A site for recollection and reemphasis of entrepreneurship and sound business practices A crucible for theory and practice of business entrepreneurship
Every generation needs a revolution - an entrepreneurial revolution
Two years ago we canvassed for ref (cadaver) and none were available locally. They are available in China. So I tried inquiring from a friend who works at a car aircon and cold chain link in the Philippines.
He instead proposed a cold storage plant which he says in Pangasinan would have a big use for onion farmers. I dismissed the idea.
Now I have my regrets that I did not take the offer I could have helped during this onion crisis.
This post is going beyond the scope of the page - entrepreneurship But it is wise to watch this video and learn from this. Paraphrasing Churchill, we say that going deep into history makes us fully understand and much more so the future We gain more insight into the currency management, money and credit and how they affect local business. Even the military, and strong local and central govts.
The Roman empire
This Maloney compares the Roman empire and the current US situation. There are parallels and we must be aware of the perils we are facing so that we can avoid the mistakes of the past civiization that has collapsed What must we do as individuals and entrepreneurs to avoid the doom and steer clear of the challenges posed by the debased monetary policy
1. Rome started with stable monetary policy, stable currency that was backed by pure gold
2. But the Punic wars (war with Hannibal) and massive military structure all over the empire and massive infrastructure caused the central govt (the Republic) caused to engage in deficit spending
3. This led to the debasement of the currency, like removal of edges of the coin, melting them and minting new coins or simply inflating the value of the coins
4. To appease the masses, the top brass of Rome, the emperors led in Circus and Bread programs. Circus - the regular spectacle at the coliseum featuring gladiators and the Bread - a welfare program where about 20% of the population get wheat ration daily. Where did Rome get the money for these
5. This lead to strong govt to collect taxes, made the central govt corrupt - due to cronyism. To curry favors from the emperor and the senate
6 Led to the strong influence of the military over the govt
These led to disorder chaos and eventual falll of the Roman empire It was not the war with Vandals that brought that Rome, the monetary system did and imploded the empire
Similarity with the US
1. The US started on a similar footing with Rome with stable currency/money in the beginning
The US Constitution prescribed only Gold and silver as the legal tender in the settlement of debt
and other obigations
Clause 1 Proscribed Powers
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
Because of this the US dollar became merely a certificate of deposit of gold or silver The US dollar or silver can be redeemed through the US dollar
2. US has to engage in deficit spending due to its involvement in two World Wars
3. In 1944, just as the world war II was coming to an end, there was this Bretton Woods agreement that led to abandoning of the gold standard (perhaps to speed up war recovery through printing of loca currency and deficit spending by countries) and instead making the dollar the world currency pegged
(reserve) pegged at $35 dollars per ounce. This led to the establishment of the IMF and IBRD
So how then the value of currency determined - by comparing the value of currency against a basket of currrency that keeps fluctuating on a daily basis
4 Due to the deficit and massive spending due to Vietnam war Nixon on August 15, 19711 declared at least temporarily that redemption convertibility of US dollar to gold was to be no longer allowed. And strict price control for 90 days. It is to be noted that inflation or price of goods going up is not the product of manipulation by traders who are just out to make a living but because of wrong monetary policy and is merely a result of debasement of currency brought about by lack of a gold standard, and/or rise in money supply. Nixon is not only famous for Watergate scandal and or Vietnam war, but for the disruption/debasement of the US monetary system
It all began in Egypt where currency started. But it was not yet money because gold which they used then lacked one characteristic: being divisible
1. Both money and currency share same characteristics:
Portable (you can have in your wallet unlike in trading wherein you bring large commoditiies with you
Divisible you can divide it into units for ease of counting
Fungible it is of similar value as the next currency
Durable cant be destroyed by moth or elements
But money has one distinct characteristic that of being store of value God and silver has distinction of storing value through the years. It is valuable then 5,000 years ago and valuable now
2. Fiat currency since 1945, after Bretton Woods agreement, govt preferred fiat currnecy, ie currency that are just paper money created by mere faith (fiat in govt) but does not backed up by real
value.
Money before in US, are depository receipt for gold and could be exchanged for gold coins.
Nixon declared in 1970s henceforth, USA will no longer allow redemption of gold by US
dollar holders
3. Money is not preferred because supply of precious metals and govt cant go in to deficit spending
Currency is unlimited because centra banks can print more money or can increase money supply
through some other means like:
4 Increase in money in circulation, ayuda, subsidy, Quantitative Easing. They all mean the same-
increasing currency in circulation
5. All fiat currency all ended up in zero. Bad news for all holding on to paper money
6 Inflation is not a result of some strange mechanism or strange economic phenomenon. It simply means that there is more more currency in circulation and thisi takes away the stored value in your
currency. If you decrease the currency supply there is deflation. If you decrease the value in the currency which happens when govt does it without your consent, Maloney terms is as theft
7. Inflation is not being felt much in USA because it is being exported world wide through trade and
international employment. But when nation sees through that the US dollar is worthless, all the
dollars will go back to US and cause hyperinflation
8. In a decade most world currencieis; US Russia, China have gone up by as much as 18x
1 US treasury issues bonds - IOU and sells this bond through banks
2. Federal Reserve writes a check, using only accounting entries.
It is an IOU (but an unfounded) - currency is created They are merely exchanging IOUS
Currency is created like magic (but the check is unfunded) It is really an entry of numbers
3. Federal Reserve sends the check to various govt agencies to pay for wages,, for war, and other
govt activities
4 The workers and other payees deposit the money in banks
5. More currency is created by banks lending through fractional lending Say 10% reserve the bank
can lend and create 10X the initial deposit. This lending multiplies the currency further
90% of all currency is created in the bank lending
Take note that the currency is created from zero mere exchange of IOU
6. More currency creates inflation
7 The income tax law was created (constitution was amended ) to support the bonds The income tax is to pay the interest on the bond. We have to pay tax to support the currency system.
8. The Federal Reserve is a private entity that pays its stockholder 6% dividend
9. The the debt limit law is a contradiction. There is always a debt for every $ borrowed.
Thus for a $ of principal, there is another debt (2x). If we pay the principal, the currency is
is destroyed. The whole system collapses.
10. The whole system requires more debt to support the currency. The whole thing continues
the interest
The US system only supports silver deposit
Mike accuses the US banks the Federal Reserve of fraud, Ponzi scheme, legalized theft. of stealing value from the citizens.
