Money System

The true nature of money of legal tender, which we use for our economy has no backing material, they are based on trust, fiat currencies.

Money is created by the expansion of private credit. The problem of using money-debt is that there is no way to grow and, since it does not create the money to the interest on the debts, inevitably tends to inflate or collapse. Classical economic cycles of capitalism not already governed success or failure: it has created a new category of the "too big to fail", big banks and insurance companies that we cannot let them to bankrupt and liquidate, but "we must rescue them". We are at that point where the pace of bankruptcies outperforms the creation of wealth. The balance of the central banks has grown several multiples from the banking crisis of 2008 as in the next crisis because there will be no safety net: or debt is unpaid or currency is destroyed by loss of confidence.

Gold standard: the prices of goods and the price of gold.

While a gold standard is working, increases in productivity are expanded to the whole society causing the fall in prices of goods, but not the consumption level.

However, the fiat system of fractional-reserve works as a parasite, which through inflation expropriates savings and causes the rise of the prices of goods, although productivity increases. Hence the loss of purchasing power for the past 40 years.

The bubble of all bubbles: the fiat money.

Sistema monetarioThroughout the twentieth century until 1971, gold served as monetary standard. This is, all the currencies established a fixed change with respect to gold. The amount of physical gold stored as a reserve in the coffers of the Central Bank was a restriction on the amount of money that the Central Bank could create.

Since 1971, the international monetary system no longer has such a reference, with which you can create infinite amount of foreign currency without gold backing. Inflation has eroded the value of the currency since then, and the debt is unpayable without a dramatic increase in productivity. The only track that is left to the central planners is to create new money to repay the debts they carry out, in a hyperinflationary spiral that will end by destroying the value of all currencies trust.

The final reference currency will be gold. The savings of those who do not have gold will fade.

  • Financial derivatives and globalization:
    The volume of financial derivatives (financial synthetic products, that does not grant ownership of any particular tangible value) exceeds the 1,000 billion dollars, several times higher than world GDP (around 65 trillion), and affect everyone, is not located in a specific country.

  • Bank failures and expropriation of accounts:
    As the real economy, the companies supply cycle is shrinking, there is not enough performance to pay debts. When bankruptcy begins caused by defaults, Governments will apply the laws governing expropiation of bank deposits for shares of the broken bank. We have seen examples in neighbouring countries.

  • We are in the loser monetary block: :
    The inevitability of the collapse of the current international monetary system does not catch many countries by surprise. Most of the so-called "emerging countries" have been organizing an alternative plan for more than one decade. The Western system (IMF, World Bank, International Bank of payments) versus the BRICS (the Golden BRIC) system.

    Last August of 2014 a monetary reserve of about 100 billion fund and a Bank of investments in infrastructures was created, on the sidelines of the International Monetary Fund and the World Bank, at the summit of the BRICS (acronym representing the initials of the main "emerging" countries: Brazil, Russia, India, China and South Africa).

    The BRICS block is planning to exit the crisis through the implementation of projects that increase the productivity of the economy in general, which makes more productive all the work done. The west goes the opposite way, the despoliation to save the monopoly through making the living conditions of its inhabitants worse.