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April 19, 2012 / 74

Need A Prescription for Economic Recovery? The Doctor is IN

“Recovery”? I’ve said it before, now I’ll say it again… you will NOT have a “recovery” until you flush the poison out of the world’s financial systems!!! That means you have to let bad banks FAIL!!! That means that governments must come to the understanding that there IS NO MAGIC WAND that they can wave and magically provide all the necessities of life for not only their own citizens, but for others around the world too!

The IMF is reported to be struggling to raise funds. With all due respect, Madam Lagarde, you can’t squeeze blood out of a turnip. When the whole world is broke, how can you reasonably expect to find anyone with money?

So… some suggestions:

Recovery Step #1 – Understand that the interconnectedness of the global financial environment is part of the PROBLEM!!! It’s like having a crowd of people in a small room, If ONE of them gets the flu, they ALL get the flu!!! Just STOP trying to weld steel to cardboard!!! It will NEVER work.

Recovery Step #2 – let NO nation create or use in international trade fiat currency. The number of ways that such currency can be abused is nearly unlimited. Some Standard of VALUE MUST be agreed on for trade. ALL currencies intended for international trade should be pegged to the international Standard of VALUE! Gold and Silver have served as such for a few thousand years. I’d suggest that there is a REASON for that.

Recovery Step #3 – BAN all international derivatives UNLESS they are bonded in EACH country they are traded in and BACKED by local financial institutions. Derivatives for trade (such as currency exchange derivatives) are self-limiting – being tied to the relative value of the currencies involved in a trade, and they automatically dissolve when the trade is completed. Any derivative that looks to some underlying commodity or good MUST BE REGULATED by the nations it is traded in, and treated as high risk speculative paper. (aka Junk bonds)

Recovery Step #4 – LIMIT ALL Central Banks and commercial banks to operating within their country of origin – and ONLY in their country of origin. NO currency swaps. NO undisclosed transactions. NO global banks! Central banks, because of the nature and reach of their power can presently dabble in the finances of other nations and even globally, and if the dabbling bank doesn’t know or care about the effect of their dabbling, can do MASSIVE harm to other economies and to the global economy.  (ie Each bank should control only ONE currency! As in #1 above) This would limit damage caused by irrational market/monetary excesses and policies by isolating them to the country of origin.

Recovery Step #5 – The purpose of a government is to GOVERN – NOT to replace your mommy and daddy and provide all your earthly needs such as housing, health care, and food (and perhaps some walking around money?). The currency and credit of any government that spends more than is reasonable (to be determined by international agreement as per Bretton Woods) becomes proscribed in international trade until they get their finances under control. I realize that it’s far easier to buy the votes of the people you govern than to EARN them by effective management of the nation’s affairs, but your leaders will eventually get used to actually doing their job.

Well… that would make a start, anyway. That’s assuming that you could get any government to voluntarily give up all that power they wield at the expense of their citizens. But think too – the power to help carries with it the power to destroy.

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One Comment

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  1. Aquaponic Family / Apr 19 2012 17:19

    Re: #5…

    Unfortunately, it seems that the majority want the government to take care of them, protect them, and provide for them. We have become an entitlement society, believing that we have the God-given right to be cared for in every way. It’s sad to watch, knowing that my children will have to deal with the consequences.

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