The central pillar of human civilisation is trade. Without the ability to exchange goods, we would not be able to produce so many other things, instead we'd all be living Stone Age style, in a state of anarcho-primitivism.
What allows us to work in a service industry job, for example, while remaining confident that others will have produced food, and will want to trade that food with us at the appropriate time? The answer is, that there are trusted means of exchange. This may be feathers, stones, iron, gold or anything else you may suggest.
The key to any good means of exchange is two things:
1. It has perceived value in the marketplace.
2. It is sufficiently scarce, enough so that people will be confident that the market's perception of the currency's value will not change greatly in the future (as that might leave you holding worthless currency later on).
Today, almost every nation on earth has currency represented by paper. It's worth a moment to ponder how paper currency came into being...
Good article on the history of money
Michael Badnarik (teaching his Constitution Class) explains currency
The story goes that, back in 'the day' (whenever that was), wealthy peoples' gold (and other commodity) assets were extremely vulnerable when being transported, as highway bandits filled their pockets with the loot. A solution was required.
So, instead of transporting gold, they traded in notes instead. These were promises from a bank (safe place where gold was stored), which effectively represented the real gold and could be exchanged at any time for the hard assets. This meant that is was much easier to transport even large amounts of money safely.
But it came at a price. Bankers figured out that, if everyone kept their gold in their vaults and rarely (if ever) withdrew it, then the banks could sneakily issue a few more notes than they could actually pay out on. For example, if I had 100 ounces of gold in my bank's vault, I could write notes totalling 120 ounces or maybe 140 ounces, hoping that my customers would never demand more than 100 ounces in withdrawals at one time. These extra notes could then be used by me to buy real assets, maybe gold from other banks, or buy up businesses, land, or anything else.
What I just described is clearly fraud. And that's how it was back then; people who did that fully deserve to be prosecuted for the crime of fraud. But then something changed: fraud was made legal.
Yep, that's right, through a process called fractional reserve banking, banks were given the special privilege to create more notes than they could back with real assets. At first, this was at the modest ratio of 2:1. So my bank can now create 200 ounces' gold worth in notes despite only having 100 ounces of gold "in reserve" (keep that term in mind, it's Newspeak; I don't have the hard assets "in reserve", I just "have" them, there's nothing else of value for these assets to be "in reserve" for).
More detail on fractional reserve and why it's a problem
Does that sound like capitalism or free trade to you? Does it sound fair, just or right? If you have an ounce of sanity and moral fibre, you'll say no. So why has the process of fractional reserve continued to this day, in increasing ratios? Nowadays, the reserve rates are 10 or 12 to 1. In what business other than banking can you commit fraud and have protection under the law?
But it gets better. The establishment of central banks "to act as the banker to the government", as the rose-tinted glasses provided by Newspeak tell us, essentially marked the end of capitalism and prophecised a return to Medieval style bondage. How can I claim that, and why are central banks so important? I shall explain.
All modern civilisations have issued their own money. This provides a standardised means of exchange, and simplifies the taxation process. So it's a win-win for governments and the people.
In societies without a central bank, government creates and issues its currency as a form of credit. That is to say, there is no outstanding debt related to the currency. What debt? Who can be put into debt during the process of issuing money? Well, let's go over how central banks issue currency, and you'll see what I'm talking about.
In a society with a central bank (pretty much every country on the globe today), when government needs money, it has to do a deal with the central bank. The bank, which despite all the disinformation out there, is always a privately owned institution, creates new money (usually digital only, not in paper form), and lends this magically created money to the government. This means that government can get funding for all its pet projects, without having to request it from the people (via taxes) first.
The problem is, that lending from the central bank was not free. Nope, now the more government spends, the more it owes to the private bank, with the cherry of compound interest on top. But it's not politicians that are saddled with this debt, of course. It's YOU. It's called the National Debt, and it's rising constantly.
More detail: The Money Myth Exploded
Of course, not all of the National Debt is owed to the central bank, but evidence shows that governments can pay off the debt when they rid themselves of the central bank parasite; for example the work of US President Andrew Jackson. Under his leadership, the second central bank of the United States was destroyed, and the national debt was for the first time in America's history, paid off in full. Only, he wasn't around when the bankers took over America again with the "Federal" Reserve, in 1913.
As proof that central banks are always private institutions run by a parasitic elite, consider this. When government borrows money from the central bank, they pay interest on what they have borrowed. To whom does the interest go? Somebody is charging for the loan. If government owned the central bank, why would they charge themselves for borrowing from themselves? Think about it, people.
Now, you may think this doesn't affect you. So what if government borrows money from a private institution? The truth is that, the interest on this debt can only be paid by government doing one of three things: borrowing more, printing more, or taxing more. Guess which two of those affects you? Yup, taxes always perpetually rise in countries dominated by a central bank, and increasing the money supply causes inflation, which devalues the currency in your pocket.
The thing is though, even as you pay more and more to this private banking cartel via your taxes, it will never be enough, as every year of government spending brings more National Debt woth compound interest to service, leading to a downward spiral of higher taxes and money devaluation (as every unit of currency lent out by the central bank is totally new and therefore an addition to the money supply).
This expansion of the money supply is also problematic because it is impossible to maintain a commodity standard at any fixed rate, with a money supply that is perpetually expanding. What I mean by that is, representative money (money representing real assets such as gold, as I used in my fictional bank earlier) cannot coexist for long with a central bank system, as more and more of the paper currency is created without any real commodity to base the new money's value on. So we move towards fiat currency.
A timeline of these events (from an American perspective) can be found here. Though most countries went through a similar process at similar times in the last 100 years, ditching the backing for our paper currency.
So, where are we now? The money you hold has no real market value save for the paper it's printed on, while many of the real assets are in the hands of the fraudulent bankers who printed this smokescreen of illusory wealth to begin with. Their attempt to reinstate medieval serfdom but this time on a global scale under a singly authoritarian regime, also known as the New World Order, is nearing its completion. How can this be told? Well, our fiat debt-based global economy is collapsing, and they in part made it happen.
(If you can't read the numbers in the image, click here for a larger version.)The big difference between fiat and commodity currency, is that one can be used as a weapon to destroy countries economically, while the other can not (so easily at least). Fiat money, once you've got everyone using it, can be exploited by wealthy elites first by taking control of real assets - buying them up with the fraudulently created currency - then by collapsing that country's economy when their debt to the bankers becomes unsustainable and hyperinflation ensues.
Thus, all the real assets are in the hands of the banking elite, while the population are literally serfs again, generally, because they had their wealth invested in a currency that ultimately proved to be worthless due to expansion in its supply.
If you're looking for expansion of the money supply, look no further than the derivatives market, where supposedly there are $1.4 quadrillion of derivatives, despite the total of all real world assets not even coming close to that. What happens when there is more money than assets? The value of money decreases, manifest in price inflation. We may be about to be hit by hyperinflation, as all the new credit from the bailouts enters circulation.
I don't want to be all gloom-and-doom about this. I, of course, am hoping we can somehow avoid the impact of the coming depression, perhaps with some other economic bubble to prop things up (although in the long term that would just make the final economic reckoning worse). There are apparent solutions from a layman's perspective, however, in that all nations could shut down their central bank and cancel the portion of the National Debt attributed to it (the more nations that do this, the better).
I'm not saying all the world's central banks are owned by the same people (though they do operate under IMF oversight, which is the prorotype world currency issuer), what I am saying is that the scam operates the same way in any country. That is, get people into massive amounts of debt that can never be paid back (the main purpose of a central bank is this), then collapse the economy in that country, then move in and buy up all of that country's real assets. It's sometimes called "Disaster Capitalism", although it's really a war against capitalism and individual/national sovereignty.
(Reliable currency: US Silver Dollar above, British Gold Sovereign below.)The IMF has done this time and time again to Third World nations; now, however, they're turning this economic weapon against the First World. It's not our fault the Third World is so impoverished and downtrodden. This injustice is a cause of anti-Western sentiment, when the average person isn't really to blame, it's the internationalist bankers based out of NY, London, Switzerland and whatever else, that are doing this to us.
We must reclaim our currency based on national sovereignty, and sound monetary systems. I'm more than a little apprehensive about the idea of gold as legal tender, because look who has the gold right now (Rothschild!), but face it the bankers own us one way or another, at least we'll have removed their system of control to an extent.
Besides, it's not as if we have much of a choice - the market, not political/economic theorists, is choosing precious metals, because people want to store their wealth in a currency that has reliable, material market value.
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