Den of Thieves

Inflation Finally Killed the Penny; It Will Come for the Rest Too

Oh how the mighty have fallen. The illustrious penny has met its bitter end. The U.S. cent has been inflated into actual obscurity. The burden to produce a single penny ($.037) so severely outweighs its purchasing power that its production has been halted indefinitely.

Next on the chopping block is the infamous nickel which costs almost 14 cents to produce. The inevitable death of our currency is baked into the cake of our monetary system. The perceived value of our money was never truly worth the coinage nor the paper it is printed on. Fiat currency is fundamentally imaginary and relies purely on the blind confidence of those who transact with it.

The devaluation of currency is a practice as old as minting. The medieval methods of counterfeiting, clipping, sweating, and plugging of various coins have been replaced with a more complex and purposeful technique called fractional reserve banking. This system creates wealth beyond the possible extent of human production. Inflation steals the value of labor.

Just like the eventual heat death of our universe, the culmination of the modern monetary system can be mathematically calculated with some asymptotic function (approaches zero to infinity). The degradation of the U.S. dollar is the final step in the demise of global finance as everything derives its value from the reserve currency. First the penny, then the nickel, and then cash is illegalized and we’re all transacting with digital Monopoly money.

Do not lose yourself in the material luxuries of modernity. We are all slaves to same debt-based system. You do not have enough disdain for the banks. They will fool you into thinking you are rich while they steal your purchasing power forever. When we reach the crescendo of this screwed up monetary symphony, they will claim to be heroes, while we’re forced to adopt a totally new system devoid of any freedom of commerce. The new economy will have total ease and convenience of transacting without the bothersome ownership of your own money. You will miss the penny.

“Now hold on a minute, isn’t the new administration encouraged to save the value of our currency with a bunch of new foreign tariffs and government efficiency programs?”

Clearly all the “winning” has clouded our understanding of where the dollar gets its value from. Our privilege as Americans comes from the relative strength of our currency. This denotes that we require foreign currencies to devalue themselves faster than our own. The best way to achieve this is extremely ironic and annoying, but it’s the one we’re stuck with and involves the following:

• Trade deficits – Yes this would be counterintuitive if the U.S. dollar were not the reserve currency of the world. America consumes the liquidity from other nations. When countries have a trade surplus with the United States, they are trading actual resources for worthless U.S. dollars which they use to transact with other countries. The net effect is a decrease in the value of every currency compared to the dollar. Yeah, it’s not fair, but the U.S. Military says otherwise.

• Fiscal deficits – This one hurts my feelings too. The U.S. government sends insane amounts of money overseas, not because we’re super generous, but because our currency strength depends on foreign usage and demand. That’s why our government sends billions to foreign wars and tells domestic disaster victims to stick it. Believe it or not, this benefits American’s purchasing power, as we are exporting inflation abroad. Our productive capacity can NEVER match the supply of dollars domestically; thus, we create artificial demand in foreign lands. (Transgender Operas in Columbia keep your eggs under $10)

• Debt, debt, and more debt – This should be obvious, but a debt-based system requires exponential levels of debt to function. This goes way beyond government spending. American business is reliant on proliferating corporate and consumer debt to have a slightest chance of increasing economic output. That means, loose credit policies for home loans, credit cards, corporate bonds and all the others. All of this can be happily incurred with the collateral of equity, which debt derives its value from… even though the equity was built by incurring debt.

The goals of the new administration are to eliminate frivolous foreign aid and trade deficits, decrease the fiscal deficit by eliminating ineffectual government departments, and pressure the Federal Reserve to cut interest rates. All these things are disputably productive for the country, however, none of them strengthen the U.S. Dollar. In fact, one could argue that the administration is hell bent on destroying the dollar’s value in favor of relative profits in asset prices. Not to mention, the favorable regulatory treatment of cryptocurrency, which is an alternative to the fiat nature of the U.S. Dollar.

Before one can definitively defend the mighty dollar and condemn the actions of the any government office; you must fully understand the state of the current financial system. The crisis of 2008 was a crisis of liquidity which can be simply defined as a lack of cash (or easily convertible to cash assets) on hand across numerous financial institutions. Basically, the banks ran out of money.

Remember: The fractional reserve system allows banks to create money out of thin air; the capital on hand NEVER matches the outstanding loans. The money was never there.

The government reaction to this liquidity crisis was to ensure that this never happened again. Just kidding, they actually guaranteed these institutions that the federal government (the U.S. taxpayer) would bail them out if they got in trouble. Not only could these institutions continue to make risky loans backed by little to no capital reserves; they would be empowered by the Federal Reserve Central Bank to generate artificial liquidity through a reverse repurchasing scheme.

Before I bore you to death with the particulars of the monetary system, just understand the following key points:

• Credit severely outweighs capital (Way more debt than available cash)

• The lack of liquidity could cause bankruptcies and bailouts (just like last time)

• U.S. dollar strength and equity markets (Stocks, real estate, etc.) are dependent on excess liquidity from trade deficits, fiscal deficits, and more debt (the three bullet points above)

• This system is not sustainable without constant intervention (asset purchases and super-secret bank bailouts from the Federal Reserve)

If the current financial system is irreparably damaged from prior calamities of liquidity and the current administration is undermining that system… Is there a replacement system? The short answer is yes. The new global financial system has been built behind closed doors and just needs the right crisis to get everyone on board. The issue of liquidity has already been fixed over twelve years ago with innovative blockchain technology and modernized payment rails. The banks always had a solution, they just needed time to test and implement it. No, you did not vote for this.

The switch could never happen without institutional and public confidence. The financial institutions are an easy sell because the compliant ones would be rewarded as stewards of the new regime and immense consolidation of wealth. The public is a harder sell, but people are known to trade liberty for unconstrained control if it leads to a false sense of security.

It may be too late to reject this new system, because it’s very possible that it has already been executed right under our feet. Be honest — would you even notice if the money in your bank account was swapped for a whole new currency in a completely different monetary system? Of course you wouldn’t, because you already use your credit card for every purchase.

Look, I am a hypocrite. I rarely use cash. I love to use Apple Pay from my phone, and I get frustrated if I can’t use the tap feature and have to swipe a silly plastic card in an outdated Point-Of-Sale machine. I am heavily invested in the software (cryptocurrency) of the new financial system, and I will shamelessly benefit from the new financial system. I will surely miss the penny, but not for the purpose of transacting. There is a certain nostalgia that comes from collecting change, but inflation has killed the incentive to do it for financial prudency.

I just don’t believe this is where our fight is. Those on the right side of this wealth transfer will find themselves in a unique position of influence in the new financial system. Power and money will be drastically consolidated, but they can’t keep out everyone. The goal should be to inform and defy. The new technology of the future system will be used to control commerce for the average Joe and Jane. However, the same technology can be utilized to form independent gray markets that challenge the status quo. We beat them at their own game.

If they create centralized, inflated currency void of ownership. We create decentralized, hard money on open faced ledgers. When they reward monopolistic corporations and corrupt financial institutions. We embargo that crap and replace them with free market competition. Commerce will take two forms, and it will be obvious which is which. You will have to choose, but the choice is same as it is today. Buy in to the corporate agenda or protest it with local commerce.

Revolution begins with civil disobedience. As a tribute to the Boston Tea Party, we will dump the processed canola oil into the harbor! I am being facetious as that would be an ecological disaster, but you get the point.

Just as Jesus expelled the moneychangers from the temple, we shall drive out the bankers from our system of commerce. They rely on obedience and confidence in their globalized Ponzi schemes. Do not give them either. Do not fear war, revolution or death itself. Fear slavery and mediocrity, for they are much worse.

“My house shall be called the house of prayer; but ye have made it a den of thieves.”

-Matthew 21:13