But it is one thing for a reforming government to take an impoverished population and provide a framework and monetary stimulation to lift it out of poverty and another to continue the process. In China’s case, anything was better than Mao and Deng seized the opportunity.
In its early stages a mercantilist approach can have obvious objectives, which leads to national capital being deployed with effect. But being based on monetary expansion, even then capital is misallocated through monetary distortion, which only becomes obvious later. As a continuing state policy, it leads eventually to substantial tribulations and inefficiencies, and China has had its share of these.
The error is to regard the state as capable of being fundamentally motivated by profit. A misleading precedent for mercantilists was the East India Company, which ran India as its fiefdom until the Indian Mutiny. But that was a company which was mandated to produce profits for shareholders.
A government is necessarily a bureaucracy, not suited to an entrepreneurial role. China will need to address the relationship between the state and its role in the economy if a yuan gold standard is to be freely accepted through trust and trade, and for the maximum benefit of its economy. In fairness, China is abandoning support for zombie companies, but it still tries to pick winners, so is hardly neutral.
Regulation must be abandoned, allowing the public to set the parameters of its own demand.
Originally the means of control adopted by fascist governments, widespread regulation of economic activities has become the standard of modern government policies. The assumption is that the consumer must be protected from avaricious businessmen. The result is cronyism.
Instead of suffering from the West’s cronyism, China promotes businesses on a purely nationalistic basis, a policy which has now backfired in a crony world. The exclusion of American technology from China’s “Made in China 2025” strategic plan has intensified American hostility and is undermining Chinese technology’s international business. This would not have happened if China had a non-interventionist policy towards her domestic market. That has to change.
Banking must be reformed
The Achilles’ heel of the West’s banking system is the fraudulent issue of bank credit, which is no different in principal from central bank inflationism. Even in the days of the gold standard the expansion of bank credit increased currency in circulation without being backed by gold. There were, in effect, two types of currency; fully backed gold substitutes and fiat currency the product of unbacked bank credit, but indistinguishable from each other in circulation.
The expansion and subsequent contractions in bank credit created a destructive cycle of bank lending, particularly following the 1844 Bank Charter Act in English law, which set the subsequent international standard. This must be stopped. In the case of China, most banking is provided by state-owned banks, so if the state is determined to maintain a sound yuan it should present few difficulties in eliminating bank credit expansion.
The provision of monetary capital must be backed by savings and it is for the market to establish a balance between immediate consumption and its deferral. And here, China is in the fortunate position of having a strong savings culture, unlike the US and UK along with most members of the eurozone, where after allowing for consumer credit saving hardly exists.
Accumulation of private wealth to be embraced
The replacement of unbacked bank credit expansion with genuine savings as the source of investment capital requires the state to take a positive view on the accumulation of private sector wealth. Being a young modern economy, in this regard China is better placed than nations with more mature economies and ingrained socialism, where wealth is regarded as a morally justified source of tax revenue.
Progressively increasing tax rates mitigate against the acquisition of wealth, and China will need to reform its income tax regime to a flat tax rate. Since government spending is under 15% of GDP, with a reasonable personal allowance a flat income tax of 20% should allow for a balanced budget and other taxes to be eliminated over time. State spending targeted to an eventual 10% rate of state spending relative to GDP would allow the income tax rate to be reduced and held to a 15% rate and the abolition of all other taxes.
Income tax should be applied at the same rate on all sources of income. To make income from savings tax-free is a distortion of the market. Post-war Japan and Germany made it easy to avoid tax on savings interest, and their economies became savings driven and highly successful. But in China’s case, where a very high savings rate already exists, not only is such a policy unnecessary, but it leads to unwelcome imbalances in foreign trade which so long as other fiat currencies exist are politically destabilising in the longer term.
Digital money
China is almost certain to be tempted to adopt a centralised cryptocurrency approach, a forerunner of which is reportedly in trials at the moment. It is thought by many that application of this technology may well find a place in a new form of gold substitute.
Other commentators suspect that China’s motivation is to maintain control over its citizens’ spending. If this is the case it would be a mistake, and at odds with an objective to maximise the nation’s economic potential for the benefit of its citizens by returning to free markets. However, state-issued crypto technology is too young at this stage to be relevant to the successful establishment of a gold substitute currency.
The return to sound money
So far, we have established that of all the major economic powers, China is well placed to adopt a durable gold exchange standard. The most significant hurdle is the Communist Party’s control freakery over its people. Under wise leadership, this can be addressed, more likely during a monetary crisis when political objectives can be radically changed, than at any other time.
Otherwise, China has sufficient bullion reserves and gold ownership is widespread in the population. Silver, which is more naturally the money of the people is also widely available for coinage. Furthermore, there is reason to hope that the state is not as beholden to the neo-Keynesian macroeconomic inflationism as are other leading nations.
We have established that it is not in China’s current geopolitical interest to introduce a gold standard that undermines or destroys the dollar. For this reason, China will only do so once it is clear that the dollar is in the early stages of an unavoidable inflationary collapse, and the risk of the yuan going down with it must be urgently addressed. An increasingly certain banking crisis, likely in the next month or so, and a reappraisal of the dollar’s prospects and the debt trap of rising interest rates being sprung on western governments is likely to determine timing.
To be successful in defending the yuan from the gathering global monetary crisis, when the decision is taken to go ahead the following announcements should be immediately made.
The markets can then set a gold exchange rate which will be adopted as the fixed rate of exchange for the yuan. The return of a monetary function to silver is likely to reduce the gold/silver ratio to 20 or perhaps less, and allowance should be made for a settled relationship between gold and silver that might take a little longer to establish on a lasting basis. Only then can silver coins return to circulation.
There can be little doubt that a move to a gold yuan will have a profound effect on remaining fiat currencies. As noted above, a short period of time between announcing these plans and their implementation will be required for markets to adjust.
It is likely that fiat currencies would face downward pressure on their purchasing power, and China must be seen to be protecting her own interests by returning to sound money and not deliberately undermining the dollar.
The consolidated perpetual loan has many advantages. It never has to be repaid. The coupon, reflecting gold’s rate of interest as well as issuer risk, could be set, at say 2%, and the conversion price set at 50 per notional 100 gold-yuan of the bond. Those prepared to back the Chinese government and its sound money regime would be rewarded for the risk by a running yield of 4%.
As the government’s rating improves with the success of the return to gold, the price would rise towards par, giving early investors a solid reward. The wealth creation for holders becomes a solid contribution to providing capital for a progressing economy.
Other nations, particularly those in Asia, are likely to follow China in implementing their own gold exchange standards, and all nations will be then faced with a stark choice: do they hang on to their welfare states and their growing difficulties in financing them, or do they stabilise their currencies? If China does adopt a proper gold exchange standard, she would neutralise all America’s geopolitical power, whether America follows suit or not.
And finally, China should cease to provide the statistics beloved of neo-Keynesian macroeconomists, for they only serve to provide reasons for state intervention.