Central Banking – Why Fix What Doesn’t Work?

Time of the Vulture In times of expansion, it is to the hare the prizes go. Quick, risk taking, and bold, his qualities are exactly suited to the times. In periods of contraction, the tortoise is favored. Slow and conservative, quick only to retract his vulnerable head and neck, his is the wisest bet when the slow and sure is preferable to the quick and easy. Every so often, however, there comes a time when neither the hare nor the tortoise is the victor. This is when both the bear and the bull have been vanquished, when the pastures upon which the bull once grazed are long gone and the bear's lair itself lies buried deep beneath the rubble of economic collapse. This is the time of the vulture, for the vulture feeds neither upon the pastures of the bull nor the stored up wealth of the bear. The vulture feeds instead upon the blind ignorance and denial of the ostrich. The time of the vulture is at hand. page 1, Topic I, How to Survive the Crisis and Prosper In the Process March 1, 2007 www.survivethecrisis.com Economics is not rocket science. Today’s use of mathematical formulae to explain economics performs the same function as did the use of Latin during the Dark Ages for the Catholic Church. You don’t need mathematics to explain economics Professor Antal E. Fekete Expert on gold & the markets Professor of Mathematics 1958-1993 To understand modern economics, however, it is necessary to understand credit. Prior to credit-based paper money, credit did not play the same role as today. Now, however, credit and its cancerous twin, debt, are the very foundation of all modern economies. The relationship between credit and modern economies is similar to that between steroids and athletic performance. Before credit based money, markets were free and economies functioned according to existing supply and existing demand; but with the introduction of credit based money and central banks, that relationship changed dramatically. Economies now respond primarily to the supply and cost of credit, not to the natural demand of free markets; and, today, the ability to absorb credit’s consequent and compounding debt is the single most important factor of market health in credit based modern economies. While credit enhances economic expansion much as steroids enhance athletic performance, just like steroids, the enhancement is artificial and unless continued, is temporary. But, if continued, credit enhanced expansion will damage the economy just as continued steroid usage damages the physical body. The experiment with credit based money and central banking began with the Bank of England in 1694. In my article Christmas On Threadneedle Street & The Coming Depression, http://www.drschoon.com/articles%5CChristmasOnThreadneedleStreet.pdf, I traced the history of credit based money and central banking from Victorian England to the present. No experiment, no matter how long in existence, lasts forever. The world’s experiment with credit-based “money” and central banking—and their bastard offspring, capital markets, is almost over; and, for those not in denial, the handwriting is clearly on the wall. CHOKING ON CREDIT DROWNING IN DEBT Capi...

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