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explaining why sovereign vs. debt money really, really, really matters…hopefully

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  • Tue, Jun 15, 2010 - 06:03am

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    strabes

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    explaining why sovereign vs. debt money really, really, really matters…hopefully

thought I’d post my latest Renaissance 2.0 video here because it addresses in a new way the sovereign vs. debt money issue that has been the subject of so many heated debates on this site that are almost as polarizing and unproductive as the AGW debates.  by avoiding the math and economic theory and simply looking at big picture reality, I hope it reveals the true nature of debt money and why it must be fixed (at the M0 level…will be explained in a future video). it also provides a new perspective on inflation, JPM Chase, and derivatives…

http://www.youtube.com/watch?v=Zw3i5Rzpx5A

  • Tue, Jun 15, 2010 - 12:18pm

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    Peak Prosperity Admin

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    Re: explaining why sovereign vs. debt money really, really, …

Damon,

Another great video.  I think it is debatable what will happen once the dollar comes under fire and the FED needs to raise rates but otherwise I don’t think you have said much that I disagree with.  I do have some questions about your beliefs in sovereign money which maybe you will adress in future videos.

  1. Do you envision sovereign money only as an equalizer to our current value sucking system or do you see it as a long term solution even once the hurricane forces are removed?  Surely if soverign money has enough force to break the current value sucking system, that same force will run the risk of exploding outward in the future. 
  2. If our current political system is captured by those that control money, won’t it be risky to give monetary powers directly to those that were so easily corrupted when that power was only indirect?
  3. I know you don’t believe in the “Quantity theory of money” but do you really believe that the quantity makes no difference, even over the long run?

I really think most of the issue I have with sovereign money come down to my scepticism of anyone that is advocating something for nothing.  This is especially true when it is sold as a solution to all of society’s problems ( hunger, crime, drugs, greed, … ) that has no costs or risks.  Man is fundamentally flawed and no economic system will fix all of his failings.

If the idea was sold as a necessary risk, and it was admited that this new purchasing power does come at an indirect cost of lost purchasing power from other areas of the system, it would be easier to support at least giving it a try.  Otherwise, to believe that creation of money has no costs or adverse effects effects on anyone in the system ( directly or indirectly ) is fundamentally a belief that creation of money is equal to creation of wealth and I just don’t understand such a belief.

ps. Are there lession 6 part 2 and 3 videos?  I was looking but did not find them?

  • Tue, Jun 15, 2010 - 12:21pm

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    Peak Prosperity Admin

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    Re: explaining why sovereign vs. debt money really, really, …

Very well done! Thank you.

  • Tue, Jun 15, 2010 - 02:46pm

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    Re: explaining why sovereign vs. debt money really, really, …

 

WOW!!!  Amazing Job!!! 

  • Tue, Jun 15, 2010 - 02:57pm

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    Re: explaining why sovereign vs. debt money really, really, …

Kudos strabes, I hope your excellent video makes people think.

I had asked a few questions in another thread that went unanswered and I’d like to re-post them here for people to contemplate:

  1. If the people and property of the U.S. are solely backing up all of our money, why are we as a nation, borrowing it from private banks that create it for free?
  2. The U.S. money supply (M3) is around $13.9 trillion and our combined private and public debt totals around $58 trillion.  We are around $44 trillion short – how will we make up this shortage?
  3. Why aren’t the above two questions addressed in neoclassical, Keynesian, Austrian, et al, economics?

It seems as if relativism trumps self evident truths when it comes to economics.

Larry

  • Tue, Jun 15, 2010 - 08:36pm

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    Re: explaining why sovereign vs. debt money really, really, …

hi goes.  To be clear where I’m coming from in this video…it’s a marketing piece.  I want to get the phrase “sovereign money” out in the public domain.  My goal is awareness.  I think we’re in a mega fight for civil rights and freedom, and I’m trying to show people how the monetary system is where the fight lies.  Explaining technicalities in this video would hurt that marketing message.  Having said that, on to your good questions…

[quote]1. Do you envision sovereign money only as an equalizer to our current value sucking system or do you see it as a long term solution even once the hurricane forces are removed?  Surely if soverign money has enough force to break the current value sucking system, that same force will run the risk of exploding outward in the future[/quote]

I see it as the only way of changing the current power dynamics in the system, i.e. pushing some power back out from the central cartel.  I think that has to happen before any (good) change is possible.  Then I think it’s worth discussing what a sustainable, 21st century monetary system might be that should replace the whole thing.  I like some of the new thinking out there that recognizes the money system is just a way of facilitating relationships, so the idea of developing one that recognizes the humanity of each individual is exciting.  The 2 key priorities for me in thinking about a new one:  1) it can’t be built on scarcity (exponential growth), and 2) it can’t enshrine hierarchical power like ours today. 

[quote]If our current political system is captured by those that control money, won’t it be risky to give monetary powers directly to those that were so easily corrupted when that power was only indirect[/quote]

What else do we have?  The only thing we have is government.  When people ask this question I’m always thinking “do you realize you’re surrendering the constitution, surrendering the idea of government, surrendering to the financial powers?” I’m open to hearing another option, but short of a miracle, I don’t see any other avenue of attack besides pushing from the bottom-up to make the government work…and I know that in itself is a miracle.  🙂

[quote]I know you don’t believe in the “Quantity theory of money” but do you really believe that the quantity makes no difference, even over the long run?[/quote]

I believe in it…just not the simplistic way it’s applied today…to immediately shoot down any new ideas for the government doing anything against the financial cartel.  Yes quantity must be controlled.  I mention that briefly in part 2 or 3 coming up.  But for now just look at the total debt number…mega deflation potential.  Let’s get the freedom concept out there, then let’s discuss how to manage quantity (though Nate Martin has discussed this if you want to check his stuff). 

  • Tue, Jun 15, 2010 - 08:53pm

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    Re: explaining why sovereign vs. debt money really, really, …

[quote=larry]2. The U.S. money supply (M3) is around $13.9 trillion and our combined private and public debt totals around $58 trillion.  We are around $44 trillion short – how will we make up this shortage?[/quote]

We should make up the shortage by working the debt down by putting banks through bankruptcy proceedings just like everyone else has to go through bankruptcy.  Isn’t it maddening how every agency of government currently serves the banks rather than treating them like everyone else?  But therein lies the power of the current central cartel controlling every dollar in the vortex…they even run the courts. 

Goes and others are right…the answer to this problem isn’t just pumping out $45 trillion in new money (but I support every sovereign money initiative out there right now because it’s a way of injecting some money and getting power in someone else’s hands besides the central cartel).  The debt has to be worked down one way or the other.  The current plan is to work it down by dumping it on the government (taxpayer) so the financiers are made whole.  Should be the other way around.  We should basically be going through a modern jubilee where the system is reset in a way that serves the people rather than in the way that serves the banks.  The process would take a lousy bank, put it through bankruptcy, and mark the assets down to market by selling them to more healthy banks…then people with $500k mortgages in Las Vegas would have a $200k mortgage because that would be what the new bank paid for it…it’s what it’s worth.  And of course given the debt-based monetary system, we’d be decreasing our money supply by doing that.  But that’s going to happen anyway.  And that could be ameliorated by sovereign money injections for things like, dare I say, infrastructure.  🙂 

  • Tue, Jun 15, 2010 - 09:28pm

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    Re: explaining why sovereign vs. debt money really, really, …

Damon,

Thanks for your answers.  Based upon what you are saying I think I could largely support such an initiative.  I still am sceptical of its long term ramifications but I do think it would probably be favorable to an IMF lead world currency which I assume is the Bankers preferred outcome.

  • Tue, Jun 15, 2010 - 11:16pm

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    Re: explaining why sovereign vs. debt money really, really, …

strabes wrote:

We should make up the shortage by working the debt down by putting banks through bankruptcy proceedings just like everyone else has to go through bankruptcy.

The problem with that idea is that the banks don’t owe anywhere near that much money so even if they go belly up, almost all of the debt would remain.  If all of the big banks went bankrupt, do you really think we would extinguish much more than a couple trillion dollars in debt?  And, the debt owed to the banks would be transferred to others through bankruptcy proceedings.  So who else goes bankrupt to extinguish bad debt?

I think as of 2007, the total outstanding private and commercial mortgages totaled around $14.7 trillion.  So if every mortgage defaulted, we would only extinguish part of the debt and would be left with close to $28 trillion in remaining debt – not including interest.  And much of that is insured through Fannie and Freddie so the U.S. would take a heavy hit in the process.  So who else goes bankrupt in defaulting on loans?

Foreign holders of Treasury Securities total around $4 trillion, if we simply refused to pay, we’d still be left with $24 trillion more in debt than money.  And don’t forget, that’s an M3 total, much of that money is not available for circulation.  M1 is only around $1.7 trillion and measured as M2, the amount is $8.5 trillion (not all of M2 is available for circulation).  And don’t forget our unfunded liabilities.

Maybe you can point out where I am wrong but I don’t see how allowing all of our banks to go bankrupt helps our overall situation much.  And even if there is other more significant debt defaults, we would still be very deeply in debt.    

strabes wrote:

We should basically be going through a modern jubilee where the system is reset in a way that serves the people rather than in the way that serves the banks.

Don’t forget that much of our debt is held by private individuals and a “jubilee” would severally hurt those who innocently bought bonds and other debt instruments.  Wouldn’t this approach be unfair to those who avoided debt and saved their money?

If we start massive defaults, or a jubilee, it will be national suicide.  We have pledged collateral that includes our future earnings, property and national infrastructure.     

The solution, if there is one, is many years of debt free money being spent into the economy rebuilding infrastructure and implementing clean and sustainable energy alternatives.  Yes, it will take many years and a lot of hard work and our life styles must change but in the end, we can mitigate a total collapse.

The contraction has already begun and if anyone thinks inflation is bad…wait till deflation goes on for another 6 months:

The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history.

The M3 figures – which include broad range of bank accounts and are tracked by British and European monetarists for warning signals about the direction of the US economy a year or so in advance – began shrinking last summer. The pace has since quickened.

The stock of money fell from $14.2 trillion to $13.9 trillion in the three months to April, amounting to an annual rate of contraction of 9.6pc. The assets of insitutional money market funds fell at a 37pc rate, the sharpest drop ever.

“It’s frightening,” said Professor Tim Congdon from International Monetary Research. “The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly,” he said.

  Shadow Government Statistics

Larry

  • Wed, Jun 16, 2010 - 12:01am

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    Re: explaining why sovereign vs. debt money really, really, …

It was good talking with you this afternoon larry.  Maybe someday the people will realize that debt free, wealth based money is the only solution to this god forsaken mess.

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