The Ins and Outs of Whose Money Is It Anyway?
“Inside, Outside…. Leave me alone!
Inside, Outside … Nowhere is home!
Inside, Outside … Where have I been?
Out of my brain on the 5:15…”
— The Who
There’s been a massive reaction to Credit Suisse analyst Zoltan Poszar’s note about the birth of a new Bretton Woods agreement.
Every investor in the world should read it. Zerohedge posted (behind their paywall) a lengthy analysis of Poszar’s musing along with some reactions from Wall St. It is well worth your time.
The people most freaked out about this note are the Keynesians who worship at the altar of what Poszar calls Inside Money — money that only exists inside the financial system, bonds, credit, dollars, euros, etc.
Austrians, like myself, have always understood that eventually Inside Money fails because it is ultimately nothing more than a Ponzi Scheme built on top of Outside Money — money that exists outside the financial system, like commodities and bitcoin.
Poszar makes his early case and then goes through the mechanics of what is happening in the financial plumbing of the world economy right now to prove the stresses are real and building quickly towards an implosion of Inside Money and an explosion of Outside Money.
Again, anyone with a passing acquaintance with Austrian business cycle theory and Mises’ Theory of Money and Credit always knew this day was coming.
Today’s “Inside Money” standard, known colloquially as the Dollar Reserve standard, is actually what I like to call “Milton Friedman’s Nightmare.” It is nothing more than a system of competitively devalued and inflated debt-based scrips running around drinking each other’s milkshakes until everyone’s glass is empty.
FYI, there are a lot of empty glasses around the world right now and more are being created everyday as the financial system turned predatory after the Lehman Bros. collapse in 2008.
It was then that the Central Banks and governments turned fully against the people sucking up more and more outside money by inflating inside money egregiously to control more and more of the real wealth of the world.
There is only one problem with that, however. Eventually, you run out of property to squeeze out of people’s hands. The more you take, the less people are restrained by little things like laws.
Eventually two things happen. The first is what we’ve been seeing from Russia and China for the past twelve years — steady accumulation of gold and other hard assets, outside money, including the building of real manufacturing infrastructure as well as the financial infrastructure to house it.
The second is just over the horizon — the moment where all the legal claims to controlling outside money mean nothing when enforcement of those legal claims gets exposed as a bluff because there aren’t enough enforcers capable of keeping the looters from taking it.
Look, I’m as much a private property guy as you can possibly conceive of but I made my peace a long time ago with what those claims of private property actually mean in the very real sense to me personally and my limits of defending them.
I can lay claim of ownership to hundreds of acres of land. I can even have a deed that proves I bought it from someone else who had a legal document to ownership. That’s legal ownership. Now, real ownership is actually being able to defend that claim by constantly applying your time and energy.
I live rural, folks. I can tell you that where the roads lie and where the legal property corners are do not square with each other. And the reality is that when you live like that, little things simply aren’t worth your time.
But, if you are a stickler for this stuff, that means, for example, rousting squatters, pressing claims of borders if people cut the corner driving along the public easement, etc. But it’s your money you have to spend, your time. You have to put up the fence, or the pole or the sign. You have to ‘police’ that claim.
And if you don’t, do you really still have that ‘claim’ to that property? Legally yes, but
Article from LewRockwell