What is the correct size and proper function of the state?

Signing of the Constitution of the United States

This is a question that was posted to me by a journalist who has read my book and is following this website. He suggested I make it into a blog. This essay is not directly about the fiat money crisis so it might at first look a bit "off message", but I guess for everyone who has read Paper Money Collapse and has been reading this website, the connections are obvious enough. This is a big, big topic, and probably too ambitious for any single essay. Although the following is fairly long even by the standards of this website, … [Read more...]

Unstoppable: Why this crisis will keep unfolding

Balls of euro banknotes

When the tectonic plates underneath society shift, confusion reigns, together with wishful thinking. It appears that financial markets have again managed to get themselves into a state of unrealistic expectation. The European summit this coming Sunday (or the follow-up summit on Wednesday) is now supposed to bring a "comprehensive plan" to solve the European debt crisis. Of course, nothing of the sort will happen, and for a simple reason: it is impossible. Those who cherish such fanciful hopes are naïve and will be … [Read more...]

Bitcoin, gold and the demise of fiat money

Falling 100-dollar bills

I am intrigued by the Bitcoin experiment - the attempt to launch a virtual currency as an alternative to the current global patchwork of local state fiat monies. Bitcoin has recently been hotly debated in the online community and among libertarians, and has now aroused the interest of the mainstream media and the political establishment.  Bitcoin's challenges seem to be mainly operational - related to computer and internet security and cryptography, which is of paramount importance to the Bitcoin project. These are areas in … [Read more...]

At Last, the Death of Politics

Dollar note on a hook

For over a year now the Eurocracy has tried to put Humpty-Dumpty together again, to somehow restore belief in the solvency of the European welfare state, which is ultimately the real issue at the core of the current malaise rather than just the  problems of the more recklessly extravagant periphery. The Greek state cannot live within its means but neither can any of the others. Meanwhile, over at the global superpower, the public is slowly waking up to the fact that this government, too, is going bust, thanks to … [Read more...]

Embrace Default!

Painting by Eugene Delacroix La Liberté guidant le peuple

There is a myth circulating, and I am not sure whether it has its origin in sloppy thinking or devious manipulation. It is this: sovereign default in the euro-area is the biggest threat to the euro's survival. Really? Why? The euro is a form of paper money, just as the dollar, the pound and the yen is paper money. Paper money is backed by - nothing. It is an irredeemable piece of paper. It is not as if you could take your paper money to the central bank and demand to get something material in exchange for it -such as … [Read more...]

Unrest in the Middle East and the Ethics of Money Printing

Printed money

It has been noted that the unrest in the Middle East is to a large degree stimulated by the rising costs of living, in particular rising food prices, and these have further been linked to the extremely expansionary stance of monetary policy by central banks around the world. These links have been identified correctly. In the following Schlichter file, I put this debate into a broader context and make some predictions. I sometimes think that modern mainstream macroeconomics has been designed specifically to appeal to … [Read more...]