Ambrose Evans-Pritchard rides the D-Notice razor edge

July 26th, 2010

Ambrose Evans-Pritchard writes in the Telegraph about ‘The Death of Paper Money’. Anyone who has been woken up by Ron Paul, Lew Rockwell, Murray Rothbard and the Austrians knows that this is in fact inevitable, and in the end, is a good thing, because it means that government can no longer steal your money from you while you sleep, spending that money on mass murder:

Great numbers of people failed to see it coming. “My relations and friends were stupid. They didnt understand what inflation meant. Our solicitors were no better. My mothers bank manager gave her appalling advice,” said one well-connected woman.

“You used to see the appearance of their flats gradually changing. One remembered where there used to be a picture or a carpet, or a secretaire. Eventually their rooms would be almost empty. Some of them begged — not in the streets — but by making casual visits. One knew too well what they had come for.”

Corruption became rampant. People were stripped of their coat and shoes at knife-point on the street. The winners were those who — by luck or design — had borrowed heavily from banks to buy hard assets, or industrial conglomerates that had issued debentures. There was a great transfer of wealth from saver to debtor, though the Reichstag later passed a law linking old contracts to the gold price. Creditors clawed back something.

A conspiracy theory took root that the inflation was a Jewish plot to ruin Germany. The currency became known as “Judefetzen” (Jew- confetti), hinting at the chain of events that would lead to Kristallnacht a decade later.

While the Weimar tale is a timeless study of social disintegration, it cannot shed much light on events today.

[…]

My emphasis.

Cannot shed much light on events today?

This is so irrational, contradictory and ridiculous that we could be forgiven for concluding that Ambrose Evans-Pritchard is working under the constraints of a D-Notice, preventing him from spelling out explicitly what is about to take place for fear of the disruption that would ensue, should the emperor’s naked state be publicly declared.

What he has done in this article is the next best thing; he obliquely spelled out the precise nature of what is going to happen in the USA, UK and all over Europe should hyperinflation suddenly kick in, and then put in a disclaimer right at the end of the section, to indemnify himself and get past the Telegraph editors.

That is the only explanation for this line. All of the factors are here for an inevitable hyperinflationary event. The parallels to the German hyperinflation are eerily similar, including the mass ignorance of what inflation is, what money is, etc etc.

So, what should you do to protect yourself from this coming hyperinflation? Evans-Pritchard tells you in this section:

Foreigners with dollars, pounds, Swiss francs, or Czech crowns lived in opulence. They were hated. “Times made us cynical. Everybody saw an enemy in everybody else,” said Erna von Pustau, daughter of a Hamburg fish merchant.

[…]

The message is clear; you need to hold currencies other than the ones that are about to go critical mass in a hyperinflationary spiral. You need to own gold. You need to own Swiss Francs. You should not own the Euro and under no circumstances, should you own the Federal Reserve Note (the ‘US Dollar’).

So what about the Pound Sterling? What are its characteristics, and why does Evans-Pritchard believe that it is immune from hyperinflation? Why has Evans-Pritchard completely (deliberately?) ignored the Pound and its nature in this discussion? He says:

This is not a picture of America, or Britain, or Europe in 2010.

Why not? What is the precise difference between the money used in the Weimar hyperinflation and the US Dollar, or for that matter the Zimbabwe Dollar (which no longer exists)?

The answer is that there is no difference.

Now, lets do what Evans-Pritchard is apparently forbidden from doing, using only the Google, and ask a fundamental question.

What is the Pound Sterling?

The pound is a fiat currency, supervised by the Bank of England.

The Pound is redeemable for nothing:

The contemporary sterling is a fiat currency which is backed only by securities; in essence IOUs from the Treasury that represent future income from the taxation of the population. Some economists term this ‘currency by trust’ as sterling relies on the faith of the user rather than any physical specie.

The bank of England has outsourced the manufacturing of its notes to the private company De La Rue:

De La Rue announces that it has been selected by the Bank of England to be its preferred banknote printing supplier. This follows an announcement by the Bank today that it has decided to contract out its banknote printing operations at Debden, Essex, to a commercial company. This will enable the Bank to lower the costs of the supply of its banknotes, while for staff it opens up the possibility of bringing in more work to Debden.

So. In five minutes we discover that the pound is worth precisely nothing. It can be printed at will in any quantity the Bank of England desires for any purpose that the state chooses, without any constraints whatsoever.

If you also factor in fractional reserve banking where UK banks are legally permitted to create money at will, you have a system, just like the one about to implode in the USA, the Federal Reserve System, that cannot possibly be immune to collapse.

If Sterling is immune from collapse, I would like to know precisely how it is different to every other paper money fiat currency that has ever existed.

Did you know that:

At heart, this economic crisis is in fact a currency crisis. Throughout history no paper currency (or “fiat currency”, since it is accepted as money by virtue of Government fiat or decree) has survived, and this time will be no different. The average lifespan of fiat currencies has been 16 years*. The present system is unique in that it has survived for 38 years and for the first time ALL countries throughout the world are on a fiat money standard. This means that the resulting crash will be on the scale of something the world has never seen.

[…]

http://www.zerohedge.com/article/coming-financial-tsunami

My emphasis. Wether or not the figure of sixteen years is accurate, ALL fiat currencies eventually collapse. These are the countries that have already tasted it: Angola 1991-1995, Argentina 1975-1991, Austria 1921-1922, Belarus 1994-2002, Bolivia 1984-1986, Bosnia-Herzegovina 1992-1993, Brazil 1986-1994, Bulgaria 1996, Chile 1971-1973, China 1948-1949, Free City of Danzig 1922-1923, Georgia 1993-1995, Germany 1922-1923, Greece 1942-1944, Hungary 1945-1946, Israel 1970-1971, Japan 1948-1951, Krajina 1992-1993, Madagascar 2004-2005, Mozambique 1977-1992, Nicaragua 1987-1990, Peru 1988-1990, Philippines 1942-1944, Poland 1989-1991, Romania 1998-2005, Russia 1921-1922 and 1992-1999, Turkey 1990-1995, Ukraine 1993-1995, United States 1861-1865, Yugoslavia 1989-1994, Zaire 1989-1996, Zimbabwe 2004-2009.

All of the countries in this list experienced government created hyperinflation in the twentieth century. If each of these countries had not had government monopolies on the creation of money and legal tender laws, opting instead for a completely market driven commodity money system of currencies created by entrepreneurs whose business it is to manufacture money, they would not have experienced this problem. The sole exception in the above list in terms of the century of hyperinflation is the USA which had its experience in the nineteenth century, so they are about to have a second experience of it.

This is what Ambrose Evans-Pritchard will not touch in his articles… and its understandable why he does not touch upon this matter. Why should he do anything that might precipitate the inevitable collapse of Sterling? What can he possibly gain from telling the truth that anyone who is reading his article, and who therefore can use the Google, can access for themselves? He will only be made a scapegoat for the collapse which is going to happen wether he writes about it or not. We have all seen how governments and the press will use anything and any person as scapegoat to deflect blame from the true causes of a ‘financial crisis’.

Pity is what you should feel for Ambrose Evans-Pritchard. He is caught between a rock and a hard place, knowing the inevitable, desperate to warn everyone but unable to do so, either because of orders from above or his instinct for self preservation.

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