Default NOW!!!

March 22, 2000

It seems unanimous: the economy is booming. Presidential candidates allude to it in condemning their opponents for not proposing more spending for education, or housing, or whatever pleases their current listeners. The pundits on the tube refer to it as if it were as inevitable as tomorrow's sunrise, or evolution, which is, in fact, just as well established as fact. They dazzle us with talk of a surplus, when there is no surplus, by any reasonable system of accounting.

But for those of us old enough to sit up unaided and look around, the picture is different. We see the disgraceful spectacle of American business leaders fawning over the monsters who rule China, for instance, to obtain a favorable foothold for doing business with that government. In our own communities we see established businesses faltering on the verge of extinction, early retirements, and one corporation swallowing up another---all practices which have become commonplace, but were, in times we can still recall, rather rare.

And we see banks lending funds as if desperate to make loans, which, we believe, they are. If the borrower is big enough, he will not be allowed to fail, because the banker--perhaps under another guise--will find a way to lend him still more money to keep his interest payments coming in regularly.

Why should this be difficult to see? After all, the nature of the system is that money (speaking loosely, of course) is loaned into existence, with a greater number expected in return than was created for the borrower. This means inevitable catastrophe unless more borrowers can be brought into the system. It's similar to the system which disgraced Ponzi, who naively attempted it without government sponsorship. We are justified in concluding that the inevitable catastrophe is impending when we see the alacrity with which the money-creators seek to indebt new borrowers in such exotic climes as China or Russia--or Mars, if it were possible.

The consequences are not only economic and financial. More and more governments (which are always good borrowers, especially since, being corrupt, their leaders are easily bribed) are finding their policies dictated by strangers representing the lending banks. Sooner or later, they will realize that national sovereignty is being sacrificed to the gods of credit, and, perhaps, some of them will resent it. The payoffs will ease their pain, no doubt, but sooner or later--I suspect sooner--one or two of them might decide that their legacies would be more attractive if they were remembered as the ones who threw off the foreign yoke. The way to do that is via default.

It's trite but true that if you owe the bank ten thousand, you worry; if you owe the bank ten billion, the bank worries. Third world dictators might well consider telling the international bankers to go fly a kite. Why should people starve in countries which produce ample food because the goons from the World Bank, or International Bank of Settlements, or International Monetary Fund, are directing that the food produced by sold, at cutthroat prices, to service the nation's debt to the bankers? What debt? What was borrowed that took more trouble to produce than a doodle? What can the bank do if the borrowing country says, "We've paid enough. Not a penny more?" Who would suffer the most from such a default, the defaulting government, or the bank? After all, the people of the country do not spend dollars in their local markets; they spend the local scrip which can be printed up at needed. They will continue to be able to make their local purchases.

Undoubtedly the banks could make trouble for a defaulting government. If neighboring governments, however, equally indebted (i.e., enslaved) also announced their intention to default, the greater terror would undoubtedly be felt among the bankers, not the borrowers. What if countries all around the world adopted such a stratagem? How could the bankers answer the question "What did we borrow from you that required as much effort for you to produce as the output of our people who are starving and sweating to repay you?"

Around the world governments realize that the growing debt cannot be serviced much longer, despite the ingenious methods devised to attempt it. When the bubble finally bursts, the suffering will be severe and widespread. The pain of default might be minor by comparison, and infinitely more just. A rancher in, say, Costa Rica, might not get much more selling his beef to his neighbors, who have been consuming less of it than the average American household pet, than he is now getting from his government which needs it for debt service; but at least his neighbors, not foreigners or corrupt politicians, would be benefiting from his labors, and the government leader who brings this about will become a national hero.

The third millennium is almost upon us. (This is the final year of the second millennium) Who is going to call the shots? Will our masters pull the rug out from under the economy, thus justifying--for the gullible--the establishment of a new universal banking system and one-world currency? Or will some desperate politician use the opportunity to free his country and establish himself as a savior of his people?

Inevitably, the economic bubble will burst, if not this year, or this decade, then shortly thereafter. There is already a United Nations plan, to be announced in the near future, of a vast extension of that agency's authority into heretofore local affairs. A one-world currency is the logical way to finance this scheme, and would eliminate the problem of establishing some sort of acceptable exchange rates between fiat currencies--a task resembling setting the comparative values of unicorns and dragons.

We can, and probably will, do nothing, and continue to turn over increasing amounts of our production to the money creators in return for the use of their imaginary money. But wouldn't it be interesting if, around the world, starving people, through their leaders, woke up and demanded to know what had been provided for them that came close to equaling what was being taken from them?

St. Paul suggested that those who will not work, must starve. In our topsy turvey world, those who are working are starving, and those whose work is creating an imaginary money with no effort or risk are growing fat and powerful. Isn't it time to turn the table?

In 1792 the U.S. Congress adopted a bimetallic standard (gold and silver) for the new nation's currency - with gold valued at $19.30 per troy ounce

Gold Eagle twitter                Like Gold Eagle on Facebook