Saturday, March 17, 2012

Printing money is not some harmless act

The end point is near. The only thing keeping both Europe and the US afloat is massive money printing by the ECB and the Fed. The world has reached the point where markets are increasingly unwilling to purchase government debt.

Downgrades by S&P of European countries, as usual, are behind the curve of what markets already reflect. Further downgrades will be forthcoming whenever the ratings agencies become too embarrassed to hold at current ratings.

It appears the only ones who still believe money creation will work are governments themselves. They refuse to cut back spending, bringing it into line with tax revenues. Undoubtedly this reluctance has something to do with maintenance of ”the myth of government.” Politicians have convinced constituents that government is the source of prosperity and “entitlements.” They have been so successful that slowing down this spending will produce civil unrest among recipients who believe they have a right to other people’s funds, even when these are not available.

It is doubtful that politicians truly believe the myth they created for the masses. But pols do know what will happen if they cease these payoffs. The masses will target them as enemy numero uno. As hunger sets in, looting and rioting will target anyone with assets. Thus, pols will continue to print money in an effort to “buy off” the masses even thought it will not solve any useful purpose other than their maintaining office for a bit longer.

But such a strategy is both selfish and harmful to the country. Printing money is not some harmless act to be used to fool citizens. It corrodes society and markets with insidious inflation. Inflation sets consumers against producers, as they are blamed for the price increases. It encourages class warfare as the middle class is slowly destroyed while the wealthy are able to prevent or minimize their own loss of purchasing power.

Inflation is not something that can be controlled at some pre-determined level. It is equivalent to setting a fire without the proper resources to contain it. When it breaks out it does so with a fury that cannot be controlled. People quickly take steps to spend money faster to beat the anticipated price increases. This condition is the precursor to hyperinflation which destroys both the economy and society. At this point, “saviors” like Hitler who claim they can solve everyone’s problems, generally arrive. Governments typically do not survive hyperinflations.

The video below, by Chris Ciovacco, explains why we may be nearing the point where control is lost. Pay special attention to the graphic where the money scam is revealed for what it truly is: insolvent central banks injecting money into insolvent banking systems so that insolvent banks can buy the debt of insolvent governments.

The entire system is bankrupt, morally and fiscally and is about to collapse. The taxpayer, whether he knows it or not, is making unknown, hidden “investments” which will come back to haunt him and his heirs for generations.

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