Posted by Planning4aCrash on 03/30/09 1:46 PM Last updated 04/01/09 4:46 PM   [Newer: Critical review of Zeitgeist (film)] [Older: EU Restricts sales of heirloom vegetable seeds]

The British, via the money act, have freedom to opt out of the fiat money system by purchasing Tax Free legal tender gold Sovereign and Brittania coins. If enough people do so, the fiat system will collapse without materially harming the British Public. Not even the Americans, with gold and silver coinage written into their constitution benefit from tax free gold as legal tender. Take advantage of it.

British Gold Sovereign

The global financial system is basically in three layers.
1) At the very top, we have gold. All central banks trade in it, and hold their reserves in it. This is what the elite use to store wealth not invested in other real tangible assets.
2) Below gold, we have international currencies, be they the global dollar reserve currency or IMF's special drawing rights, which are a basket of other currencies and commodities. This is what governments use to interact with corporations and other governments. It is fiat and debased, allowing the financial elite to extract wealth from and re-distribute wealth between nations.
3) Beneath international currencies, absent from America, are national currencies. These, historically are debased even further than the world reserve currency, allowing nations to extract wealth from and re-distribute money within countries.

But, gold sovereigns (also, half, double and x5) - And, Brittania coins (come in 1/10, 1/2 and 1 ounce), are legal tender.

A sovereign has a legal tender value of £1, a £5 gold, quintuple of a sovereign has a £5 face value. It is legal to use them for purchases at those values. All the parties need do is adjust prices according to the price of spot gold, plus any premiums they choose. A 1 ounce Brittania has a face value of £100.

British Britannia Bullion Coin

The coins are absent VAT and capital gains tax, being money, so value is not eroded with multiple purchases.

During the early 1800's, small coinage (decimals of gold coins) were provided via the private sector, but the government ended this, causing a shortage of small change. We need to reverse legal tender laws for the final step, but, with gold not part of the grocery trade, we are not there yet.

Gold price has risen from £200 to £650 since 2000. Why? Because the money supply has gone up, whilst the supply of gold has remained stable. Why? Because 90% of the gold ever mined still exists today as money. There is so little, that it would all form an 18ft cube. About 3billion ounces.

To understand why freedom from money supply manipulation (known as counterfeit when not carried out by state or state sanctioned monopolies) is important, we get to the heart of Austrian Economics. Printing money increases the supply of money, without providing any additional productive capacity. The value of the currency is therefore diminished via inflation. What occurs is, that money is re-distributed from the public, who hold the fiat money, to those who print money and those who partner with those who print money. What this generally means, is re-distribution of wealth from the productive public, to parasitical big government and state sponsored corporate monopolies. In past centuries, money, being distributed and backed by gold, was more in the hands of the public. Just look at cities to see the result. We see state and monopolies forging monstrosities and copycat high streets, whilst the proles do not even have the wealth to repair their windows. Industry re-orientates itself to serving the state and corporate monopolies, capacity that once served the public is diminished. The latter, being in direct contact with diverse people, tended to be diverse and decentralized, the former, supporting a small elite, is centralized and de-humanized.

In a capitalist, free market, government and corporations do not have the power to print money. Money is left to the market. The past 5000yrs has favored Gold, because its stable supply and ability to store wealth is unrivaled. It is almost entirely a precious metal, with very few industrial uses, unlike Silver. Silver does not form the top-dog global money because more is mined, and more is used. Silver inventories, fluctuating more widely, make it less capable of storing wealth. But lets not get confused about money here, because, with gold, we are talking about barter, i.e. exchange of one commodity for another commodity, product or service. Gold just happens to best satisfy the requirements for indirect barter. Gold only becomes money when instituted by legal tender laws, when the monarch or despot's face is printed on it by dictate. As seen above, the private sector and free market is more than capable of better carrying out that role.

We do not have a free market, because government and corporations have a monopoly over and control of the money supply. Via legal tender laws, they declare pieces of paper more valuable than gold, then go about printing it for their own purposes, that cannot otherwise be stomached by the public via them purchasing with their own money on the free market or handing over taxes

The business cycle is the next major implication. With sound money, money deposited in a bank is what it can loan out. This is called 100% reserve banking. Savings represent delayed purchases, and are therefore an efficient measure of spare capacity within the economy. Entrepreneurs, via loans on offer from 100% reserve banking institutions, or, directly, via gold invested into business by the public, are given a signal of the quantity of business start-ups the economy can support. The signals are very efficient, therefore, a small percentage of businesses that misjudge demand fail. These go bankrupt, providing additional free resources that healthy business can use to provide additional productivity. You would get a steady flow of failing and succeeding businesses, unlike today, where you have a boom when nobody fails and a crash, when all fail at once, except those connected insiders that get bailed out.

In a fiat money system, banks operate a fractional reserve, whereby they loan out more money than they have on depsit. For example, a 10% reserve involves lending £100 for every £10 on deposit. This can only occur in a fiat paper or digital money system not backed by gold, which can only be supported by force, via legal tender laws, because the free market will always prefer real value, in gold. The effect is, that more money is lent than lenders have on deposit. Deposits, being the free market signal of resources free to be processed by entrepreneurs, means that entrepreneurs are given a false price signal by additional liquidity. They start up more businesses, and invest more money in commodities, products and services than the economy can support.

As a result of inflation in the money supply, we get inflation in shares, commodities, products and services, be it Dutch Tulip Mania in 1637, .com boom of the 1990's or the housing bubble of the noughties. These bubbles are pyramid schemes, supported by new entrants. The bubble is exponential, so cannot keep up with new entrants forever. Once it gets to that point, new entrants go on strike by choice or default. Often, government steps in, raising interest rates to pop the bubble before it becomes a systemic risk, but the bubble always collapses, confidence and money supply dry up, and we get a recession due to a pause in money supply expansion, followed by, about once every 80yrs, a depression, when the money supply and debt itself collapses.

The central bank is central to this process. They act as lender of last resort, a need wholly created by the fiat money system, because banks, with fractional reserve, never have enough money in vault to satsify all depositors, should they re-call their savings. Infact, if 10% reserve is allowed, banks often go under that reserve and have to borrow money from other banks over their reserve. During times of recession, no banks have reserves, so the central bank prints money for them, relaxes reserve requirements, reduces the cost of borrowing, or all the above. Clearly, this simply involves state sponsored increase in the money supply that replaces one bubble with another. dotcom to housing, to commodities, to the final bubble, the bubble of all bubbles, the bubble of gold, i.e. the fall of fiat money and return to sound money. But all collapses are just that, the free market trying to re-assert itself against state and corporate manipulation in a constant war between savers and speculators.

What we see now, is that central banks cannot provide anymore liquidity. Legalization of derivatives has created a 1quadrillion derivatives debt bubble that is beyond fractional reserves, and central banks have interest rates at zero. All that is left now, is for government to purchase all the bad debt, leading the the other final bubble, the bubble in treasury bonds, where government purchases its own debt to bailout debt in the corporate sector, this creating a bubble in treasury bonds, that threatens to bring down government itself and the currency it is trying to support, via Weimarization and Zimbabwification.

Which brings us back to gold. It does not owe anybody, has no counterparty risk, and those who hold it, gain the blessings of liberty via freedom from the state and corporate counterfiet. Becoming your own central bank via a reserve of legal tender British coins provides you a tax free, legal, legitimate way to protect your wealth, so that you, not the state, and the corporate whores it supports, can be the Pheonixthat rises from the ashes.

Posted 03/30/09 3:37 PM Elysiumboy Billericay, United Kingdom

Loads of information there Planning4aCrash; I particularly liked the explanation about the computer money they decided to just make up. I use the ratio 10:1 to show this point, but it stands out when you place it in realistic figure. For every ten dollars/pounds they can loan one hundred dollars and they didn't see a problem with that?

Posted 03/30/09 7:17 PM Planning4aCrash London, United Kingdom

Elysiumboy, it gets worse. Reserve Ratio's have pretty much reduced to zero now, hense, a quadrillion dollar derivatives debt bubble, to a $50tn economy. This is more like a ratio of: 1 : 0.005 http://www.dailypaul.com/node/65591 Or, $1000 loaned to every $5 deposited!! That's $950 of false price signals for entrepreneurs for every $5 of true savings and price signal. This just means that the bubbles get bigger, and bigger. The bailout is a huge bubble, but it takes place in a collapsing debt bubble. The risk now is that the money, sequestered into derivatives during the past 20yrs of bubble, hits the real economy as hyper-inflation via monetization of the debt.

Posted 03/31/09 12:51 PM Elysiumboy Billericay, United Kingdom

Every time I hear the figures they not only stagger me, they worsen. What on Earth could be achieved here other than total disaster, Philprism. I've answered in extension on message.

Posted 03/31/09 4:57 PM Planning4aCrash London, United Kingdom

Disaster, except for those invested in real assets, like gold, and whatever is of value that doesn't owe anybody. Even personal relationships, that's something of value that can't be destroyed, how about the soul? They aint havin that,

Posted 04/17/09 1:04 PM Elysiumboy Billericay, United Kingdom

Still can't get over those figures, they are bloody ludicrous!!!