False Currency

False Currency by Sauvik Chakraverti

3 Mar 2006, 0000 hrs IST,

When a bad king of yore 'debased' his currency by mixing some 'base' metal with the gold in his coins, he and the officials of his royal mint acted as counterfeiters. 

The 'false' coins were then used to take over 'real' properties of his subjects, and finance his banquets, palaces and wars. The same is done with currency notes by modern-day governments, but the process is far more insidious. 

A currency note is, in truth, a 'property title': The note is supposed to entitle the note-holder to obtain, from the issuer of the note, on demand, 'real' money in exchange for the note. 

However, each and every central bank in the modern world issues notes that are irredeemable. Even the 'mighty' US dollar is not convertible into anything. 

Thus, all the governments of the world today use 'false' money to take over 'real' resources. In effect, then, all the governments in the world are guilty of acting in the manner of counterfeiters. 

All the currency notes issued in the world today are 'property titles without property'. As this false money pervades the global market, the rich get richer while the poor get poorer. 

The immediate effect of currency debasement is that those who first get to use the 'new money' buy up resources at current prices. 

First users of the 'new money' are politicians, bureaucrats, government contractors and those 'crony' businessmen who get generous loans from banks. Those who lose most are those who get to use the notes last: The poor, and those who save. 

There is thus a 'transfer of wealth' from the poor to the rich, and from creditors to debtors, due to the step-by-step process of creeping monetary inflation.  

The world economy is headed towards a monetary crisis as the lead counterfeiter, the US Fed, becomes unable to cope with its 'twin deficits': A huge fiscal deficit combined with a huge trade deficit. 

This time, the blame should not fall on markets and speculators, the blame should fall squarely on central bankers. As we inch towards global capitalism, we need to ditch the false ideas that created central banking (and the IMF). Then only can a true capitalism arise and leftists be put permanently in their place. 

http://timesofindia.indiatimes.com/articleshow/msid-1435777,flstry-1.cms