Category: The Financial Awakening

Why pay taxes…

when they can just print money?


Day 1 in Coronavirus Home Isolation, we are thankful that the governments of the world are printing trillions of dollars to keep us fed and paying our bills.

Day 2 we start to wonder… if the governments of the world can simply print money… why have I been paying taxes for all these years?


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The taxes we have paid all our working lives pales into insignificance to the amount of currency printed by governments over the past month.

If you have been reading this blog and other similar blogs, you are part of the Financial Awakening. You understand that there is a finite amount of resources in the world. You also understand that currency is a claim over these resources.

When currency is printed by banks and governments, it is creating new claims on the finite resources. In effect, it is stealing resources from those who had been saving their currency and allocating those resources to others.

Once the panic of coronavirus is over, the reality of what we have done will set in and the inflation will begin.

Pay attention to how different countries attempt to combat this inflation. There will be:

  • price fixing;
  • rent fixing;
  • wage fixing;
  • loan fixing;
  • more printing; and,

many combinations of the above.

Of course this has all been tried before and by potentially every failed civilization in human history.

The Financially Awakened (especially those in the US) will be on the lookout for a currency reset. A reset to a gold or silver standard would be a reset back to good money. However, a reset to a new fiat currency, would be simply be starting a debt based system over again.

There has been some talk about a new Digital Dollar. This is not a cryptocurrency. This is simply another fiat currency, which will be electronically printed and issued at the discretion of those in control.

Regardless of many good intentions at this time, we must remember that no country has ever printed itself into prosperity.

To finish I would like to say – citizens paying taxes can be a wonderful thing. Taxes can build great nations. Just as important however is the Golden Rule – Governments should be spending less than they earn. Additionally, well managed countries with plenty of savings, would have no trouble managing pandemics, without the need to print.

So tell me…

  1. What would you do if you were the leader of a country, which was tens of $ trillions in debt?
  2. How will you protect yourself against consumer price inflation?

Please stay healthy… and wealthy.

GOLDSMITH



Good Money and the Dollar 3

Part 3 – Dollars are not trustless!


Our analysis of the ‘dollar’ in respect to the ‘8 characteristics of good money‘ detailed at Good Money continues. In this post we ask – are dollars trustless?


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The only reason a paper currency has any type of value is because a government says it does – not for any other reason. So we start by trusting the government to protect the value of these dollars.

So what if this government simply turned around and stated – ‘Those dollars we told you to trustwell sorry, you’re not allowed to use them any longer!’

This was exactly what happened in India. With the stroke of a pen, President Modi banned all 500 rupee and 1,000 rupee denominated notes effective 31 December 2016. 

Under the guise of eliminating cash from the black economy, the plan also had the impact of flushing out savings of law abiding Indian citizens. Those savings were then forced into banking institutions. 

You might think, ‘this is not so bad’. Well not so bad if you trust the banks and you were able to get to one in time to deposit your rupees. However if you were in a village without a bank and lacked the transportation to get to one, this policy change might have been a financial disaster.

Think this can’t happen to our Australian dollars? Wrong! There have been reports for many years now that the Australian Government was looking to abolish the $100 note. There is also talk about getting rid of cash in Australia altogether – thereby forcing everyone to become a creditor of the banks.

Currently being debated in Australian Parliament is a bill banning cash payments of over $10,000, subject to a two year jail sentence. Imagine, two years jail for using your country’s legal tender.

So in India, and probably in Australia – great sums of cash are being forced out of the cash economy and into the banks. So you might now ask – ‘once done, the dollars will now be safe in the banks right?’

‘Wrong!’.

In 2013 the Government of Cyprus simply seized a percentage of all funds sitting in Cyprus bank accounts.  Account holders woke up one morning to find their bank accounts pilfered by the very people they had elected to represent them in parliament.

Other countries are introducing so called ‘bail-in’ provisions. Should a bank experience financial difficulties, the dollars of depositors would be automatically converted to ordinary shares, to ensure that other creditors of the bank can be paid out first.

When it comes to TRUST – you now know that when holding cash you are trusting your government to protect the integrity of those dollars.  You also know that once you deposit the cash with the bank, you are now both reliant on the government to protect the integrity of the dollars and on the bank to remain solvent.

So NO, dollars are NOT trustless!


Of the ‘8 characteristics of good money‘ – modern day fiat currencies fail at least 3, being:

  1. Dollars are not a good store of value due to inflation.
  2. Dollars are not difficult to create, as financial institutions simply create currency with each loan they write.
  3. Dollars are not trustless, as you must either trust the government to honour and protect the currency in circulation; and, you must trust the banks who you deposit these dollars with.

Understanding what constitutes ‘good’ and ‘bad’ money is necessary for your Financial Awakening. This does not mean that we should be avoiding cash and bank deposits – this is not practical or even desired. 

What it does mean is that we need to understand the risks and opportunities associated with holding dollars and we will structure our financial affairs accordingly.

Next time I address the topic of Our Money, I will examine types of money which have all the characteristics to be considered ‘good money’.

GOLDSMITH


Goldsmith


As a means of introduction, I am a relatively simple man who desires little more than to feed, shelter and educate my family and leave the world a little better than how I found it.

Unfortunately, I was finding this is easier said than done and getting harder. I found myself asking ‘why’?


Financial Awakening


My background is in accounting and financial services.  Ten years of accounting across several different fields did lay a solid foundation for the past 12 years spent providing holistic financial advice. 

I do not consider myself entrepreneurial and I have a strong level of admiration for those who are. It is the small business owners who drive the prosperity of nations.

Whilst this website will be considered ‘self-help’, I do not consider myself to be a ‘guru’.

I do however have 3 aptitudes which have proven to be highly beneficial to those whom I serve, being:

  1. I am a ‘contrarian’ by nature.
  2. I have a strong tendency to be ‘skeptical’ of the motivations of others.
  3. I have a passion for ‘strategy’.

These aptitudes have also given me cause to observe and reflect upon the financial and political systems across my home country and the West generally.  

Even the most rudimentary examinations of our monetary, taxation and superannuation / pension systems are enough to conclude that the future for the ‘working class’ is looking disconcerting. 

Add to this an ever expanding bureaucracy, regulation, compliance overburden and generally poor government budgeting – then the financial future of the ‘middle-class’ is a matter of concern too. 

Fortunately I am not the only one who is concerned and doing something about it. There are others out there openly critical of the politicians, bankers, advisers and educators who they claim have been perpetuating a financial mistruths for 3 generations. I hope to be able to highlight their arguments here, at this site, over the coming months.

Historically the outcome of poor financial systems is devastating. Homelessness. Hyper-inflation, which could make pension and savings accounts worthless. Starvation. A general inability to trade and conduct any type of business.

Regardless of the above, I believe there is much you can do as an individual to protect your financial position and even opportunities to avail ourselves of.  There is also much we can do together through the advocacy for sound monetary systems, along with sensible and conservative government budgeting.

It all starts however with your financial ‘re-education’. In other words your ‘Financial Awakening.’

I hope that you will join me on this journey.

GOLDSMITH


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