Simple Liberty  

 

     
   
     

Monetary Reform

Preface

Written by Darrell Anderson.

Consider the titles of the following books:

  1. Wealth, Virtual wealth and Debt, The Solution to the Economic Paradox, Frederick Soddy, (1921)
  2. Death of the Dollar, William F. Rickenbacker, (1968)
  3. How You Can Profit from the Coming Devaluation, Harry Browne, (1970)
  4. The Coming Currency Collapse, Jerome F. Smith, (1980)
  5. How You Can Find Happiness During the Collapse of Western Civilization, Robert J. Ringer, (1983)
  6. The Great Depression of 1990, Dr. Ravi Batra, (1987)
  7. What’s Next? How to Prepare for the Crash of ‘89 and Profit in the 1990s, Paul Erdman, (1988)
  8. The Coming Economic Earthquake, Larry Burkett, (1991)
  9. Bankruptcy 1995, Harry E. Figgie, Jr., (1992)
  10. The Great Reckoning, James Dale Davidson and William Rees-Mogg, (1993)

Notice the publication dates. Yet the predictions of economic doomsday and collapse are much older. Opponents of the 1913 Federal Reserve System legislation predicted collapse. Opponents of Greenbacks predicted collapse.

Why the predictions? Because the mathematics and presumptions supporting the modern exchange system are flawed. Nothing can secure stability in an exchange system based upon common mediums of exchange because all mediums of exchange, regardless of content, are subject to fluctuations and manipulation. Always. And no exchange system that allows and encourages compound interest will ever find stability. Ever.

A handful of people in the past 300 years have recognized these flaws but always have been overshadowed and ignored by the status quo. The question always has been not if the system would collapse but when. Now that the exchange system is global and fully interconnected, predicting when is almost impossible because the system is incredibly complex, and human inertia and momentum rarely shift quickly.

Yet the breaking point might not even be noticeable. The colonial Americans saw the gradual degradation of the continental, but there was no breaking point that could be marked on the calendar.

An exchange system based upon common mediums of exchange has always depended solely upon confidence. Nothing more, nothing less. The modern exchange system will degrade continually, but will not collapse until a significant portion of the participants lose confidence. What will cause that final loss of confidence is unknown because human nature is the primary element in controlling that confidence. When fear and uncertainty with respect to a medium of exchange rises to a breaking point, then confidence will evaporate and the medium will stop circulating in any meaningful manner.

A collapsed circulating medium of exchange does not mean a collapse in the social structure. Many currencies collapsed in the 20th century, but sadly, the underlying political system remained. The long-term result was that little changed. Should the dollar collapse the outcome likely will be similar — politicians and bureaucrats merely will remold the underlying currency system and start their shenanigans anew. The underlying foundations likely will remain unchanged.

As long as people embrace compound interest, fear and uncertainty will thrive, which always will provide fodder for distrust and violence. The concept of compound interest is mathematically unsustainable; is incompatible with human existence; and is socially destructive, both individually and communally. Humans needed about 300 years to create a global exchange system that finally would produce the destructive effects of compound interest. Because compound interest is an exponential relationship, the first 250 years or so were relatively mild, but the past 50 years or so have witnessed the harsh reality of an exponential function as the effects accelerate.

The standard of living in America will continue to deteriorate. Not only because of a degrading currency and numerous ideological conflicts, but because Americans no longer can compete for wages with people in developing regions of the world. Those people embrace a lower standard of living and carry far less debt than Americans. Those people will find a steadily rising standard of living for the next generation while Americans witness the opposite before there will begin to be some equilibrium. Until then Americans will continue to find in oncoming years that they will work for less pay but must continue to service debt coupled with compound interest. As the standard of living deteriorates, aggregate debt will increase as many people try to survive through debt, which will be their only option. A significant number of people eventually will buy bread with credit cards that they cannot repay. As many people discover they cannot service the debt they created, they eventually will stop paying taxes, not because of ideological reasons but simply because they cannot pay. Throughout the period foreclosures and asset seizures will rise. As tax collection dwindles draconian collection methods likely will rise.

In the near future, short of a catastrophic shift in the system, the dollar will continue to erode in exchange power. Hyperinflation is unlikely but continual erosion will persist. For the past several decades, a significant problem is not a lack of production on the part of people living and working in America, but raw inflation at the political level to finance the welfare state and nonsense wars. In neither process does any actual wealth back the currency being produced at the political level. Americans will continue to buy goods and services produced elsewhere but as global confidence in the dollar decreases, Americans will find that they can buy less as producers around the world continually devalue the dollar against their own preferred form currency. Whether that devaluation continues to zero remains to be seen.

The primary catalyst, however, is compound interest. Eliminate all fractional reserve banking and currency inflation would remain because of compound interest. Fear and uncertainty will remain, as will rising violence and unrest. The problems cannot be solved within the current system boundaries. New methods and ideas about sustaining human social systems are needed. In short, a paradigm shift in thinking.

Within the current system boundaries there are only a handful of solutions: 1) eliminate the debt through ridiculously high taxation, a process that would require 50 years at 100% taxation and no additional debt; 2) reduce the debt through the printing press (hyperinflation); or 3) the politicians default on the outstanding debt (they refuse to pay). Because approximately 80% of the overall “public” debt is privately owed, any of those solutions would throw every granny in tennis shoes out onto the street. None of the options are palatable or likely. The solution is to modify the system, not continue playing by the same flawed presumptions and equations. Until people not only recognize the flaws and presumptions of this exchange system but respond with new foundations, the problem will continue to worsen.

The potential for that paradigm shift exists, but nothing will change until the foundations for the current exchange system are replaced with concepts and ideas that are compatible with human existence. Do you want to understand that paradigm shift? Then turn the page.

Finis.

Terms of Use

Next: Chapter 1 — Wealth and Debt

Table of Contents

Bibliography