When speaking about the modern capitalist economic model, the phrase “broken by design” comes to mind. Decline is inherent in it’s very design; debt is inevitably incurred or created, more money is injected into the economy, and inflation creeps in to devalue people’s hard earned wealth.
This fiasco continues until such time as the system becomes insolvent and comes crashing down, then it’s rinse and repeat. The idea that money is actually worth something is purely an illusion, and while there was once a gold standard, money is now just a symbol of the bank’s blatant corruption, and the inability of civil libertarians to do anything about it.
“But why on earth would anyone design it that way?”, asks the innocent child.
“It’s about balance of power and maintaining control, my precioussss”, replies the small clammy reptilian looking figure.
The small clammy figure pulls a balloon from his pocket and proceeds to inflate it, and the child sits mesmerised as the big shiny balloon inflates before his eyes.
The small clammy figure continues to inflate the balloon, when will of a sudden, BANG!! The balloon explodes from too much air. The child bursts into tears with outstretched arms, and the small clammy figure smiles a twisted smile.
Fractional Reserve Banking
Essentially, fractional-reserve banking means banks can legally issue more hat checks than there are hats. As defined by Wikipedia:
Fractional-reserve banking is the practice whereby a bank holds reserves (to satisfy demands for withdrawals) that are less than the amount of its customers’ deposits. Reserves are held at the bank as currency, or as deposits in the bank’s accounts at the central bank. Because bank deposits are usually considered money in their own right, fractional-reserve banking permits the money supply to grow beyond the amount of the underlying reserves of base money originally created by the central bank.
So what happens when everyone comes to collect and their aren’t enough hats? Therein lies the problem. Let’s illustrate the issue with a practical situation:
Mr Bean enters the bank to secure a $50000 home loan, with his house as collateral of course. The bank accepts the load, and gives Mr Bean his money with an interest of $5000. Mr Bean is over the moon and goes on his merry way, but what Mr Bean doesn’t know is that the money he has just been given does not actually equate to deposits held by the bank, or at the central bank (in the time of the gold standard it would have been exchangeable for gold and silver)
Unfortunately for Mr Bean he has a bad gambling problem, and he blows most of his money on the horses … and the rest on a costly divorce settlement. Unable to make his repayments, poor old Mr Bean declares bankruptcy, and the bank takes his house. Mr Bean is really up shit creek, but the bank is laughing because they’ve just scored another house.
Mr Bean’s bookie on the other hand is living it up on a yaght spending cash hand over fist, which is great for the economy because for intents and purposes it looks like “boom times”, especially at the strip club he frequents.
The reality is though, that a whole bunch of debt has been created at the central bank, and will now be generously passed on to the populace as inflation. Now Mr Bean can’t even afford a cardboard box to sleep under, and little Mr Bean Jr. (whom his missus had with her new husband) who just graduated from business school is flipping burgers at Mc Donalds.
Even is Mr Bean had gotten his shit together and paid back the loan, the Bank would be richer, so for the middle-man ie. the commercial bank, it’s a win-win situation.
Congratulations if you made it all the way through that! Hopefully it can be seen then that a fractional reserve system is inherently unstable and fraudulent, and at odds with underlying real physical variables. The money issued as loans on principle is truly created from nothing and backed up by nothing, and this is indeed the very definition of counterfeited money: Money created from nothing and backed up by nothing.
Such a system is designed operate in temporary cycles of artificial activity, until such a time as there is an inevitable day of reckoning wherein the system collapses onto itself, wiping away all fraudulent claims and re-synchronising wealth with its true owners. Money is destroyed, and the true order of affairs is re-established once more. See Business Cycles
The business cycle, as defined in the modern day, is a primarily central bank-driven phenomenon. The Wikipedia definition does not really do it justice:
The business cycle is the downward and upward movement of levels of gross domestic product (GDP) and refers to the period of expansions and contractions in the level of economic activities (business fluctuations) around its long-term growth trend.
The central bank prints more money, injecting more credit than is necessary into the economy. The volume of money fools investors into thinking that a rapid expansion is underway, which, in turn stimulates a “boom”.
As the economy overheats, products and services that are an unnecessary outcome of the artificial boom become commonplace, leading to glut and, inevitably, to a collapse.
During the boom, the central bank may artificially increase interest rates while also raising the amount of money available via credit and its printing plants. This inflation eases the economy (best case) into a “soft landing” – after which the cycle begins again.
Fixing the Numbers
With world governments desperately playing the forex, and government economists employing statistical slight-of-hand to keep the economic outlook looking peachy from the outside in, figures on a sheet of paper can’t always be taken at face value.
It’s necessary to seek multiple sources of information to properly gauge the actual state of an economy, such as:
- Rate of inflation
- Average disposable income compared to cost of living
- Interest rates and fluctuation over time
- State of health care and social welfare
- Percentage of university graduates unable to secure work
- Rate of unemployment among the proletariat
- Spend some time living among the proletariat!
The New Generation
Dangerous times lie ahead, and the issue is social as well as financial. Millennials are growing up in a state of disillusionment, totally disempowered and wanting no part of the world they were raised is. While this may be nothing new, the stakes are higher than they have ever been before.
For the most part, children of the previous generation grew up with strong morals values instilled by their family and the society around them. Small business owners took pride in their work, people exchanged and bartered at markets, cared for each other, and life was good. These days we have mass corporitisation and poverty breeding contempt and hate for the world in young minds, and thanks to modern technology and communications the perception of this reality is no longer isolated to the individual or the immediate community.
It’s small wonder young people turn away from the world and immerse themselves in technology, passive entertainments and destructive behaviour. After all, what is there to look forward too? A crappy minimum wage job and a crippling mortgage in 10 years time?
Young people need something to believe in, and apathy is our worst enemy and people who don’t care about anything are easily controlled and coerced. One can only hope the youngsters of the new generation wake up before all their freedoms have been systematically revoked and they are too blind and weak do anything about it.
Stages of Decline
The process of economic decay is roughly as follows:
In a strong economy everyone lives in abundance, goods are readily available, and life is good. People become accustomed to the good life, and complacency and a sense of entitlement sets in. Inflation and decline can caused by a number of practical reasons, including and not limited to:
- Fractional reserve banking loan debt (American fiasco)
- Central bank generating surplus credit (Business Cycle)
- Rising oil prices (peak oil scare and corruption)
- Rising real-estate prices
- Government contract corruption (Philippines, china ghost cities)
- Abuse of social welfare programs (Australia)
- Increased supply over demand
- Unions demanding wage increases
- Market bubbles
The economy is sent into a steady decline as inflation rises. Unemployment is on the rise. Ever increasing numbers of people receive government assistance in one form or another. Government spending has increased dramatically. The price of gold, silver, and other precious metals reach record highs.
Prolonged periods of decay trigger a recession, causing businesses to fail and leaving a large portion of the population jobless and homeless. Infrastructure begins to decay due to reprioritisation and lack of government funds. It’s do or die for the working class, and large scale civil unrest and riots become the norm.
At this point the economic collapse can be sent into overdrive, when the people fearing banks will become insolvent, panic and withdraw their deposits en masse causing a “bank run”. As a bank run progresses, it generates its own kind of momentum, with the likelihood of default increasing as more people withdraw their deposits. This can destabilize a bank to the point of facing sudden bankruptcy. At this point a bank must either default (great depression, 10c on the dollar), or be bailed out (American bank bailout).
In the event of a total collapse, infrastructure grinds to a complete halt and there are no more deliveries to fill the supermarket shelves. There is a rush for supplies and everything goes within in a matter of hours. The power grid becomes unstable and rolling blackouts are a daily occurrence. Those who have hoarded goods or gasoline now offer them at exorbitant prices, and those who can’t afford them turn to vandalism and violence in order to survive.
Total lawlessness ensues and urban areas become war zones controlled by gangs. Severe poverty and starvation become a common sight. The government implements martial law and now controls the supply and distribution of food and water. Clashes break out between civilian militia and government forces. Those who have no means of providing for themselves have no choice but to accept the government’s totalitarian regime.
The term “economic collapse” has been used to describe a broad range of bad economic conditions, ranging from a severe, prolonged depression with high bankruptcy rates and high unemployment (such as the Great Depression of the 1930s), to a breakdown in normal commerce caused by hyperinflation (such as in Weimar Germany in the 1920s), or even an economically caused sharp increase in the death rate and perhaps even a decline in population (such as in countries of the former USSR in the 1990s).
Weather we choose to acknowledge it or not, an unseen battle rages between the powers that be and the people they seek to control, and our basic human dignity and right for freedom is at steak. We live at a crucial turning point in mankind’s history, and the outlook is grim but not yet hopeless. The ever encroaching dark hand of control continues to sell their subversive action under the guise of altruistic endeavours, and a generation of youth raised on social media think apathy and cynicism is cool, but we have to have faith in the resilience of the human spirit to fight in faced of adversity.
Just remember that the handful of people who run the world economies will do literally anything to maintain the power, so educate yourself and keep your eyes open - the world is counting on YOU to be as passionately about YOUR freedom as the shadow governments are about keeping control.