Actually, it has been slowly collapsing for many years. Better questions are: is the collapse speeding up, and where might the collapse end? Could the buck in your pocket ever become as worthless as the Zimbabwe Dollar, for instance?
Prices are always going up and down, as we know. Houses are falling, at the moment, in the West; supermarket items are rising. Currency prices are volatile. One US Dollar buys a lot more Jamaican Dollars than it did ten years ago, but not quite as many Japanese Yen, and not as much gold or silver.
Everything is relative. “The Dollar” (everybody’s Dollar) has collapsed relative to goods and services that have increased in price. Those items haven’t necessarily increased in value – except when measured against the currency in which you pay for them, and when. In terms of the 1971 Dollar, a lot; in 2011 Dollars, not so much.
On the other hand, The Dollar is booming relative to things that have decreased in price, such as houses. Given all the goods and services produced by the USA, and all the assets held there, how could the US Dollar conceivably collapse? Against what benchmark could a currency resting on a base so fantastically strong and comprehensive possibly collapse? The short answer is: the accumulated debt of the Federal government, that financed its huge overseas empire.
This is not a new problem. Ancient Rome ran into financial problems when the expense of expanding and securing its empire became too much for its tax base. Its government, too, borrowed more than it could service. Its lenders lost confidence in its ability to repay its loans at all. No more loans were available, and taxes were already at a maximum. What to do?
It had to either cut back on government expenditure (mainly, the imperial army) OR devalue its currency against its benchmark – which, back then, comprised certain weights of pure gold and pure silver. What Rome did was surreptitiously reduce the proportion of silver and gold in its coins and add cheaper metals into the mix. Then it paid off its loans with the adulterated coins. What a swindle!
These days, governments issue IOUs called “currency notes”, rather than coins – and those notes are issued against no specific security at all. In effect, the governments have adopted single-entry bookkeeping. They simply think of a figure and write it on their cheque-stubs, and draw cheques like there’s no tomorrow. When they reckon the total of cheques drawn reaches the thought-up figure, they think of another figure and write that on the stub and draw more cheques.
In theory, the thought-up figures are deferred Public Revenue – tax-revenue that will be paid by taxpayers in forty years’ time, or a hundred and forty, or... whenever. In theory, national governments that commit this sort of swindle are insolvent – just as individuals would be. But individuals would be defrauding the banks whose cheque-books they were using, whereas governments are only defrauding their taxpayers with the consent of those same taxpayers, who keep voting the fraudsters back in. Why? Because the fraudsters are sweet-talkin’ rogues, that's why.
It’s a handy way for a country to pay its bills, as long as its suppliers continue to accept the cheques. Of course, sooner or later the irresponsible creation of credit (all those thought-up figures) will lead to a collapse of confidence in the cheques and the currency they’re drawn in. When that happens, the suppliers will switch to other mediums of exchange – other forms of money.
At worst, the spurned currency goes out of use, like the Zimbabwe Dollar did in recent times. The US Dollar itself? Yes, its slow collapse could suddenly accelerate; a loaf of bread could cost ten dollars, then fifty, then a hundred, and so on. Wages would have to rise, to allow people to buy the bread; then the price of bread would rise again – and so on.
Well, paper currency began as IOUs for pure gold and silver kept in warehouses, and the world might have to revert to that practice one day soon. It could be anything else kept in warehouses, as long as the item wasn’t readily available all over the place.
You wouldn’t get far trying to use warehouse receipts for cans of soup as money. Soup isn’t rare. Everybody’s Mum could cook up a pot of soup-money every morning.
Wal-Mart wouldn’t give you much in exchange for a can-of-soup certificate, or a “you can trust me” certificate from some crooked Central Banker. A gold certificate? Ah, that’ll do nicely, sir.
Sunday, February 23, 2014
All the gold there is in Fort Knox
There’s a lot of chatter on the financial blogs about people’s declining confidence in the US Dollar (USD) as an international currency. For the past sixty years or so the US Dollar has been the world’s “reserve currency” – that is, the currency in which most international trade contracts are settled.
Now, in the face of the US Government’s reckless inflation of its money supply (creating credit out of thin air), some nations and multinational companies are beginning to look at what other currencies might be suitable. The Chinese, Russian and European currencies are the chief candidates.
Gold is also under consideration, because the total quantity of gold in the world is limited and not easily augmented – in stark contrast to paper currencies. Contracts can be priced in terms of gold whenever the contracting parties agree on its value. That value is not easily discernable these days, because there is no free market in gold. The market is manipulated daily, with unidentified buyers buying for no money down, and sellers selling gold they don’t own. The fraudsters are in charge.
For decades, gold certificates (certificates representing named quantities of pure gold) have been traded on the world’s major commodity exchanges; but those certificates’ claim to be backed by actual physical quantities of gold are often false. It has been a shell-game. Despite all the supposed concern about money-laundering, tax-dodging, terrorist financing and the like, the major world trading corporations and banks have fiddled their books with the full approval of the world’s major governments.
The world’s largest inventory of gold bullion is in Fort Knox, Kentucky – at least in theory. However, there has been no independent audit of the inventory since 1953, or even inspection! The US government flat refuses to allow such an audit, and everybody knows how unreliable unaudited figures are. Most objective critics believe that the advertised quantity and quality of gold in Fort Knox are false.
Actually, there may be no gold there at all. The former inventory may have been leased or sold to carefully selected banks that are owned and/or managed by political cronies; or it may have been replaced or adulterated by cheaper metals.
Remember: there has been no independent check at all for sixty years. None. Remember too that the US government has long been in the hands of arguably the most corrupt lobbyists, administrators and politicians the US has ever seen. Those carefully selected banks may have sold or leased every bar of it to lesser banks and brokers, and corrupt companies and individuals. All the favoured banks would have sold or lent it to their clients, including quoted investment funds.
Sometimes the sales will have been of physical bullion, sometimes of certificates (“paper gold”). Sometimes the banks will have sold certificates for the same bars of gold several times over. Each gold bar in Fort Knox used to be individually numbered and allocated to the relevant specific owner. Not any more.
When, last year, the government of Germany wanted to withdraw its specific numbered and allocated gold bars (about two per cent of the total amount claimed to be held in all US depositories), the most that could be cobbled together by the USA was a bare tenth of the requested amount, with the rest promised in seven years’ time. Dear God! And, all the bars that were grudgingly given back were unnumbered (generic), probably melted down from ingots hastily recovered from the banks, or stolen from Libya by the NATO invaders.
The fate of the gold bars may have been the same as the fate of the multi-trillion-dollars’ worth of bonds, contracts, insurance policies, etc, that were cut and bundled over and over again without audit or accountability until nobody could tell who owned what. That worldwide “derivatives market” may never be unravelled.
America’s gold inventory may never be accounted for, either. Whoever does physically hold the gold bars (whether legally or illegally may never be proved) will one day be in a position to set its price.
Now, in the face of the US Government’s reckless inflation of its money supply (creating credit out of thin air), some nations and multinational companies are beginning to look at what other currencies might be suitable. The Chinese, Russian and European currencies are the chief candidates.
Gold is also under consideration, because the total quantity of gold in the world is limited and not easily augmented – in stark contrast to paper currencies. Contracts can be priced in terms of gold whenever the contracting parties agree on its value. That value is not easily discernable these days, because there is no free market in gold. The market is manipulated daily, with unidentified buyers buying for no money down, and sellers selling gold they don’t own. The fraudsters are in charge.
For decades, gold certificates (certificates representing named quantities of pure gold) have been traded on the world’s major commodity exchanges; but those certificates’ claim to be backed by actual physical quantities of gold are often false. It has been a shell-game. Despite all the supposed concern about money-laundering, tax-dodging, terrorist financing and the like, the major world trading corporations and banks have fiddled their books with the full approval of the world’s major governments.
The world’s largest inventory of gold bullion is in Fort Knox, Kentucky – at least in theory. However, there has been no independent audit of the inventory since 1953, or even inspection! The US government flat refuses to allow such an audit, and everybody knows how unreliable unaudited figures are. Most objective critics believe that the advertised quantity and quality of gold in Fort Knox are false.
Actually, there may be no gold there at all. The former inventory may have been leased or sold to carefully selected banks that are owned and/or managed by political cronies; or it may have been replaced or adulterated by cheaper metals.
Remember: there has been no independent check at all for sixty years. None. Remember too that the US government has long been in the hands of arguably the most corrupt lobbyists, administrators and politicians the US has ever seen. Those carefully selected banks may have sold or leased every bar of it to lesser banks and brokers, and corrupt companies and individuals. All the favoured banks would have sold or lent it to their clients, including quoted investment funds.
Sometimes the sales will have been of physical bullion, sometimes of certificates (“paper gold”). Sometimes the banks will have sold certificates for the same bars of gold several times over. Each gold bar in Fort Knox used to be individually numbered and allocated to the relevant specific owner. Not any more.
When, last year, the government of Germany wanted to withdraw its specific numbered and allocated gold bars (about two per cent of the total amount claimed to be held in all US depositories), the most that could be cobbled together by the USA was a bare tenth of the requested amount, with the rest promised in seven years’ time. Dear God! And, all the bars that were grudgingly given back were unnumbered (generic), probably melted down from ingots hastily recovered from the banks, or stolen from Libya by the NATO invaders.
The fate of the gold bars may have been the same as the fate of the multi-trillion-dollars’ worth of bonds, contracts, insurance policies, etc, that were cut and bundled over and over again without audit or accountability until nobody could tell who owned what. That worldwide “derivatives market” may never be unravelled.
America’s gold inventory may never be accounted for, either. Whoever does physically hold the gold bars (whether legally or illegally may never be proved) will one day be in a position to set its price.
Saturday, February 15, 2014
Cayman’s boat-people
This blog began in 2010 as an offshoot of my weekly newspaper columns. For a while, they ran parallel – often sharing a topic although they were written separately. The newspaper had gone off-line, and an anonymous fan kindly set up this blog.
The most popular recurring subjects of the newspaper columns were unskilled migrant workers and Cuban boat-people. By the time the blog began, those crusades had pretty much run out of steam. They actually hadn’t achieved much, in the face of hostility from our local politicians and bureaucrats.
Domestic servants have always been shamefully exploited by some employers and the Immigration authorities, who regard them as little better than slaves. By law, they are indentured servants – voluntary ones, but highly vulnerable to exploitation. Employers have the legal power to short-pay them and steal from them, and deport them if they complain about that or anything else. Countless crimes go unprosecuted because witnesses have been deported.
Only a small proportion of employers are guilty of such things, but those who do are not held accountable. The guilty ones form a formidable voting bloc, and politicians are always afraid of formidable voting blocs. Jamaican female domestic servants call their conditions of employment “near slavery”, and my columns popularized the term. The Immigration authorities and the exploiters have cleaned up their act somewhat since then, but there are still too many holdouts.
Cuban refugees on ramshackle rafts and boats cross Cayman waters on their way to Honduras, where they join a long-established underground railway up to the USA. To please the Cuban government, our British police force impounds those who physically land in Cayman, and flies them to Havana. There they are excluded from the workforce, so many of the returnees must try their luck again on the next ramshackle craft they can find.
Our Police refuse help to those who pass by – however unlikely they may be to reach Honduras alive. Denying water, food, fuel and medicine to unseaworthy boats contravenes the international law of the sea – a law that saved countless native Caymanians in the islands’ seafaring days. Police boats fend off freelance rescue-attempts; policemen onshore confiscate water etc brought down to the boats, and arrest the guilty parties.
At least, they used to do. They are more observant now of their human-rights obligations – ever since the visit (at my invitation) of a representative from the International Organization for Migration (IOM). A sympathetic reporter and I met her off the plane, and told her the truth of the situation before any government officials could get to her and lie to her. Today, our authorities turn a blind eye to breaches of the formal Memorandum of Understanding with Cuba as often as not. Ours was a meagre victory, but better than nothing.
At the time of the IOM visit, I was a member of a government-appointed Human Rights Committee. I did what I could there, always well aware that they had appointed me purely to keep me quiet. The other appointees blocked my every attempt to improve the lot of the boat people and the migrants in indentured service. As ordered, they concentrated on trivialities and technicalities. In the end, I quit in a burst of publicity.
There is a Human Rights Commission, now, that operates under the same terms of reference that the Committees did. It pretends to care, but doesn’t advance the cause. Ah well, what can you do? Cayman is the regional headquarters of MI6 (Britain’s CIA), so human rights aren’t much of a priority for our colonial administrators back in London.
The most popular recurring subjects of the newspaper columns were unskilled migrant workers and Cuban boat-people. By the time the blog began, those crusades had pretty much run out of steam. They actually hadn’t achieved much, in the face of hostility from our local politicians and bureaucrats.
Domestic servants have always been shamefully exploited by some employers and the Immigration authorities, who regard them as little better than slaves. By law, they are indentured servants – voluntary ones, but highly vulnerable to exploitation. Employers have the legal power to short-pay them and steal from them, and deport them if they complain about that or anything else. Countless crimes go unprosecuted because witnesses have been deported.
Only a small proportion of employers are guilty of such things, but those who do are not held accountable. The guilty ones form a formidable voting bloc, and politicians are always afraid of formidable voting blocs. Jamaican female domestic servants call their conditions of employment “near slavery”, and my columns popularized the term. The Immigration authorities and the exploiters have cleaned up their act somewhat since then, but there are still too many holdouts.
Cuban refugees on ramshackle rafts and boats cross Cayman waters on their way to Honduras, where they join a long-established underground railway up to the USA. To please the Cuban government, our British police force impounds those who physically land in Cayman, and flies them to Havana. There they are excluded from the workforce, so many of the returnees must try their luck again on the next ramshackle craft they can find.
Our Police refuse help to those who pass by – however unlikely they may be to reach Honduras alive. Denying water, food, fuel and medicine to unseaworthy boats contravenes the international law of the sea – a law that saved countless native Caymanians in the islands’ seafaring days. Police boats fend off freelance rescue-attempts; policemen onshore confiscate water etc brought down to the boats, and arrest the guilty parties.
At least, they used to do. They are more observant now of their human-rights obligations – ever since the visit (at my invitation) of a representative from the International Organization for Migration (IOM). A sympathetic reporter and I met her off the plane, and told her the truth of the situation before any government officials could get to her and lie to her. Today, our authorities turn a blind eye to breaches of the formal Memorandum of Understanding with Cuba as often as not. Ours was a meagre victory, but better than nothing.
At the time of the IOM visit, I was a member of a government-appointed Human Rights Committee. I did what I could there, always well aware that they had appointed me purely to keep me quiet. The other appointees blocked my every attempt to improve the lot of the boat people and the migrants in indentured service. As ordered, they concentrated on trivialities and technicalities. In the end, I quit in a burst of publicity.
There is a Human Rights Commission, now, that operates under the same terms of reference that the Committees did. It pretends to care, but doesn’t advance the cause. Ah well, what can you do? Cayman is the regional headquarters of MI6 (Britain’s CIA), so human rights aren’t much of a priority for our colonial administrators back in London.
Sunday, February 9, 2014
Inside the rabbit-proof fence
As a boy I once watched a bull being killed at my uncle-in-law’s cattle station in Central Queensland. I have never forgotten the shock. A very large beast, it was, in a pen maybe thirty feet in diameter; a couple of dozen employees and their families leaned against the fence and watched the show.
A man with a rifle – an old Enfield .303 – waited patiently on the fence for the beast to stand still and in the right place, then shot it in the forehead. To my surprise, nothing happened. The man lowered his rifle; the bull stood immobile, as did the spectators. It was eerie. After five seconds – maybe seven or eight – the front knees wobbled slightly, then it collapsed in slow motion in a cloud of dust.
I blogged a while back [The Man from Snowy River, November 2012] about how my Dad used to kill a sheep every ten days, for meat. Dad carefully scraped out the brains – a finicky job that he hated. In my post I noted the difference in attitude between townies and bushies towards the lives and deaths of animals. There are few vegetarians in the bush.
The men of the district organized dingo drives once in a while, and occasionally took potshots at kangaroos. Dingoes were hated because they would kill or cripple sheep for fun (seemingly), and sheep were our livelihood. Kangaroos are classed as a pest – cute though they undoubtedly are – because they nibble the grass too close to the ground and leave none for the sheep. So do rabbits, which were a tremendous pest (though cute, of course) and had to be poisoned en masse in the 1950s because there were too many to shoot.
By rights there shouldn’t have been any dingoes or rabbits on the Darling Downs in Queensland. My Dad’s little patch of five thousand acres was inside both the official rabbit-proof fence and the dingo fence that stretched a thousand miles or so across the State. The whole purpose of the fences (erected and maintained by the State government to this day) was to keep the vermin out of where we lived, so I don’t understand why our men’s dingo-drives were necessary. Mind you, I never saw any bodies, though they talked of finding one or two each time.
The only other things killed in any quantity were snakes. Few of them in our neighbourhood were deadly (unless there was no antidote handy), but all were poisonous to some degree. We boys weren’t allowed to play beneath our house, which sat on two-foot stumps with tin caps over them to frustrate snakes’ attempts to get upstairs.
None ever did, to the best of my knowledge, although I used to imagine a nest of them underneath my bed at night. I slept with a sheet over my head, which I must have been just stupid enough to believe would save me.
Mum was a city-girl, who wasn’t raised to kill snakes. Her job was to pour boiling water on any she found inside the yard and wait till Dad got home. He would break their backs with a length of cable that he mysteriously called “the Kelly”. He had a good eye for snakes, and would watch them carefully while we boys ran and fetched him the Kelly.
If he hit the snake amidships, it couldn’t spring back on him. He was pretty good at it. Only once did he have to resort to shooting one. He never kept a shotgun or a rifle, but he dug out his .45 revolver issued to him during The War (along with a box of bullets) to fight off the expected Japanese invasion.
At dusk one day a snake wriggled under the tilted barrel of chook-food and hid there. Pop lay on the ground and carefully fired six shots into the darkness. Three of them hit, which impressed us immensely. We’d never seen him shoot before, and never even knew he had the gun. What a kick that thing had. POW!
A man with a rifle – an old Enfield .303 – waited patiently on the fence for the beast to stand still and in the right place, then shot it in the forehead. To my surprise, nothing happened. The man lowered his rifle; the bull stood immobile, as did the spectators. It was eerie. After five seconds – maybe seven or eight – the front knees wobbled slightly, then it collapsed in slow motion in a cloud of dust.
I blogged a while back [The Man from Snowy River, November 2012] about how my Dad used to kill a sheep every ten days, for meat. Dad carefully scraped out the brains – a finicky job that he hated. In my post I noted the difference in attitude between townies and bushies towards the lives and deaths of animals. There are few vegetarians in the bush.
The men of the district organized dingo drives once in a while, and occasionally took potshots at kangaroos. Dingoes were hated because they would kill or cripple sheep for fun (seemingly), and sheep were our livelihood. Kangaroos are classed as a pest – cute though they undoubtedly are – because they nibble the grass too close to the ground and leave none for the sheep. So do rabbits, which were a tremendous pest (though cute, of course) and had to be poisoned en masse in the 1950s because there were too many to shoot.
By rights there shouldn’t have been any dingoes or rabbits on the Darling Downs in Queensland. My Dad’s little patch of five thousand acres was inside both the official rabbit-proof fence and the dingo fence that stretched a thousand miles or so across the State. The whole purpose of the fences (erected and maintained by the State government to this day) was to keep the vermin out of where we lived, so I don’t understand why our men’s dingo-drives were necessary. Mind you, I never saw any bodies, though they talked of finding one or two each time.
The only other things killed in any quantity were snakes. Few of them in our neighbourhood were deadly (unless there was no antidote handy), but all were poisonous to some degree. We boys weren’t allowed to play beneath our house, which sat on two-foot stumps with tin caps over them to frustrate snakes’ attempts to get upstairs.
None ever did, to the best of my knowledge, although I used to imagine a nest of them underneath my bed at night. I slept with a sheet over my head, which I must have been just stupid enough to believe would save me.
Mum was a city-girl, who wasn’t raised to kill snakes. Her job was to pour boiling water on any she found inside the yard and wait till Dad got home. He would break their backs with a length of cable that he mysteriously called “the Kelly”. He had a good eye for snakes, and would watch them carefully while we boys ran and fetched him the Kelly.
If he hit the snake amidships, it couldn’t spring back on him. He was pretty good at it. Only once did he have to resort to shooting one. He never kept a shotgun or a rifle, but he dug out his .45 revolver issued to him during The War (along with a box of bullets) to fight off the expected Japanese invasion.
At dusk one day a snake wriggled under the tilted barrel of chook-food and hid there. Pop lay on the ground and carefully fired six shots into the darkness. Three of them hit, which impressed us immensely. We’d never seen him shoot before, and never even knew he had the gun. What a kick that thing had. POW!
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