No place for the old money
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talkpoliticsA governmental Las Vegas. Thats how a US journalist called Astana during the global economic forum which was held earlier this year in the new Kazakh capital city. In just 12 years the former Tselinograd (literally: New Soil Town) has been transformed completely from a typical small town amidst the Kazakh steppe. Now weird-looking high-rise architecture is hanging in the air, sprinkled with all sorts of kitsch lights. Egyptian style pyramids stand next to sarays taken from the 1001 Nights tale, next to Chinese pagodas, next to traditional Turkic yurts. Unlike the more cosmopolitan, old style, Stalinist-socialist-realism-architecture, but green and cosy old natural capital Almaty which i've always loved returning to, during my only visit to Astana a year or so ago, the new jewel of the steppe struck me with its markedly sterile environment - it looks as if it was specifically built for the purpose of being put on postcards. And in a sense, it really was.
I mean look at this.
But in some way Astana was indeed the right place to discuss the "architecture" of the global financial system. Lots of parallels could be drawn between the artificial creation of a capital in the middle of nowhere, which was meant to host all the leaders and politicians of a fast developing country, and the pronounced striving for a, largely artificial, global currency, which could provide shelter to the money of the investors. But there are several significant differences. In a city like that you could easily summon all the geniuses of architecture to unleash their imagination and craziness, and create the most posh patchwork of buildings. But in the world of finance, experimenting in such ways is intolerable - the various concepts are often mutually incompatible, and change occurs with lots and lots of efforts and pain, and it requires not just economical logic and consistency, but also a serious amount of resolve.
And no matter what they say in front of the cameras, the time for a drastic change of the model may be getting ripe the sooner than we are suspecting. Hardly anyone is content with the domination of the dollar any more (even many within the US are not), but meanwhile there doesnt seem to be a viable alternative (yet). The Eurozone is on the verge of going bust from all those state bankruptcies, the yuan has spread its legs wide open into an impossible side-split position between China's desire to stimulate export and its desire to become the real financial centre of Asia. What could be the substitute for the current system is hard to say. Therefore, when put next to each other, the ideas of the various economists and politicians about what the "new financial order" should be, are looking very similar to the Astana architectural landscape: shiny but inconsistent. And, i'm afraid, in order to make a choice of any one of them, a major cataclysm seems to be necessary to happen, a much bigger cataclysm than a mere debt crisis of a couple of small European countries.
So if not the dollar, then what? The dollar has been torn between the US governments' desire to use an expansionist fiscal policy to solve emerging internal problems, and the international role of the US currency, which in turn requires a certain amount of stability and fiscal conservatism. And the crisis has only intensified this conflict. Despite the desire of many people, the US policy will probably remain focused towards its internal problems. The lack of predictability and security forces the developing countries to stockpile enormous reserves, which are concentrated in dollars. But due to lack of sufficient secure assets this imminently leads to a multipolar currency model, where the dollar is steadily losing weight, and stepping back from its dominant role.
But not everyone is hasting to declare the death of the US dollar. Prof. Richard Cooper from Harvard for instance expects that the dollar would remain the leading currency at least for a few more decades, and there are several reasons for that. Firstly, it is the widespread availability and easy accessibility. Secondly, the US financial markets are much bigger and enjoy higher liquidity than any other. And thirdly, there's still no viable substitute. There's a certain discontent with the dollar, he argues, but its substitution wouldnt happen by itself. Some coordinated actions would be required, and since no one is taking them, this must tell us something about the usefullness of the status quo for those who are calling the shots. Its still the best option and, though it has an increasing number of flaws, its what we have at this point. It may not be the best situation but its still much better than any other achievable fiscal system.
When creating the euro, its founders had some hopes that it'd be an alternative to the dollar as a reserve currency. But even then there were doubts, and the main disadvantage was the lack of a uniform debt market. And now this is looking like the lesser problem. "It seems the European countries have wasted so much energy in forging the rules of the Euro that they've got little left to put into following those rules" - those are words by the head of board on JP Morgan Chase, Jacob Frenkel. The guy who a year ago predicted that Greece would bring the end of the Eurozone.
The Eurozone will most certainly survive, although it is not impossible that some countries would have to re-structure their debt, the Nobel prize winner in economics Robert Mundell said (thats the so-called father of the Euro because of his extensive work on the optimal currency zones). "It is probably technically possible for a country to leave the Eurozone, but the question is what policies would lead to improvements after that", another remark which warrants some thinking.
The other currency which could claim dominance is of course the Chinese yuan. And though Europe traditionally views it as an instrument for projecting export policy on a global scale by the Chinese government, there's a clear tendency towards liberalising the yuan rates as of late. In 2-3 years the yuan deposits in Hong Kong will probably exceed 3 trillion dollars, and in 3-5 years the Chinese currency will be completely convertible, the chief editor of the Global Business & Finance magazine, Sun Zhou Xiang predicts. He also thinks the strengthening role of the yuan in the Asian-Pacific region is the only chance to realise the goal of the Chinese government to turn Shanghai into the financial centre of the continent. And the positive effects from that would by far outweigh the negative effects of the stronger currency on export.
If there's anything which unites most economists, its the notion that creating a world currency could theoretically be the most optimal system. It would, they argue, bring down friction and risk in international trade and investment. These, in many opinions, utopian ideas, first appeared as early as Keynes, the guy who during WW2 proposed that all countries should give up their national currencies and create a new one - the bancor. Since then many economists have come up with similar proposals (or just alternative names for the same thing).
Now the idea for a global currency looks a bit less defensible. Since even a small number of European countries with similar economies and values are finding difficulties to hold their currency union together, whats left for a larger number of countries at a very different stage of development and very divergent concepts about fiscal policy? The temptations to break the consensus would be immense, and popping around every corner. Despite that, most economists still maintain that the natural course of things is that the world would, like some kind of evolutionary path, be striving towards a united global currency.
But, lets assume its possible. Then, how could such an utopia be achieved? Well, prof. Herbert Grubel of the Fraser University argues that there are two ways: one is to sit together and make another Bretton Woods conference (i think this is the even more utopian task). The other is to start from bottom up through regional currency unions like the EU, which could demonstrate the upsides of integration to the smaller countries.
The above mentioned Robert Mundell draws another possible way. The fiscal system is like the Solar system, he says... There cannot be two reserve currencies. He argues that the only achievable way towards stabilising the Euro-vs-dollar rates is... to fix them at a certain constant level. That could initially vary in certain broad margins: say, between 1.20 and 1.60 dollars for a Euro. The European Central Bank would support the dollar if it goes beyond 1.60, and the Fed would support the Euro below 1.20. Then the yuan could be added to the equation.
Another traditionally mentioned candidate for a global currency are the Special Drawing Rights (SDRs), put into circulation by the IMF. They were created with this exact purpose back in 1969, shortly before the Bretton-Woods system collapsed. Under that system, all currencies were tied to the dollar, which in turn was tied to gold. Now the SDRs represent the market value of a basket of currencies, which is being reviewed each 5 years (reminds a lot of the 5-year plans in USSR, eh?) Since January 1 this year, this basket consists of 0.66 dollars, 0.423 Euros, 12.1 yen, and 0.111 pounds, which at this moment corresponds to a 42% US share, 37% EU share, 11% UK and 9% Japanese. The problem with IMF's so-called "currency" is that it never became a payment means in the first place - its use was mostly restricted to central state banks, and there are practically no usable instruments, and practically any central bank could create the same basket without even needing such a synthetic currency. Jacob Frenkel says that the basket of floating currencies with different weights will never become a global currency. If they are fixed to each other and China is added, now we could have a possible solution.
Another smarthead, Warren Coats, former IMF chairman (hello, Strauss-Kahn?), who was specifically responsible for the SDRs, counters with the argument that their use as a supplement or a gradual substitute to the dollar could have lots of positive effects. On one side, things would no longer entirely depend on one single country (which removes some of the risk in case of another crisis). And on the other side, there would be enhanced stability. Thus practically the entire world could enter a currency board, Coats explains. "We could think about substituting the currency basket with a basket of goods. Then realistically the instruments within the SDRs could generate interest, which would be amended in accordance with inflation".
Whichever of these alternatives eventually prevails (i'm excluding here the other scenario, of the collapse of the globalist agenda and returning to pre-40's systems which to many could look like the bigger evil at this point), the road to any of these scenarios would be extremely difficult and would have to pass through numerous political arguments - actually much more political than economic. Unfortunately the only way for any viable reform seems to be through cataclysmic change, i.e. in case of a major catastrophe (and i'm not talking one of the recent type). Whatever arguments for or against these scenarios, the status quo now looks increasingly intolerable. And it seems the whole world is unanimous in its decision to constantly postpone tackling the problems, which somehow mitigates the sense of a huge looming danger on the horizon. Whats more, the mainstream way of thinking has shaped public perceptions in such a way that anyone who dares to talk about these things in such a way is instantly called an alarmist or outright lunatic, and is accused of pushing somebody's agenda.
But its a fact that all countries are trying to heal their illnesses through the easiest way possible - by turning private debt into public one. The former Argentine minister of finance from the 90's, Domingo Cavallo warns that this creates a danger that the era of the dollar could end in a massive global inflation due to the huge amounts of printed dollars, created out of thin air with no real fiscal and/or economic support to back it up. Today, stimulus means printing more money. "Argentina failed because of the stubborn attempts to use inflation for softening the weight of private and public debt. The Western countries should take a lesson from the Argentine mistakes and devise another way of dealing with their debt", Cavallo says.
But meanwhile, countries like Greece remain trapped in the status quo, and they'll find it extremely difficult to get out of their predicament - be it through inflation (for lack of a currency of their own), or through stimulus (because they now have to limit their deficits drastically). Its becoming clearer that the only possible solution, however painful, is restructuring debt, and the creditors taking the bulk of the losses. Or, as Martin Wolf of the FT wrote, "However unpopular debt restructuring might be, the alternative would be worse". The debt would have to be financed for eternity... The super-indebted countries with their own currency would unleash inflation. And the countries who take loans in a foreign currency would go bankrupt.
In order to avoid such dramatic outcomes, probably it wouldnt hurt to first think very deeply about all possible options before starting to arrange the "new financial order". But if we keep dribbling the ball in one place, hoping that things would somehow arrange themselves on their own, the debt crisis would only continue to spread. Really, the world is full with lots of real Greece-s.
I mean look at this.
But in some way Astana was indeed the right place to discuss the "architecture" of the global financial system. Lots of parallels could be drawn between the artificial creation of a capital in the middle of nowhere, which was meant to host all the leaders and politicians of a fast developing country, and the pronounced striving for a, largely artificial, global currency, which could provide shelter to the money of the investors. But there are several significant differences. In a city like that you could easily summon all the geniuses of architecture to unleash their imagination and craziness, and create the most posh patchwork of buildings. But in the world of finance, experimenting in such ways is intolerable - the various concepts are often mutually incompatible, and change occurs with lots and lots of efforts and pain, and it requires not just economical logic and consistency, but also a serious amount of resolve.
And no matter what they say in front of the cameras, the time for a drastic change of the model may be getting ripe the sooner than we are suspecting. Hardly anyone is content with the domination of the dollar any more (even many within the US are not), but meanwhile there doesnt seem to be a viable alternative (yet). The Eurozone is on the verge of going bust from all those state bankruptcies, the yuan has spread its legs wide open into an impossible side-split position between China's desire to stimulate export and its desire to become the real financial centre of Asia. What could be the substitute for the current system is hard to say. Therefore, when put next to each other, the ideas of the various economists and politicians about what the "new financial order" should be, are looking very similar to the Astana architectural landscape: shiny but inconsistent. And, i'm afraid, in order to make a choice of any one of them, a major cataclysm seems to be necessary to happen, a much bigger cataclysm than a mere debt crisis of a couple of small European countries.
So if not the dollar, then what? The dollar has been torn between the US governments' desire to use an expansionist fiscal policy to solve emerging internal problems, and the international role of the US currency, which in turn requires a certain amount of stability and fiscal conservatism. And the crisis has only intensified this conflict. Despite the desire of many people, the US policy will probably remain focused towards its internal problems. The lack of predictability and security forces the developing countries to stockpile enormous reserves, which are concentrated in dollars. But due to lack of sufficient secure assets this imminently leads to a multipolar currency model, where the dollar is steadily losing weight, and stepping back from its dominant role.
But not everyone is hasting to declare the death of the US dollar. Prof. Richard Cooper from Harvard for instance expects that the dollar would remain the leading currency at least for a few more decades, and there are several reasons for that. Firstly, it is the widespread availability and easy accessibility. Secondly, the US financial markets are much bigger and enjoy higher liquidity than any other. And thirdly, there's still no viable substitute. There's a certain discontent with the dollar, he argues, but its substitution wouldnt happen by itself. Some coordinated actions would be required, and since no one is taking them, this must tell us something about the usefullness of the status quo for those who are calling the shots. Its still the best option and, though it has an increasing number of flaws, its what we have at this point. It may not be the best situation but its still much better than any other achievable fiscal system.
When creating the euro, its founders had some hopes that it'd be an alternative to the dollar as a reserve currency. But even then there were doubts, and the main disadvantage was the lack of a uniform debt market. And now this is looking like the lesser problem. "It seems the European countries have wasted so much energy in forging the rules of the Euro that they've got little left to put into following those rules" - those are words by the head of board on JP Morgan Chase, Jacob Frenkel. The guy who a year ago predicted that Greece would bring the end of the Eurozone.
The Eurozone will most certainly survive, although it is not impossible that some countries would have to re-structure their debt, the Nobel prize winner in economics Robert Mundell said (thats the so-called father of the Euro because of his extensive work on the optimal currency zones). "It is probably technically possible for a country to leave the Eurozone, but the question is what policies would lead to improvements after that", another remark which warrants some thinking.
The other currency which could claim dominance is of course the Chinese yuan. And though Europe traditionally views it as an instrument for projecting export policy on a global scale by the Chinese government, there's a clear tendency towards liberalising the yuan rates as of late. In 2-3 years the yuan deposits in Hong Kong will probably exceed 3 trillion dollars, and in 3-5 years the Chinese currency will be completely convertible, the chief editor of the Global Business & Finance magazine, Sun Zhou Xiang predicts. He also thinks the strengthening role of the yuan in the Asian-Pacific region is the only chance to realise the goal of the Chinese government to turn Shanghai into the financial centre of the continent. And the positive effects from that would by far outweigh the negative effects of the stronger currency on export.
If there's anything which unites most economists, its the notion that creating a world currency could theoretically be the most optimal system. It would, they argue, bring down friction and risk in international trade and investment. These, in many opinions, utopian ideas, first appeared as early as Keynes, the guy who during WW2 proposed that all countries should give up their national currencies and create a new one - the bancor. Since then many economists have come up with similar proposals (or just alternative names for the same thing).
Now the idea for a global currency looks a bit less defensible. Since even a small number of European countries with similar economies and values are finding difficulties to hold their currency union together, whats left for a larger number of countries at a very different stage of development and very divergent concepts about fiscal policy? The temptations to break the consensus would be immense, and popping around every corner. Despite that, most economists still maintain that the natural course of things is that the world would, like some kind of evolutionary path, be striving towards a united global currency.
But, lets assume its possible. Then, how could such an utopia be achieved? Well, prof. Herbert Grubel of the Fraser University argues that there are two ways: one is to sit together and make another Bretton Woods conference (i think this is the even more utopian task). The other is to start from bottom up through regional currency unions like the EU, which could demonstrate the upsides of integration to the smaller countries.
The above mentioned Robert Mundell draws another possible way. The fiscal system is like the Solar system, he says... There cannot be two reserve currencies. He argues that the only achievable way towards stabilising the Euro-vs-dollar rates is... to fix them at a certain constant level. That could initially vary in certain broad margins: say, between 1.20 and 1.60 dollars for a Euro. The European Central Bank would support the dollar if it goes beyond 1.60, and the Fed would support the Euro below 1.20. Then the yuan could be added to the equation.
Another traditionally mentioned candidate for a global currency are the Special Drawing Rights (SDRs), put into circulation by the IMF. They were created with this exact purpose back in 1969, shortly before the Bretton-Woods system collapsed. Under that system, all currencies were tied to the dollar, which in turn was tied to gold. Now the SDRs represent the market value of a basket of currencies, which is being reviewed each 5 years (reminds a lot of the 5-year plans in USSR, eh?) Since January 1 this year, this basket consists of 0.66 dollars, 0.423 Euros, 12.1 yen, and 0.111 pounds, which at this moment corresponds to a 42% US share, 37% EU share, 11% UK and 9% Japanese. The problem with IMF's so-called "currency" is that it never became a payment means in the first place - its use was mostly restricted to central state banks, and there are practically no usable instruments, and practically any central bank could create the same basket without even needing such a synthetic currency. Jacob Frenkel says that the basket of floating currencies with different weights will never become a global currency. If they are fixed to each other and China is added, now we could have a possible solution.
Another smarthead, Warren Coats, former IMF chairman (hello, Strauss-Kahn?), who was specifically responsible for the SDRs, counters with the argument that their use as a supplement or a gradual substitute to the dollar could have lots of positive effects. On one side, things would no longer entirely depend on one single country (which removes some of the risk in case of another crisis). And on the other side, there would be enhanced stability. Thus practically the entire world could enter a currency board, Coats explains. "We could think about substituting the currency basket with a basket of goods. Then realistically the instruments within the SDRs could generate interest, which would be amended in accordance with inflation".
Whichever of these alternatives eventually prevails (i'm excluding here the other scenario, of the collapse of the globalist agenda and returning to pre-40's systems which to many could look like the bigger evil at this point), the road to any of these scenarios would be extremely difficult and would have to pass through numerous political arguments - actually much more political than economic. Unfortunately the only way for any viable reform seems to be through cataclysmic change, i.e. in case of a major catastrophe (and i'm not talking one of the recent type). Whatever arguments for or against these scenarios, the status quo now looks increasingly intolerable. And it seems the whole world is unanimous in its decision to constantly postpone tackling the problems, which somehow mitigates the sense of a huge looming danger on the horizon. Whats more, the mainstream way of thinking has shaped public perceptions in such a way that anyone who dares to talk about these things in such a way is instantly called an alarmist or outright lunatic, and is accused of pushing somebody's agenda.
But its a fact that all countries are trying to heal their illnesses through the easiest way possible - by turning private debt into public one. The former Argentine minister of finance from the 90's, Domingo Cavallo warns that this creates a danger that the era of the dollar could end in a massive global inflation due to the huge amounts of printed dollars, created out of thin air with no real fiscal and/or economic support to back it up. Today, stimulus means printing more money. "Argentina failed because of the stubborn attempts to use inflation for softening the weight of private and public debt. The Western countries should take a lesson from the Argentine mistakes and devise another way of dealing with their debt", Cavallo says.
But meanwhile, countries like Greece remain trapped in the status quo, and they'll find it extremely difficult to get out of their predicament - be it through inflation (for lack of a currency of their own), or through stimulus (because they now have to limit their deficits drastically). Its becoming clearer that the only possible solution, however painful, is restructuring debt, and the creditors taking the bulk of the losses. Or, as Martin Wolf of the FT wrote, "However unpopular debt restructuring might be, the alternative would be worse". The debt would have to be financed for eternity... The super-indebted countries with their own currency would unleash inflation. And the countries who take loans in a foreign currency would go bankrupt.
In order to avoid such dramatic outcomes, probably it wouldnt hurt to first think very deeply about all possible options before starting to arrange the "new financial order". But if we keep dribbling the ball in one place, hoping that things would somehow arrange themselves on their own, the debt crisis would only continue to spread. Really, the world is full with lots of real Greece-s.
(no subject)
Date: 18/5/11 20:01 (UTC)(no subject)
Date: 18/5/11 20:16 (UTC)(no subject)
Date: 19/5/11 01:46 (UTC)(no subject)
Date: 19/5/11 07:19 (UTC)A partner in Sakha: "Come here, comrade, but come in October while its still warm. Just -15'C, you know".
Me: "-15'C, is that right? No shit... Um, yeah..."
It wasnt that bad though.
(no subject)
Date: 18/5/11 20:07 (UTC)(no subject)
Date: 18/5/11 20:08 (UTC)(no subject)
Date: 18/5/11 21:53 (UTC)I think your ideas are really valid though and they make me uneasy.
(no subject)
Date: 18/5/11 22:04 (UTC)Such volatile currency fluctuations has had a big impact on our export industry (many people can no longer afford to come here as a tourist/education destination, our 3rd and 4th biggest industries). Most agricultural/resource contracts are worked out in USD; the farmer who used to get AU$2.40 for his product now only gets AU$0.90 without any change in sale price.
The only thing it's good for is buying stuff from the US. This would in the past mean that our import industries would be doing really well, but they have lost so much market share to the internet that they're hurting too (largely their own fault in refusing to acknowledge the new paradigm and not getting online themselves IMO). But yeah, ebay is cheap as now :P
(no subject)
Date: 19/5/11 01:00 (UTC)(no subject)
Date: 19/5/11 02:15 (UTC)It's good to know my wambles are appreciated.
Another interesting anecdote. Our two biggest book retailers have gone bust in the last few months. There's many offered reasons for this, but it's essentially a combination of books being one of the few things we still have import tariffs on to protect the local printing industry and the rise in online sales combined with the strong dollar. I can buy books from bookdepository.co.uk for a third the price I can in a shop here (with free shipping to boot). Now, this may sound like a tragedy for the local book industry. However, from an independent publisher/author point of view (which is the vast majority of works published in Aus) as the titles being bought from overseas either have no connection to here (not written/printed here) or if they are large they're printed by a multinational printer (meaning there's no benefit in saving the local industry, because there is no local industry in multinational book publishing). It's hard to get indy Aus books online, so you have to go to a shop. "But all the bookshops have closed!" I hear you say. No, the two big chain bookstores have closed. Bookstores that were hostile to the local market, dictating price and distribution and using predatory pricing to drive out independent book stores. Not to mention that they wouldn't carry all that much local indy stuff anyway.
So the net result is we've killed the behemoths that were killing our small publishers/authors; independent book sellers are loving the new paradigm, as are local writers.
(no subject)
Date: 19/5/11 11:47 (UTC)Interesting how that works, eh?
(no subject)
Date: 19/5/11 00:59 (UTC)The system of a currency like that is structured for rich economies, poor states that are overpopulated and struggling mightily to maintain lesser infrastructure than the poorer rich states have far less with that. A One World Currency is Imperialism with a human face.
(no subject)
Date: 19/5/11 02:16 (UTC)(no subject)
Date: 19/5/11 02:19 (UTC)It seems to me that a single currency requires a single reserve, and I am really happy with the way our reserve bank has run things since it's inception, with the exception of some horrible miscalculations in the late 80s which I'm happy to put down as a learning curve.
(no subject)
Date: 19/5/11 11:45 (UTC)(no subject)
Date: 19/5/11 02:57 (UTC)Also, Greece is a special case, it has spent most of its life as a modern nation in bankruptcy. The Euro wasn't enough to change this aspect of their national character. Having a crisis, or a periodic crisis, doesn't mean that the Euro is doomed, it is an opportuinity to improve in the future. Maybe in a few decades the Euro will be a serious challenger to the dollar.
(no subject)
Date: 19/5/11 08:16 (UTC)(no subject)
Date: 19/5/11 11:45 (UTC)See: NAFTA. Which was a big disaster in one major way in undercutting Mexican agriculture and thus boosting the cartels into the civil war currently happening in Mexico.
(no subject)
Date: 18/5/11 20:33 (UTC)(no subject)
Date: 18/5/11 20:47 (UTC)(Review (http://www.amazon.com/History-Money-Jack-Weatherford/dp/product-description/0609801724) of The History of Money)
...Electronic money (the all-purpose electronic cash card), ... he believes, will radically change the international economy
Virtual money will create a civilization of their own, which will differ from the present one as much as it differs from that of the Vikings and the Aztecs.
While we are about quotes...
Date: 18/5/11 21:13 (UTC)- Adam Smith
“At the end fiat money returns to its inner value—zero.”
- Voltaire
“If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.”
- Thomas Jefferson
“The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy.”
- Abraham Lincoln
“Give me control of a nation’s money and I care not who makes the laws.”
- Amschel Rothschild
“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. No longer a government by free opinion, no longer a government by conviction and vote of majority, but a government by the opinion and duress of a small group of dominant men.”
- President Woodrow Wilson (regretting signing into law the Federal Reserve Act)
“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before morning.”
- Henry Ford
“By this means (fractional reserve banking) government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.”
- John Maynard Keynes, The Economic Consequences of the Peace (1920)
“The modern banking process manufactures currency out of nothing. The process is perhaps the most astounding piece of slight hand that was ever invented…If you want to be slaves of the bankers, and pay the cost of your own slavery, then let the banks create currency”.
- Lord Josiah Stemp, Former Director of the Bank of England (1937)
“If the governments devalue the currency in order to betray all creditors, you politely call this procedure “inflation.”
- George Bernard Shaw
Another interesting quote:
Date: 19/5/11 18:13 (UTC)In all social systems there must be a class to do the menial duties, to perform the drudgery of life. That is, a class requiring but a low order of intellect and but little skill. Its requisites are vigor, docility, fidelity. Such a class you must have, or you would not have that other class which leads progress, civilization, and refinement. It constitutes the very mud-sill of society and of political government; and you might as well attempt to build a house in the air, as to build either the one or the other, except on this mud-sill. Fortunately for the South, she found a race adapted to that purpose to her hand. A race inferior to her own, but eminently qualified in temper, in vigor, in docility, in capacity to stand the climate, to answer all her purposes. We use them for our purpose, and call them slaves. We found them slaves by the common "consent of mankind," which, according to Cicero, "lex naturae est." The highest proof of what is Nature's law. We are old-fashioned at the South yet; slave is a word discarded now by "ears polite;" I will not characterize that class at the North by that term; but you have it; it is there; it is everywhere; it is eternal
(no subject)
Date: 19/5/11 02:14 (UTC)(no subject)
Date: 19/5/11 07:31 (UTC)