Money And The Processes At Work

     Bustednuckles deposeth and sayeth:

     One of the things that is amazing to me is the gamble the people in charge of the money supply system are taking. They are deliberately killing the dollar as they have run it as far as it will go before it becomes completely worthless, while thinking that they have it all figured out with this Electronic system they are rolling out. They have all of their eggs in that basket and the handle is loose.
     The rest of the world has had enough of being beaten about the head and shoulders with the constant economic warfare that has been going on since Bretton-Woods and now they have just dealt a severe body blow with the addition of six new countries to their alternate BRICS system.
     The way I see it, this Digital Dollar scheme is going to be dead before it gets completely unveiled.

     The infamous Bretton Woods agreement just might go down in history as the biggest con job / Ponzi scheme ever conceived. From this vantage point, I can’t imagine how the nations that agreed to it – other than the United States, of course – could have done so voluntarily and in their right minds. FDR’s negotiators must have held a huge club over their heads…probably access to American credit markets.

     Today’s dollar is approaching complete worthlessness. If we use the price of gold as a measure, the dollar’s purchasing power is less than 2% of what it was in 1944, when the Bretton Woods meetings took place. This correlates well with other, more “relatable” commodities such as food, clothing, and automobiles. If we use single-family houses as the measure, the picture is even worse, though that’s partly because of the deductibility of mortgage interest and property taxes in one’s income tax calculations.

     Bustednuckles sees the rampant inflation as a precursor to the “digital dollar,” which is likely to be correct. The masters of the Federal Reserve system are pushing hard for that change, and for the concomitant elimination of physical cash. No one I’ve spoken to is enthused about that, for a variety of reasons I need not repeat here. But whether or not the Federal Reserve manages to impose it on us, it’s likely to come up hard against a vital fact that overshadows everything else about money, currency, and banking:

     If Americans decide, as the BRICS countries appear to have done, that the dollar is no longer a reliable “medium of exchange and store of value,” they will abandon it in favor of something more trustworthy. The process has occurred many times in history. It can be slow or very, very fast, according to the need. And it cannot be halted or prevented by any exertion of political power.

     There are already indications of a change in progress. One that should not be overlooked is the increasing propensity of ordinary Americans to stockpile physical goods. That’s been accelerating for more than thirty years. Why should anyone have expected otherwise? He who sees that the necessities of life have risen steadily in price and appear likely to continue to do so will naturally shift his priorities away from his bank balance and toward his pantry. It’s the opening response to the dominant currency’s loss of purchasing power.

     Note also the proliferation of services that aid the ordinary citizen in acquiring precious metals. That’s not a fad; it’s the expression of a desire for stability and security that the magnetic domains on banks’ servers cannot provide. Expect it to continue.

     There will be some retarding influences, of course. People are used to pricing, buying, and selling in dollars. Most of Americans’ savings – especially their 401(k) and IRA accounts – are denominated in dollars and redeemable only in that form. The popularity of electronic funds transfer (EFT) must be considered as well. But as the dollar asymptotically approaches worthlessness, those factors will dwindle in importance, especially if convenient facilities should arise, as I expect they will, for dealing in precious metals or the steadily growing alternative currencies.

     Change is coming. It won’t be entirely pleasant, nor will it be “fair” in any popular sense. As always, those who are better prepared will better weather the storms to come. But it will result in gains in two vital commodities whose overwhelming importance is impossible to conceal.

     The first of those commodities is wisdom founded upon personal experience. Americans are again learning, albeit slowly and painfully, not to trust the State. The phrases “hard money” and “real money” will re-enter our lexicon. Appreciation for personal dealing and financial privacy will follow in tandem. We might even relearn the importance of the virtues of temperance and frugality.

     The second commodity is one that’s been on the wane for a long time now. We traded it away in slices for illusory goods: mostly convenience and “security.” Today only thin vestiges remain to us. It’s called “freedom.”

     You know what I’m trying to tell you. Don’t make me go all Francisco d’Anconia on you, right out in front of God and everybody. What’s that? You insist? Oh, all right:

     “Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked: ‘Account overdrawn.’”

     But do have a nice day.