Monetary Monoculture Danger

October 13th, 2008

I have had some interesting conversations over the last few weeks, all centering around the current historic economic events. Two of them are notable.

The first was with a good friend to whom I gave Ron Paul’s ‘The Revolution: A Manifesto’. He said that he read it up to the point where the book supports the Second Amendment right to bear arms. “I just cannot support the right to bear arms and all of that sort of stuff”.

This man owns two shotguns.

I am telling this story because it demonstrates that there are many people out there who simply cannot think. I had to go through the reasoning behind the Second Amendment, why it applies today more than ever and how many people react in a knee-jerk fashion to it thanks to a constant stream of propaganda. At the end of the conversation, he said, “I have to get more ammo”.

Sadly, this unthinking reaction to the Second Amendment is not uncommon, and I have had the same reaction to Ron Paul from a software developer who had only heard a little about him, “he’s not one of those ‘Right to Bear Arms’ people is he?, because I’m not down with that”.

These people, if they are lucky, understand the importance of bearing arms only when it is spelled out to them very slowly. If they are unlucky, they understand it only when it is too late, and the state is stealing their property from them, or they are being slaughtered in ethnic cleansing operations.

Which brings us to the other of the two conversations.

I informed a friend with suitable dread that Nicolas Sarkozy called recently for a world currency controlled by a world bank. My good friend replied, “So? Whats wrong with that? It would mean that you can trade anywhere in the same currency”.

I then explained to him that a world currency would be controlled by a single group of people,  and a single bank, who would control its value by either printing or not printing it, they would also control the interest rates and there would be absolutely nothing anyone could do about it.

He gasped, “My God, that would be TERRIBLE.”

This person already has a limited (but growing) understanding of the problems with fiat currency thanks to the internet. It only took a little push to make him totally reject the idea of a world currency. That is a good thing; someone starting to wake up and who is able to see the problem with only a small amount of prompting.

We then went on to discuss why trans-national currencies ‘Currency Monocultures’ like the Euro are a bad thing.

Imagine that the Euro never happened, and each European country had kept its own currency. Each country would be able to formulate its own response to bank failures, and their currency would suffer or gain depending on their response. Each person with savings could hold a basket of currencies to protect themselves from being wiped out by inflation. The Italians might opt to let their banks fail so that the system is cleaned out of bad debt. The Lira, the Italian people and anyone holding Lira would benefit. The French might nationalize their banks and bail them out with taxpayer’s money. The Franc would suffer from inflation, the French would suffer separately from other states, and the FrenchCitoyen would have an opportunity to get out of the Franc and into a currency that was not inflating.

Monocultures make it easy for disease to spread. In computers, everyone running windows makes it easy for viruses and trojans to spread like wildfire. Flu spreads rapidly when many people are sharing the same space in a crowded city. If you want to make it impossible to have a world wide systemic monetary crash, you make sure that every economy, every country is insulated from the others by each having its own currency, its own independent financial policy and you reduce the importance to near zero of currencies like the Dollar, whose status as the world’s reserve currency exposes everyone to risk.

The absolute last thing you do is create a ‘world currency’. This would create an opportunity for a crash that would make this one look like a picnic with apple juice and marshmallows as the food. It would create a monoculture where any disease would be instantly caught by everyone everywhere, where there would be no place for anyone to run to protect their wealth, where a handful of naturally incompetent people would control the destiny of the whole world.

A world currency is the very definition of insanity.

Those in the know are heading for the Yen to get out of the way of the oncoming train. Gold is already in very short supply or sold out world-wide as people flee to it to protect the value of their money.

That last link was from The Guardian. The newspapers have demonstrated that they are no longer the place to get any sort of real information. There has been a rush for gold not because anyone in any newspaper has explained why inflation is coming, but everyone who knows about this has found out about it from the internet. Newspapers like The Guardian are still trying to sell the utter nonsense that mega salaried executives and lack of regulation are the cause of these problems. Everyone who takes the time to find out about the truth behind all of this (that it is regulation and interference by the state in the market, combined with central banks and fiat currencies, mostly the dollar, being printed to excess) knows that the Guardian, Gordon ‘Man of Clay’ Brown and all the other newspapers have got it totally wrong either because they are being told to print lies or they just do not know anything about economics.

Notice the words that are missing from every explanation of what is going on. There is no mention of ‘Fiat Currency‘, for example and never any reference to any of the people who predicted every element of all of this.

But I digress.

Anyone who calls for a bailout, anyone who calls for more regulation, anyone who calls for more centralization, anyone who calls for fewer currencies, or the worst possible scenario, a world-wide single currency, just doesn’t know what they are talking about.

They are not going to get away with this. Too many people are aware of what is really happening (as demonstrated by the rush to buy gold world-wide, without any prompting and a total lack of real information from any major news source). When they fail, we will return to local currencies on a national or even smaller basis, so that everyone will have built in protection for their wealth. The disease spreading central banks are now totally discredited. They do not have the ability to set interest rates correctly; no one can, in the same way that no one can predict the weather. The weather man always gets it wrong to some extent, but in the case of central bankers, they make the bad weather wheras the weather man merely reports it.

We will return to a state where no central control of money exists. The dynamic, chaotic yet stable, market will take control and everyone will understand that there is an underlying stability, (in the summer it is hot, and in the winter it is cold) and inside these variations there are flucituations that are understandable. Those with a background in maths know what this looks like as a picture; a Lorenz Attractor a shape that describes a chaotic system, yet which is self contained and understandable on the large scale. Students of dynamical systems will also know that chaotic systems can tolerate a small amount of parameter change without flipping into another stable state. When those parameter changes, i.e. tweaking of the economy, too much regulation insane taxation, are too great for the system to absorb, the market becomes distorted, and the attractor that describes it doesn’t stay in a shape that anyone can understand or predict, especially as the changes imposed by the state keep happening regularly.

On every level and by every measure state interference in markets is wrong. It is morally wrong because the state steals from people to do its dirty work. It is wrong objectively, and this can be demonstrated by mathematics.

It is high time that people everywhere cut the state out of their affairs and restricted them to the servant position where they belong.

4 Responses to “Monetary Monoculture Danger”

  1. meaumeau Says:

    The newspapers have demonstrated that they are no longer the place to get any sort of real information.

    We had the misfortune of being at somebody else’s house yesterday and having to watch the BBC’s 10pm news programme. Evidently this is after the ‘watershed’ (if it still exists) and aimed at adults, however the way the government’s actions were explained was simply dreadful – an insult to primary school children. Not only in the flimsy surface explanation of everything, and the mushy Evan-Davi(e?)s like presentation/obfuscation of economics but also the complete non-history of events, nothing about why the other banks mooted to accept the deal declined, etc.

    Anyone who calls for a bailout, anyone who calls for more regulation, anyone who calls for more centralization, anyone who calls for fewer currencies, or the worst possible scenario, a world-wide single currency, just doesn

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