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“Our Debt-Based Money System Will Break Us”

This article appeared in Prosperity, June 2001

The Earl of Caithness speaks…

This speech was delivered by the Earl of Caithness in the House of Lords, Wednesday, 5 March, 1997. It is reprinted in full from Hansard, Vol. 578, No. 68, columns 1869-1871.

The Earl of Caithness: My Lords, I too wish to thank my noble friend Lord Prior for initiating this debate. It comes at a most interesting time in the run-up to the general election and, as a result, we could not have envisaged the parties opposite saying anything thought-provoking or interesting about the economy. We were not disappointed.

Looking at it from a conventional viewpoint, the economy is in good shape and the Government have done better than most of their counterparts in Europe. We have moved out of recession and on the surface the economy is stronger and people are more confident. There is much that I could say about that. I think the Government have done a very good job.

However, it is also a good time to stand back, to reassess whether our economy is soundly based. I would contest that it is not, not for the reason to which the noble Lord, Lord Eatwell, alluded, which is that it is the Government’s fault, but our whole monetary system is utterly dishonest, as it is debt-based. “Dishonest” is a strong word, but a system which by its very actions causes the value of money to decrease is dishonest and has within it its own seeds of destruction. We did not vote for it. It grew upon us gradually but markedly since 1971 when the commodity-based system was abandoned.

Let us look at what has happened since then. The money supply in 1971 was just under £31 billion. At the end of the third quarter of last year, it was about £665 billion. In 25 years it has grown by a staggering 2,145 per cent. Where has the money come from? Interestingly, the Government have only minted a further £20 billion in that time. It is the banks, the building societies and our commercial lenders who have created the balance of £614 billion. If this rate of growth is projected over the next 25 years, the money supply in 2022 will be over £14,000 billion.

All that new money bears interest paid either by us as individuals, by companies or by the Government. Today the Government pay over £30 billion annually in interest charges — coincidentally about the same as the total money supply only 25 years ago. Governments since then have abdicated their responsibility for producing new money and controlling the money supply so that now they are marginalised. In 1971 government notes and coins accounted for 14 per cent of the money supply. Now it is only about 3.5 per cent. “So what?”, noble Lords might ask.

The problem is that it is commercial lending that has boosted the money supply, thus increasing debt and, as sure as night follows day, inflation follows growth in money supply of this sort. The only reason that debasement has not flowed into price figures in the last four years is that the high interest rates in the recession gutted businesses and individuals, leaving too many unable to pay the price levels that the debasement requires. But the wall of money is increasing remorselessly. The noble Lord, Lord Ezra, mentioned the Halifax Building Society’s latest surplus of about £3 billion to £5 billion.

Since 1991, in a time of recession, it has increased by 32 per cent and most of that is in the last two years. We must remember that virtually all the increase represents a rise in the burden of debt the economy must carry. The wall of money has already driven the stock market to an all-time high and some are now questioning whether it truly reflects company performances. Recently more money has begun to be channelled into both the residential and commercial property markets. Here I must declare my interest as a residential surveyor in central London who has benefited from that. Our company, Victoria Soames, recorded a hardening of the residential market early last year, followed by a 20 per cent rise in the last six months. That rise is continuing, if not accelerating. Lenders remain aggressive and, very disturbingly, the proportion of borrowing by individuals is moving up.

When the money supply increases, as it is doing, the previously existing money is debased accordingly. Therefore, either wages and salaries must also increase to maintain parity or those who earn wages and salaries will find that they no longer participate in the national economy to the same extent as they did previously. This exacerbates the growing fragmentation of our society, which cannot go on for ever. I am not advocating high wages but I am advocating less debasement and better control of the money supply.

When wage inflation does happen, it will feed through to all parts of the economy. The result, sadly, will be that the Government have to use the only tool they know — an increase in interest rates. That has happened fairly recently, but it is not the first time that is has happened. We saw it in the 1970s and again in the 1980s. It is a consequence of our debt-based monetary system that it leads inevitably to business and economic cycles.

Conventional wisdom tells us that in order to create new jobs and boost the economy, interest rates have to be reduced. That has happened. People are encouraged to borrow to invest and spend. That has happened. As the continuing flow of new money finds its way into the economy, inflation will follow and up will go interest charges again to reduce the level of borrowing. In order to pay the increasing levels of interest, borrowers will once more have to reduce expenditure in other areas of economic activity. The cycle will continue, but the next time, as before, we will all start deeper in debt and with a burden harder to carry. Personal debt has already increased by nearly 3,000 per cent since 1971. How much more can we take? I hope, for the sake of our economy, without which we cannot finance what we want to see — a good health service and a good social security system among other things — we will question this conventional wisdom.

We all want our businesses to succeed, but under the existing system the irony is that the better our banks, building societies and lending institutions do, the more debt is created. The noble Lord, Lord Kingsdown, said that there is little that can be done about debt. No, I do not believe that. There is a different way: it is an equity-based system and one in which those businesses can play a responsible role. The next government must grasp the nettle, accept their responsibility for controlling the money supply and change from our debt-based monetary system. My Lords, will they? If they do not, our monetary system will break us and the sorry legacy we are already leaving our children will be a disaster.

Source: www.prosperityuk.com

“Bail in” Cyprus-Style Wealth Confiscation Laws coming to Australia!

In 2012-13 Cyprus a Greek Island in the Mediterranean which is just of the coast of Syria and Lebanon were subjected to a Modern day wealth confiscation called “Bail in” ( instead of Bailout)

It is now clear that bank depositors will lose their hard earned money above 100,000 Euros and they will lose 6.7% of funds under 100,000 Euros.

These were the demands of the EU to secure a 10billion Euro capital injection over the next few years.

Its now happening around the world!

Laws are now being put in place in other countries around the world  like EU, Poland, Iceland, Italy, USA, UK, Canada and New Zealand and it seems soon to come to Australia! (All part of the G20!)

It seems that governments all the around the world are getting ready for a major financial problem which will mean that our savings deposited in the banks will be taken lawfully by our elected governments to stabilize the global banking system!

Just this Month October 2013 the International Monetary Fund has called for a 10% Levy on ALL European household saving accounts!

See the IMF report here go to page 48!

Here is a CNN MONEY news report on the plan – Europe bank rescue plan would hit investors

Poland has just announced that it is confiscating the funds held within Private Pension funds- check out this story at:  reuters.com

The Australian Government has recently confiscated ALL private bank account funds that have not been operated on for over 3 years and announced it will raise the Australian Govt debt ceiling to $500 billion!

See also

Barnaby Joyce Blog site   “Australian government planning to steal your money to “bail-in” so-called “systemically-important financial institutions” (SIFI’s) — under the orders of an unelected international body (of bankers and bureaucrats) you’ve never heard of; a body funded by the Bank for International Settlements (BIS), and chaired consecutively by Goldman Sachs alumni”

Barnaby Joyce barnabyisright.com  “G20-governments-all-agreed-to-cyprus-style-theft-of-bank-deposits-in-2010″

investmentwatchblog.com  Cyprus-Style Wealth Confiscation Is Now Happening All Over The Globe-  September 24th, 2013

wikipedia.org – Cypriot financial crisis

globalresearch.ca  The Bank Confiscation Scheme for US and UK Depositors

etfdailynews.com

Letter found on the internet addressed to Department of Treasury from Australian Financial Markets Assoc.

11 January2013

General Manager – Mr Lonsdale

Financial System Division

The Treasury

Langton Crescent

PARKES ACT 2600

Extract  “However, APRA, as the resolution authority, should have the power to enact a bail – in for banks incorporated in Australia during a resolution.”

David Love

Director

Policy & International Affairs

Australian Financial Markets Association

APRA is the prudential regulator of banks, insurance companies and superannuation funds, credit unions, building societies and friendly societies.

Martial law coming to America?

The economic challenges and the US Government shutdown has now got people talking about martial law.

 

Reports are now coming from Religious leaders and from business and political leaders in America that martial law is coming to USA – caused by a financial collapse.

My last blog post mentioned a coming financial collapse that will cause hyper inflation but now other leaders are warning of martial law.

The current people who are predicting martial law in USA is Rich Joyner, Ron Paul, Peter Schiff and Ellen Brown President of the Public Banking Institute.

http://www.morningstarministries.org/resources/prophetic-bulletins/2013/straw-breaks-camels-back#.Ulk8OFeab-o

http://www.globalresearch.ca/martial-law-and-the-economy-is-homeland-security-preparing-for-the-next-wall-street-collapse/5353267

http://www.theoakinitiative.org

http://www.infowars.com/ron-paul-warns-of-martial-law-and-economic-collapse/

http://www.infowars.com/peter-schiff-warns-of-martial-law/

These are a few extracts from Rich Joyner’s October 8th 2103 report:

  • “The main cause of the crisis that leads to martial law will be a currency collapse and a banking system failure.”
  • “This will lead to a period of near anarchy and chaos that forces our military to intervene to stop the meltdown.”

“The IMF (International Monetary Fund) did a widely publicized study on America’s debt and concluded that our real debt is over 100 trillion. The $16 plus trillion our government is now reporting as our debt is calculated by using a cash basis accounting method that would get us sent to jail if we tried to use it. This figure only reports how much we have borrowed and does not consider future obligations such as entitlements.”

“The IMF study concluded that if Americans were taxed at the rate of 100%, we still could not ever pay our obligations. This alone could ultimately bring down our currency, but it is just one of many deadly factors that could be equally devastating. Something has to give. We have dug a hole that we cannot get out of. It will ultimately result in the collapse of the dollar. That will be an emergency like we have not faced before, but we can get through it. It does not have to be the end of our Republic or our freedoms, but it will take martial law for a time to get the country stabilized and restored to our constitutional moorings.”  Rick Joyner

The USA is a $16.6 Trillion dollar (No 1 in world) economy and Australia a $1.6 Trillion (GDP per year).- The USA is not Australia’s largest export trading partner, China is, BUT the USA is China’s largest export trading nation a total of $411 billion! And the USA is Australia’s second largest importing nation into Australia making up 11.6% of  Australia’s imports. (Australia exports to USA in 2011 was $16billion)

It is now time to consider in Australia what would be the effect on our economy if the USA was to suffer this type of economic shock-wave.

Alan

 

Why the USA is facing a future of hyperinflation.

Glenn Beck Interviews Prof David Buckner about how USA is facing a Wiemar Republic type Hyper Inflation scenario.

Thursday, Oct 3, 2013

Columbia University Professor David Buckner joined Glenn on tonight’s Glenn Beck Program to offer some frightening insight into the state of the U.S. economy. Glenn has long talked about the collapse of Weimar Republic and the triggers that lead to a state of unsustainable hyperinflation. David laid out five “steps” that lead to/cause a hyper-inflated state:

1. Economic implosion
2. Collapse in tax revenues
3. Raise taxes
4. Lenders stop lending
5. Austerity or print

As you can see from the list, the U.S. is obviously not the untouchable stable powerhouse as it was once believed.

So is there any hope for our economy? David believes that the decades of poor policy will ultimately come to a head in October 2014 or January 2015, and from there a complete collapse would be complete in just months. It’s a scary prospect, but, as David explained, it is important to understand the root of problem, if we have any hope of righting the wrongs.

Watch the Video interview

Aug 24, 2013 - Global Financial System    2 Comments

Alan Economic Update- August 2013

I start this comment making it very clear that I am not an investment adviser and would class myself as an amateur in the financial markets.  But I have been studying this area since the GFC and I follow a number of financial newsletters.

Plus I attended the Investment Expo yesterday and listened to allot of people who know allot more than me in this field.

This is what I learned and what I am hearing.  Check with a professional before you act on any of my comments.

What could be coming:

Immediately after our Australian election on 7th Sept the Australian stock market will see a further spike in prices and confidence up until about the 16th Sept which is the height of the company dividend payouts.

But by October we will see a decline towards Christmas.  However internationally there could be a major correction very soon!

The DOW is at an all-time high of 15558 which is higher than just before the GFC of 13895. The Aust All ORDS is just over 5000 it was at 6875 just before the GFC.  CBA bank shareholders beware CBA is one of the most expensive bank shares in the world, its currently $72 AUD its was $60 AUD just before the GFC and it went to $24 so I would be looking at this share very closely. (wink wink say no more) but beware the dividend date for CBA is 3rd October so don’t do anything until after then.

I would also consider taking a defensive position, some people I know have already moved their super into cash.

Bonds are getting sold off which means interest rates will be on the way up if this trend continues. It could be a good time to lock in a fixed term interest rate for your mortgage. Remember if interest rates go up overseas like USA they must go up in Australia so we continue to attract overseas capital, even if our local market is depressed interest rates would still rise.

Gold and Silver has been heavily sold off and are now looking like they might be in a long term upward trend, with some fluctuations along the way. Gold had a 45% retracement from its low of $280 to $1920 back to $1180 USD an ounce. And one thing I have learnt is that what goes up goes down and what goes down goes up! I heard some estimates by Gold enthusiasts of $ 5000+ USD in longer term future.

AUD might stay in the mid to low .90s in Sept and might start sliding down to mid-80s and then find good long term support, unless there is a major 2GFC.

Our petrol prices will stay somewhat stable as international oil companies need oil to stay above $80- 90 dollars a barrel (currently $106 barrel) but will not get allot higher as high oil prices encourages alternative energy solutions so OPEC and other oil producing nations have a vested interest to keep oil affordable so it does not encourage alternative energy rivals.  This little fact explained to me why the big car companies have not been quick to design alternative fuel source cars!

A shining light for the USA is shale oil, which is expensive to produce but is making a helpful 22% reduction to the US trade deficit that is still over $500 billion per year. The USA stopped having a trade surplus after 1975. They still export $2.2 trillion per year but they import 2.7 trillion per year. The US National Debt stands at $17 Trillion.

I hope you found this interesting!

Alan

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