US Strength in the Upcoming Monetary Shift


There is one thing that the current Austrian economic minded Libertarian community seems to pride themselves on and that is challenging the mainstream narrative. I count myself among them. I would like to turn some of that skepticism back on some of the standard trains of thought that are often touted as self evident by many among us in a series of posts.

The first accepted ‘fact’ I would like to question is that during the next world monetary overhaul the United States will be doing so from a position of weakness. Here is a quote from Mike Maloney when answering a question about which countries will be hurt most and which ones will do well in the upcoming turmoil when the current system comes crashing down: “The countries where most of the currency supply is base money circulating as paper bills in the public are going to suffer a whole lot less than countries like the United States that is rigged up on credit that’s leveraged by credit that’s leveraged by credit.” This quote exemplifies how many Americans with an Austrian economic view feel the US will fare when the crisis happens and a new system is required. I certainly agree with much of what Mike has to say but this belief that the US will fare the worst in the monetary shift at very least should have its merit evaluated.

Bitcoin an E-Dollar Beta Test?

The E-Dollar is a new form of currency, albeit a questionable one, that could solve the unsustainable debts of the current monetary system. It fits the mold of past currency overhauls, namely it increases the power of both the banks and the government. This post is the result of new information that has been brought to my attention about bitcoin and not a re-explanation of the E dollar. If you would like more information on the E dollar please read the most recent developments here.

Financial Repression Can't Work This Time

Financial Repression is defined by Lexicon.com as measures sometimes used by governments to boost their coffers and/or reduce debt. These measures include the deliberate attempt to hold down interest rates to below inflation, representing a tax on savers and a transfer of benefits from lenders to borrowers.

Obviously, this is an insidious way of reducing a nation's debt load and is simply a shift in the debt load from the public to private sector. Like the use of military force its use should certainly be done with great discretion if at all.

The use of military force often uses the ‘just war doctrine’ to determine IF it can be used. Some of the criteria that must be met under the just war doctrine are all other means of putting an end to the evil must have been shown to be impractical or ineffective and the use of arms must not produce evils and disorders graver than the evil to be eliminated. Both of these conditions could be slightly altered and applied to financial repression but we will focus on another just war doctrine criteria, there must be serious prospects of success. We will attempt to determine if there is a reasonable prospect of success of reducing the national debt load through financial repression.

I Bought What?!

There are several nations that charge investors for the privilege of loaning money to them. Denmark yields are negative past a year, German yields are negative out to the 5 year bond, Switzerland bond yields are negative past 7 years, and even Austria sports negative yields on short term debt.

Now why would any investment entity allow a borrower to take their money, tie it up for several years eliminating the ability to use it, finally ending up with less than they started? Any rational investor would keep the cash and maintain the flexibility to use it if an opportunity or emergency arises. The reason yields have drifted negative is due to out of control monetary policy such as negative overnight rates in Switzerland, Sweden and Denmark, as well as the ECB’s introduction of QE. This coupled with regulations forcing pension funds and insurance companies to buy only “safe” sovereign bonds as their investment have caused this financial abomination. I wish I could force someone, anyone, to buy debt I have taken on where they would pay me interest for their trouble but I guess that privilege is reserved for governments.