Tag Archives: Economics

A world and wages without central banks

central banks wages

 

Many do not realize it, but were it not for central banks controlling the global economic and financial system, first-world nations would be living in a paradisiac world with very little poverty or crime. And poorer countries would have a much higher standard of living as well.  Overall, wages would be better for everyone.

Recent technological developments have, in some ways, made the masses far richer. For example, a computer tablet today costs several hundred dollars contains far more computing power than massive mainframes worth millions back in the 1970s. The same concept applies to most electronics and several other areas such as publishing, travel, and telecommunications, to name a few.

But consider the following: what would happen if the nation’s currency, America in this example, had been issued directly by the treasury itself instead of being loaned to it at interest by a central bank? What if we had remained true to the USA Constitution and only minted silver and gold coin as currency? Has the Federal Reserve Act of 1913 pushed all of us into poverty relative to what we would otherwise be living in?

Living costs, wages, and inflation

In America, wages have been stagnant for about forty years. If the minimum wage in 2017 were equivalent to it’s measurement in gold dating back to 1967, it would equal forty-three dollars per hour today.

By forcing almost every nation on Earth into a perpetual cycle of debt that can never be escaped, central banks have managed to enslave the world to their system of total monetary control. Issuance of a nation’s currency via an independent and unelected banking body makes a mockery of the very concept of sovereignty, or capitalism for that matter.

Let us return to the topic at hand – what this world would be like without central banks.

Minimum wage “debate”

As previously mentioned, the first thing that would change would be wages many orders of magnitude greater than what exists today.

Many scorn such a scenario, claiming the price of all goods and services would rise in direct proportion to any change in wages. This claim rests upon faulty premises. It does not take into account the fact that inflation has already taken hold in those goods and services. Whether in real or nominal terms, wages have stagnated for forty years under the present system. This has happened while the cost of living has continued to soar. If higher wages lead to increased living costs, the converse must also be true: increased living costs necessitate higher wages. And yet, this has not happened. Much has been made of the recent minimum wage increases in places like California.

Yet this debate rested upon nominal wages, and fails to take into account what has happened to real wages when measured against an objective standard such as the price of gold. The following Forbes article summarizes the situation very well:

 

“The bottom line is that, in terms of gold, wages have fallen by about 87 percent. To get a stronger sense of what that means, consider that back in 1965, the minimum wage was 71 ounces of gold per year. In 2011, the senior engineer earned the equivalent of 63 ounces in gold. So, measured in gold, we see that senior engineers now earn less than what unskilled laborers earned back in 1965.

That’s right: today’s highly skilled professional is making less in real, comparative terms than yesterday’s unskilled worker.

When measured in dollars, wages and prices appear to be rising and, comparing wages to prices, we see only a small loss of purchasing power. However, prices do not tell the whole story, because they reveal nothing about costs. Costs also fell and this explains why the apparent drop in the real wages seems small.

But measured in gold—and this is crucial to understanding why we need a gold standard—we see reality with clarity. Incomes are about one tenth what they were in the 60’s. Prices are down too, but not as much.

People who work for a living—those who produce every good and service—are being steadily and severely marginalized.”

So while wages ought to be much higher, the cost of living should also be lower. If currency had never been made fiat and devalued, wages would have continued to rise in both real and nominal terms. This would have occurred alongside stable or even declining living costs.

In an ideal world – one without the tyranny of central banking – our present reality would be inverted. The exact opposite of what has occurred over the past century would have taken place. Instead of stagnant or falling wages with rising living costs, we would have rising wages with stagnant or falling living costs.

Of course, this economic situation would have had many other windfalls as well. Crime would be reduced, wars would be fewer and less severe, and technology might have advanced even faster. By now I’ve made it clear that central banks must be held accountable for their detrimental impact upon all of human civilization.

Godfrey Bloom shares this sentiment. For a concise two-minute summary of the current banking fraud-based system, see Godfrey Bloom’s speech here:

 

 

Conclusion

No one can change anything on the political level.  Central banks control the economy, and any politician who tries to end them will be assassinated or suicided.  The deep state and secret societies run everything in the shadows.  Banks own Washington.

Bitcoin presents the best opportunity for drawing power away from the central banking apparatus and putting it back in the hands of the people where it belongs. Recently Bitcoin hit a new all-time high of well over $2,000. Total crypto currency market cap has soared to over $80 B.  This represents an increase of over 130% in little over a month. Perhaps hope does exist.  It exists in the form of a new decentralized form of money that requires no third-party or central authority.

 

The Rise of Bitcoin and its Meaning of Freedom for Finance




 

Bitcoin Meaning of Freedom

Bitcoin may be the most significant technological invention of the twenty-first century. While I won’t go into excessive detail about what it is and how it works here, I will summarize its key characteristics, recent revelations, and attempt to explain why they have proven to be so revolutionary. Crypto currency has tremendous implications for the meaning of freedom.

 

The basics

Bitcoin is a new form of digital currency known as crypto currency. A computer programmer using the pseudo name “Satoshi Nakamoto” invented it around 2009. This form of digital money can be divided up and sent anywhere in the world in the absence of a third-party (such as a bank or PayPal). It cannot be created by fiat means (central banks create traditional currency out of thin air to no end), and must be “mined” using sophisticated computer hardware to solve complex algorithms. The difficulty of mining a coin rises exponentially as time goes on. The currency payment system works using a decentralized peer-to-peer network with which “miners” are incentivized to facilitate transactions by being awarded with new coins.

This means that no central hub or server needs to exist. A fully distributed, efficiently functioning, decentralized financial network has been created for the first time in history. For more on the mathematics and hard science of bitcoin, see the Satoshi Nakamoto white paper here. 

The following 5-minute YouTube video also provides brief analysis by such titans of business as Richard Branson and Bill gates, among others.

While one ought to ignore the extravagant price projections, listening to what the experts in this video have to say may be enlightening. They provide a good summary of key points for those unfamiliar with this development.

While many people may still be unaware of the technical aspects of crypto currency, it has begun to work its way into the mainstream. With each passing day, it becomes more and more recognized as a legitimate store of value and convenient medium of exchange. So, you may be wondering, how does one acquire bitcoin, and what can it be used for? The answers to such questions are legion.

Uses and Acquisition

Bitcoin ATMs have already sprung up in many places. In fact, there are a total of 552 BTC ATMs in America, a full index of which can be seen here. Large merchants such as Expedia.com and Overstock.com accept Bitcoin as a form of payment. Many online precious metals dealers also accept Bitcoin in exchange for copper, silver, gold, and platinum. The number of businesses accepting bitcoin and other alternative crypto currencies as payment continues to grow.

Upon gaining more widespread acceptance and legitimacy, Bitcoin has begun to boom. A year ago (January 2016), its market cap was under $7 billion. Today (January 2017), it has risen to over $12 billion, at some points reaching as high as $16 billion. While some financial commentators note that this overall market cap pales in comparison to most traditional financial markets, they tend to overlook the pace at which it has risen. If this pace were to continue, it would place bitcoin in contention with many other financial assets in short order. Some say this has already begun.

Rapid Rise

This rapid increase in value can be attributed in large part to the ongoing instability of geopolitical events over the last year. It began with Brexit (Great Britain choosing to leave the European Union), accelerated with the election of Donald Trump, and really took off into the stratosphere with the devaluation of the Chinese Yuan.

Indeed, the Chinese are responsible for the bulk of bitcoin investing and trading. Chinese trading accounts for somewhere around 90% of all the bitcoin traded in the world. The Chinese are the biggest investors in the crypto currency sector. So often, when there are big moves, it can be attributed to something they are doing.

Seeing their native currency depreciate rapidly, Chinese buyers may be the largest factor in finally pushing bitcoin prices beyond the psychologically important $1,000 mark. 

Of course, crypto currency being notoriously volatile, the price quickly retreated back to the $900 range. This kind of steep correction often follows a quick spike upwards. Still, bitcoin continues to become more stable with time. At the time of publishing, the price stands at about $810 per bitcoin.

For some historical perspective, it’s worth noting that over the past year, bitcoin has still risen over 100% percent relative to the US dollar, and almost 15% over the past month, even after the sharp decline from its recent peak. Going back even further, again looking at values in USD, the value has risen over 350% in the past two years, and over 1,200% in the past four years! Astonishingly, bitcoin has soared approximately 7,500% since its inception back in 2009.

During the year of 2015, bitcoin became the best-performing asset in the entire world.  And while it’s not certain yet, it looks as if it may enjoy that same status for the year of 2016 as well.

Summary

In short, crypto currency allows people to become their own banks, as it requires no third-party for transactions. This amounts to a huge advancement for individual liberty and brings the meaning of freedom into new realms for personal finance. The value of a digital commodity that cannot be created by fiat cannot be overstated.

As mining coins becomes more difficult, they become more and more scarce as a digital commodity. The most noteworthy aspects of this whole thing involve the following: 1) for the first time, a real digital commodity has been created – something that cannot be created by fiat, and 2) an online medium of exchange not requiring a third party now exists. Entire books could be written on the magnificence and significance of this.

If you’re interesting in getting into the crypto currency sector, engage in your own meticulous research before doing so. The legendary investor Warren Buffet has been known for stating that one of his biggest keys to success has been never investing in something he doesn’t understand.

Should you decide crypto currency might be for you, the best options include US-based exchange Coinbase and local bitcoin ATMs. Look into a BTC ATM in your area, or learn more about Coinbase, the largest exchange and online-hosted wallet for digital currency.

What do you think? Does the idea of owning your own money (rather than entrusting it to a bank) appeal to you? Does the ability to conduct secure financial transactions, without a third party and with almost zero fees, sound intriguing? How do you see this impacting the meaning of freedom, from a financial perspective? Leave your thoughts in a comment below.

 

 

Five Unbelievable Figures Regarding the Student Loan Debt Bubble

 





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You may have heard about the student loan crisis in America. Millions of college graduates cannot repay trillions in loans. Their wages, or lack thereof, seem to inhibit their capacity for servicing their debt. This lack of repayment, while inconsequential in the near-term, will at some point become catastrophic for the nation as a whole.

The fact that student loans cannot and will not be repaid will have two inescapable ramifications: 1) impact upon the broader economy resulting from former students being burdened by excess debt, and 2) impact upon the national debt, adding to the black hole that is US Finances.

When people cannot afford to pay back student loans, they cannot even think about purchasing homes. This effect appears to have already begun to take hold within the real economy, as evidenced by the fact that the rate of home ownership has been tanking for over a decade now, reaching recent lows not seen in almost fifty years. Startling as that last fact may be, it does not constitute one of the five unbelievable figures about the student loan debt bubble. To begin:

 

  • 3 Trillion USDThe size of the bubble to date. It seems like just yesterday this number had only surpassed the trillion mark. Those trillions represent the lives and dreams of millions of people who “invested in their futures” by borrowing for an education. Now that education has failed to produce a return on investment.
  • 100%The amount by which public, in-state university tuition has increased over the last ten years. When compared to the increase in cost of tuition for out-of-state and private schools, this appears tame. Many observers note that this meteoric rise has only been made possible by government intervention. Government-guaranteed loans can be secured for any amount, regardless of market value. This results in increased costs for diminishing quality products. Again, we see similar lending dynamics that took hold during the housing bubble that took center stage during the 2008-2009 financial crisis. Could the student loan debt bubble enter the spotlight during the next stage of this crisis that seems to never end?
  • 293,029 – The number of Master’s Degree holders on food stamps. Take a second to soak in that figure and grasp its significance. Hundreds of thousands of people in the land of opportunity can no longer afford to feed themselves, despite having worked so hard they managed to achieve a level of education that only about 2% of human beings who live today will ever achieve in their lifetimes. How can anyone believe that “everything is awesome”?
  • 40% – Rate of delinquency on student loans. You read correctly – over forty percent of all student loans remain in delinquency today. That means that almost half of all graduates cannot afford to make even a single payment on their loans. And somehow people still insist things have not deteriorated. How anyone can perceive this situation as normal will forever be beyond the scope of reason.
  • Student loans cannot be discharged through bankruptcy. This last one may not be a figure, but it overshadows all of the grim statistics. Student loan debt can be considered the most sinister form of all debt, for it can never be discharged. That translates to a lifetime of debt servitude for all who bought into this most epic of financial scams. Most were never educated on the far-reaching consequences of these loans. Some didn’t even have a clue that loans were being taken out in their name – or even what a loan was!

 

In short, this bubble will have to burst one day. Some indications exist that it has already begun to do so. For instance, in 2011, a form of mass loan forgiveness was introduced – income-based-repayment. This plan allows students to make payments no greater than 10% of their income. For many, this amounts to a payment of zero.  So millions can be in default indefinitely.  The meaning of freedom involves being free of debt.  Austrian economics dictates that debt deters savings, which inhibits economic growth.  Therefore, further debt expansion will always be needed…until the bubble finally bursts.

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Brazilian Revolution

Demonstrators protest against Brazilian president Dilma Rousseff on Copacabana beach in Rio de Janeiro, Brazil, Sunday, March 13, 2016. Brazilians are taking to the streets for a day of nationwide protests against embattled Rousseff. (AP Photo/Silvia Izquierdo)
Demonstrators protest against Brazilian president Dilma Rousseff on Copacabana beach in Rio de Janeiro, Brazil, Sunday, March 13, 2016. Brazilians are taking to the streets for a day of nationwide protests against embattled Rousseff. (AP Photo/Silvia Izquierdo)

If you watch mainstream news, you might not even have heard about the recent rioting in Brazil.  In short, the Brazilian economy has been in big trouble for many months, and while the people witness their purchasing power decrease, they have begun to get very angry.

At last, they have begun to revolt against their own government.  While this ought to be hailed as a good thing, and at minimum a step in the right direction, Zerohedge takes a different tone.  A tone that tends to mock those seeking freedom.

The following comes from a recent Zerohedge article:

“…said Christopher Garman, the half-Brazilian head of country analysis at political consulting company Eurasia Group in Washington. “The notion that a new government can easily turn the corner on this crisis is overstated.

First off, who is this guy, and why do we care about his opinion?  What vested interest might Eurasia Group have in this ordeal?

And second, what are Brazilians supposed to do, just take it lying down?  “All this revolting business is absurd, people must learn to be looted and like it”.  Who said the corner could ever be easily turned, anyway?  It’s not easy.  But it would be a lot easier if people shed their slave mentalities and wanted to fight the powers that be instead of each other.

The criticisms leveled against certain alternative media sources such as Zerohedge can be substantiated in some ways.  For example, the whole “pessimism” complaint.  Articles like this do in fact conform to that criticism, since the overall tone denotes a sense of helplessness.  Any potential solution gets ridiculed to no end.  Resistance is futile.

Overall, while alternative news focuses more on obscured topics of importance, it also seeks to put its victims in a state of psychological fear and helplessness.  All this while the mainstream media does the converse: focusing on mainstream topics of little importance, while seeking to put its victims in a state of distraction, apathy, and of course, fear (albeit a more mild variety than that of fire & brimstone, doom & gloom media).

Then you have those who blur the lines between mainstream and alternative.  Take Michael Snyder of theeconomiccollapseblog.com, for example.  He warns people of what’s really going on in the global economic & financial system.  His website has become very popular, and profitable.

According to himself, Michael Snyder was just an average law school graduate in D.C. before he took up blogging full-time and began to make a living at it.  He now lives in the Pacific Northwest with his wife and children.

He truly can be considered a modern American success story.  I hope this website one day achieves a tenth of the popularity and traffic that theeconomiccollapseblog.com does.    Maybe one day he will let me write a guest post for his blog.