The Coming Cashless Society
You are now watching newspapers, TV shows, and other forms of media preparing for the coming cashless society. This is a marketing campaign, and may indeed be what October 1, 2015 is all about – 2015.75. I doubt that the USA will be able to move to a cashless society as easily as Europe. The dollar is used around the world and cancelling that outstanding money supply would bring tremendous international unrest. Additionally, the USA is not in crisis financially, as is the case in Europe.
Europe, on the other hand, has an entirely different problem. The failure to have consolidated the debts of member states meant that the reserves of the banks were constituted from a politically correct mixture of debt. Instead of fixing the problem, politicians who are lawyers always move one-step forward with laws. To them the logical solution is to eliminate cash to protect banks from a panic run that would collapse Europe and take Brussels with it.
This is now a deliberate marketing campaign. I know how these things work and pay attention. They are selling this idea everywhere and that is the preparation for the inevitable action. With the speed at which they are moving, it certainly appears they are gearing up for October 1 on our model. It is also interesting that some German press misquoted our date as October 17. I was not sure why they would do that, but perhaps that was intentional as well. This is very curious, for when they take that final step, it will most likely be sudden and overnight. They would announce it and give everyone some time frame to take their paper currency and deposit it into their bank accounts.
For European readers, swap to dollars for hoarding and you can open accounts in the U.S., which for now is a safety valve. While gold makes sense for local hoarding, it may have lost its movability.
The Greek Nightmare
QUESTION:
Marty,
With the default of Greece and their exit from the Euro, what is likely to happen to the debt and what rate would you expect the drachma to be established?
I really don’t think you can possibly know how much this blog is appreciated. I’m not in the finance industry but have followed you since your (enforced) holiday. Ever since it has been a daily awakening. Many, many thanks.
AB
ANSWER: In the past, governments have defaulted in one of two ways, and so far I have not seen a third option materialize. That is our proposed solution. Either a nation defaults entirely on everyone, or they default partially on external debt that is justified by the claims that foreigners have exploited their country.
I understand that this subject was never taught in school. I believe that was part of our “conditioning” by government to accept them as our savior. My eyes opened when I stumbled upon a very rare book – “Herbert Hoover’s Memoirs”. He did not want to appear to have profited from the Great Depression, so he demanded that the publisher not make any money. As a result, they published 500 copies. I stumbled upon a copy in an antique bookstore in London. When I read his chapter on 1931, everything I learned in school collapsed. It became obvious, if you wanted to know history, you had to go to contemporary sources and become self-taught, seeking the truth, rather than being fed propaganda. The classic book that defined the Great Depression was Galbraith’s “The Great Crash 1929″. It became obvious that it was just propaganda with no mention of any government ever defaulting in 1931.
Ukraine is already looking at the debt, and is arguing for the default on external debt that has exploited their country. This will include Russia, but there will be others caught up as well. The USA will guarantee new debt to keep the borrowing cycle going.
When I was in Poland, the response of the crowd was not to join the euro, for they feared what happened to Greece and Spain would happen to them – smart move. Politicians want to rule the world and assume they can just write a law and make things happen. They are DEAD WRONG, but unfortunately its our dead bodies that result from their stupid actions.
The stupidity of creating the euro without consolidating the debt, when debt is used as money and reserves of banks. The debt of Greece was converted to euros, and then the euro rose from $0.80 cents to $1.60, and Greece then had to pay back twice as much. The new government is looking at selling national assets to pay off these debts. They will lose the entire country because politicians cannot grasp what they have done to the country.
So what value the drachma would have if it is reintroduced depends entirely upon how much more they allow the strip-mining of the nation. This is a crazy period where lawyers acting as politicians have ruined our society and our future.
Greece should default on external debt, at the very least. What they are doing is trying to honor the debt at the demand of Brussels, and this is destroying the future. Eventually, the Greek government will be forced to default on the entire debt, bringing about social unrest in Greece that will not end nicely. They have to wake up before it is too late.
For the individual, hoard dollars not euros. I seriously doubt the USA will be able to cancel dollars, but the ECB can cancel the euro overnight.
Gold & the International View
QUESTION:
Dear Martin,
When you comment upon the majority of your analysis, I assume it is from a domestic (US oriented) perspective, looking out at the world.For instance, when you comment upon real assets such as gold, or silver (a stance which I agree with, incidentally) I assume that this is a position from the perspective of a US based investor?Would it be fair to say that the needs of a person who is based in Europe may differ from the needs of a US oriented reader? Would it make more sense for a European to be invested in some real assets over a US reader?
As always, enjoying your analysis. I am glad to see that you are gaining a big following as time progresses. In this current age of unenlightenment, it is necessary for rational, educated discourse to take place somewhere. I have been disparaging the way that Keynesian macroeconomics has been taught to many economics and history students for several years now.
CS
ANSWER: The definition I use for a bull market is something that rises in ALL currencies. Otherwise, just as you are buying someone else is selling. You can never analyze anything purely in a single currency. We will be releasing Socrates soon, and there you will have the ability to name your home currency. It will provide a look at whatever you want, and will reflect it back to your base currency to see if it is really bullish or bearish, based upon how you measure your profit and loss.
Gold – the Hedge Against Government
I have stated countless time that gold is NOT the hedge against inflation, hyperinflation, the anti-fiat antagonist against the dollar, or manipulation that keeps gold down; paper gold suppresses the price, and anything of the sort that amounts to promotions or excuses. Gold has followed the deflationary trend in commodities, if you haven’t paid attention to oil, and money supply is not a one-to-one relationship with inflation, for this is a global economy driven by CONFIDENCE. All of that nonsense is pure BULLSHIT, to state it bluntly.
Every single one of those sales promotions are meaningless and most manipulations in metals have been to the upside to entice the unsuspecting to rush in and buy every single high before they crash it. This has been going on since the 1970s. I knew the Hunt brothers in the early 1970s. They became a household name when the promoters exposed them to for convincing people that they would see $100 silver, so buy now at $50.
All of these promotions existed for the 19-year decline from 1980 to 1999. They roll them out to dupe people into buying every rally and these same people pretend analysts are selling gold, which is a conflict of interest. Come on. Today there are more regulations to protect the public when buying a used car than there is for gold.
I am not selling gold. There is ALWAYS a time to BUY and there will be a time to SELL. Sorry, I am a trader first and foremost. Gold is the hedge against government. The low in terms of dollars is still probably not in place. Keep in mind that we may see a major rally in the dollar and that will help gold decline in dollars.
NEVERTHELESS, that is the TRADING view. Gold from the hedging perspective may have lost its movability. This will have some dampening effect in price long-term. However, if we are talking about trading, then there may be better opportunities than gold. Perhaps the way to make gold movable again is for everyone to start wearing “bling-bling” as they call it, perhaps 2-ounce wedding rings are in order.
If we are talking about hedging, then yes you should have some common gold coins or jewelry. Where to store them is another whole problem. So we are not talking about trading in this context. They are moving rapidly to shutdown paper currency for they see this as the only way to prevent a bank meltdown. Their solution is to collect all the taxes they ever dreamed of to prevent anyone from buying or selling without government approval, using terrorism and drug dealers as the prime excuse. Of course, how are the police going to make money? When I landed in Poland, big signs at the airport declared it was illegal to carry ANYTHING worth more than €10,000. This is going to be a very questionable future we face.
I remain skeptical that these people can hold on to power, for we may be facing a serious political meltdown come 2016 into 2017. Gold is the hedge against government, not fiat or inflation. In this context, coins of common date will be the best rather than bars. Of course, you may not be able to leave your home.
We cannot stop what is coming; we have to crash and burn. We are in a battle for our freedom and that of our children. This is the only reason I have not run off to a beach and retired. What about my own posterity? While the crash and burn is inevitable, perhaps we can reduce the pain if we push back when the time comes and prevent the complete loss of all rights, privileges, and immunities, which America once embodied in our Constitution, securing the right of citizens to travel from one state to another was already protected by the Privileges and Immunities clause.
