Thought Exercise: There's No Money

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Thought Exercise: There's No Money

Hi Everyone,

In the spirit of the Crisis Simulation threads, I would like to submit the following scenario for discussion. This particular scenario is very different from the Crisis Simulation scenarios in all but one way: it involves dealing with the unexpected. I’m sure many here will be tempted to dismiss it as unrealistic, but then again, how many of us can say that the future unfolds exactly as we expected.

 

  • In the near future, the fear of a coming hyperinflation reaches critical mass. The Fed and large banks become targeted by the public’s rage and anger. The “End the Fed” movement sweeps through the country, and in response to this aggression, the Fed decides to fight back and show the country “who is boss” here.
  • Faced with extinction, the banking system begins to systematically to remove all credit from the financial system. 
  • The banks “call-in” all outstanding loans and shut their doors.
  • The money supply is reduced to only the physical cash in circulation, and the bankers have most of it.
  • Without credit, nearly 70% of all existing business go bankrupt in the following year.
  • Unemployment exponentially soars to over 40%.
  • A country built on and addicted to credit, suddenly is forced to become a pay-you-go society, as the financial system as we know it ceases to exist.
  • The one thing that nearly everyone shunned only a year before is now the only thing that guarantees your survival, cash.
  • On a personal level, this translates to the following: 
    • The only money that you have, is the physical cash in your direct possession. 
    • Your job is gone. 
    • Your bank account is gone. 
    • Your safe deposit box is gone. 
    • Your 401K and retirement is gone. 
    • Your stock portfolio is gone. 
    • Your credit card is gone. 
    • And if you can’t payoff your mortgage on the spot, your house and/or farm is gone too.
  • Everywhere you look people are trying to sell anything to raise cash. The only problem is, the people with cash are hoarding it, so the only thing that sells is the bare necessities.
  • The people holding gold and silver bullion can’t find a buyer. With no job and starving family members, people begin trading Gold and Silver coins at face value. What would be considered a small fortune in gold just a few years before, is eagerly given away just to pay the taxes on the roof overhead. In an act of desperation, a one ounce gold coin is traded for 3 loafs of bread and a pound of ham.
  • The country is suffering in the midst of plenty, all because their is no money supply to effect trade.
  • At an opportune time, a new mega-bank emerges and begins to buy up anything of value for literally pennies on the dollar. 

 

 This scenario is of course a deflationary depression, and on the generational timeline, its overdue. If you think the idea that a central bank would create a depression by contracting the money supply is far fetched, you should know that it has happened in this country before (the depression of the 1890’s is just one historical precedence). 

 

Any thoughts on how to play this scenario, if I dare ask?


Thanks for your participation...Jeff

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Re: Thought Exercise: There's No Money

 

If this were to happen I hope society would then realize you don't need money to do anything.  The real question is "do you have the resources?"  If so then keep producing.  That is how you destroy the banking crooks, stop using their instrument (money) that is the equivalent of a noose around ones neck.  

Communities would have to pull together and create their own independent livable economy without money.  Factoring in data such as supply and demand would be the concern.  I say "without money" because if we use the money system again, we will just end up repeating the same old patterns of the past.  

If you think about it, the masses rejecting the money system is really the Free Market (the people) at work.  Banking cartels have become to abusive, so naturally a form of rejection must occur.  Just like the human body fighting off a virus or flu.  

Educating that masses on how a small community resource based economy would work must be implemented too.  

Money is the tool the banking elite use to control you, money has become more of a control devise then it's original intent, and that is a medium of exchange that is workable for society where the Produce, consumer and employee are all satisfied.  

Easier said then done, I know, but so is a lot of things suggested on this site.  

~Joe

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Re: Thought Exercise: There's No Money

Wouldn't this force people to start all over from scratch ... I mean in terms of creating money? Those who grow food would obviously have the upper hand for awhile, and people would start with bartering, maybe move to working in trade for food. But eventually, even farmers will need a tool fixed or a sick family member tended to and soon enough someone will break out a printing press and create local "money" that can be bartered back and forth within the community.

What I'm not clear on is, if the FED closes off all the sources of money, could they really confiscate your house for non-payment? They probably wouldn't because then they'd have to deal with cold and starving masses and that kind of population can get dangerous. Isn't that's why there's been a moratorium on foreclosures? It's got nothing to do with giving people time to recover (how can they recover when there's no jobs?) and everything to do with keeping us in the dark about how bad it already is and risking us pushing for change (not the Obama kind.) 

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Re: Thought Exercise: There's No Money
JK121 wrote:

I say "without money" because if we use the money system again, we will just end up repeating the same old patterns of the past.  

I can't picture how this would work. Direct barter and even indirect to a certain extent, I can understand (i.e. between 3 or 4 people where one wants what the other has, but the other wants what the third offers, etc.) But how does one realistically operate exchange of goods, labor, services, etc without something that it can be exchanged for that everyone will accept? I'm open to a complete change of thinking - just not creative enough to envision it ...

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Re: Thought Exercise: There's No Money

I believe as Chris talks about in the crash course.  If the dollars ceased to exist, a new version would pop up very quickly in it's place.  Most likely that will be gold, silver, and other metals.

So I don't think the scenario is likely.  Sure, the Fed can take their money and go home, but then their money is worthless since money is only good for what it will buy, and who would take it anymore?  After all, I think we are already most of the way there, the banks are not lending now.

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Re: Thought Exercise: There's No Money

I suppose we would default into a barter system but the real concern would simply be theft. Theft of anything and everything. People would be killed for a grain of rice. If you had anything of value you would have to violently defend it.

As for farms. They would need an army to protect what they grew from theft. The moral breakdown from fear and desperation would be the biggest concern if we had a polar switch in our monetary system like what JAG is suggesting.

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Re: Thought Exercise: There's No Money
rhare wrote:

I believe as Chris talks about in the crash course.  If the dollars ceased to exist, a new version would pop up very quickly in it's place.  Most likely that will be gold, silver, and other metals.

The problem with this argument, is that during the 1890's depression (that this scenario is based on), gold was money. Gold, and silver to a lesser extent, are the easiest forms of money for a central bank to control. 

Not the mention that money is officially "money", because the government accepts it as payment for taxes. So while I agree that other forms of barter currency would indeed materialize in this scenario, most people would still have a need for traditional cash.

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Re: Thought Exercise: There's No Money

The problem is taxes.  There is no way that the government will give up on taxes.  You can barter all the other necessities of life away until the tax man comes calling.  In the old West, people were food rich and cash poor.  The government WILL find a method to get their pound of flesh.

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Re: Thought Exercise: There's No Money

oops

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Re: Thought Exercise: There's No Money
JK121 wrote:

The real question is "do you have the resources?"  

I think you nailed it Joe. No matter what happens in the future (hyperinflation, deflation, or the goldilocks economy) the critical aspect to survival seems to be one's ability to furnish the basic necessities (clean water, food, clothing, shelter, protection, and medicine) with the minimal use of money.

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Re: Thought Exercise: There's No Money

 

It's not easy for society to take such a dramatic change to a Resource based economy.  I suggested it to the question, because the banking system has failed over and over and over again.  We have been so conditioned and brainwashed to know no other workable systems for society.  People would panic first at such an idea.  The idea of no money would be scary at first, but if humanity used it skill/resources in a humane way, then humanity could be called a civilization.  Think about how better off society would be if the 130,000 scientists that worked on the Manhattan Project were used to create abundant energy, sustainable travel, hydroponic food fields, top of the line medical units.  If person A has something that Person B wants, why not create access to the items needed so Person B can create it himself?  Person B acquires a new skill and the item.  

 

People need to start thinking of what is really important, is the first thing.  Our current system of monetary economics creates a patch work system for society.  The fake "free market" as I call it, would never allow a car that would only need maintenance once per year, or have cars run off of water (see stan meyers story).  In other words, Oil/energy cartels/duopolies would not allow free, abundant, sustainable, efficient products to enter the market.  That is why we never have a true free market.  A true free market would allow The Stan Meyers water car to be worked on and introduced to compete with fossil fuel cars.  It's money/profit system that prevents that from happening.    If I make a car that needs no maintenance I go out of business, If I make batteries that last 50 yrs, I go out of business and so on.  Your turnover rate would fall below levels to be sustainable in a monetary based system.  Our current system of taxing, interest, lawsuits is more then a headache for all.  I mean, we actually have people committing suicide due to money troubles.  It's insane and inhumane.  

Money has become a noose to the masses and not a positive instrument for society.  Moral hazard/perversion, greed, power and so on has molded "money" into the root of all evil.  Our current system is selective patch work.  We will never ever have enough jobs that pays everyone 50,000/yr with benefits. With continual outsourcing and downsizing due to new technology, and inevitable crash awaits.  

 

As for the question you posed, think about it like this.  If a similar scenario were to happen, and lets say 20 people were stuck on an island, but had all the tools to create abundance on that island, ex. solar panels, communications, hydroponic food, and so on.  Would you want efficiency and abundance or scarcity and inefficiency?  And decisions would be arrived at using the scientific method, as opposed to elected officials who make decisions based on their unique political status.  Example, Alaska's bridge to nowhere.  

I know religion is not supposed to be a topic of conversation, but please let this one slide.  

That famous line "On Earth as it is in Heaven"  We can move toward that direction or we can keep this Hell on Earth.  You think Heaven uses a Monetary system?  

It's easier said than done I know, but to say that we can't do that is ridiculous.  

Hope this helps.  

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Re: Thought Exercise: There's No Money

The US congress passed the Federal Reserve Act of 1913,  and it can also dissolve it.  

There is  already a  country operating without a central bank:   Panama.      It doesn't have a FDIC either.    Bankers act prudently or they go out of business.    The banks nor their government cannot expand the money supply.    The only inflation the economy feels come from the monetary policies of the US Federal Reserve., since the country adopted the US dollar as its own currency.

If we want to see how an economy  function without a central bank,  Panama is a good place to start:   

http://mises.org/story/2533

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Re: Thought Exercise: There's No Money

 

As we move forward with more technological advancements, the world will require less and less of the population to produce the worlds goods.  

An example of this would be Farmers and the Farming Industry.  It now takes less farmers to create the amount of food needed for society.  Less now produces more.  

True, new markets will open up and create jobs, but the better technology becomes, the quicker the human factor will be designed out of the market.  Leading to a paralysis of purchasing power, slowly crippling the consumption cycle leading it to collapse.  Mass unemployment leads to mass starvation and social unrest.  

We used to design the Elevator to be operated by people, now they are all designed with no human effort at all.  We used to hire people to process tons of paper work, now bar codes and scanning system shrinks that market.  The list goes on and on, and as technology progresses, more will be produced with the human factor left out to dry, forcing them to obtain a job with significant lower purchasing power.  In Germany and Japan they are already designing restaurants with no Waiters or Waitresses, and even no cooks, the workforce is dramatically shrunken in that industry, imagine 50yrs from now, how can we maintain a system (money) that has a natural propensity to fail?  

The system we have in place is not working for the many and only benefiting the few.  We try to help the "many" through our current system, call it Capitalism, Free Market does not matter, it get an F-.  True many great things have come from our current system, but when you observe the global Prosperity to Poverty levels you see a much different picture.  The top 20% own more than the bottom 80%.  If I were a Doctor with that kind of success rate I'd go out of Business.  Check out CIA World Factbook.  

 

 

 

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Re: Thought Exercise: There's No Money
JK121 wrote:

As we move forward with more technological advancements, the world will require less and less of the population to produce the worlds goods.  

An example of this would be Farmers and the Farming Industry.  It now takes less farmers to create the amount of food needed for society.  Less now produces more.

Don't you realise this has NOTHING to do with "technological advancements" and everything to do with cheap and abundant fossil fuels?

Come on people, time to stop confusing the two......

Mike

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Re: Thought Exercise: There's No Money

Hi Mike,

I've been following many a thread from Joe (JK21) for almost a year now and hold some honest respect. Much of his notion is based within the work of Peter Joseph. I know your internet is limiting the opportunity to pick and choose films at will so I've found the transcript to the 'Orientation Presentation' film for you to read :-

http://dotsub.com/view/a34fba0d-4016-4807-b255-021b58dbc9a4/viewTranscript/eng

... and the film itself :-

Best,

Paul

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Re: Thought Exercise: There's No Money

 

It's all interconnected.  Not sure what you mean, please explain

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Re: Thought Exercise: There's No Money

I think that what Matrix was alluding to is that all the technological advancements we've made to reduce the amount of labor needed to generate products, is underpinned by the presence of abundant cheap energy, in our current case fossil fuels.

Without that cheap energy, then most of our advancements cannot function, you can't harvest crops if your harvester is out of fuel, your grain silo's need power to run, so do well pumps, you need fuel to drive to where you work, we even need power for information transfer. Similarly if you look at any area where labor costs have been reduced you'll see an equivalent (higher) increase in the use of energy.

Now if we believe in peak oil, and resources, then we're in a bit of a bind, the time of cheap abundent energy is rapidly coming to a close, so many of the technological advancements are going to fail or be less useful, it's easy to burn 2 gallons of gas an hour for $6 if it replaces 2 men at a cost of $15, but if gas is at $10, then it's not quite the bargain it used to be. The same applies to most efficiencies, they're only efficiencies since it's cheaper to buy the energy than it is to pay for the labor. In many ways we've overextended ourselves by doing this and most production cannot be sustained without that energy, i.e. to cover the energy costs with labor is impossible with the current population. So should there be an energy crisis then production will have to fall, to account for the lower energy production, depending on how far it will fall depends on the extent of the lower energy production, and the amount of labor that can be hired to reduce that energy need.

 

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Re: Thought Exercise: There's No Money

 

Yeah I kinda connected the dots after I read his reply again.  

That comes back to the point that the Oil/energy Cartels would never allow free abundant energy.  OPEC shut up Stan Meyers and many other brilliant people.  All cars run on water, OMG OPEC would kill their own mothers to hide that technology.  The U.S. is OPEC's biggest customer, if we invented cars that ran on water, many more 9/11's would probably happen. 

We are forced by the money/profit structure to be depended on oil/fossil fuels.  I get what Mike is saying, but it's the entire money system that forces us to be addicted to fossil fuels.  

 

As far as Peak oil, lets think about this.  If the Earth has been around for about 6 billion years, and the industrial/fossil fuel era has been around for only a microsecond, how could we use up all of the potential OIL in a time period of 6 billion yrs?  I think Peak Oil is, like the movies... Staged. 

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Re: Thought Exercise: There's No Money

"As far as Peak oil, lets think about this.  If the Earth has been around for about 6 billion years, and the industrial/fossil fuel era has been around for only a microsecond, how could we use up all of the potential OIL in a time period of 6 billion yrs?  I think Peak Oil is, like the movies... Staged. "

Joe,

I'd still beg to differ with that approach to Peak Oil as there is way too much data to back up the decline without using subversive tactic. This interview with the director of the International Energy Agency from December 2008 is a case in point :-

...as money is equated as a value through energy and oil being the main energy base, its imminent decline is a frightening reality over the coming decades ...

Gungnir,

a very well written post,

Best,

Paul

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Re: Thought Exercise: There's No Money

Yeah I kinda connected the dots after I read his reply again.  

That comes back to the point that the Oil/energy Cartels would never allow free abundant energy.  OPEC shut up Stan Meyers and many other brilliant people.  All cars run on water, OMG OPEC would kill their own mothers to hide that technology.  The U.S. is OPEC's biggest customer, if we invented cars that ran on water, many more 9/11's would probably happen. 

We are forced by the money/profit structure to be depended on oil/fossil fuels.  I get what Mike is saying, but it's the entire money system that forces us to be addicted to fossil fuels.  

 

As far as Peak oil, lets think about this.  If the Earth has been around for about 6 billion years, and the industrial/fossil fuel era has been around for only a microsecond, how could we use up all of the potential OIL in a time period of 6 billion yrs?  I think Peak Oil is, like the movies... Staged.

Are you actually saying that you believe in a engine that could break the first and second laws of thermodynamics but you don't believe in Peak Oil? 

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Re: Thought Exercise: There's No Money

 

Not saying it's not 100% real, but if technology is suppressed then peak oil's truth could be too.  

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Re: Thought Exercise: There's No Money
JAG wrote:

Any thoughts on how to play this scenario, if I dare ask?


 

Here's a far out thought.  Maybe it would set the stage for a military coup when members of the armed forces, both past and present, decide that it is their constitutional duty to fulfill the obligation of their oath of enlistment and defend the Constitution of the United States against all enemies, foreign and domestic

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Re: Thought Exercise: There's No Money

Here's a far out thought.  Maybe it would set the stage for a military coup when members of the armed forces, both past and present, decide that it is their constitutional duty to fulfill the obligation of their oath of enlistment and defend the Constitution of the United States against all enemies, foreign and domestic.

That is a nice thought but what are the odds?  This country was already blessed once with altruistic founders that voluntarily yielded power that they had the opportunity to keep.  I am not sure that lightning will strike twice.

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Re: Thought Exercise: There's No Money

Money has become a noose to the masses and not a positive instrument for society.

The problem is fiat money! I think if we had sound money that couldn't be manipulated and silently stolen we wouldn't have near the problems.

 

 

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Re: Thought Exercise: There's No Money
ao wrote:
JAG wrote:

Any thoughts on how to play this scenario, if I dare ask?


 

Here's a far out thought.  Maybe it would set the stage for a military coup when members of the armed forces, both past and present, decide that it is their constitutional duty to fulfill the obligation of their oath of enlistment and defend the Constitution of the United States against all enemies, foreign and domestic

Don't forget naturalized citizens in that too. We also swear that oath.

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Re: Thought Exercise: There's No Money
goes211 wrote:

That is a nice thought but what are the odds? 

Very small ... but you never know.

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Re: Thought Exercise: There's No Money
ao wrote:

Here's a far out thought.  Maybe it would set the stage for a military coup when members of the armed forces, both past and present, decide that it is their constitutional duty to fulfill the obligation of their oath of enlistment and defend the Constitution of the United States against all enemies, foreign and domestic

As a country, we have kicked out the central (or national) banks before, we can surely do it again. But as this scenario suggests, the central bank and its cohorts are not going to relinquish their power without inflicting as much pain on the country as possible. 

If America would defend itself from its domestic enemies, there would be no foreign enemies to deal with.

 

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Re: Thought Exercise: There's No Money

Very small ... but you never know.

That guy sounds like the real deal and I would happily support him for whatever office he runs for.  I also personally know several US military officers and they are all true patriots.  What I don't know is how honorable the top leadership is.  My fear is that they may be more politician than patriot.

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Re: Thought Exercise: There's No Money
JAG wrote:

If America would defend itself from its domestic enemies, there would be no foreign enemies to deal with.

Ding, ding, ding!  And the price goes to the gentleman quietly meditating in his cave contemplating such a world.;-)

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Re: Thought Exercise: There's No Money
goes211 wrote:

 I also personally know several US military officers and they are all true patriots.  What I don't know is how honorable the top leadership is.  My fear is that they may be more politician than patriot.

Unfortunately, that fear is probably true.  They allow the true warriors to "do their thing" during time of war (the George Pattons, the Chesty Pullers, etc.) but once the conflict is over and won, they lock the "barbarians" back up in their figurative cages and bring out the politicians again. 

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Re: Thought Exercise: There's No Money
Gungnir wrote:
ao wrote:
JAG wrote:

Any thoughts on how to play this scenario, if I dare ask?


 

Here's a far out thought.  Maybe it would set the stage for a military coup when members of the armed forces, both past and present, decide that it is their constitutional duty to fulfill the obligation of their oath of enlistment and defend the Constitution of the United States against all enemies, foreign and domestic

Don't forget naturalized citizens in that too. We also swear that oath.

So true.  I think of brave men like Myles Keogh and Rick Rescorla who were naturalized citizens that served their country with great courage and distinction.  They both had amazing stories but most Americans have never heard of them.    

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