A 'New' Reserve Currency? What Does That Mean?
by Pat Fields, Saturday, Nov. 23, 2013
"All the perplexities, confusion and distress in America arise, not from defects in their Constitution or Confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit and circulation." -John Adams
A growing realization that the American banknote is in the throes of imminently losing its status as the world's 'Reserve Currency' is reaching critical frequency of discussion and so naturally, what follows are attempts to assess which other banknote could possibly fill that role in its stead. Most often focused upon is the Chinese banknote, largely because China's government is vigorously striving to use it for trade on as many occasions as it can negotiate and closing most agreements proffered to that end.
The greatest consternation surrounding this development is of there being insufficient quantities of renminbi/yuan in the world to assume this role with any realistic efficacy. This is the case with all other brands of banknotes as well, which lends to the second-most discussed replacement comprising a so-called 'basket' of banknote brands distributed as notional Special Drawing Rights issued by the International Monetary Fund.
'But, Let Us View What Is Kept Unseen' - Bastiat
Lies and prevarication intended to defraud, always depend on false presumptions, set out in such a way that they're left unquestioned and fastidiously dissuaded from examination at every allusion. This is so with the false presumption that a Chinese or IMF banknote ought to be chosen as a replacement for the American banknote, now that its preeminence is approaching an irreversible end. This is because the truth lay in the fact that the circulation of banknotes, in and of itself, has caused all the economic and financial ills our world has so gravely become mired under. Yet, the degree of power and control enabled by the banknote scheme reaches so deep into societies, that regardless of its self-destructive nature, its progenitors (governments, bankers and monopoly industrialists) will callously allow that periodic ruin to spread terrible global deprivation and anguish on humanity nevertheless. To gain a grasp on how the banknote scheme facilitates such enormous influence, it's indispensable to see down into its core workings.
All banknotes are issued into existence as Loan Principal. No loan can be paid off from Principal, because Interest service adds to the total due. So, the plain but rarely asked question surfaces … where must the Interest Servicing Funds come from? It's quickly obvious; it can only come from more borrowing. Thus, the scheme is one where banknotes incur interest, which in turn impels more banknotes, in a Positive Feedback Loop of co-generation, incrementally growing larger with every reverberation … into infinity. Some suggest issuance of 'no-interest' currency as the cure, but that's impossible to begin with, and that aspect of the scheme … terrifying enough of a specter … is shown below as only its least obscure horror.
Without delving into the historical record of studies done to thoroughly debunk any notions of 'virtual money' dating back to China in the mid-15th century, I'll first suffice to point out that artificially reproducible trade media like banknotes destroys Price Discovery, affecting every single item in markets like ripples radiating on a smooth body of water, then reflecting back into a cacophony of 'chops' on the whole surface. At length, what appear as 'market prices', relied upon by entrepreneurs to offer goods, rather prove misperceptions which bankrupt them. Unpredictable infusions of banknotes cause demand prices to rise on whims, so this phenomenon comes and goes as 'mysteriously'.
Further, as the exponential progression of automatically inflating currency (whether or not 'hidden' in banks and equity shares) steadily mushrooms the interest load it incurs, loss of Purchase Power makes debt service more onerous until all sectors of societies reach a condition of 'Debt Saturation'. This is the critical juncture where creation of new currency for interest service funding dwindles beyond any capacity of productive gains from export or domestic consumption … fails. In other words, debt obligations rising on fundamental 'monetary' design alone, inevitably surpass any prayer to 'out-grow' them. This is so with every banknote issue on our planet. There is no other 'end' but a grand worldwide default. That's a fact of mathematics.
What I find to be the most egregious aspect of banknote 'Transaction Facilitation Instruments', is that they can not convey 'Title At Law As In Equity'. Common Law (Natural Right and Justice) requires that to extinguish debt with finality, exchange must be of items offered having similar independently derived values, possessed in full Title by both respective parties. It isn't ultimately things which we exchange, so much as incontestable Titles of Ownership in them. Banknotes, however, are 'Private Intellectual Property' of their issuer, only loaned to temporary possessors for a fee (interest). Borrowed items can not command superior Title in things acquired through them, only a legalized 'right' of conditional possession. Governments 'get in on the act' by their 'guarantees' (of ephemeral numbers) for the right to demand tax for that 'service'. Thus, I call banknotes Plantation Scrip and identify their purveyors as economic Slavers.
So, given that either Chinese banknotes or IMF issued SDRs are inherently evil, ruinous, self-destructive, enslaving candidates for replacement of American banknotes as our world's 'Reserve Currency', what else presents itself a better nominee with all the ubiquity Chinese banknotes lack or uncertainty balled up in multi-currency SDRs?
In order to circumvent all the inconvenient and despicable effects of the banknote scheme, there is only one choice which stands far, far above those we're encouraged to accept … either of which, by the way, will still lead to generally experienced impoverishment and cruel sacrifice by all but the government, banking and monopoly industrialist 'classes', whether disarmingly called 'capitalist' or 'collectivist'. The only true delineation being 'Free' or 'Slave', where only Honest Money of circulating copper, silver and gold (nickel, palladium, platinum and rhodium too, for maximum effect) is conducive to financial independence in every social level throughout the spectrum, giving each the power to resist financial oppression by any other group.
1783 American Confederation Copper
For the particular case of the American banknote, at its introduction in 1913, it was measured by 100 'cents' of copper coin. To date, according to the Bureau of Labor Statistics, it's depreciated in Purchase Power by about 98% (with remarkably similar figures elsewhere, as I understand). As a result, all the circulating American banknote units are in true physical terms, and ought rightly be replaced with, copper coins of approximately 6.5 grams in weight, yielding a handy enough size, issued exclusively as 'Coppers' by such weight and fineness alone, as the word 'dollar' has become a meaningless joke and its application disingenuous anyway. These 'Coppers' would not incur interest on their issue, and therefore stop 'the bleeding' that's emaciating our country's productive capacity to honorably extricate itself from indebtedness and begin to re-build greater capacity to actually grow our economy again because the absence of this 'great drain' would release capital to rather apply to investment … more dependably placed in a rational environment where both money and goods again stand in a rational symbiosis of supply-demand. No one would be any richer or poorer, though the interest income flowing from issue and float of banknotes would … cease.
Since the 'Coppers' would be 'pari passu' with the present banknotes, all wages, prices and accounts would practically remain numerically identical, imposing very little disruptive effect on the financial superstructure everyone is accustomed to. From this environment, a generally agreeable copper-silver ratio would rapidly emerge, prying silver into the stream of the markets … with such a silver-gold ratio to struggle into existence over a little further time along with others, all probably anchored to their natural ratios in the earth's makeup. No less a genius than Sir Isaac Newton himself, could admit a better basis than the periodic table.
This path is entirely plausible as it was carried out by the Chinese in 1450 AD at the final collapse of their 'flying money'. Their resulting copper 'cash' measured in 'tael-weight', went on to be a principal coin across the whole of Asia for their 'rice and dumpling' daily needs … faithfully serving the Peoples of that entire region up to 1938 AD.
If we want … fully owned money to acquire fully owned possessions … costing nothing more to use than initial production expense … existing in a consistent rational supply-demand relationship to all other things in markets, resulting in objectively fair and stable prices … allowing maximum independence for people, regardless of station in life … conducive to universal trade, where all partners can deal from a level negotiating ground … more ubiquitous than the present 'Reserve Currency', sufficient to convert every present banknote on earth … we need only demand it in no uncertain terms, with enough determination to make it happen ourselves despite the Slavers' opposition.
Paper Rots, Coin Dies Not