How the Public’s Declining Trust in Corporate, Banking, and Governmental Power Will Inevitably Destroy the Faith-Based Fiat Currency System
“It’s the economy, stupid,” was a presidential campaign slogan made famous by President Bill Clinton in the 1992 campaign against George Bush, Sr. Since that time, it has taken its place in American culture as one of the most memorable presidential political slogans in American history.
Oh how thirty years have taken this famous phrase and flipped it onto its head. To focus on the economy while ignoring American culture is a classic case of missing the forest from the trees, but for those who think the “economy” is something other than a manufactured mirage propped up by the faltering fiat system, then look no further than Wall Street.
For those that pay attention to the American stock market, it’s an open secret that the FAANGs are the fig leaf propping up the entire edifice of a market-based stock exchange — Facebook, Amazon, Apple, Netflix, and Google. With Facebook’s recent drubbing (losing a $120 billion in a single day, the largest stock market drop in American history), the collapse of just one of these five stocks would spark an investor panic which could bring the entire stock market crashing to the ground.
As I wrote in another article that focused on Baby Boomer investors, in addition to wiping out stock portfolios and 401ks, a stock market collapse could also set off a second time bomb — local, state, and federal pension programs (which are already underfunded by trillions of dollars) are also heavily invested into the over-inflated stock market. A crash would leave most of them bankrupt and financially insolvent.
But yet again, pointing out these economic problems simply puts the “cart before the horse” in regards to understanding what’s really wrong with America. In a brilliant article entitled “Here’s What We’ve Lost in the Past Decade,” which every American investor should read, the author and economic analysts Charles Hugh Smith highlights ten systemic cancers that are slowly poisoning and destroying the culture needed to perpetuate the fiat system.
What the elite of our economy have forgotten is that culture comes before economic prosperity, and the cancers that Smith lists include the complete loss of functioning markets and real price point discovery, the loss of genuine civic virtue, the loss of societal civility when engaging with one another in political debate, the loss of public trust in both corporate and governmental institutions, the loss of social mobility for the majority of the American public, the loss of respect and admiration for federal law enforcement agencies as they now engage in hyper-partisan politics, the loss of a free and open internet in favor of a growing oligarchy that controls access to media and content, a loss of national vision and sense of purpose, a loss of work ethic that has been replaced with an overwhelming sense of unearned entitlement, and finally, a loss of humility in favor of a cynical and self-serving grandstanding.
There are three more societal cancers that I would add to Smith’s list. The first would be the casual, matter-of-fact embrace of national treason, where corporate, banking, and governmental agencies now openly conspire to embrace policies and platforms that avidly work against the security and well-being of the American people both politically and economically.
Not only have the wars that have been waged over the past twenty years been absolutely ruinous for the country’s finances, but none other than JPMorgan Chase has admitted that the massive Quantitative Easing and currency debasement that was unleashed after the 2008 crash could end up having absolutely devastating, long-term consequences for the American economy.
To quote Marcus Tullius Cicero:
A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. A murderer is less to fear.
In regards to the second cancer that Smith doesn’t list, he nonetheless touches upon it when describing the loss of America’s national vision and sense of purpose. In his own words:
The society and culture have degraded to an abject worship of greed and private gain. The “national purpose” is to maximize one’s personal gain by whatever means are available, including fraud, racketeering, embezzlement, lying, cover-ups, punishing whistleblowers, gaming the system to maximize overtime, etc.
The rationalization is always the same: everyone else is doing it.
Indeed, everybody else is doing it, but what Smith fails to mention is that the loss of strategic, long-term thinking and policy formulation inevitably dooms and destroys a fiat-based currency and economy, as the strength of that system is inherently connected to the faith and trust that a society maintains towards it economic, civic, and political institutions.
That faith and trust is now in complete freefall, which brings us to our third cancer. The inability to utilize history as a guide and compass when avoiding the pitfalls of past civilizations, and Rome is a perfect example, especially its decisions to start debasing it currency.
In a brilliant article written for the Mises Institute, Joseph R. Peden points at that the “Crisis of the Third Century” was in large part due to rampant currency debasement, which accelerated under the reign of Caracalla (198–217 A.D.). Indeed, in one of the most stark examples of the “emperor having no clothes,” imperial coins eventually became so thoroughly debased that the Roman government itself started refusing them as payments for taxes because of how worthless they had become, and instead demanded gold and silver bullion along with goods and services paid as a substitutes for their own currency.
Hand-in-hand with massive currency debasement came skyrocketing taxes (which were expected to be paid with debased currencies that absolutely destroyed the people’s ability to save, invest, and accumulate real wealth) along with ruinous centralization policies and price controls such as Diocletian’s Edict on Maximum Prices in 301 A.D.
Collectively, these policies absolutely devastated the Roman economy, and as Peden points out, as the currency became debased and economic commerce collapsed, the need for raw goods and services was nonetheless desperately needed (especially when funding the Roman Military Industrial Complex). What was the solution?
Serfdom. Far from what the history books tell us, feudalism didn’t emerge during the European Middle Ages, it actually emerged during late Roman Antiquity. The Empire had to confront the fact that maintaining the production of valuable goods and services with a debased currency and economic stagnation could only be attained by passing laws which forced sons to embrace the same occupations that their fathers and grandfathers had engaged in, and this was especially true for the coloni, the peasants who farmed both imperial and prive pieces of land, and who would eventually became bonded and enslaved to the massive estates and manors of the Roman aristocracy.
While Constantine tried to reverse some of this systemic rot (such as a half-hearted attempt at reforming the imperial gold coinage through the introduction of the solidus), these reforms could only be accomplished by robbing Peter in order to pay Paul. Namely, the gold and silver needed to enact these reforms was procured through a scorched-earth campaign of looting the Roman citizenry of every scrap of precious metal they could get their hands on, which only further impoverished both the people and economy even further.
Increasingly, a two-tiered system emerged where emperors, governmental bureaucrats, and soldiers were at least able to maintain a level of comfort and wealth (albeit in an increasingly primitive, feudalistic fashion based on the bartering of basic goods and services because of rampant currency debasement), while the people sunk further and further into impoverishment and destitution.
Peden concludes that far from what the history books tell us about the fall of the Western Roman Empire, many Roman citizens, having been abused, enslaved and crushed for centuries by both oppressive taxes and ruinous monetary policies, actually welcomed foreign rule so long as the invaders promised them one thing — to never again fall under the rule of the Roman bureaucracy. Such was the visceral hatred and complete collapse of loyalty that the populace held toward the emperors.
History doesn’t repeat, but it does have a rhythm, and it’s a pity that most “respectable” economists of the modern day won’t touch either the Mises Institute or the Austrian School of Economics with a ten foot pole. Why? Because they contradict the Keynesian Orthodoxy that has reigned supreme since the end of World War II.
Keynes hated sound money as well as people who tried to utilize sound money to build real wealth and prosperity, viewing them as parasitic dead weight that dragged down an economy’s consumption and economic prosperity. In Keynes own words in the Treatise of Money — Saving is the act of the individual consumer and consists in the negative act of refraining from spending the whole of his current income on consumption [Emphasis mine].
Of course, the Austrians make the common sense rebuttal that saving is merely deferred consumption. Benjamin Franklin’s famous saying that “a penny saved is a penny earned” isn’t implying that the penny be permanently pulled out of the money supply and prevented from ever being directed towards consumption. Rather, the penny was to be saved and diverted to such economic activities as buying a home, starting a business, buying a bond or stock, or passing down an inheritance. The penny would inevitably be used, but used in a manner that rewarded the saver with both consumption and increased personal wealth.
This honestly isn’t rocket science. But try explaining this very simple point to the rank-and-file Keynesian who believes fiat currencies and Quantitative Easing are needed to “encourage” (i.e. punish and rob) savers by forcing them to spend their money before its devoured through inflation. We go back to America’s inability to the think and plan long-term and strategically, and Keynes economic philosophy is in large part responsible for it.
But with nationalist and populist movements spreading across the West like wildfire, along with a systemic disillusionment and loss of faith towards both the economic and political elites, investors ignore the fate of Rome at their own peril. As stated, history has a rhythm, but it doesn’t necessarily repeat, and you’re just as likely to get a blowback comparable to the French Revolution, the Bolshevik Revolution, or the Munich Beer Hall Putsch as you are a replay of the collapse of the Western Roman Empire.
When it comes to the United States, we should remember that America is still a Republic (albeit a faltering one) just like Rome was at one point. But all that changed with Julius Caesar and Octavian Augustus, and I’m sure had you asked Cincinnatus, Cato the Elder, or Scipio Africanus whether their beloved Republic would fall, much like with many American patriots who love the Constitution and the Founding Fathers, such a transformation would have been absolutely unthinkable.
The Roman Republic fell nonetheless.
But perhaps that will not be our fate. Winston Churchill had a famous saying when describing East Germans who braved death in order to escape the state-based prison created by the Berlin Wall. When all else fails, people vote with their feet, and when it comes to the public trust and faith that is needed to preserve a fiat-based currency and economy that’s slowly degenerating into tyranny, when all else fails, people start voting with their wallets, especially those that recognize that the future of the global economy will be grounded upon both a revolution and a renaissance.
Cryptocurrencies are still by and large valued in fiat currencies, but as those currencies continue to falter and fail, they’ll simply circumvent the system in its entirety and instead base their value on two of the oldest and most trusted currencies in the world — gold and silver.
This is undeniably one of the principle reasons that central banks are scared of cryptos. In addition to all of the technological advancements they’re about to unleash on the global economy, they’re also going to liberate the gold standard and restore real price point discovery. People will once again be able to save, invest, and create real wealth without the Keynesian central planners rabidly debasing their wealth and robbing them blind.
We at Karatcoin represent the “tip of the spear” when it comes to this revolution and renaissance, as we offer an outstanding investment portfolio that synthesizes the speed, liquidity, and technological advancements that cryptos provide with the trust, loyalty, and anti-inflationary store of value that gold provides. For more information, visit us at http://www.karatcoin.co/
https://www.cbsnews.com/news/facebook-stock-price-plummets-largest-stock-market-drop-in-history/
https://www.cnbc.com/2018/03/20/zuckerbergs-facebook-stock-selling-dwarfs-all-other-insiders.html
http://charleshughsmith.blogspot.com/2018/07/heres-what-weve-lost-in-past-decade.html
https://www.zerohedge.com/news/2018-07-28/jpmorgan-qe-might-have-devastating-consequences-after-all
