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The illusion of our monetary system
ECONOMY - 15/12/2018

Money is power. Over other people and in some extension, over your sovereign life. But after a simple analyse what is the money, the illusion falls. The real owner of the money is YOU – at least you have some part of it. The Government is the manufacturer of your property, it prints the money and keep some order, and you pay taxes for that service. The administrator of your money is the Bank, you pay them to keep your capital safe, to lean out or to borrow you more money, which you later must pay back – with YOUR money. But who is in charge? You, the owner of the capital, certainly not, your piece of money is not big enough to acquire any power. State and bank, together they help each other to be in charge.

 


Freedom and power is for most people just an illusion. If money is power and the key to freedom, the real CEO in charge should be you. But instead, it is the state or the bank, they have no money, but they use your money to control you. As an example, a lot of lawyers and bookmakers has become extremely rich administrating the money of professional soccer players or other athletes. In fact, they, not the athlete, are in charge of the property from he millions the clubs and advertisement has paid in absurdum. 

 


There are 4 scenarios, you are in one of them:
1. The state controls you, if you are too much dependent of the system; or
2. The bank controls you, if you have loans bigger than you can liquid in short time; or
3. You are in sufficient material control – if you belong to some of the 0,001% of mega capitalists;or
4. You have released your mind from the material chains and understand the meaning of spiritual values, however, you maintain a perfect material balance. You are not poor, but not too rich, money and material issues are of less importance of your life.
If scenarios 3 or 4 you will not learn any significant for your life in the following text and you better spend your time for other activities. Reading what follows is really important for people cheated by the illusions from scenario 1 and 2, that is what they should try to read, over and over, to try to get out from the worst case the World ever had, responsible for the future war and the destruction of our environment.

 

Ancient times, the governments needed to borrow money to fight a war. Every citizen who loaned money to the government was to receive an official paper certificate guaranteeing that the state would make interest payments. Those certificates could then be transferred to other people… and the government would make payments to whoever held the certificate at the time. In this way, the loan that an investor made to the government essentially became an asset-- one that he could sell to another investor in the future. This was the first real government bond.

 

When a government’s fortunes change and its ability to make interest payments is in doubt, the price of the bond fall. When confidence is high, bond prices rise. Governments still borrow money by issuing bonds, and those bonds trade in a robust marketplace where countless investors buy and sell on a daily basis.One of the most important factors affecting bond prices is interest rates: when interest rates rise, bond prices fall. And when rates fall, bond prices rise. And this law of bond prices and interest rates moving opposite to one another is as inviolable as the Laws of Gravity.

 

Needless to say, it didn’t take long for banks to get in on the action; they realized very quickly that by controlling government debt, they effectively controlled the government. The dominance of the banks over the government cannot be overstated, there is a deep, long-standing relationship between banks and the government: Banks buy government debt-- helping to finance spending packages that keep them in power. And the government bails out the banks when they get into trouble. You scratch my back, I scratch yours.

 

Of course, they both use other people’s money. YOUR money. Governments bail out the banks with taxpayer funds. Banks fund the government with their depositors’ hard-earned savings. Of course, it’s so absurd now that they’ve simply resorted to creating money out of thin air to benefit the both of them… which is precisely what central banks do.  A decade ago during the 2008 global financial crisis, central banks around the world created trillions of dollars, euros, yen, etc. worth of currency and effectively gave it all away to their respective governments and commercial banks.

 

The weird part: if you remember that inviolable law of bond prices-- when interest rates go up, bond prices fall. But: The Central banks buy expensive bonds at a time when interest rates are at extremely lows. Then, they begin slowly raising interest rates. Each time the Central Bank raised rates, the value of the government bonds that they have purchased will fall.  This seems insane, right? By raising rates, the Central Bank is creating massive losses for itself. Our society has awarded an unelected committee the ability to conjure trillions of any currency out of thin air and render itself insolvent to support the ongoing, mutual back-scratching of governments and banks, all at your expense. Even more remarkable, though, is how little anyone has noticed.

 


You’d think the front page on every financial newspaper would be “CENTRAL BANK INSOLVENT.” But it’s not. No one seems to notice that the whole bank system is insolvent. Or, for that matter, that most Western governments are insolvent.  It’s crazy. It’s as if it doesn’t matter that the government of USA, the largest economy in the world loses a trillion dollars a year, has $22 trillion in debt, $30+ trillion in unfunded pension liabilities, or suffers a debt-to-GDP ratio in excess of 100%.


Or that the central bank of the largest economy in the world is insolvent on a mark-to-market basis according to its own financial statements. There seems to be an expectation that none of this matters and it will continue to be rainbows and buttercups forever and ever until the end of time despite some of the most compelling evidence to the contrary. It’s difficult to imagine a consequence-free future with data like this. Peaks, corrections, crises, etc. are often preceded by similar dismissive, willful ignorance and irrational optimism. It would be foolish to presume that this time is any different.

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