The world seems to be falling to pieces with protests & riots then the overthrow of the Tunisian President who has fled with 1.5 tonnes of the countries gold.
Riots in Eygpt & airport security has intercepted 59 shipments of gold destined for the Netherlands. The question was raised about how the Eygptian Presidents son is an international banker in regards to this gold.
Protests in Yemen.
Through out it all the US & Britain warn that the governments must respect the rights of the protesters. Will they be saying that when it is in their streets? Britain has already had protests & riots but it is about to get much worse.
This is why China has been going on its own course because it knows from its long history that when people start doing the likes of what the US & central banks have been doing it will not end well. They have been resisting raising the Yuan too quickly against the US dollar as this would put millions out of work, would mean millions starving or turning to crime to feed their families. Much like what is happening in the US.
But the worlds politicians just march on saying they are getting the best economic advice. Yeah right.
As has been noted when the US prints currency(or Quantitive ease) it causes inflation throughout the rest of the world, it causes inflation in the US when it monetizes that by buying debt as in bailouts or buying government bonds since no one else will.
When the meeting to take place at Davos proposes to create another US$100 Trillion in SDR's(the IMF-International Monetary Fund-equivalent to a currency) it will cause inflation world wide. Probably Hyperinflation. They say this US$100 Trillion will be over 10years with probably another US$100 Trillion needed, but the world is in so much debt it will need it quick.
Culture and Inflation in Weimar Germany (Weimar and Now: German Cultural Criticism)
The problem is the more currency that is created just making the coming problems worse. The only solution is to follow Iceland & let it fail but no country is likely to do that so there will be more riots, more governments overthrown & more people taking off with the only true Money gold or silver.
So since governments are going down the track of what advice they get the other option is with the created currency to put it into start up businesses to create jobs & create real wealth. If it goes into bailouts & government hand outs it creates no wealth what so ever(Ok apart from the central bankers & banking industry paying themselves for a job well done, but that is not real wealth).
Sir Robet Muldoon tried it here in New Zealand in the late 70's early 80's. Didn't quite take off but the idea was there. If you are going to have to do it then use it to create not keep the status quo or destroy.
Germany 1922 10,000 Mark, Pick 70. Large size "Vampire" note.
What is presently happening in the world has been referred too as the "Greatest transfer of wealth & power ever". Transfer of wealth because as central banks bail people & governments out they then can then claim those bailed out as their assets. Just like someone believes that China by buying European debt will be able to ask for the repayments in gold.
But then there are now issues over that gold. It is believed that the US no longer has any gold of its own although the US treasury claims to have 8000 tonnes. But then the IMF & Federal reserve claim to have that same 8000.
As shown in the movie Diehard 3 the worlds gold is held in the New York Federal reserve with an estimated 60% of Germany's gold held there. Already there is talk of the US seizing that & moving it to a military protected facility. If I was Germany I would be moving my physical gold home now.
Expectations, exchange rates, and monetary theory: The case of the German hyperinflation (Research paper)
Then we get to New Zealand where the government is proposing to sell assets. Since those assets give them a dividend they will actually lose out in the long run. They are better off trying to create jobs that create wealth. The New Zealand government is not seen as been that badly in debt actually so the reasoning behind it is flawed. Where New Zealand is in debt probably worse than anybody else is privately & in business. So when bailouts occur it is transferring that debt to the government.
But the opposition are no better. First whilst in government they had a finance minister with a degree in history who never studied financial history so made every mistake you could. Now they are trying to win favour by proposing tax changes that will give $10 a week extra! My grocery bill has doubled in the last year at least, $10 will not make one bit of difference.
Then they are saying they will take the GST off food. As the president of Tunisia found when the inflation is caused by the likes of the US creating currency out of thin air removing taxes will not make one bit of difference.
1918-1923 German hyperinflation,
So you either have to let it all fail with short term pain like Iceland or use any currency you create to try to create real wealth.
Otherwise crime will rise, there will be riots & possibly even the otherthrow of governments.
When people are struggling to feed their families then is when the situation leds to either extreme politics or coups. That was actually a strategy proposed in Iraq by a Colonel of the US Army Corp of Engineers when talking to him. He had seen how the British had succeeded initially in the South. If you create jobs, people are able to feed their families & have less time to get upset & join the insurgency. Same here if you create jobs people can feed their family, the government takes in more tax. Just giving the currency to the banks though is a recipe for failure.
Britain, the US & even New Zealand need to worry less about the rights of protesters in the Middle east & more about how they are going to stop it happening here. Seems that governments have not learnt from the French lesson that led to the revolution. To 'fix' the problem they just kept creating more currency.
Though it might give them more power to control the population. Interestingly overnight the Egyptians have suspened social media & even the internet with some people reporting the affects on twitter further a field.
Further evidence on expectations and the demand for money during the German hyperinflation (NBER working paper series)
We are already seeing the affects here in New Zealand of the inflation with a rise in armed robberies but many are not been reported by the authorities until days later. Sounds like been back in Iraq at times. Everyone sees the police flying past. Word goes out something has happened but it is not in the news. It never happened.
I know of one in the last couple of days but there has been no reports so far about it. It was just by word of mouth through the security industry that I came to know about it. When you get to that stage it is a very dangerous situation.
New Zealand is becoming like the US. On the face of it open & freedom of speech with good information flow but in reality much of the information is surpressed. Denial leds to people taking action at some stage.
Social Media & the internet are getting around this for now but already filters are been put in place like here in New Zealand that will limit what is said.
http://www.foxhoundsecurity.co.nz
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