by George Oprisko
Earler, you specifically mentioned that currencies of many energy exporters, eg: Venezuela, Iran, Malaysia, Indonesia, Russia, and Ecuador have dropped sharply against the US Dollar.
This essay explores the reasons behind the observed sellof(s), and debunks the myth that each currency stands on it’s own, and is a unique case, instead asserting that concerted action by one party is responsible.
The party I believe to be responsible for the declines observed in the above currencies, and that of Argentina, is the US Treasury. The venue for attack on these currencies, is NYMEX in NYC and it’s sister exchange in London, the world’s largest, which has increased its share of global turnover in traditional transactions from 34.6% in April 2007 to 36.7% in April 2010. London’s dominance in the market, determines a currency’s quoted price, which is usually the London market price. This even affects operations of the International Monetary Fund which uses noon London Market Prices to calculate the value of its special drawing rights.
Note that virtually all currency trading occurs on these two exchanges, and that currencies are traded like commodities, with only 0.1% margin required. Furthermore, both exchanges are located on territories hostile to the BRICs, SCO, and CSTO.
Needed is a mechanism which shifts trading in the Rouble to Moscow, and only Moscow, likewise trading in the Yuan must be shifted to Shanghai/HongKong, the Iranian Rial to Kish Island, the Argentine Peso to Buenos Aires, the South African Rand to Johannesburg, the Ecuadorian Sucre to Quito, the Venezuelan Bolivar to Caracas, and the Brazilian Peso to Rio.
Needed is a mechanism which eliminates naked short selling, while permitting trade in physical goods.
Since virtually all the currencies studied here are FIAT currencies, not backed by specie, I assert that the principles espoused in Modern Monetary Theory(MMT) apply. The key principles of MMT with respect to FIAT currencies are the following:
a) FIAT currencies have value because the sovereign demands payment of fees and taxes in them
b) FIAT currencies have value because the sovereign demands acceptance of them for settlement of debts, public and private
c) FIAT currencies have value because the sovereign has a monopoly on their issuance
To maximize the value and utility of a FIAT currency, the sovereign must maximize the volume of goods and services purchasable in it’s currency, and must jealously guard against issuance of it’s currency by others.
In the case of the Rouble, maximization of goods and services purchasable by it, involves demanding payment in it for all goods and services produced in, imported into, or exported from Russia. This specifically means
a) requiring payment in Roubles for Russian energy exports,
b) demanding that importers of goods to Russia accept Roubles as payment,
c) eliminating the ability of Banks to “create” Roubles through accounting entries when loans are made, via imposition of full reserve banking covering all banks(including foreign banks) operating within the Rouble Zone.
Additionally, Russia must re-industrialize, and must grow it’s agricultural sector to fully meet domestic demand for manufactures and food. This will require redefining Russia’s W
TO obligations.
To protect it’s foreign reserves, and exchange rate, Russia must eliminate naked short selling of the Rouble, and must maximize international demand for the Rouble. Demanding payment in Roubles for Russian exports of energy, and materials is essential for the latter, and conversion of the electronic Rouble from a commodity into a security, via BitCoin Technology (BCT) is essential for the former.
BCT as mentioned here is the algorithm which creates BitCoins. A BitCoin is a data packet, nothing more. Yes, much of the data is encrypted, to provide authenticity, but in essence, a BitCoin, has an issue date, issuer, Denomination, serial number, and transaction history. This is similar to a paper Rouble note, which uses special paper, special inks, unique engraving, holograms, to create a paper emblazoned with the denomination, serial number, date of issue, issuer, using the former to guarantee authenticity.
This essay advocates conversion of all electronic Roubles into ElectronicRoubles, which we define here as Data Packets containing the following fields:
1. Denomination
2. Serial Number
3. Issue Date
4. Issuer
5. Encrypted Transaction History
6. Security Code, which is an encrypted hash of the foregoing fields
To prevent counterfeiting, all ERs are recorded in the RCB database, including the owner of record.
To prevent naked short selling, only the Owner of Record, or an authorized exchange may sell ERRs. Furthermore, authorized exchanges must post a bond with the RCB, amounting to 1oz of .999 fine gold per 100,000 Roubles in authorized open interest, subject to forfeit at 1oz of gold for every 100,000 Counterfeit/Stolen Roubles traded. This mechanism links the Rouble to gold, but does not make the Rouble exchangible for gold, and it specifically eliminates the ability of UK/US money center banks to fund naked sales of the Rouble, via the mechanism of the RCB challenging any or all sales, for the purpose of enforcing it’s monopoly on issuance.
How would this work in practice?
Consider the following example:
The Russian Government pays Sukhoi 100,000,000 Roubles for Fighter Aircraft. Traditionally, this is done by crediting Sukhoi’s account at it’s bank, which we assume to be SberBank. Using ER(s), The Defense Ministry pays Sukoi with 100 Electronic Rouble Notes, each worth 1 Million Roubles. Sukhoi deposits the notes at it’s bank, SberBank. Upon making the deposit, SberBank notifies the RCB of the transfer from Sukhoi to itself of the notes, and the RCB confirms the authenticity of the transfer with Sukhoi. The RCB recalculates the Security Code using it’s 512 bit Private Key for these notes, and ReIssues the Notes to SberBank.
Sometime later, Sukhoi pays it’s employees and suppliers 50 million Roubles, via transfers from it’s account at SberBank to other accounts at SberBank and other banks. Of this amount 25 million Roubles is owed AlfaBank. SberBank transfers 25 of it’s million Rouble ERs to AlfaBank. AlfaBank notifies the RCB of the purchase, and the RCB verifies the transaction, adding it to the transaction history of each note, recalculating the Security code using it’s private key, and re-issuing the 25 notes to AlfaBank.
Later, Diamler of Germany, a customer of AlfaBank chooses to transfer 10 million Roubles to it’s German Bank to pay for items imported into Russia. AlfaBank notifies the Russian Ex-Im Bank of the international transfer to DeutchBank, DeutschBank confirms receipt of the 10 million Rouble notes, The Russian ExIm Bank notfies the RCB, which adds the transaction to the history, recalculates the Security Code, and reissues the notes, which are recorded on the ExIm Banks Transaction Log as held outside Russian Territory.
Still later NYMEX receives an order to sell 10 million Rouble ER(s) from DeutschBank. NYMEX sends the serial numbers to the Russian ExIm Bank, which verifies ownership, and authenticity. If the owner is selling and the notes are authentic, the Russian ExIm Bank so notifies NYMEX. If not, the notes are listed as stolen or counterfeit, as appropriate. Should NYMEX choose to conduct Sales of Rouble Notes without verifying their authenticity, RCB can seize the collateral NYMEX put up to become authorized to trade Roubles, according to the volume of unauthorized trades conducted.
Via this mechanism, embezzlement of Roubles is eliminated, and illegal movements of Roubles abroad are also eliminated, and the RCB ExIm Bank knows the exact volume of Roubles held abroad, the daily/annual demand for Roubles by foreign firms who trade goods and services with Russia, and the identity of those firms. Furthermore, this mechanism makes impossible naked short sales of the Rouble, because all Roubles offered for sale, must be authenticated by the RCB – ExIm Bank, who reserves the right to buy them. This specifically means that Futures Contracts in the Rouble must specify the notes offered for sale, and the notes in question must be authenticated before the contract position is opened, because the RCB can at any time challenge the contract, demanding forfeiture of collateral, should the contract be for non-existent/conterfeit/stolen notes. This will essentially eliminate Futures Trading of Roubles.
The Brazilian currency is not Peso, since 1994 it has been the Real (BRL)!
The Brazilian currency is the Real (BRL) since 1995, not a Peso!
Utter nonsense: The majority of global currency trading does not take place on exchanges at all, least of all on the NYMEX. What planet are you from?
Baboo here,
Stopped reading at BITCOIN, it’s a scam.
Capital city of Brazil is Brasilia not Rio
Utilizing the tenants of MMT to make a point makes your point invalid from the start. MMT is not correct or descriptive of any sort of reality; since it assumes that most money is created by the sovereign. It is NOT! It is created by PRIVATE banks through the issuance of debt. MMT is mostly prescriptive rather than descriptive of reality. At the same time MMT never challenges the status-quo when it comes to the money creation process. It is time you become acquainted with the American Monetary Institute in the US and Monetative, through the works of Joseph Huber, in EU. You might gain a sense of reality by doing so.
Thank you for correcting Brazilian Currency Name to Real, and for reminding me about Brazilia. Regardless, Rio is the commercial capital, and you are missing the point of the essay.
BitCoin Technology does not mean BitCoins, as discussed here it means a secure electronic currency achieved via digital encryption.
The essay advocates replacement of current electronic currencies, which are not protected in any way from fraud, with secured electronic currencies issued as encrypted serialized Notes, whose transaction history is recorded at the respective Central Bank.
This to prevent naked short selling and other attacks by NATO money center banks at the behest of NATO
The comment WRT the location of currency sales conflicts with public information.
The essay proposes sales in any country’s currency be under control of that country at an exchange located in said country. Envisioned are currency swaps between central banks of friendly countries as is the current practice among the BRICS
Jim Rogers’ contrarian view on Russia
“The rouble may be down more than 25 per cent versus the dollar this year, but the currency’s recent slide won’t be enough to dissuade legendary investor and author Jim Rogers from adding to his Russia investments.”…
“Rogers also added that he believed international sanctions would eventually backfire on the United States and its allies by driving the Russian economy into closer relations with China and Asia, and that Putin’s desire to turn Russia into a financial centre would as a result likely pay off.”…
“Regarding the Eurozone, Rogers said he didn’t own any euros, nor did he want to because he would rather buy Russia.”
The main point of the article is that naked shorting of currencies are occurring with 1000/1 leverage by the western controlled fx exchanges and are subject to manipulation by powerful geopolitical forces. I don’t know if his proposed plan suggested would work from a practical consideration. However, tying gold to any currency would solve many of problems related to unlimited printing and manipulation of currency markets. Although of course a country must have gold reserves to do this and Russia and China are rapidly increasing their gold reserves, unlike the USA, whose former head of their central bank, Ben Bernake referred to gold as “a barbaric relic” Thanks to Saker for your continued amazing work!! Tom in Vero Beach, florida
The English strategy is to involve others like usa and even Europeans to destabilise other nations through any means so that leader of such nations will flee with stolen money to london on which depends the money laundering economy of enlgand –real pirate which must be killed now.
The strategy has always been to make countries unstable and ungovernable. Subjected to internal/external conflict/aggression till they are weakened to accept handing over effective power, control to the new world criminals. You only have to look at the template being used in various countries in the world,
Don’t forget that Putin jailed Khodorkovsky, one of the many Oligarchs who had raped Russia’s resources after Glasnost, nationalised his oil and gas fields and paid off the debts of the Russian Federation in 5 years. Just before his arrest Khodorkovsky wired all his money to Jacob Rothschild who runs the corrupt City of London, without proper financial regulation, so that 60% of the UK GDP is fraud.
Gangster Bankers: Too Big to Jail
February 15, 2013
Source: Matt Taibbi, Rolling Stone
he U.S. Justice Department granted a total walk to executives of the British-based bank HSBC for the largest drug-and-terrorism money-laundering case ever. Yes, they issued a fine – $1.9 billion, or about five weeks’ profit – but they didn’t extract so much as one dollar or one day in jail fro===================
http://www.blacklistednews.com/HSBC_wins_OK_of_record_%241.92_billion_money-laundering_settlement/27072/0/0/0/Y/M.html
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http://indrus.in/blogs/2013/03/26/mobsters_paradise_why_britain_remains_a_haven_for_the_bad_guys_23239.html
Cecil von Renthe-Fink is a mere footnote in the pages of history. A Prussian aristocrat who joined the Nazi Party in 1939, Renthe-Fink however has a claim to fame. In August 1943, he drafted a memorandum proposing a European economic union with a common central bank and currency. But there was a caveat – if the new union was to be a success, Britain must be kept out because according to the German diplomat it was “the continent’s ancient enemy”.
“You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that’s trillion, with a “t”) worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it “dwarfs by orders of magnitude any financial scam in the history of markets.”
That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world’s largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world’s largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.” From rolling stone magazine.
http://www.rollingstone.com/politics/news/everything-is-rigged-the-biggest-financial-scandal-yet-20130425
Federal and state authorities have chosen not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system.
The global money laundering system Britain put in place as its colonies dwindled is the core element of its new Empire. It consists of a string of tax havens around the world operating with London [ Images ] as a global hub. The system now caters to all sorts of criminals, ranging from super-rich tax evaders and corporate bigwigs hiding the proceeds of mispricing of trade to mafiosi engaged in garden variety organised crime.
The tax haven system washes an estimated $2 trillion annually into the “legitimate” world economy. According to a recent report from Washington-based Global Financial Integrity, an NGO headed by a former World Bank economist, it also drained about $6 trillion out of poor countries over the last decade. Adding up the estimates made by a number of experts indicates that the total of illicit assets in tax havens is some $30 trillion, double the GDP of the United States.
That massive pool of money generates the multi-billion dollar “hedge funds” that have made a travesty of free market mechanisms, especially commodity markets.
treachery has been a staple in Britain’s international relations.”
The British politics and policies have always been the stumbling block for the creation of a Greater truly UNITED Europe with Russia, aspiring to control Europe by using America. “America has lost its independence to British Financial Empire City of London.” So America is actually controlled and run by the england.
Western imperialism guided by Pentagon but ordered and planned by england , has attacked and invaded over 30 countries,since WWII. Started by killing 4 millions in Korea,and she hasn’t stopped or shown any regrets for the past sixty years. Should we continue to witness these genocides by USA&Co for another sixty years,or ask for the formation of a new international court,approved by NAM ,SCO and BRICS ,to demand justice for the citizens of this global village of ours.
The British government and the royal family survive on money pilfered from various countries. Any foreigner who is loaded with money is welcomed in the UK irrespective of the source of the money. In addition the British government gets protection money from the Gulf States in billions of dollars. The payment is in proportion to the income from oil. For example Kuwait under signed agreement with the British government has to invest a third of its annual income from oil in Britain every year in addition to the payment which is directly made to the British government. The British government is sustained by the flow of this illegally earned money.Still bankrupt britian prints money and still gets triple A from corrupt agencies of anglsaxon evil empire.
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The British are one of the most Russophobic and Slavophobic nations on the planet, and they provide safe harbor to “oligarch” crooks, terrorists, extremists, traitors and other criminals on the lam from Russia and many other countries, protecting them from justice.
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COLD WAR WAS STARTED BY CHURCHILL TO KEEP BANKRUPT ENGLAND HAVE SOME INFULCNE AFTER WORLD WAR TWO.
4th June, 2007.
President putin is wrong when he says that russia should or will target the missile on europe if america goes with anti missile defence plan in Europe.
Russia must target (rather than should) the nuclear missiles with multiple war heads against all the cities, towns and big villages( including military instalations) of england because this cold war -like the one before- is being started by england for the benefit of english race only-.it is race war between the english parasite race versus the rest of the world-the sooner the rest of the world realizes that better it is for the world.
in fact it was not America but england which asked for ABM against Russia. BBC spy journalists were harassing presidential candidate Gore not to go ahead with Florida recount on ground” ally like britian want to conclude AMB deployment in Yorkshire as soon as possible so there should be no delay in govt. formation.in other word accept fraudulent win of bush for sake of england ! “
look how germany wes villified soon after fall of soviet union-look how russia is being vilified immediately after Putin made russia strong.
such is the evil propaganda of british spies inside america. .
poland is nothing but a proxy for the british parasites.
It is no use targeting poland -target the main villain which is england and the english nation
The MMT adverse comment coincides with a point I made, namely that a sovereign wishing full benefit of it’s franking privilege must ELIMINATE fractional reserve banking in it’s currency area.
It is widely disseminated that the recent collapse of oil prices is the reason for weakness in the Rouble. Nonesense! Virtually all Russian energy exports are under long term contracts whose price is independent of the Commodity exchage pricing mechanism, EXCEPT for NATO oil majors who do use CBOT/ NYMEX pricing for their products
For more about MMT Go to Bill Mitchell’s blog
http://bilbo.economicoutlook.net/blog/
for a full discussion of MMT
Russia must always be cautious when the US-NATO Axis comes smiling, bowing and bearing gifts, because nothing that this Axis offers the Russia Federation is for the benefit of the nation and its people. Every NGO, every assistance group, every medical team, and ever entertainer, etc, that the Axis sends to Russia has the aim of slowly undermining the stability of Russian Federation.
Tracing funding alone is just a small step in the right direction.
If the Russians want to break the neck of the Axis inspired anti-Russian viper coiled within its borders, they must first find it and deal with it with extreme ruthlessness before it can do serious damage to the land of Rus.
2011
In recent developments the US, England and France have declared a so-called NATO war against Libya. They have frozen $32 billion held in trust by the US in the US. That is the largest amount ever held by the US concerning a foreign country’s asset. The three countries want Libya’s oil, four water aquifers, central banks and their 484.5 tons of gold, plus the Libyan funds held by other countries. These three want to steal it all and leave the country destitute. The EU has in addition frozen $67 billion. It is thought that because the US is desperate for funds that they will now put into the economy those funds to help keep the economy from collapsing.
Anything to keep the game going, anything to deceive. We see no comment in any media that the US and European countries had frozen some $32 billion in US banks and $67 billion in European banks of Libyan sovereign wealth funds. As you have seen desperate people do desperate things. These funds do not belong to Mr. Gaddafi, they belong to the Libyan people. It is simple the west is broke and needed the funds. When you see Chatham House all over the European news you know the black nobility executed this.
The US Treasury and the Fed have created a giant bond fraud and the world’s professionals and governments are well aware of it. If they have to take the US dollars in trade they have to take the inflation that comes with them.
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===Afghanistan and Pakistan are merely stepping stones on the road to “taking out” or dismembering the only power on earth which can be a competitor to the US, China. And the US ruling class is deadly serious about this. Its main propaganda weapon will be human rights, in the form of free speech, ethnic rights and, yes believe it or not, trade union rights (!). If one has any doubts about it, the latest example is in today’s NYT:
http://www.nytimes.com/2011/05/09/world/asia/09ch…
@ kocherpirat (Berlin)
With regard to your comment on True Ott (in the post on conspiracy theories and credibility) I will say that pointing out some recondite inaccuracies in some old curriculum of his does absolutely nothing to erase the 1921 Kansas City court case from which he quotes. His article has been referenced in hundreds of publications and in several books. Unless you can show me that True Ott made up the entire court case, invented the plaintiffs and the defendants, invented quotes from a non-existent record and so on, I will believe the court case took place and it was about the things described in the article.
There is also very little doubt that the 2009 “swine flu” scare was fabricated and intended to make huge amounts of money to some farma companies in the foreced sale of vaccines, in total collusion with the WHO. The WHO changed the definition of pandemic to facilitate the scare (the mortality rate of this flu was not higher than normal flu). After a few days they stopped testing for it and proceeded to declare EVERY case of flu symptoms as being “swine flu”. It was crude joke which they finally had to let go, as many people realized what was going on and were refusing to get vaccinated not before several farma companies made a lot of money.
The history of government immunizations is murky.
A Brief History of Government Immunizations
http://www.thenewamerican.com/culture/history/item/4693-a-brief-history-of-government-immunizations
Check out also:
In Lies We Trust: The CIA, Hollywood and Bioterrorism
https://www.youtube.com/watch?v=IktAYg9YCPA
Now, another concrete example:
In the news is announcement of a high speed(400 km/hr) rail line from Beijing to Moscow.
Cost 7 billion Roubles……
Russian Railways claims Russia does not have the funds, and sought 4 billion Roubles from the PRC.
Nonsense!
Given the land, rails, ties, and labor are sourced in Russia, and the rolling stock is sourced in Russia, or made in Russia under license, only tens of millions of Roubles must be used to pay foreign firms.
That is, the Russian Government could simply let contracts for the materials and labor, paying in Roubles, which It alone can create, to firms who will spend same entirely within Russia.
That is, funding this railway need not add significantly to external Rouble float.
The RCB has, as has been mentioned elsewhere, adopted a protective stance WRT the exchange rate of the Rouble, precisely to prevent the effects of naked short selling by NATO banks, to the detriment of the Russian economy, as has been stated elsewhere.
Given the Electronic Rouble is converted into an encrypted note, per the essay, the currency market is effectively converted from a game of Baccarat (ala 007), into single deck Black Jack, with the RCB the only one who knows the cards previously played, and the house making the rules.
INDY
lol bitcoin pushers are realy everywhere.
bitcoin is a scam.
from a practical point of view – if a cryptocurrency would accually be accepted (and there is absolutely no sane reason to do so), its just like cash. cash that could be stored everywhere and transmitted anywhere within seconds. it is also much easier lost or destroyed than cash in case of serious crisis.
but its the wet dream of radical “anti-governemnt” liberals. no “gubernemts” can ever tax them anymore!
but its a scam anyways.
Due to current FOREX trading rules, it is disastrous for any currency other than the USD to be convertible into specie.
This because, US money center banks will go the FED window for USD at 0% interest, and will use the funds to sell the target currency in NYMEX and GLOBEX. They will post margin in USD, which is backed by nothing, and will demand the target cover the sale in specie, or in USD, neither of which the target can make in unlimited quantity.
The essay proposes a way around this, via issuance of all Electronic Currency as Encrypted serialized Notes, which must be sold by the registered owner, and no one else.
This gives the issuer redress against naked short sales, because the issuer can simply rule that only registered owners can offer notes for sale, and notes cannot be held in street name, or borrowed. The penalty for violating this rule is declaration that the notes are void.
I want to make perfectly clear that I am not advocating adoption of BitCoin by a sovereign as it’s currency.
My essay proposes using the Technology developed to implement BitCoin, to create electronic notes by the sovereign, which via encryption, cannot be counterfeited, or if counterfeited, can be immediately identified as such because the transaction record of any note is in the central bank database, including the name of the registered owner, and the status of the note, whether stolen/cancelled/valid.
Not mentioned, I assume that Russia would issue notes in the following denominations:
a) million Roubles
b) billion Roubles
c) trillion Roubles
Given these notes will be held mostly by banks, the aim is to severely limit the number on issue at any given time.
I also assume that the holder of one of these notes may attempt to sell them on the black market. However, the purchaser of same will likely want to re-sell them later, and unless ownership is transferred to him at the Central Bank, the notes he attempts to sell will be marked as “stolen” and will be voided. This effectively eliminates the black market.
I further assume that Russia rules that paper Roubles are not exchangeable for other currencies, only electronic Roubles are. Instead Paper Roubles can only be used within Russia, including deposit into bank accounts in Russia.
This effectively eliminates movement of large amounts of Paper Roubles out of the country to pay for drugs for example.
Possible, but not required is declaration by the RCB that it will buy Electronic Roubles using USD at the rate of 1:1 from anyone so desiring, or will exchange ERs submitted for conversion into other currencies for credits against amounts owed Russia for energy exports to the country where the seller is domiciled.
This is enforceable because otherwise ERs are not convertible unless the FED wants to buy them, and the RCB approves the sale.
It’s truly astonishing to read about MMT on your blog Saker.
A sign to be more optimistic
Using only the rouble in payment for exports is the THIRD step. The first & second simultaneous steps are secession from the IMF and nationalization of the central bank. As matters stand now the foreign currency reserves and gold of the central bank DO NOT belong to Russia! Membership in IMF requires being subject to the international banking cabal’s system, which gives huge benefits to the official reserve currencies– the dollar, the pound and the euro. The rules of the IMF system are what prevents Russia from availing herself of MMT (Modern Monetary Theory advocated by Michael Hudson, Ellen Brown, etc.). The “public banking” aspect of MMT, in which national treasuries issue their own interest-free money to the govt, cannot be accomplished without first performing the 3 steps above. (except in countries w official reserve currencies). http://borisanisimov.blogspot.com/2010/10/nationalization-of-ruble.html
The currency drops are better explained by the above article. In fact probably George Oprisko would wish to revise his article after reading the above-linked extraordinarily informative article by Nikolay Starikov.
Here’s Starikov’s online book:
http://lit.md/files/nstarikov/rouble_nationalization-the_way_to_russia's_freedom.pdf
Some observations:
Futures trading started out origonally for those engaged in the food production chain,i.e. Farmers,wholesalers,grain silo operators,as a way to hedge price fluctuations,seasonal problems etc.
Now the futures contracts system is used as a casino,gaming a price up or down.
Getting arbitrage from the carry trade,ramping the $US,’buying’ USDX ,dumping AUX & AGX.
Dumping 3000 gold contracts in 1 second, at the most illiquid time of night,for the worst possible price fill.
Fake markets,fake money,fake AAA ratings,fake orgasms too no doubt.
These systems were created for the purpose of controlled fleecing.
Since the US defaulted in 1971,there has been no proper settlement of international trade.
Last year Goldman-Sachs and J P Morgan-Chase were caught out, gaming alluminium,loading up from one warehouse and driving it to another warehouse,pretending a long waiting time for delivery and creating an artificial shortage.
Then they announced their departure from the commodities business…….goodbye Ms Blythe Masters!.
The Shanghai precious metals futures market started recently, the rules are different from the Comex,if you take a contract and do not stand for delivery,you are fined.
Last year the Shanghai Gold Exchange DELIVERED 2,197 tons,due to import restrictions in India, China became not only the worlds largest producer of gold,but the largest importer of gold.
India still was second in gold and imported over 7,000 tons of silver,the previous year was over 5,000 tons,silver is the metal for the poorer farmers and country people.
Russia is said to be introducing the ‘gold rouble’,something like the British Sovereign perhaps,
also a gold coin for the ‘Customs Union’…..so russian people can spend fiat currency,then save in gold roubles…it works for me!
Fiat currencies will always be counterfeited,likewise digital technologies.
Caveat Emptor!
MMT does not assume that most money is created by the sovereign. The government creates fiat (high powered) money when it spends or lends and destroys it when it taxes. The creation of credit money by bank lending or spending is usually greater.
Also MMT does not favour full reserve banking. That is the Positive Money School.
Bloody brilliant!
Oil currencies are down because oil prices are down, which means oil importing countries need purchase fewer rubles, etc. to finance their oil purchases.
For the oil exporters the decline in the value of their currency offsets the decline in the price of oil, which means that companies such as Rosneft, whose costs are denominated primarily in the local currency, will suffer little if any decline in income as measured in the local currency and will, therefore, continue to operate profitably at the lower oil price.
For consumers, a decline in the value of the currency means an increase in the cost of imports. But that is not all bad. Increases in import prices while local labor costs remain constant promotes economic development through import substitution. The decline in the currency also creates new export opportunities.
Electronic money is an interesting concept, but how safe is it? There are some gifted hackers out there and some are government employees. There has also been speculation in Bitcoin with the value going up and down. I prefer to stick with money as we know it, coins and bills, as long as I can, but we need to solve some old problems. Speculation, foreign control and the power of the banks to create money. I am uncomfortable using a card that suddenly stops working. That has already happened to me twice over the years.
The weak rubel will change a lot in Russia. There will be more inflation. Some homeowners will have trouble paying their loans. This is already happening, according to the CB, and it will get worse.
A weak currency can overheat the economy in a country dependent on exports,but I am not at all sure the wheels will start turning faster in Russia, which has a peculiar exporting sector dependent mainly on gas and oil.
Inflation eliminates debts, but only when the government keeps the banks in line and wages keep going up. A weak rubel requires a high interest rate to protect the currency as long as the investors don’t come back and Moscow does not take firm control of the oligarchs.
It is my opinion that, though the sanctions are bad, the weak rubel is more dangerous. It hurts ordinary Russians over time and we are probably talking about years. People will start looking for alternatives and, et voila, regime change may be possible and that was the whole point.
The proposal for an Electronic Ruble makes a good deal of sense, and corresponds quite closely with my own proposal for an international digital currency, the Numero.
Whether there is a need to link a digital currency of which every unit has a unique numerical identity to gold is unclear. The unique numerical identifier of each currency unit is sufficient to prevent counterfeiting and unauthorized money creation. It is true that authorized digital money creation might be conducted irresponsibly. But the same authorities might, at any time, irresponsibly break any link to gold, as the US broke the link between the dollar and gold in both 1933 and 1971.
But in any case, an Electronic Ruble would still depreciate with a decline in the price of Russia’s main exports, and such a decline, as I indicated in a previous comment, is a good thing.
Additional advantages of a national digital currency is that it could provide a simple means of eliminating money creation by banks and other private institutions: all lending being of either money deposited with banks or money borrowed from the central bank. The central bank would then have tight control of the money supply and could raise or lower it simply by adjusting the rate at which it advanced funds to the lending institutions.
By giving every currency unit a unique numerical identifier and recording ownership of each unit in a nuclear-hardened multi-location electronic archive, currency theft, bribery, drug dealing and human trafficking would become much more difficult. Crooks would have little option but to use gold or other commodities for currency, which would make for some difficult explanations when it came time to spend the loot.
Dr. George: My understanding, per the Nikolay Starikov article
http://borisanisimov.blogspot.com/2010/10/nationalization-of-ruble.html
is that the drop in the rouble v dollar is done by Russia’s own Central Bank. And it must be so, per IMF membership rules. The essay is fascinating, but 3 steps advocated by the article are priority.
The Bank Of Russia was created as a state corporation under article 75 of the constitution of the Russian Federation.
The Bank of Russia is accountable to the State Duma of the Federal Assembly of the Russian Federation (hereinafter referred to as the State Duma), which appoints and dismisses the Bank of Russia Governor (on the proposal of the President of the Russian Federation) and members of the Bank of Russia Board of Directors (on the proposal of the Bank of Russia Governor, agreed with the President of the Russian Federation), sends and recalls its representatives in the National Financial Board within its quota and considers the guidelines for the single state monetary policy and Bank of Russia annual report and takes decisions on them. On the proposal of the National Financial Board, the State Duma may take the decision to get the Audit Chamber of the Russian Federation to audit the financial and economic activities of the Bank of Russia and its divisions and establishments. In addition, the State Duma holds parliamentary hearings on the Bank of Russia activities with the participation of its representatives and hears the reports by the Bank of Russia Governor about the Bank of Russia activities in the course of presenting the annual report and guidelines for the single state monetary policy.
Excellent article. George Soros was one of the first to show how naked shorting could be done to not only make money, but, wage economic warfare against other countries. No wonder he also funds the color change movements.
That’s why measures like this need to be implemented NOW. The US has always used economic warfare as a tool, and woe betide people like Muammar Gadhafi, Saddam Hussein and Mahathir Mohammed if they tried to uncouple from the dollar.
The world’s financial system is still anchored in New York, London, and Switzerland. Time to me to a regional set up, because right now the only effective weapon the US has is still, the dollar.
Bitcoin isn’t a scam, it’s bitcoin. For all those saying bitcoin is a scam, would you say the following declaration makes sense-
“copper is a scam”
Yes you can say that copper has many practical uses in industry and the like, well bitcoin has many practical uses of its own: an indelible entry in an open public/pseudonomous ledger.
Perhaps a better sentence equally ridiculius to “bitcoin is a scam” would be “TCP/IP is a scam”.
Bitcoin technology is a protocol for entries in a massively distributed public ledger.
Don’t get me wrong, there are many scams around bitcoin, mostly involved with stealing bitcoins or duping people into sending bitcoins to scammers. Bitcoin itself however, is bitcoin, make of the bitcoin what you will, or have nothing to do with it. Saying “bitcoin is a scam” though makes you sound like an idiot.
If you have bitcoins and want to sell them for your local currency, you can do that, if you’d like to exchange some local currency for bitcoins, you can also do so- just watch the price, don’t catch any falling knives on either side of the trade as bitcoin is the ultimate free-floating currency. And mind how you trade, some exchanges are scammy, but there are many that are sound, do you research, just like if you wanted to buy or sell gold or… copper.
Having said all that I am reminded that I wanted to suggest to Saker that he setup a bitcoin address for people who would like to make donations that way.
Saker?
If you all are curious as to how naked shorting works, read Paul Craig Robert’s excellent explanation of how (forces loyal to) the Fed have been using naked shorts to keep the price of gold down, despite all the buying going on in Russia & China:
http://www.paulcraigroberts.org/2013/04/13/assault-on-gold-update-paul-craig-roberts/
There is no doubt that trading exchange prices can be rigged. It happens in the stock market too.
However, there is one crucial element of Russian fiat currency being not considered.
The Bank of Russia is not Russian, but controlled by those who control most banks. They can create tons and tons of “money” with the stroke of a pen, and keep it in motion, because they also control the settlements of all checks.
Thus, the Bank of Russia can issue either in credit or currency all the money it needs to secretly drive the price of the Ruble down as much as it can.
One more thing about bitcoin, you need to practice secure use of bitcoin. In some ways it’s easy to lose bitcoins by being hacked for instance, or leaving them on your hard-drive and then wiping the drive, stuff like that. But in other ways (once you grasp the idea that bitcoins are data) you have a much greater ability to secure your bitcoin wealth than with cash or gold. You can backup your coins, you can have distributed backups, you can encrypt, password protect, stick on a memory stick and bury under the floorboards your bitcoins. How hard is it to protect data? If you do want to use bitcoins, think of it as data that needs to be secured, backed-up, password protected and not left lying around on your Windows box or something, think of it as private email.
I’d also like to point out that I am no Libertarian,the potential for crypto technology is vast. There will always be a place for Fiat currency (by who’s fiat and for whose benefit is a different question) but please do not lump everyone who is comfortable with bitcoin and other cryptos with Libertarians. Not all of us who use email have some axe to grind against the Postal Service for instance.
This is a good article and an easy read on a subject that can be quite obtruse.
Question for the author. Can you explain how we move to full reserve banking in a world of fiat currency where people still need to borrow for car loans, mortgages etc?
Amazing how many people can misunderstand clear and direct writing. Other than the correction of Peso to Real the initial commenters seem to have completely misunderstood/missed the point.
To the Saker..why not have a report abuse button?? and save yourself moderating time?
——–anyway…
Anyone reading the article by Boris Anisimov , that Penelope linked to, will soon understand
the neat trap set for all the emerging and developing countries.
In 1944 less than 50 countries existed,but the British,French, Dutch,Belgians and Germany,all
realised their empire was gone! ….period!,unless…..they could install proxy controllers.
Enter.. your friendly central banker!…France and Britain still have huge leverage through the central banking system,while the ‘Bretton Woods’ system has been broken since 1971,still America controls through’s’instruments’, the Fed,the IMF and the World Bank..& UN, hosted where? ..where else? New York,USA .
Member countries must lodge gold assets with both the IMF and the Bank for International Settlements,This organization was established after WWI for war the reparations demanded of Germany.It is often referred to as “The Central Bank of central banks” this BIS, is hosted in Switzerland,who are now having a referendum,regarding repatriation of their gold stored overseas.
The Isreal lobby put American pressure on Switzerland to abandon gold backing of the Swiss franc and sell 1/2 their gold in order to depress the price of gold…make the US$ look good and atone for USA/AIPAC.. ‘nazi guilt’…….now the FED is fighting the SGI(swiss gold initiative)hard!.
No member country of the IMF can back their currency with gold,a swiss by the name of Ferdinand Lips,wrote a fine book called ‘Gold Wars’…it is free online.
John Maynard Keynes was the British negotiator at Bretton Woods and was not in favour of the American system…but Britain was bankrupt! and the US had 22,000 tons of gold,so they made the rules.
It is estimated that something in the order of 170,000 tons of gold have been mined,since the year dot!,much of it dynastic gold(The Royals),Indian dowry jewelry and other sources..religous artifacts,museum pieces…who knows?.
What we do know, is that… half the worlds population consider it precious,Indian people consider it to be a symbol of purity and sanctity in marriage..no gold! …no wedding!.
The people of China will queue for hours to enter a gold bullion shop(10,000 people)…google it!…
What of the so called westerners?..if you have a wedding ring..is it made of lead?.
If you have an inherited heirloom tea service,it is probably silver,not pewter.
There are pictures on the internet showing VoVo holding a gold brick..he knows!,Sergei Glazeyev knows!…as I posted a couple of weeks ago…they understand the central bank problem.
The US/UK have done Russia a vast service,allowing them the freedom to,leave the WTO, IMF,treaties which are clearly not in Russia’s best interest,like nuclear treaties favouring NATO.
When Russia is trapped in this vile net of monetary hegemony,it takes time and precise steps
to exit,these are not stupid people!,the gold mining industry is state property,not controlled by the central bank of Russia,yes the central bank buys gold on the OTC market,about 50 tons a month!.
They mine at No 3 after China,Australia…USA is No 4…..it will not be vaulted where it can be hypothecated,you can rely on that!..
The Russian,Chinese,Indian hunger for gold and silver are historic!, they wants it!… “it is our precious!” …”give us our precious!”.The same applies to Iran,Turkey,throughout asia,the middle east….the US/UK and it’s ‘partners’ cannot possibly win!.
To understand the attitude of AngloAmerican policy I would recommend ‘The Silver Stealers’, and other content of a man named… Charles Savoie,a very commited person in the search for monetary truth.
Now the world comprises almost 200 nations,four fold the number of ‘Bretton Woods’ participants,many of whom are resource rich! …..how would a new conference work???.
Caveat Emptor!
MK Ngoyo,
Many wars (I would argue most wars) have been fought for the control of a countries banking system, most recnetly Lybia and Iraq.
Putin is walking a very fine line in gaining control of RCB, most recently by laws which would increase Russia’s holdings of the RCB to 75% IIRC.
Some links:
old classic: Money Masters 3+ hrs
http://www.youtube.com/watch?v=HfpO-WBz_mw
Patric Byrne on naked shorts:
http://www.youtube.com/watch?v=BdBe5_8z53A
I’ll dig out some mmore as time alows, there’s a lot of info out there.
Anon said:
“Electronic money is an interesting concept, but how safe is it?”
Are you joking?
Money is ALREADY ‘electronic’. Only a small fraction is in paper.
When you buy a house for $100,000 with a bank loan the bank doesn’t move around $100,000 paper dollars. It’s just notations in a ledger, or today….’electronic’.
Dr. GEORGE: Your quotation regarding the Duma’s control of the Central Bank looks perfectly reasonable; it is only when you look more closely that this patina is pierced.
The following is not MY opinion but that of economist Nickolay Starikov in his book, available online at http://lit.md/files/nstarikov/rouble_nationalization-the_way_to_russia's_freedom.pdf
pp24-34 There is no short quote, so I have to paraphrase. Please go to the book.
Article 2. The registered capital belongs to the State. The assets (foreign currency reserves and gold) belong to the Central Bank, and cannot be spent or encumbranced by the State, or lent to the State.
It is all tied up with laws which originate w IMF membership, such that no loans can be made from Central Bank to Russia, etc. This body of law explains the nondevelopment of the Russian economy. I do not think the principles of the essay can be implemented– or indeed ANY reforms until Russia secedes from the IMF and nationalizes the Central Bank, per Starikov’s documentation.
Sometimes you must load more than once for this file to function. Or you could save the file, instead of just opening.
This is tremendously exciting as an explanation & I wish that others wd look as I am slow at learning new stuff. Kat Kan, your outrage would be well-served here.
This comment has been removed by the author.
This guy may have a point or not, but it doesn’t inspire any confidence when a supposed expert doesn’t get simple facts right.
Ecuador stopped using the Sucre in 1999! Period. It has been using the US dollar since then. For 15 years! But for this guy it doesn’t matter, even though it certainly bears on the issue of currency sovereignty.
And considering the matter of a currency’s name when talking about policy something of minor importance, as with Brazil’s in this case, reminds me of an “ugly American” thinking that all Latin Americans use Pesos and celebrate independence in the same day as Mexico.
Also, when someone starts playing loose with basic facts about countries in the South, I just can’t help being reminded of some arrogant W. European or US economist telling us (am from Ecuador) how to live and run our economies, not caring how we have been running them and how we would really like to run them.
Re:England/City of London
Found this unfinished”Note” on the internet some years ago under title of “The Petrogame”
The Petrogame
Note–in late 1500’s, the English Crown realized its island survival and lack of raw materials required sea-trade, sea-control and resource acquisition. They began a global survey of all resources, collected by any means and first compiled by the Hakluyt team. That vital viewpoint drove many subsequent adventures from gold-buccaneering, fleet-building and wiping-out the Spanish Armada on up to The East India Company and explorations. Operations for resource-control never stopped. Long-range planning evolved by trial and error into mastery of long-range, very covert operations. The small island-nation of England learned well its limitations as its Empire collapsed. Surely by the early 20th Century, survival of the ranking oligarch families depended on correct analysis of the looming failure to control that Empire. The island-nation needed a proxy-nation to front for its future Empire-building; . Whoever could it be?.
The PetroBanker game of “I can dominate you” is getting interestinger and wilder.
Controlling energy and money-printing is the means to World Domination by a small group sharing similar goals. It is opposed by time, as other nations acquire means to resist domination. E.g., daunting weapons and attacks on USDollar hegemony..
The compulsion to rule and force others to obey is a terrible disease.
From this, one might leap to cognition that petroleum is a keystone to the power to control others; even to dominate the world. A ruling-class wet-dream.
Russian chem/scientist Mendeleev [re Periodic Table of Elements] realized just that in 1860 during visit to Pennsylvania/Ohio oil fields. Rockefeller saw it by the 1880s and then realized his dream to create and apply a chokehold on supply [“The oil business is mine.”] Simultaneously, Dieterman [“Baku is the finger that points East.”] and The Crown joined via Royal Dutch Shell to share Rocky’s dream. Both World Wars failed to to rip the mineral wealth from first the Czar and then the USSR.
Another key to understanding how control of resources is vital to survival and especially dreams of dominion, look to the history of the Hakluyts of England. They began the first compendium of the world’s resources in late-1500’s and it is ongoing today.
105
Anonymous Rick hopes this helps connect historical dots.
Flow is a magic word.
Few people see the water flow in the river, when they arrive at the waterfall is simple claim that they did not know the abyss!
Kkkkkkkkkkkkkkkkkkkkkk!
Barter is another magic word!
Pure and simple exchange of products!
Politically Incorrect between Banksters, it is!
Proftel (Brasil).
hehe.
George Oprisko said,
“Since virtually all the currencies studied here are FIAT currencies, not backed by specie, I assert that the principles espoused in Modern Monetary Theory(MMT) apply. The key principles of MMT with respect to FIAT currencies are the following:
a) FIAT currencies have value because the sovereign demands payment of fees and taxes in them
b) FIAT currencies have value because the sovereign demands acceptance of them for settlement of debts, public and private
c) FIAT currencies have value because the sovereign has a monopoly on their issuance
Sir, would you inform the readers what sovereign exists to enforce value for the Euro?
How did the MMT theory of sovereign guarantee of value work in Zimbabwe or in any other country whose fiat has been regected by the sellers of goods and services?
You are suggesting return to a closed system such as that of the USSR. A dictatorship of the rouble, backed by the sovereign’s monopoly on violence has already failed.
I think Mao sums up your authoritarian scheme with more honesty….power comes from the barrel of a gun.
TI said: “Putin is walking a very fine line in gaining control of RCB, most recently by laws which would increase Russia’s holdings of the RCB to 75% IIRC.”
Increase holdings of the Russian Central Bank to 75% IIRC???
What’s IIRC? All or almost all of the world’s central banks are owned by the international banking cabal.
BOB KAY: i agree w what you’re saying, except power also comes w the power to control money and banking. Thru membership in the IMF most countries are largely governed by banksters of their central banks which control their govts– and thereby, the gunbarrels too.
Penelope I think you’re doing just fine at learning stuff fast. I also like this line from Anisimov’s translation of Starikov’s words:
What I am suggesting here is not a ready-to-use program, but a set of theses, each one requiring further detailed analysis. But, if challenged by anyone anywhere, I am ready to defend each one of them as well as the need for development in the above-mentioned direction.
We have time to absorb and think and get this meme correct for it to propagate well.
Re-reading the article by Dr. George, I think his major focus is to maximize the sovereign utility of the Ruble. The more I absorb Starikov, the closer to being on the same page Dr. George appears.
This article says that the Ruble’s value is subject to manipulation – bullying, we could almost call it – because it’s tied to the US Dollar. The author seeks to separate the trading of the Ruble from the world and bring its exchange into Moscow.
Starikov is explaining that the Ruble’s very issuance and quantity is subject to parity with the Dollar,and seeks to separate this parity (which is imposed by membership in IMF). I’m not sure there’s much difference between the two principles at stake, more in the way the methods are outlined in the Oprisko approach versus the Starikov approach.
I suspect if these two guys got together with a mandate to reform the situation, then (a) they’d agree on many points and (b) we’d see some major ass-kicking on the global monetary scene.
I’m going to combine the Starikov caution that these points are all theses that require further elaboration, with the Grieved caution that in all this money stuff it’s real easy to get one of the pieces of the puzzle exactly backwards. So we must form our consensus very deliberately here in these threads.
But I love this conversation. It pleases me beyond measure that part of Russia’s thinking involves central banks and currency, and how best to manifest the money of the people.
@T1
Not sure if your comment is really meant for me. But I do disagree that most wars, even a small fraction of wars, are fought to control banking systems.
Most wars are fought to control resources especially land and what comes from it. Vast parts of the world have been repeatedly attacked and seen plenty of wars, yet they did not have a banking system to speak of.
Regarding the independence of the RCB, download the following:
http://www.ponarseurasia.org/sites/default/files/policy-memos-pdf/pm_0349.pdf
Which explains how the Russian Government regained control over the RCB, and brought it under the Finance Ministry.
As for RCB conformity to IMF & BIS strictures, these are all the more reason for SCO/BRICS to setup and operate their own Development Bank, and International Clearing System.
These changes take time, which is what Russia is fighting for……. specifically time to reorganize Russia’s international payments systems to insulate them from NATO control.
I am pleased to see at least one of you realize that virtually all currency in circulaton today is electronic. Debit Cards represent electronic currency, which in essence are accounting entries at a bank. MMT emphasizes the role played by banks in financial intermediation, and takes into consideration the structure of the modern FIAT currency system. Furthermore, MMT incorporates the work of Marx, Keynes, Minsky, and others. For more about MMT visit Dr. Mitchell’s blog.
INDY
Penelope…True enough about the IMF, but whose guns? It is not necessary that a currency need be forced upon anyone by an authoritarian sovereign. People will support honest money.
There is nothing inherently wrong with the sovereign’s fiat favored by Mr. Oprisko; but where do we find an honest sovereign?
Money serves three functions in the modern world. It is a unit of account, a unit of transaction, and a store of wealth. Must these functions be served by the same vehicle?
The possibility of separating the savings function of money from sovereign fiat is concealed from the collective mind.
A sovereign(Leviathan) always prints more fiat to further its schemes; yet the networking effect of fiat is so valuable mankind tolerates the theft, especially easy money theft of shrinking the unit of account by printing. Short term transactional money can be hedged; but savings and measurement must carry value through time and space.
We do not need a sovereign to emit and force acceptance of honest money, which preserves its integrity by opening its books to the public and separating the savings function from the transactional and accounting function. Money should serve man, not man serve money!
The USD is weaponized because ALL must save in USD promises-to-pay. Even Central Banks have their reserves in USD; which reserves(savings) are being systematically diverted to the US Treasury by shrinking the unit of account.
I see nothing in Mr. Oprisko’s essay which would protect us from a rapacious sovereign. The scheme even ties down the creation of credit to base money. It is a central planners dream!
Mr. Oprisko is director of the Public Research Institute, which proposes unemployment be solved by forced labor he has redefined as a citizen army.
“We propose to deal with high unemployment among young adults aged 18 – 24, via a national service scheme costing $ 100 billion annually. Our proposal would take them off the streets, provide them room and board and $400 per month in spending money. We envision building a citizen army, planting forests, restoring grasslands, controlling erosion, policing communities, caring for the aged, rehabilitating fisheries, harvesting fruit and vegetables, modernizing the rail system, and other essential tasks now delegated to immigrants.”
(PRI)
He further advocates devaluation of the USD by a factor of 100 to 1. This proposal would devastate the savings of the Americans and immediately induce a a devastating depression.
“We propose dramatic, immediate recognition of the discounted value of debt securities, via a Treasury sale of $100million of them to establish market value. We believe they will bring 1% of notional value, thus setting in motion an orderly liquidation of insolvent banks via the FDIC mechanism and the bankruptcy statutes.” (PRI)
Lucky for Russia they have experienced the Utopian dreams of politically correct US educated think tank experts who advised Russia in the 1990’s. The Public Research Institute’s green ideas would devastate the Russian energy industry and wreck the world economy; so I doubt Vladimir Putin will be calling Mr. Oprisko for advice anytime soon.
LOL @ Penelope:
IIRC = “if I recall correctly”
The author, Dr. George, posits:
a) FIAT currencies have value because the sovereign demands payment of fees and taxes in them
b) FIAT currencies have value because the sovereign demands acceptance of them for settlement of debts, public and private
c) FIAT currencies have value because the sovereign has a monopoly on their issuance
FIAT currency has no value. Period. None of the above “because” supports the claim. Backed by “a monopoly” and Issued out-of-thin-air. The monopoly must be maintained, defended.
> . . . . . .
Bitcoin
@ A.B. “Bitcoin is a scam from a practical point of view – if a cryptocurrency would accually be accepted (and there is absolutely no sane reason to do so),”[.] 26 November, 2014 16:13
The Government will take over the scam and make it legal. It’s the competition thingy that will not be allowed.
Sovereigns will crush any attempts to attack their monopoly:
Just recently, there is this gem from one of the G7: Bank of Canada mulling ‘potential merits’ of issuing e-money
[.]
The central bank said Thursday it’s exploring the “potential merits” of getting into the e-money business amid worries that bitcoin and other unregulated digital currencies could eventually hamper its ability to conduct monetary policy and undermine the financial system.
“E-money and the technology that enables it are circumventing our models of payment and fast creating new efficiencies and new risks,” Carolyn Wilkins, the bank’s senior deputy governor, said in a speech at Wilfrid Laurier University in Waterloo, Ont. “It affects the risks faced by people who use e-money and it has the potential to affect risks to the Canadian financial system as a whole.”
The bank and the federal government have another, more selfish, reason for not wanting virtual currencies to muscle in on the dominance of the Canadian dollar – huge profits.
The Bank of Canada remits a surplus of roughly $1-billion a year to Ottawa on the proceeds of printing money – so-called seigniorage. Those operations also pay for running the central bank.
The bank is closely monitoring the rapidly emerging world of virtual cash – both as a rival to its monetary authority and as a threat to the payments system, Ms. Wilkins said.[.]
= = = = = =
Be assured the other 6 are “mulling.”
DR. GEORGE: Thank you for the link to the Ponars memo as a source of history of Putin’s struggle w the Central Brank (RCB). You realize of course that the Ponars organization is an advocate of the banksters/NWO. Ponars was housed at the Council on Foreign Relations for 2000-2001 shortly after it was launched.
I am familiar w the arguments that the banking cabal always makes in support of their “independent” central banks. (Independent from govt always means controlled by the international banking cabal)
Hence, the Ponars Memo says “Independent Central Banks Restrain Inflation”. The current inflating of the money supply (QE) has not vastly inflated prices because wages are being held down, money is flowing into speculation and abroad to the developing economies. Nevertheless it is inflation. MMT maintains that the money supply can be increased so long as goods/services are increased in parallel, as you know. Experts are always independent: a doctor is independent within his professional judgement, but subject to laws (govt).
I especially liked the final line of the Ponars Memo: “A central bank whisch is simply one more institutional tool in a centralized Russian state apparatus may turn out to represent an equal if not greater threat to what remains of representative politics in Russia.”
Translation: an unelected offshore bankers cabal can be trusted to represent the banking interests of the Russian people, but if the elected govt spervised the bank, that wd be undemocratic.
The Russian govt didn’t regain control over the RCB. PLEASE read pp24-34 of Starikov’s book or the article. She made some gains but has not touched the most basic aspects of the RCB’s power– really the power of the IMF/BIS system. The essay deals with preventing speculative attack, but the RCB deals w creation/issuance of the rouble and its relationship to the dollar. The system outlined in the essay (or any other substantial reform) cannot be carried out without first ripping the RCB out of the clutches of the current system. Reform is incompatible w the current system under which the RCB is controlled.
DR GEORGE said: “As for RCB conformity to IMF & BIS strictures, these are all the more reason for SCO/BRICS to setup and operate their own Development Bank, and International Clearing System.
Yes of course both are desirable, but an alternative to the SWIFT clearing system cannot be devised without first freeing rouble-creation from the dollar.
I despair of getting you to read pp24-34 of Strikov’s book, so I give you one quote:
rouble can only be issued by the Bank of Russia. And according to the same law, it is not entitled to provide loans to the state. How is emission organised then, how are roubles introduced into circulation? Easily — through purchasing foreign currency at the stock exchange.
There is a strict relation between the monetary stock inside Russia and the dollar stock that Russia receives from the outside. And that means that we are vulnerable. We are not fully independent. Why does the Central bank keep the parity rate between the amount of dollars in the gold and foreign currency reserves and the gross volume of issued roubles? Because the Central bank controls issue of the rouble in the ‘currency board’ mode.
http://lit.md/files/nstarikov/rouble_nationalization-the_way_to_russia's_freedom.pdf
Regards I’ve really enjoyed the conversation, wd like to know what you think of the link.
BOB KAY said, “It is not necessary that a currency need be forced upon anyone by an authoritarian sovereign. People will support honest money.”
I agree; if there is no other, they even use dishonest money like we have.
“There is nothing inherently wrong with the sovereign’s fiat favored by Mr. Oprisko; but where do we find an honest sovereign?”
I agree there’s nothing wrong w fiat money. So does MMT agree.
“The possibility of separating the savings function of money from sovereign fiat is concealed from the collective mind.”
I disagree. People save using all sorts of assets: stocks, bonds, property, art, etc.
For my part I think MMT including issuing interest free (nondebt) money, plus some provision against speculative attack would solve the total existing monetary thievery system. It is quite impossible to implement even the smallest provision of MMT without first discarding the current IMF/US Fed system.
Thanks for the info about the Public Research Institute. Wow! I have no objection to a domestic Peace Corps provided its voluntary. Won’t comment on the rest of the PRI stuff, wd rather read more of Starikov.
Take care.
In my understanding of MMT, currencies do not exist outside their national economy’s banking systems other than as loose paper money and coin taken abroad. When one makes banking transactions in dollars, for example, all such transactions take place inside the US banking system. This is why the US Treasury is able to reach out and fine and slap down European banks. The European banks pay up because what is at stake is their ability to operate inside the US economy.
Also, MMT does accurately describe the monetary creation process. Money is not created in the banking system unless one ignores debt. When a bank issues me a loan, the cash I receive is debited out by the cash I owe in net, meaning no net new dollars are created by such transactions in the economy (unless one simply ignores debt as money, which gives a very false view of the economic world). If I use them to buy a house, everyone knows the real owner of the house is the bank, not me, until I pay off the loan with interest from my earnings.
New US money does now and always (even in gold/silver standard times) has come from two places – the issue of debt by the Treasury, and the coinage of new money at the Mint and the printing of bills at the Bureau of Engraving and Printing. These concepts were already established in the works of James Steuart and Alexander Hamilton in the 1700’s. The Mint long had free coinage, meaning anyone with base metal could have it turned into money by bringing it to the Mint. The National Debt and thus the dollar currency was established by taking on the war debt of the states and stabilizing it and monetizing it by creating surety in the payment of interest and principal through guaranteed issue of funds by the Treasury. Aside from coin, the National Debt is what creates the Dollar, and if it were paid off, there would be no Dollars and the US economy would plunge into recession. The anti-debt populists did pull this off once under Andrew Jackson in 1835 – they paid off the National Debt and destroyed the dollar currency, resulting in a run on the banks and a deep depression that lasted throughout the presidency of Martin Van Buren in the late-1830’s.
If this were attempted today, the paying off of the National Debt would result in the calling in of all bank loans or a defaulting of loans, whichever came first, as banks would not have the capital necessary to have loans issued and prices would be deflating. The calling in of loans would result in a redistribution of the cash money base as everyone paid off all their loans to each other, cancelling out all the credits and debits of the banking system. The dollar would rise quickly in value as everyone attempted to raise the dollars they need to pay loans in by dumping assets into the market, meaning prices would sink and a depression would ensue.