Crypto Market Commentary
7 October 2019
Doc's Daily Commentary
The 10/2 ReadySetLive Update with Doc & Mav is listed below.
Mind Of Mav
How To End The Fed
When discussing the “evil” inherent in our current system, fingers are often pointed to Central Banks, and chief among them is the United States Federal Reserve.
The Fed is the third iteration of a central bank in the US, and arose over 100 years ago as a means to combat market instability and serve the ulterior motives of the finance industry that created it.
True, the Fed is not a US government institution, despite what you might think or what the name might imply, but it does have close ties with the operations of the government.
While the Fed does not actually print money (The US Mint creates coins and the Us Treasury handles the paper currency), it does print money in the theoretical sense.
Quantitative easing has been the Fed’s response to the 2008 financial crisis. Looked at in terms of financial markets, QE similarly has not been good for stocks. Indeed, stocks have been rallying ever since word emerged from the Fed two years ago about an eventual end to the program, and as markets always price in the future, it’s apparent that investors would logically prefer an end to what which logically does not, and cannot, work.
Taking this further, implicit in the suggestion that QE has been good for stocks is the view that the creation of liquidity in search of yield will force buyers into the stock market. That’s fine, but for an investor to buy, another investor must be willing to sell.
That aside, we also have to think about the role of the Fed in exacerbating market conditions following the abandonment of the gold standard and the proliferation of fiat currency based on nothing other than the whims of government controlling it. As you might recall, this came after the Bretton Woods conference in 1944. The Bretton Woods system was the first system used to control the value of money between different countries. It meant that each country had to have a monetary policy that kept the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold.
But 30 years later that linkage to gold would be gone and so began the global debt spiral we are currently in.
Needless to say, the sins of the Fed are many and there are many good reasons to consider an alternative. Without seeing this debt spiral out, we could instead entertain a second Bretton Woods conference that would instill radical changes meant to stem the tide.
Among the most prolific changes would be to End The Fed, as the slogan often is heard.
So, how would that happen and what would it look like? I’m going to borrow heavily from the fantastic book, The Creature From Jeckyll Island, which detailed exactly that”
“To abolish the Federal Reserve System would be quite simple. All that would be required is an act of Congress consisting of one sentence: The Federal Reserve Act and all of its amendments are hereby rescinded. But that would wipe out our monetary system overnight and create such havoc in the economy that it would play right into the hands of the globalists. They would use the resulting chaos as evidence that such a move was a mistake, and the American people would likely welcome a, rescue from the IMF/World Bank. We would find ourselves back in the Pessimistic Scenario even though we had done the right thing.
There are certain steps that must precede the abandonment of the Fed if we are to have a safe passage. The first step is to convert our present fiat money into real money. That means we must create an entirely new money supply which is 100% backed by precious metal—and we must do so within a reasonably short period of time. To that end, we also must establish the true value of our present fiat money so it can be exchanged for new money on a realistic basis arid phased out of circulation. Here is how it can be done:”
1.Repeal the legal-tender laws. The federal government will continue accepting Federal Reserve Notes in the payment of taxes, but everyone else will be free to accept them, reject them, or discount them as they wish. There is no need to force people to accept honest money. Only fiat money needs the threat of imprisonment to back it up. Private institutions should be free to innovate and to compete. If people want to use Green Stamps or Disney-ride coupons or Bank-of-America Notes as a medium of exchange, they should be free to do so
2.Freeze the present supply of Federal Reserve Notes, except for what will be needed in step number eleven.
3.Define the “real” dollar in terms of precious-metal content, preferably what it was in the past: 371.25 grains of silver. It could be another weight of silver or even another metal, but the old silver dollar is a proven winner.
4.Establish gold as an auxiliary monetary reserve which can be substituted for silver, not at a fixed-price ratio, but at whatever ratio is set by the free market. Fixed ratios always become unfair over time as the prices of gold and silver drift relative to each other. Although gold may be substituted for silver at this ratio it is only silver that is the foundation for the dollar.
6.Pay off the national debt with Federal Reserve Notes created for that purpose. Creating money without backing is forbidden by the Constitution; however, when no one is forced by law to accept Federal Reserve Notes as legal tender, they will no longer be the official money of the United States. They will be merely a kind of government script which no one is required to accept . . . The decision to redeem government bonds with Federal Reserve Notes is not ours. Congress decided that long ago, and the course was set at the instant those bonds were issued. We are merely playing out the hand. The money will be created for that purpose. Our only choice is when: now or later. If we allow the bonds to stand, the national debt will be repudiated by inflation.
9.Determine the number of all the Federal Reserve Notes in circulation and then calculate the real-dollar value of each one by dividing the value of the precious metals by the number of Notes.
13.Abolish the Federal Reserve System. It would be possible to allow the System to continue as a check clearing-house so long as it did not function as a central bank.
14.Introduce free banking. Banks should be deregulated and, at the same time, cut loose from protection at taxpayers’ expense.
No more bailouts.”
Author Edward Griffin uses many of the points to talk about a return to a precious metal-backed currency and the mechanisms we would need to convert the existed Federal Reserve fiat into gold or silver backed notes, but given that the edition I’m sourcing from is over 20 years old I would think we can use the advances in technology to offer a better solution.
Namely, one using blockchain and other appropriate technologies to build a better system.
We need a new system of rules for the digital 21st century that enhances global digital cooperation and welfare. Nothing less than a historic gathering of the world’s key decision makers will get us there. e
Only then can we begin to reverse the damage.
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