Author Archives: Thomas H. Greco, Jr.

Can we afford our social programs?

As Bill Hicks says, “It’s just a ride.”

“The eyes of fear want you to put bigger locks on your doors, buy guns, close yourself off. The eyes of love instead see all of us as one. Here’s what we can do to change the world, right now, to a better ride. Take all that money we spend on weapons and defenses each year and instead spend it feeding and clothing and educating the poor of the world, which it would pay for many times over, not one human being excluded, and we could explore space, together, both inner and outer, forever, in peace.” — Bill Hicks

Its just a ride.

 

An Update on the Iceland Financial Crisis

Because of the way in which its people have responded to the financial crisis, tiny Iceland has drawn a lot of attention lately. Some pertinent information about this was provided in a previous post. Prof. Margrit Kennedy, author of Interest and Inflation Free Money, traveled to Iceland recently on a fact-finding tour. Her report below provides some additional insights. –t.h.g.

A Visit in Iceland

Margrit Kennedy. 23 September 2011

[English translation by Prof. Philip Beard, Ph.D.]

When I read an article two months ago about the state bankruptcy in Iceland and the public’s refusal to accept the government’s debt retirement plan, as a result of which the three largest banks became insolvent, I decided to travel to Iceland.  I wanted to find out whether the new, popularly-elected 25-member  Council, whose job was to formulate proposals for a new constitution, had made any statements regarding the monetary or financial system.  No such news had shown up in the several reports and English translations I’d gathered.

So a week ago, off I flew, after having received a few contact addresses from friends and having made three appointments with “Constitutional Council” members via email.  I stayed in Reykjavik from 9/13 till 9/19 and then went for a day to Solheimar, Iceland’s only eco-village, whose director had supplied me with these council members’ addresses.

Hardly had I arrived at my Reykjavik hotel when the first of my interlocutors showed up: Salvör Nordal.  A professor of ethics at Reykjavik University, she answered my questions patiently, and in about the first half hour filled me in on what all my later conversations would confirm: No, no one had said anything about the systemic monetary roots of the crash.  The Council’s discussions revolved around laying new groundwork for their democracy, environmental protection and protection of the commons, more transparency in governmental affairs and thereby better regulatory capacities.  She was glad to hear and watch my short presentation on the topic “Money rules the world!  — But who rules the money?”, and immediately said, “You must meet my friend in the finance ministry.  For sure, she’ll be fascinated by what you’ve got to say.”  Then she departed.  It was Tuesday evening.

The next day I met the man who had been elected to the Council with the most votes, the economist Prof. Sylfarson.  We had a short, congenial conversation of about an hour in which I learned that from where he stood, the situation in Iceland had returned to “normal”.  Before the crash everything had been more or less exaggerated: salaries, the value of the Icelandic crown, housing prices, the standard of living.  In his opinion his countryfolk were still doing well (which corresponded to my own first impressions), and Iceland was now catching up to the rules that every other European democracy had been practicing for decades, e.g. universal suffrage, transparency of public budgets, environmental laws, etc.

And no, the monetary system had not come under discussion.  Monetary matters remained pretty much as they had been, except that an index was now being applied to loans in order to reduce excessive credit demands.

He had never heard of complementary currencies, though he was very interested in the couple of examples I described to him and asked me to send him more information.

My third conversation partner was the young singer Svarvar, a friend of friends who had witnessed the so-called “revolution” but hadn’t taken part in it.  His opinion was that people had just been venting their fury at having all gotten poorer again, but he hadn’t seen much in the way of new values being adopted.

I could see, though, that the money theme fascinated him.  He brought a few of his friends to my talk at Reykjavik University that I had been invited to give by the dean of the engineering and natural sciences faculty, Kristin Vala Ragnarsdottir, and some of her colleagues.  They were all astonished that the room they’d chosen for the lecture turned out much too small.  But the concierge had already figured from the many phone calls he’d received that we would need a larger room, and had arranged for it.

It took a little time to get the crowd moved to the new room, but an atmosphere of high spirits and goodwill prevailed.  Obviously the 150-200 guests, many overflowing into the hallways, expected I’d be talking to them about something important.  And I later learned that two translators had already published parts of my first book in Icelandic; they proudly showed me their published articles, replete with graphs.  They didn’t know each other, but had each motivated a sizeable number of people to come to the talk.  I could tell from their questions how deeply concerned they were about this topic, and I agreed to meet with the “hard core” of a few grassroots groups on Sunday evening at one of their gathering places to discuss action strategies.

That evening at dinner I had the pleasure of a conversation with the personal adviser of the Economics Minister about the drama that had led up to the near-total collapse of Iceland’s financial and economic system.  This evening was the preparation for my discussion with the minister and the government’s chief economic adviser on Monday, shortly before leaving Reykjavik.

It was an important meeting for me, and for these two leading specialists as well.  As it turned out, they had never before so clearly perceived the role of interest and compound interest in the lead-up to the collapse, even though they’d been confronted with it practically every day since 2006.  And their serious countenances showed that they were taking it to heart.  Their comments indicated however that it would take considerable time before these new insights could be applied to political practice.  Germany, they said with mild regret, had no doubt been among the hardest hit by the whole matter.  [Translator’s note: It’s unclear how this last sentence relates to the preceding line of thought.]

But I did have the feeling that they were open to new solutions.  Most impressive for me was the evening I spent with representatives of perhaps seven grassroots initiatives, of whom at least three had been trying for years to get the money topic on people’s radar screens, with little prior but now greater success, to judge by their growing membership figures and the fact that they’re now “being heard” in the media.

The main topic was action strategies.  Lots of concrete questions: How can we change this and that?  What’s the best way to introduce complementary currencies?  How can we reduce the debt burden that’s been forced upon our poorer citizens?

I told of our experiences with barter circles, regional currencies, and the WIR system, and described our successes in the Chiemgau and Vorarlberg regions.  And I promised to send them written summaries of the key ingredients.

In any event we shall stay in contact, exchanging news of problems and successes.  As I left I had the feeling of having sown some seeds – having nourished the hope and the knowledge that new pathways lie before us, and what they might look like.

Overall a newcomer to this country notices little of its bout with bankruptcy.  You do see several unfinished skyscraper projects, especially near the seacoast and on the way to the airport.  But very few people or neighborhoods look genuinely poor.

With the help of the 2.1-billion euro credit from the IMF, the country has once again just barely avoided total breakdown.  Now people are rolling up their sleeves and saying, “We’ll make it back.”  I certainly hope they will, because I have become very fond of the Icelanders in the week I spent with them.

The best, most concrete outcome of this trip would be for the grassroots groups to enjoy a new level of attention, understanding, and perhaps even active support for their efforts at introducing new systems – systems that prove that we can run our monetary affairs without interest.

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Here is a link to a tv interview of Prof. Kennedy by Egill Helgason, which was aired on Icelandic television on Sunday the 25th of September 2011: http://silfuregils.eyjan.is/2011/09/26/fjarmalakerfi-sem-leidir-til-glotunar/

Hurrah! Free Money once again a topic of debate in U.S. politics

Once more, Congressman and Presidential candidate, Ron Paul has championed the cause of honesty and freedom, this time by introducing a bill (H.R. 1098) that would promote free competition in currency and end the monopoly control of money and finance by the banking and political elite. Seth Lipsky’s article below tells the story.

I’ve not read the bill, so I don’t know the details, and I don’t expect it to get very far in a Congress that is, by and large, bought and paid for by the same interests that the bill seems to challenge, but its very existence and the fact that is getting some media coverage could go a long way toward educating the public about the vital issues and systemic flaws that are involved in the money system.

The survival of democracy and the future of civilization depend on, one way or another, on liberating the credit commons from monopoly control. Action from the bottom up (the organization of private, free exchange alternatives) combined with action from the top down (popular pressure for legislative action) might eventually be sufficient to crack the nut.—t.h.g.

Ron Paul, Upping the Ante in His Campaign for Liberty, Hoists the Flag of Hayek

Offers a Bill To Allow Free Competition in Currencies

By SETH LIPSKY, Special to the Sun | September 29, 2011

http://www.nysun.com/opinion/ron-paul-upping-the-ante-in-his-campaign/87502/

The first time I met Friedrich Hayek was in 1980 at California, where he was staying at the home of another economist. Then a young editor for the Wall Street Journal, I’d asked to call on the Nobel laureate for a book review I was writing. His host invited me for dinner. Before the meal, Hayek and I retreated, alone, to the far end of the host’s living room, for a chat.

We were but a few minutes into our conversation when, suddenly, Hayek clapped a hand over his nose and mouth and started coughing convulsively, before slumping onto the couch. I raced back to the host to exclaim that Professor Hayek seemed to be in trouble, only to be told that it was okay, he was just taking his snuff. A jolt of the divine herb, it seems, and the sage was back on his feet.

Hayek died 12 years later at the age of 93. I never came to know him well. But this week I found myself imagining that were his long-ago collapse-into-a-coughing fit to occur in front of me today, I’d whip out a copy of a new bill in Congress, H.R. 1098, called the Free Competition in Currency Act of 2011, and wave that under the great economist’s nose. It’s hard to think of anything, even a pinch of the strongest snuff, being a greater pick-me-up for his spirits.

For Hayek was an advocate of, among other things, private money — competing currencies — and HR 1098 would end a ban on them that has obtained here in America since the Civil War. The new bill in Congress, introduced in March by Rep. Ron Paul, would repeal the legal tender laws, prohibit taxation of certain coins and bullion, and clean up other sections of our coinage laws.

It is not a measure the Congress is going to pass in a hurry. But it is being nursed by advocates of monetary reform, and it would be unwise to discount it entirely. Few, after all, gave Congressman Paul much of a chance to win passage of a measure to audit the Federal Reserve, but when it eventually passed it was with an overwhelming, bipartisan vote. It may yet be enforced by the courts.

The Free Competition in Currency Act is far more important. It comes amid a historic collapse in the value of the dollar to less than a 1,600th of an ounce of gold. The dollar has gained a bit of value in recent days, but it is still worth less than a sixth of what it was worth as recently as, say, the start of President George W. Bush’s first term.

One of the things the government has done in the face of that collapse is seek to enforce a prohibition against private “uttering” — that is, putting into use — of coins of gold, silver, or other metal as current money and making or even possessing likenesses of such coins. H.R. 1098 would end the ban on private uttering of coins and, presumably, stop any current prosecution of such uttering.

The drive for the bill is animated, if only in part, by the case of Bernard von NotHaus, who was convicted in March of issuing a private medallion called the Liberty Dollar. The government prosecuted von NotHaus even though the coins he issued were made of silver and are today worth much more, in terms of Federal Reserve Notes, than when they were issued.

What the government is doing in the Von NotHaus case is seeking to suppress sound money in order to protect the unsound, fiat money the government has been issuing via the Fed. A federal judge in North Carolina has agreed to consider post-conviction motions to throw out the von NotHaus verdict, partly on the argument that the Constitution does not enumerate a power of Congress to outlaw privately-minted coins, which were widely produced in America’s early decades.

H.R. 1098 would go way beyond the Von NotHaus case, by asserting the virtue of the idea of private money as a system. The idea was sprung by Hayek not long after he won his Nobel Prize, in the mid-1970s. He started with a lecture. He later wrote, in a slim volume called “Denationalization of Money,” that he’d been in “despair about the hopelessness of finding a politically feasible solution to what is technically the simplest possible problem, namely to stop inflation.”

“The further pursuit of the suggestion that government should be deprived of its monopoly of the issue of money opened the most fascinating theoretical vistas and showed the possibility of arrangements which have never been considered,” he wrote. He came to the view that a plethora of privately issued money would enable mankind’s millions to find their own mediums of exchange, and good money would end up driving out bad.

Hayek concluded “Denationalization of Money” by calling for what he termed “a Free Money Movement comparable to the Free Trade Movement of the 19th century.” He came to the view that the gold standard was not the solution, though it was “the only tolerably safe system” if the management of money were going to be the preserve of the government.

The Free Competition in Currency Act got an early hearing in Congress this month in the House Subcommittee on Monetary Policy. The hearing wasn’t widely attended, but there was testimony by the president of the Foundation for the Advancement of Monetary Education, Lawrence Parks, and by a professor at George Mason University, Lawrence White, who talked about how FedEx and UPS’s private competition with the Post Office has brought benefits to American consumers. He extended the analogy to money.

It’s too bad Hayek couldn’t have been at the hearings. He viewed the denationalization of money as the “cure” for “recurrent waves of depression and unemployment that have been represented as an inherent and deadly defect of capitalism.” In other words, as a cure for ills like the current crisis. How Hayek, who once called for a global debate on socialism versus capitalism, would have thrilled to the moment, pausing only for the occasional pinch of his favorite snuff.

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Money and Politics–what’s next?

This from Dmytri Kleiner is an excellent political analysis.
The vast majority of people in the world today have negative financial net worth, and, as their incomes shrink and their cost of living increases, their debts are becoming ever more unbearable.
A debtor’s initiative may be right on target.–t.h.g.

Debtors’ of The World Unite! The Initiative to form an International Debtors’ Party.

Dmytri Kleiner. 20 September 2011

Congratulations to the Pirate Party having won an astounding 8.9% in the Berlin elections.

As I wrote two weeks ago, this is their moment of relevance, the emergence of Information politics as a mainstream political topic. Having 15 Piratenpartei representatives in the local government will certainly be of direct material benefit to activists fighting against software patents, for network neutrality, online security and privacy, etc, and that is a development to be celebrated.

Modern politics has become a politics of identities and causes. Major parties construct identities, these identities function as Legitimization Brands, not so much tied to specific social outcomes, but rather to specific personalities, representations, framings and forms of apology.

People vote for a Party because that’s the kind of person they identify as: the kind of person that votes for that party and imagines themselves having the essentialized, yet drifting, characteristics the party markets as their image. Party membership is just another consumer identity.

The interests of the State and it’s ruling class doesn’t change from election to election, and the elected politicians of the ruling party’s job is to represent the policies demanded by the ruling class to the people that support them. The election is a market survey, designed to identify which Legitimization Brand will most effectively deliver public support.

The political policies of the major parties are formed byway of the campaign contributions and lobbying of the holders of the major economic power, not by the interests of the voters whose support they deliver.

Political resistance is limited to activist movements, which occasionally manifest as minor parties, the Greens and more recently the Pirate Party are such manifestations.

As minor parities, they are not integrated into the ruling class system, but rather represent the social power of movements around specific causes. These parties retain relevance to the degree that they are primarily the representatives of the activist social movements they emerged from, when they grow beyond being minor parties, like the Greens have in Germany, they become integrated into the ruling class, and begin representing ruling class interests.

The reason this happens is that as representatives of causes, they have no mass appeal.

The social power they can mobilize, although often visible and noisy, is not enough to propel them beyond the political fringes, yet maybe enough to attract attention from the same economic powers whose contributions and lobbies animate the major parties, and are thereby transformed into Legitimization Brands, like the other major parties, trading in the support of their now expanded constituencies so long as their legitimacy survives.

The masses are not interested in causes, at least not enough to mobilize around them.

And for very good reason, understanding complex causes like environmentalism and information politics seem complex and abstract to people, more concerned with their everyday lives. Activist campaigns often focus on the misdeeds of corporations and States. Most people feel unqualified to comment on it, and are therefore not so compelled to try to unravel the storms of claims and counter claims, accusations and apologies, all the rhetoric that drives such polemics. These are not their concerns, forming an opinion on such issues does not help in the daily challenges they face in their private lives. And the solutions presented are not clearly implied by their own conditions, thus they are happy to have these concerned administered for them, which the Legitimizing Apparatus is happy to do.

What’s missing from modern politics is, well… politics.

The traditional parties formed around the emerging power of different economic classes. Specifically from the interests of those who derived their incomes from the different Factors of Production, namely Land, Capital, and Labour.

Conservatives are called conservatives not because they have delicate sensibilities when it comes to sexuality or have regressive views of gender and racial roles, but because they wantwd to “Conserve” the system of Nobility, where elite families retained power and led society. Which, due to there superior genetic heritage, they where, aledgedly, uniquely able to do, and as they had done for centuries.

The primary economic power of the Conservative part come from those that controlled the land.

The Liberal are called Liberals, not because they emerged as movement of people who believed in being a little less uptight and a little less xenophobic, but rather because they represented the emerging Capitalist class, they believed that the State, meaning at that time, the Nobility, should let them conduct their businesses as they see fit, and not intervene in the marke.

The primary power of the Liberals came from those that controlled capital.

As Capitalism triumphed, and Feudalism disappeared, Liberals and Conservatives became not so much representatives of different classes in conflict, but rather competing brands to market the interests of Capital to the masses. Both parties represent only slightly differing views on how markets and governments aught to be run, and in whose interest

Labour Parties began as dissenting, activist parties, formed by groups of political intellectuals such as the UK Fabians, and began as minor parties that had grown out of the workers’ movement.

Yet, the workers’ movement was different from the types of causes we have seen emerge more recently.

The workers’ movement was not fuelled by intellectual appeals to abstract technical concepts, and was not focused on the reported conduct of remote corporations or states, but on the direct conditions and interests experienced by workers, and workers where legion.

Their cause was not based on morality or belief, but on the conditions of their daily lives. What’s more, the platforms where directly implied by their conditions, they where not administered beliefs, but known facts. Workplace safety, wages, working hours and other matters of direct interest to workers did not require subscribing to one ideology or another to understand.

The workers movement, because of its class basis, did not need to rely on campaign contributions and lobby to have power, because the workers where the masses.

The power of the worker’s parties came from control of labour.

However, this language of Landlord, Capitalist and Worker emerged in quite a different era. The Power Loom was the driving force of industry, Nobility controlled the land and the State, and being a worker in early industry was torturous, inhumane, and importantly, most workers where direct-producers. The value they created took the form of stocks of goods that where literally taken from their hand and into the possession of the Capitalists, who became their owners and profited from their circulation, while the workers where left with nothing more than that which their subsistence demands so they could toil another day. Workers knew their class interests. The exploitation of labour was not a theory, but a felt, daily experience. There demands where not opinions, but terms of struggle.

The workers’ movement won many of these struggles. Working conditions and hours where improved as a result of fierce battles between workers and capitalists. This began to make the demands of workers’ parties less pressing, more marginal and abstract, while theories of value and economy developed further, the immediacy of the issues fell away.

More and more workers became non-direct producers, working in administrative or technical fields that did not directly produce stocks of goods, appropriation of the product of the labour became not a felt and observed experience, but yet another theory, something about which one could have an opinion, but not something that was a uniting term of struggle.

All the while the most oppressive and harsh conditions where relegated to the margins of society or even to other ends of the world, with whom the great body of workers in developed society had no relationship at all, or if any, then as yet another cause.

Politics has vanished and in it’s place is a marketplace for legitimization.

The commodity has become the voter themselves, delivered to a consciousness industry made up of parties, public relation firms and other agents of economic power.

Absent from organized opposition, Capital has reshaped society towards it’s own interests. Where the owners of productive assets have increased power and freedom, unchecked by any kind of political contestation, and the masses are subjected, administered, and controlled. Workers are just another economic input, like energy and natural resources, who matter only enough to ensure reliable supply. Capital is spreading poverty, social stratification, environmental degradation and war with impunity, checked only by the economic and natural limits of such outcomes, and able to socialize or transfer the costs even when such limits are exceeded and catastrophe ensues.

To make politics relevant, to challenge and contest the interests of Capital and to represent the interests of the masses we need workers to once again unite in their common interests and make their social power felt.

Yet, workers’ politics is now failing because workers do not identify as workers, and thus any appeal addressed to workers is unlikely to achieve results. As the economy has moved on from the simple model of production that classical language was born in, so must the language of class politics. The workers are no longer direct witnesses to the product of their labour being ripped from their hands and hoarded by the Capitalist. Many people may hate their job, or their boss, but as the production of value is more abstract and remote, they do not feel that their boss is taking anything from them, rather they feel they are being given something, their job and their paycheque, etc. It is not in the workplace that the appropriation is felt, but rather after work, when they go home to pay their bills.

We can’t mobilize the masses as workers, but we can mobilize them as Debtors.

Debt is not simply a cause to build awareness and support for, it is the felt condition of the masses, who are struggling to pay their bills, who are frustrated and angry and who demand representation which no mainstream party will give them.

The Time has come for The Debtors’ Party.

Join the initiative to found an International Debtors’ Party. So far, the resources are small, come help us build a movement.

– Facebook group: http://bit.ly/debtorsfb

– irc channel: #debt on irc.oftc.net

– wiki: wiki.debtorsparty.org

With your help, much more to  come.

Anybody is Berlin is welcome to come to Stammtisch tonight and say hi, this is in no way an official meeting of the Debtors’ Party, just an informal get together, but no doubt the topic will be present. Stammtisch is at Cafe Buchhandlung, starting at 9pm. http://bit.ly/buchhandlung

Debtors’ of The World Unite!

Legal obstacles to moving your money

Now, more than ever, it is imperative that people move their available financial resources away from conventional Wall Street investments that offer the illusion of security toward real assets that can provide real security in basic living essentials. There are however legal obstacles that limit our ability to do that.

One of the best resources for information about that is Cutting Edge Capital. The September 2011 newsletter is a good place to start. Be sure to listen to Jenny Kassan’s presentation, ACCELERATING COMMUNITY CAPITAL WORKSHOP: The Legal Landscape, given at the recent BALLE conference.

Time to pay the piper: Who gets stuck with the bill?

Prior to his recent visit to China, Vice-president Joe Biden tried to assure investors that U.S. Treasury bonds are still a good investment, saying that the US administration “is deeply committed to maintaining the fundamentals of the US economy” to “ensure the safety, liquidity and value of US Treasury obligations for all of its investors”.

Good try, but the Chinese are not buying it, nor, it seems, is anyone else. The Federal Reserve has become of late the biggest buyer of treasury bonds, and Standard and Poor recently announced that they have downgraded the U.S. debt rating from AAA to AA+. Dollar denominated securities are now becoming a “hot potato” as loss of purchasing power of the dollar seems assured.

An August 19, 2011 article in China Daily titled, Experts urge China to trim US T-bond holdings, quotes both Chinese and American authorities and concludes thatChina should reduce its holdings of US Treasury bonds to protect the value of its massive foreign exchange reserves.” Here are some excerpts:

“China should move progressively to cut its holdings of US Treasury bonds and use it as leverage to ask Washington to further open its markets, including the high-technology sector, to Chinese investment,” Xiang Songzuo, deputy director of the Center for International Monetary Research at Renmin University of China, said at a forum.

“Washington should provide a guarantee on the safety of China’s assets,” while it is creating global inflationary pressure through quantitative easing to stimulate its economy, Xiang said

Zhu Chao, assistant dean of the School of Finance at the Capital University of Economics and Business, said Biden’s promises were more symbolic than meaningful.

Stephen Roach, the non-executive chairman of Morgan Stanley Asia, said that the US debt crisis has shaken China’s confidence in Washington but the pro-consumption shift in its economic structure will help reduce the pace of its foreign-exchange accumulation.

“The US debt crisis has taken a serious toll on China’s confidence in Washington’s economic stewardship,” Roach said in a research note.

“China is no longer willing to risk financial and economic stability on the basis of Washington’s hollow promises and tarnished economic stewardship.”

The situation suggests some major policy questions that could have far-reaching effects on the American economy and on the American middle-class. China has, up to now, been willing to accept America’s i.o.u.’s in exchange for all those computers, TVs, shoes, clothing, and other goodies that Americans have been gobbling up at bargain prices. Now the piper must be paid, one way or another. Will Washington “further open its markets, including the high-technology sector, to Chinese investment,” as the Chinese are demanding? Will the U.S. government allow Chinese companies to buy up American companies, real estate, and infrastructure?

You can’t blame the Chinese for wanting real value in return for what they have already delivered. The fault lies with the policies of the past 30 years that, in the guise of “free trade,” have promoted the interests of the few at the expense of the many.—t.h.g.

More about Iceland’s ongoing revolution

This article, Iceland’s On-going Revolution, by Deena Stryker, provides additional information and inspiration.

New Moneeey

I recently came across a series of video animations titled, New Moneeey, which, it turns out, are pretty good. New Moneeey appears to be a group effort but John Ince seems to be a key player. I met John a couple years ago when he came to one of my lectures in San Francisco. I lost track of him for a while but we’ve recently reconnected. I’ve not tried to verify all of the statements made in the videos, but even if off by a factor of 10, they are significant.

John’s credentials are quite impressive. They include a Harvard MBA and whole raft of accomplishments in writing, media, and entrepreneurship. He is the author of two recently published books, The Money Question, and Meaningful Money, and is in the process of preparing a new book, The Wizard of Iz.

Here is the first part of the New Moneeey series. You may want to watch the entire thought provoking series.

Move Your Money

The movement away from dependence upon mega-banks and political currencies is gaining momentum, not only amongst individuals and companies, but also amongst countries that have lost confidence in the international banking establishment.

The Associated Press reports today that Venezuela is recalling $11B in gold reserves. Here are some excerpts:

President Hugo Chavez announced Wednesday he is nationalizing Venezuela’s gold mining industry and intends to bring home $11 billion in gold reserves currently held in U.S. and European banks.

Central Bank president Nelson Merentes said on television that the decision to move the gold reserves was being taken out of “prudence.”

Venezuela has nearly $4.6 billion of its gold reserves in the Bank of England, according to a report by Finance Minister Jorge Giordani that was leaked to the news media Tuesday by an opposition lawmaker.

The report said additional Venezuelan gold reserves are held by the U.S. bank J.P. Morgan Chase, British banks Barclays, HSBC and Standard Chartered, France’s BNP Paribas and Canada’s Bank of Nova Scotia.

Giordani and Merentes, who appeared together on television Wednesday, said they proposed to Chavez that Venezuela’s nearly $6.3 billion in non-gold international reserves such as bank deposits and bonds should be reviewed and transferred from U.S. and European banks to countries they consider safer, including China, Russia and Brazil, among other countries in Asia and Latin America.

It makes sense for countries like Venezuela to hold their reserves in the currencies of countries that actually produce something and from whom they make substantial purchases. While the U.S. remains one of its main suppliers, Venezuela also imports significant amount from Colombia, China, Brazil and Mexico.

Meanwhile, back in the U.S., there has been a growing grassroots movement in which savers are taking their money out of the large banking corporations and moving it into credit unions and locally owned banks. One significant development is the Move Your Money Project, “a nonprofit campaign that encourages individuals and institutions to divest from the nation’s largest Wall Street banks and move to local financial institutions.” Go here to find one near you.

In my May presentation to the Financial Planning Association, I provided a resource list that included financing alternatives for enterprises and options for savers and investors.

As a side note, you may be interested in viewing Dylan Ratigan’s recent rant on MSNBC, in which he complained that the “Banking system is corrupt and defrauding us.” You can see it here.—t.h.g.

A mega-dose of reality

The message by Silver Shield titled,  5 Reasons Why American Riots Will Be the Worst in the World, by may seem rather harsh to some, but it is one that needs to be heeded. I recommend that it be read in its entirety, and that the embedded videos be watched. The article ends on a hopeful note saying,

This collapse will not result in a One World Order. The Elite that are trying desperately make this happen will no longer be able to operate in secrecy. Their minions will lack any legitimacy with the people they rule. After all who is going to trust a President who says he did not see this coming when you and I can see it coming from miles away. The result after a very violent Anger phase is going to be massive decentralization of power not more centralization of power. Local communities, cities counties and states will assert more power over the daily activities of our lives. Some will slip into tyranny to make order out of chaos. Others will attract the best and brightest by embracing freedom and honest money. The end result is a life where we can reach our highest and best self. How we get there is a rough road, but one I feel is easily traveled if you are aware and prepared.

Let us work together to ease the transition and assure a happy outcome.