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Finance

A timely taster: Move your Money

I don't pretend to understand economics but I have been following and reading a lot about it of late. When people ask me what I think I don't know where to start. This website is my attempt to come to terms with all that.

In the beginning there was ...

In 2007 a British Bank, Northern Rock, collapsed. What happened was that a little old lady heard a rumour that the bank was in trouble so off she went to the bank to draw out all her money. When the bank manager refused to let her have her million, she kicked up a big fuss and he called the police. After a brief chat, the police told the bank manager to give her the money. Once the media picked up on this story there was a run on the bank with people lining up down the street. This was the first obvious evidence of the extent of the financial mess, though the underlying foundations of the problems remained difficult to discern for the average man on the street. Indeed, it now appears most bankers or investors had no clue since they were hit like everyone else. How could they have gotten it so wrong?

Governments and economists of today generally follow the Keynesian school of thought and this is the reason governments like to 'stimulate' the economy with our money. The Austrian school has remained in the background but provides - to me anyway - clearer understanding and direction, along with the advice that we should run a government with fiscal responsibility, just like we run our own home. It makes a lot of sense in the current situation.

The banking system dropped the gold standard and now produces paper backed only by trust. It promises growth without cost but if governments act irresponsibly then disaster looms. Check out the neat video under 'Banking System' on the history of banking and the creation of fiat money.

The 2008 collapse was sparked by the sub-prime mortgage problem. This intertwines with the great derivative default, the solution to which has been to saddle us with their debt. Read up on 'Derivatives' to make sense of the mess we are all in.

As a result of American mismanagement and over-stimulation to the trillionth degree, the future of the American dollar is in doubt. Asia will stutter a little, but once it turns its focus inwards it will soon boom again, but its tendency to follow Western ideas (excessive lending and borrowing) will no doubt lead to future trouble. Europe has its own problems, not the least of which are financial over extension (money lending) into Eastern Europe. Centralized power threatens individual sovereignty and decision making power that will stifle recovery rather than promote it.

Gold is the new kid on the block. As currencies die it's value will increase - that is, relative to the dying currency. For good or for worse, gold will become the new old money. Bitcoin also threatens existing currencies but itself will be threatened by the powers that be who will do everything within their power to destroy it and/or those who own it. If they cannot destory it they may try to contol it by creating new forms of Bitcoin with new names in competition.

Conspiracy theories abound but there really is not much time to dwell. The greatest threat to all our futures is if countries go to war to mask their inefficient management of the home front. I might end up fighting you across a trench because 'they' stuffed it up and won't admit it. See you there.

For an excellent video that explains why we are in such dire straits: The Money Masters (Part 1 - follow the links for the rest)

For an angry commentator: The Big Takeover

 

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