Tuesday, October 26, 2010

When the bullshit is all over....

We will need to re-establish some form of sanity in our monetary system. Here's an interesting piece, which yes, I know it's very "American" but the same arsepartery that has wrecked the US economy has happened here too:

Silver money for Americans
By: Hugo Salinas Price
I think that my readers will agree that there is a desperate need for some fresh thinking about money in the U.S.
Many respected analysts worry that the expected action by the Fed to apply a new bout of QE after the coming elections is fraught with danger.
Fiat money in the US is in an advanced stage of decomposition and when money rots, the whole social, economic and political structure of the nation rots with it. A return to sound money is urgent. More and more people are aware of the perilous road ahead if nothing is done.
The problems facing the US are so gigantic in nature, that an all-round solution to them is impossible when analyzed in practical terms. A return to sound money is a return to gold and silver as currency. Gold is outstanding as money – but how to realize that goal? Silver is great for popular use – but again, how to regain it?
The only way open to regain a sound footing of real money for the US economy must be by establishing a process through which there will be a gradual and natural return to sound money. It is impossible to reform or improve the present monetary system of the US any other way.
The US abandoned sound money in a series of gradual steps; the first metal out of the monetary system was gold, in 1933; the second metal out of the system was silver, in 1965. The return to sound money would follow those steps, in inverse order: silver would return first, because silver has always been the money of the people; gold would return last, silver having opened the way.
Why did silver coinage disappear from circulation in America?  It disappeared because the dollar price of silver rose to a point, back in 1965, where the value of the silver in the silver coin was superior to the value of the coin itself. The result was that most silver coinage was melted down into bullion, which had a value greater than the monetary value of the melted coins. On October 20 a silver dime contained silver worth $1.72! (www.coinflation.com) Dollar inflation caused by expansion of the fiat money supply and expanding credit drove up the price of silver and thus drove silver coinage out of circulation.
The gradual return of silver money to circulation in America
In today’s world, a world where the Fed is probably going to print another huge amount of money out of nothing by “QE2”, explicitly in order to cause the American people to have inflationary expectations, is it possible to think of silver money returning to circulation in America?
The answer is “Yes”! But, it must be done by a new method. This new method will operate gradually by introducing silver money into circulation in parallel with the present monetary system of “fiat” paper bills and digital currency.
In recent years, others have attempted to restore silver money to the US economy. However, these well-meaning attempts have not been well thought out and have failed. You will recall that not long ago, Von Notthaus got into trouble with the Feds due to his misguided work.
Private attempts to restore silver to circulation as money must necessarily fail. Money is an extremely sensitive matter and only the cooperation of government can allow any reform to the monetary system.
The powers that be in the US Government must recognize at some point that it is indispensable to the health and continuing existence of the US as we have known it, to restore silver coin into circulation. At present, its policy is to ignore public discontent; the results of the coming elections will probably do little to change its policy. The discontent of the American people will increase until the government hears the rumble of distant drums. Perhaps then, it will be willing to turn to silver, to appease the population.
Silver money can indeed be restored to circulation in the US, but it must be by a new method. Anything new in monetary affairs must always be suspect and must face an initial opposition. However, we are forced to resort to a new method because the conditions are new: inflation of the money supply and unlimited expansion of credit are new conditions which silver coinage, as it has been created for centuries, has never before faced.
A new method for monetizing silver
Silver went out of circulation because the monetary value of silver coins was engraved upon them. When the market price of silver rose, and the value engraved upon the coins was left behind and below the value of the silver in the coins, the coins became more valuable as bullion than as coins. The coins were melted down. The silver coinage disappeared.
This gives us the clue to restoring silver into circulation: eliminate the engraved value.
In this case, what would be the monetary value of a silver coin with no engraved value?
The answer is that – like a stock – its value would be a quoted value; however, unlike a stock, the quote would not be a market quote but a quote coming from the Treasury.
The legal tender monetary value of the silver coin quoted by the Treasury would take the place of an engraved value. This monetary value would be increased to meet rises in the price of silver, but remain stable at its last quote, during falls in the price of silver.
Stocks prices fluctuate, but the monetary value of a silver coin cannot be allowed to fluctuate, because money must have a stable value. A silver coin, whose quoted monetary value goes up and down, remains a commodity. It cannot be used as money. The Treasury must issue a stable quote for the monetary value of the silver coin with no engraved value.
This Treasury quote of the monetary value of this silver coin must always be superior, albeit by a small amount, to the market price of the silver contained in the silver coin. The difference between the market price of the silver in the coin, and the monetary quote issued by the Treasury, would result in a small profit for the Treasury, classically called “seigniorage”. Since the quoted monetary value of the silver coins would be slightly higher than the value of the silver contained in the coins, there would be no profit in melting them down. They would remain in circulation permanently.
We have ruined our economy with credit. The reason for this is the easy ability to create paper money, or today a new row of zeros on a hard drive. This is fine for the high flying and powerful, but -look around yourself - for the average bloke or gal on the street. 

Mass personal credit was impossible until the silver was removed from our coinage. In 1919, one shilling was 90/100ths silver, reduced in 1920 to 50/100ths, and even then, because silver cannot be "made", there was still not enough in circulation to have Credit Cards, personal loans and buy now pay in three years for the toiling masses.

For the same reason, welfare and general spending was controlled -  there was a NATIONAL INSURANCE FUND for example, wherein only what was paid in could be paid out (the failure of the fund was in it's organization, not a "fund" as an idea).

There was little inflation - and what there was was gentle, and often temporary - the price of silver and gold being a fixed amount. A shilling in 1750 bought more or less the same amount of goods - or more - in 1900.

The last sixty years have been a purposefully created fantasy, wherein the great mass of people were blinded and entranced with easy credit and toys. When the dust finally settles, we will have to rebuild our system of life, to return it to sanity. Paper money (and it's electronic equivalent cannot be trusted.


Stable coinage disbars governments from borrowing and then repaying debt by printing bank notes and enslaving the the people to the Rothschilds and friends for schemes and dreams of whatever gang of cranks oddballs and freaks control the Exchequer.

Stable money is vital to enable saving towards the bad times and toward retirement & old age. Allowing inflation is theft from the working people. 

These sites may be a bit of an eyeopener, have a play and read....

This will allow you to see the collapse in the value of your money:

Inflation figures from 1270 - 2009 for the UK,  the lunacy of the modern era starts in 1914 when gold was removed from circulation, never to come back  :

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Listen to me Sweary Mary, I get to decide what passes for good taste, what counts as poor taste, and what is just a Load of Bollocks. I'm not interested in multicultral clap-trap, liberal pleading for felons, or the status of Islam really being the "Religion of Peace(TM)".

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