A very peculiar currency
As for any fire sale of a bankrupt company or country, the creditors will ultimately have their pound of flesh, even if it cuts into the very heart & soul of a nation. For a decade we have borrowed with reckless abandon at an individual, corporate and national level (following our American cousins), and at long last our debt-fuelled orgy of indulgence on fast cars, fine restaurants, fitted clothes and fussy travel has come to its natural climax, more euphemistically known as the ‘credit crunch’. What goes up must eventually come down, and this law applies to a credit card balance as much as it does a hot air balloon, which is incidentally an appropriate model for an economy based upon debt rather than substance.
For generations, supposedly free-thinking individuals have been conned by governments, creditors and corporations into believing that if you borrow hundreds of thousands to ‘buy’ a house over a thirty year span that you are in some way a ‘home owner’. By way of anology, if I went to the local Ferrari dealer and acquired a ‘prancing horse’ over a twenty year term by agreeing to pay twice its list price in monthly installments you might rightly think me mad (Ferraris also appreciate with time). Is there really a difference? At least if you rent property you do not risk negative equity, the volatility of mortgage rates, inevitable repairs, insurance, and death duties. As if our debt culture didn’t stop there, your access to credit is linked to your mortgage debt - if you own part of your home by carrying a massive mortgage, then you are fully free to borrow more against it, while those who are not ‘property owners’ who therefore ‘own’ less debt find it very difficult to borrow... The truth and tragedy of this statement is reflected in the hundreds of thousands of home ‘repossessions’ across the UK & the US this year.
As the actual value of assets that exist in material terms (i.e. assets, gold, land etc) are finite, governments and corporations have circumvented this little limitation to consumer spending, borrowing, investment and stock market speculation by creating a virtual currency which could in reality never be redeemed in the form of actual gold, green pastures, or property. The most direct proof that the huge sums of money that the government and industry spend and borrow do not in actual fact exist may be seen when a vast project is proposed, even one that is ultimately guaranteed to make a healthy return. Take, for example, the construction project for the 2012 London Olympics, where even our government cannot borrow the actual cash to complete the Olympic village, or the Channel Tunnel, a project that was ultimately completed through vast IOUs based on the economic law of “we’re halfway through, so we might as well finish”, carrying interest payments that in all likelihood will never actually be repaid, let alone the original loans. If you’re a bank or a corporate investor please don’t fret – the taxpayer will always foot the final bill, one way or another.
We once religiously upheld a system known as ‘fractional reserve’ banking. There were, at one time, over £25bn in bank notes and coinage in circulation outside the Bank of England, and £33.9bn in gold held in the reserves. In theory the bank only held in reserve a small fraction, set at 15%, of what was actually in circulation, apparently confident that we would not all turn up on the same day to collect our money – a dilemma known as a ‘run on the bank’. This fear might have seemed theoretical, until of course Northern Rock couldn’t give a tenth of its investors their money. The note and coin minted by the Bank of England is said to be a ‘fiduciary issue’, which means that the whole economic house of cards is built upon ‘trust’. Our government presides over a fundamentally dishonest banking system, as our bank notes are no longer convertible into gold currency as stated, and the promise ‘to pay the bearer on demand’ on our bank-notes can no longer actually be kept. Prior to 1914, Bank of England notes were exchangeable for gold sovereigns on demand. Now there is insufficient gold even to cover the circulating currency, let alone all of the digital zeroes of debt that are transferred daily at the speed of light.
For all of our much vaunted public ‘morality’ and demonization of youth gangs, international drug smugglers and the ‘mafia’, the actual scale of these criminal empires pales in comparison to the world of government expenditure. Ignoring local taxation, in 2005 the UK national government raised some £122 bn in tax revenues, far higher than either the estimated size of the global adult entertainment industry (around £70 bn) or Britain’s illegal drug trade (£8bn). Every year ‘respectable’ contractors, politicians, councilors, accountants and other middle men siphon off tens of billions of pounds for unnecessary expenses and over-priced, unfinished or undone work, whether it be in the form of MP’s lavish expense accounts, backhanders for exorbitant government contracts, or just billing for fact finding tours to Paris. In truth, the scale of embezzlement of the tax payers’ purse dwarfs any actual profits made from the illicit narcotics trade. If you want to hunt down society’s biggest thieves, the best place to start is not the coastline or the city’s seedy backrooms, but government hall (they’ve even started paying bonuses to top civil servants on six figure salaries…on what basis may I ask?). Still watch out below for the predicted surge in cases of petty and violent crime, unsurprisingly foreseen for the harsh times to follow, and keep your eyes wide shut as to the dealings of our rulers above.
The highest level of taxation recorded in the Bible was the 20% levied in Egypt during a time of national crisis, a rate comparable to that of King Solomon’s unpopular reign. It may be interesting to note that after Solomon died, there was a revolt on this very issue, and the principal tax-collector was said to have been stoned to death. Ah, if only we could dispense such swift justice to the directors and accountants of the RBS, HSBC, Northern Rock & the Treasury… Humour aside, it is no laughing matter when the true burden of UK taxation, after national insurance, VAT, income tax, council tax, excise duties and import taxes are considered, amounts to over 90% in real terms.
There are many ways in which our governments and their apparachiks ‘steal’ from the rank and file of society. When the Euro Zone was established in 2002 I noted that although the exchange rate of the Deutschmark to the Euro was set at exactly 2:1, the prices in the shops, restaurants and on the domestic bills didn’t halve, merely our salaries. Only the currency symbol seemed to change on the restaurant menus and invoices. The same trick was played upon the British people during the conversion of Imperial to decimal currency in 1971. The Government also steals when it prints inflationary money to overcome budget deficits, as it did recently to bail out our frankly irresponsible banks. Inflation is a tax on savings, and cheats those who were actually encouraged to save in the first place so that the greedy banks could squander their money on sub-prime loans and idle stock market speculation.
Currency serves a medium of exchange and also as a measure of value, but money by definition also serves as a store of value. However, our notes and coinage no longer represent actual ‘money’ but mere ‘currency’. The official UK inflation rate is now 'said to be' 4.4%, although the actual increases in the price of oil, gas, energy, debt repayments, property, food and domestic transport over the past two years would suggest that the true figure falls somewhere between 8% and 20%, depending on what items you choose to include in the shopping basket. Still such a bare-faced government lie is perceived to be necessary to prevent wage demands fuelling an episode of hyperinflation. I wonder what rises our 'elite' will receive themselves this year in pay and bonuses? I am sure that they will exercise considerably less self-constraint than they have with those in the public sector, whose pay rises have been frozen at around 2%, far below the true rise in the cost of living. The poor become poorer, and the rich still richer...
Then of course there are the pensions, which have been systematically raided by our bankrupt government and by the creditors of insolvent companies. The only proof of, and solution to the pension crisis, was the recent raising of the official retirement age to 70, by which time most of us hard working souls would be dead and conveniently ineligible to claim...
Perhaps the best illustration of our social caste system of ‘masters’ and ‘servants’ came this year when the government found itself a little short on cash for MP’s expenses, civil servants’ bonuses and important construction projects like the Olympic village & new government offices. In its wisdom it decided to abolish the 10p tax rate for the most vulnerable members in society, deciding that increasing it to 20% was the the 'fairest and most equitable' solution, whilst simultaneously reducing the basic rate of tax from 22% to 20% to relieve the strain upon the 'mortgaged' middle classes. The 10p tax trick raised an estimated £7 bn for the treasury, but following a near backbench mutiny, unseen since the days of the infamous Poll Tax, a full scale rebellion was only narrowly averted after a month of wrangling over an eventual £2.7bn tax rebate for the former 10p band members. Note that the Prime Minister had to be dragged kicking & screaming to this half way house concession, despite his much vaunted profession of heart-felt socialist values. At the same time, it took the government only a few days to agree to bail out our insolvent & irresponsible banks by means of a £50bn government bond issue...
The minimum wage remains our token statute to avoid the formal imposition of slavery upon the blue collar classes. After all, being forced to pay workers £5 an hour, in an age when a peak time 2nd class rail ticket to London costs over £50, is clearly denying executives of their rightful bonuses and noble shareholders of their dividends. Thus it comes as no surprise to the blue bloods that this ghastly affront to corporate profitability had to be bypassed somehow. There were two simple solutions, each as Draconian and brutal as the other. The first was to use gang masters to bring in foreign workers who were willing to work for less (in part because they did not have to pay our costs of living). The second, and more recent, measure was to force all unemployed people who claim a mere £58 a week in benefits to have to work for them, thereby ensuring an instant supply of millions of workers who are obliged to perform the nation’s drudgery for less than £2 an hour. A brilliant wheeze, certainly worthy of a knighthood, and possibly the best scheme to further deprive the poor since John Major cooked up the notion of denying homeless people access to housing benefits until they were resident in lodgings (which they couldn't afford without the benefits).
Is there no end to this Luciferian treachery? No, not yet, as the government and corporations have at last grasped that people will have to pay whatever they are charged for food, energy and healthcare. Take energy prices, which have comfortably outstripped the basic rate of inflation and wage increases for the past few years. Last year the UK's ‘big six’ energy suppliers increased their dividends to shareholders by 19%, paying out some £1.64bn in ill gotten gains. Surely, at a time when the price of oil and gas is surging, they would be making losses within a free market, like the airlines? Of course dividends are ultimately derived from the bill payers, and can only be found from net profits once the costs of research, repair, installation, development and corporation tax have all been deducted. EDF Energy increased its dividend from £105m to £110m, and last week bought British Energy for some £12bn, consolidating its position as one of the largest energy suppliers in the UK. As part of our cartel of energy suppliers, their true motive is of course to print money from an essential commodity which is, to all intents and purposes, essentially unregulated, and then to reinvest the profits in more power and property. It matters little to them that poor households cannot afford to support their massive profit margins, which have been maintained despite the massive rise in the price of oil and gas and their vast
investments in new infrastructure and power stations. They have even appointed Ernst & Young’s legendary options & derivatives gambler Justin Rowland as their Chief Financial Officer. A trained accountant, Mr. Rowland cares little for social economics or ethics, but he is superbly equipped to help to punt EDF’s immoral profits on the world’s stock exchanges. If you think that evil has no name or face, just send justin.rowland@edftrading.com, unaffectionately known as JR, a quick note to ask when your electricity bill will fall to a fair and competitive price. You might also care to ask him where else he is investing all of EDF’s filthy lucre...
For generations, supposedly free-thinking individuals have been conned by governments, creditors and corporations into believing that if you borrow hundreds of thousands to ‘buy’ a house over a thirty year span that you are in some way a ‘home owner’. By way of anology, if I went to the local Ferrari dealer and acquired a ‘prancing horse’ over a twenty year term by agreeing to pay twice its list price in monthly installments you might rightly think me mad (Ferraris also appreciate with time). Is there really a difference? At least if you rent property you do not risk negative equity, the volatility of mortgage rates, inevitable repairs, insurance, and death duties. As if our debt culture didn’t stop there, your access to credit is linked to your mortgage debt - if you own part of your home by carrying a massive mortgage, then you are fully free to borrow more against it, while those who are not ‘property owners’ who therefore ‘own’ less debt find it very difficult to borrow... The truth and tragedy of this statement is reflected in the hundreds of thousands of home ‘repossessions’ across the UK & the US this year.
As the actual value of assets that exist in material terms (i.e. assets, gold, land etc) are finite, governments and corporations have circumvented this little limitation to consumer spending, borrowing, investment and stock market speculation by creating a virtual currency which could in reality never be redeemed in the form of actual gold, green pastures, or property. The most direct proof that the huge sums of money that the government and industry spend and borrow do not in actual fact exist may be seen when a vast project is proposed, even one that is ultimately guaranteed to make a healthy return. Take, for example, the construction project for the 2012 London Olympics, where even our government cannot borrow the actual cash to complete the Olympic village, or the Channel Tunnel, a project that was ultimately completed through vast IOUs based on the economic law of “we’re halfway through, so we might as well finish”, carrying interest payments that in all likelihood will never actually be repaid, let alone the original loans. If you’re a bank or a corporate investor please don’t fret – the taxpayer will always foot the final bill, one way or another.
We once religiously upheld a system known as ‘fractional reserve’ banking. There were, at one time, over £25bn in bank notes and coinage in circulation outside the Bank of England, and £33.9bn in gold held in the reserves. In theory the bank only held in reserve a small fraction, set at 15%, of what was actually in circulation, apparently confident that we would not all turn up on the same day to collect our money – a dilemma known as a ‘run on the bank’. This fear might have seemed theoretical, until of course Northern Rock couldn’t give a tenth of its investors their money. The note and coin minted by the Bank of England is said to be a ‘fiduciary issue’, which means that the whole economic house of cards is built upon ‘trust’. Our government presides over a fundamentally dishonest banking system, as our bank notes are no longer convertible into gold currency as stated, and the promise ‘to pay the bearer on demand’ on our bank-notes can no longer actually be kept. Prior to 1914, Bank of England notes were exchangeable for gold sovereigns on demand. Now there is insufficient gold even to cover the circulating currency, let alone all of the digital zeroes of debt that are transferred daily at the speed of light.
For all of our much vaunted public ‘morality’ and demonization of youth gangs, international drug smugglers and the ‘mafia’, the actual scale of these criminal empires pales in comparison to the world of government expenditure. Ignoring local taxation, in 2005 the UK national government raised some £122 bn in tax revenues, far higher than either the estimated size of the global adult entertainment industry (around £70 bn) or Britain’s illegal drug trade (£8bn). Every year ‘respectable’ contractors, politicians, councilors, accountants and other middle men siphon off tens of billions of pounds for unnecessary expenses and over-priced, unfinished or undone work, whether it be in the form of MP’s lavish expense accounts, backhanders for exorbitant government contracts, or just billing for fact finding tours to Paris. In truth, the scale of embezzlement of the tax payers’ purse dwarfs any actual profits made from the illicit narcotics trade. If you want to hunt down society’s biggest thieves, the best place to start is not the coastline or the city’s seedy backrooms, but government hall (they’ve even started paying bonuses to top civil servants on six figure salaries…on what basis may I ask?). Still watch out below for the predicted surge in cases of petty and violent crime, unsurprisingly foreseen for the harsh times to follow, and keep your eyes wide shut as to the dealings of our rulers above.
The highest level of taxation recorded in the Bible was the 20% levied in Egypt during a time of national crisis, a rate comparable to that of King Solomon’s unpopular reign. It may be interesting to note that after Solomon died, there was a revolt on this very issue, and the principal tax-collector was said to have been stoned to death. Ah, if only we could dispense such swift justice to the directors and accountants of the RBS, HSBC, Northern Rock & the Treasury… Humour aside, it is no laughing matter when the true burden of UK taxation, after national insurance, VAT, income tax, council tax, excise duties and import taxes are considered, amounts to over 90% in real terms.
There are many ways in which our governments and their apparachiks ‘steal’ from the rank and file of society. When the Euro Zone was established in 2002 I noted that although the exchange rate of the Deutschmark to the Euro was set at exactly 2:1, the prices in the shops, restaurants and on the domestic bills didn’t halve, merely our salaries. Only the currency symbol seemed to change on the restaurant menus and invoices. The same trick was played upon the British people during the conversion of Imperial to decimal currency in 1971. The Government also steals when it prints inflationary money to overcome budget deficits, as it did recently to bail out our frankly irresponsible banks. Inflation is a tax on savings, and cheats those who were actually encouraged to save in the first place so that the greedy banks could squander their money on sub-prime loans and idle stock market speculation.
Currency serves a medium of exchange and also as a measure of value, but money by definition also serves as a store of value. However, our notes and coinage no longer represent actual ‘money’ but mere ‘currency’. The official UK inflation rate is now 'said to be' 4.4%, although the actual increases in the price of oil, gas, energy, debt repayments, property, food and domestic transport over the past two years would suggest that the true figure falls somewhere between 8% and 20%, depending on what items you choose to include in the shopping basket. Still such a bare-faced government lie is perceived to be necessary to prevent wage demands fuelling an episode of hyperinflation. I wonder what rises our 'elite' will receive themselves this year in pay and bonuses? I am sure that they will exercise considerably less self-constraint than they have with those in the public sector, whose pay rises have been frozen at around 2%, far below the true rise in the cost of living. The poor become poorer, and the rich still richer...
Then of course there are the pensions, which have been systematically raided by our bankrupt government and by the creditors of insolvent companies. The only proof of, and solution to the pension crisis, was the recent raising of the official retirement age to 70, by which time most of us hard working souls would be dead and conveniently ineligible to claim...
Perhaps the best illustration of our social caste system of ‘masters’ and ‘servants’ came this year when the government found itself a little short on cash for MP’s expenses, civil servants’ bonuses and important construction projects like the Olympic village & new government offices. In its wisdom it decided to abolish the 10p tax rate for the most vulnerable members in society, deciding that increasing it to 20% was the the 'fairest and most equitable' solution, whilst simultaneously reducing the basic rate of tax from 22% to 20% to relieve the strain upon the 'mortgaged' middle classes. The 10p tax trick raised an estimated £7 bn for the treasury, but following a near backbench mutiny, unseen since the days of the infamous Poll Tax, a full scale rebellion was only narrowly averted after a month of wrangling over an eventual £2.7bn tax rebate for the former 10p band members. Note that the Prime Minister had to be dragged kicking & screaming to this half way house concession, despite his much vaunted profession of heart-felt socialist values. At the same time, it took the government only a few days to agree to bail out our insolvent & irresponsible banks by means of a £50bn government bond issue...
The minimum wage remains our token statute to avoid the formal imposition of slavery upon the blue collar classes. After all, being forced to pay workers £5 an hour, in an age when a peak time 2nd class rail ticket to London costs over £50, is clearly denying executives of their rightful bonuses and noble shareholders of their dividends. Thus it comes as no surprise to the blue bloods that this ghastly affront to corporate profitability had to be bypassed somehow. There were two simple solutions, each as Draconian and brutal as the other. The first was to use gang masters to bring in foreign workers who were willing to work for less (in part because they did not have to pay our costs of living). The second, and more recent, measure was to force all unemployed people who claim a mere £58 a week in benefits to have to work for them, thereby ensuring an instant supply of millions of workers who are obliged to perform the nation’s drudgery for less than £2 an hour. A brilliant wheeze, certainly worthy of a knighthood, and possibly the best scheme to further deprive the poor since John Major cooked up the notion of denying homeless people access to housing benefits until they were resident in lodgings (which they couldn't afford without the benefits).
Is there no end to this Luciferian treachery? No, not yet, as the government and corporations have at last grasped that people will have to pay whatever they are charged for food, energy and healthcare. Take energy prices, which have comfortably outstripped the basic rate of inflation and wage increases for the past few years. Last year the UK's ‘big six’ energy suppliers increased their dividends to shareholders by 19%, paying out some £1.64bn in ill gotten gains. Surely, at a time when the price of oil and gas is surging, they would be making losses within a free market, like the airlines? Of course dividends are ultimately derived from the bill payers, and can only be found from net profits once the costs of research, repair, installation, development and corporation tax have all been deducted. EDF Energy increased its dividend from £105m to £110m, and last week bought British Energy for some £12bn, consolidating its position as one of the largest energy suppliers in the UK. As part of our cartel of energy suppliers, their true motive is of course to print money from an essential commodity which is, to all intents and purposes, essentially unregulated, and then to reinvest the profits in more power and property. It matters little to them that poor households cannot afford to support their massive profit margins, which have been maintained despite the massive rise in the price of oil and gas and their vast
posted by The Angry Man at 1:48 PM
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