From the October 2007 Idaho Observer:
The Placebo Economy
The Placebo Economy
By Hari Heath Definitions: Placebo. From the Latin, placere, to please. A medicine having no pharmacological effect but given to please or humor the patient. The benefit gained from taking a placebo occurs because the person taking it believes it will have a positive effect. Sugar pill or any other "make believe" drug, which looks like the real thing but isn’t. Placebo medication, which has no pharmacological effect, is sometimes prescribed by doctors for patients who insist that they have to take some kind of medicine, however inert, and often feel better psychologically for going through the ritual of taking medicine. More importantly, placebo medication is often used when conducting of scientific experiments on drugs to provide controls for determining how effective a particular drug may be, often without either the doctor or the patient in the experiment knowing whether the medicine is a placebo or the actual drug. Placebo effect. Placebo effect occurs when a patient’s symptoms are altered in some way by an otherwise inert treatment, due to the individual expecting or believing that it will work. Some people consider this a remarkable aspect of human physiology; others consider it to be an illusion arising from the way experiments are conducted. The placebo effect occurs when a patient takes an inert substance (a "sugar pill") in conjunction with the suggestion from an authority figure that the pill will aid in healing and the patient’s condition improves. This effect has been known for years. Placebo money. Any financial device made to appear as money but having no real substance or true value. Financial instruments used as money but having no intrinsic or redeemable value. Money, which has no value, but is useful as money only because sufficient users of the placebo money believe it has value. Placebo economy. An economic system based on placebo money, in which the circulating medium of exchange has only imaginary value. ____________________________
By Hari Heath
Placebo. From the Latin, placere, to please.
A medicine having no pharmacological effect but given to please or humor the patient. The benefit gained from taking a placebo occurs because the person taking it believes it will have a positive effect.
Sugar pill or any other "make believe" drug, which looks like the real thing but isn’t. Placebo medication, which has no pharmacological effect, is sometimes prescribed by doctors for patients who insist that they have to take some kind of medicine, however inert, and often feel better psychologically for going through the ritual of taking medicine. More importantly, placebo medication is often used when conducting of scientific experiments on drugs to provide controls for determining how effective a particular drug may be, often without either the doctor or the patient in the experiment knowing whether the medicine is a placebo or the actual drug.
Placebo effect. Placebo effect occurs when a patient’s symptoms are altered in some way by an otherwise inert treatment, due to the individual expecting or believing that it will work. Some people consider this a remarkable aspect of human physiology; others consider it to be an illusion arising from the way experiments are conducted. The placebo effect occurs when a patient takes an inert substance (a "sugar pill") in conjunction with the suggestion from an authority figure that the pill will aid in healing and the patient’s condition improves. This effect has been known for years.
Placebo money. Any financial device made to appear as money but having no real substance or true value. Financial instruments used as money but having no intrinsic or redeemable value. Money, which has no value, but is useful as money only because sufficient users of the placebo money believe it has value.
Placebo economy. An economic system based on placebo money, in which the circulating medium of exchange has only imaginary value.
We live under a placebo economy and have for so long that placebo money is the only money most people have ever known. This economy and its unit of measure, the "dollar," are make believe—literally; we have been made to believe in it by systemic programming of a nearly religious magnitude.
So many people believe unquestionably in the mythical dollar that it works—for now. The advance of our present civilization has, in large part, been made possible because people believe the born-in-credit "dollars" they receive are worth their time, talent, resources and productive efforts. And with such a credit system, we do live in a great and opulent time. Not just the opulence of the past where a few at the top lived in magnificent splendor, but in our system, born from the extension of credit, the masses enjoy lifestyles of great indulgence and prosperity heretofore unseen in human history.
But how is this economy of inert sugar pills made and how much longer can the masses be kept in pews of the placebo cathedral? The writing has been on the wall for all to see, but few bother to read it. There is a crack in the ceiling and the foundation of this cathedral is crumbling. Even the now retired high priest, Greenspan, is proclaiming the temple's doom.
What keeps it all going and how much longer can it go on? G. Edward Griffin, in his book The Creature from Jekyll Island, calls it the "Mandrake Mechanism" after Mandrake the magician. Our "prosperity" is created by the slight of the banker’s hand. By loaning units of credit ("dollars"), money magically appears and we get what we want. Shrouded in the great mystery of the banking institution, we are none the wiser, continuing our belief in the dollar as we race in vain to pay the interest on "money" loaned/borrowed into circulation.
This mythological credit "money" is not new. Marriner Eccles, chairman of the Federal Reserve Board (the FED) in 1941, testified before Congress way back then, about the Federal Reserve’s right to issue credit-money. Congressman Patman asked him, "There is nothing behind it, is there, except our government’s credit?"
Eccles answered, "That is what our money system is. If there were no debts in our money system, there wouldn’t be any money."
Can we borrow our way to prosperity forever? The current FED system is over 90 years old and coming apart at the seams. The FED has enjoyed the power to control the issuance of their credit money and therefore has controlled what industries and commerce can prosper and enrich their friends; and what will fail—in receivership to their friends. This power has shaped the Borg of corporate dominance in our world. Into this fold, everything that can be given a price or a bar code has been assimilated.
Their partners in Congress and the Treasury Department have paralleled the FED’s reckless dominance. The power to trade Treasury Bills for FED "dollars" has led to shameless appropriations and spending without end. Both sides of the fascistic consortium of corporate government are morally and economically bankrupt—and their depravity is spiraling out of control.
How far, how fast?
Consider the following financial points of interest and what they tell us about where the FED's placebo economy is headed:
• Since August 9, 2007, the FED has injected 200 billion dollars to keep their economy "inflated" and afloat.
• Gold hit a 28-year high of nearly $750/ounce.
The Canadian dollar surged from $.6179 U.S. five years ago, to over $1.00 this month, a 31-year high.
• The CRB Index, representing 19 commodities, has surged 8.1 percent this month, the most since July, 1975.
• Crude oil has hit $83.90 a barrel, the highest ever.
• Wheat is a record $9.51 per bushel, more than three times its level of just two years ago.
• In 2005, the personal savings rate of Americans dipped below zero. The Commerce Dept. stated that the nation’s personal savings rate for 2006 was a negative 1 percent, the worst in 73 years. [Note: Fueling Americans' savings deficits is their conditioned belief that access to credit is synonymous with having bankable savings on account].
• The U.S. must now attract some $3 billion of foreign capital each and every business day in order to keep its economy growing.
• Between July and August, 2007, the sales of existing homes plunged 4.3 percent. Meanwhile, existing homes, condos and co-ops that are for sale jumped more than 19 percent from a year ago and foreclosure filings are up 115.3 percent.
• Price rises in the first half of this year include: crude oil up 23 percent; a gallon of unleaded gas up 37 percent; soybeans soared 26 percent; wheat prices are up 18 percent; corn rose 6 percent; uranium nearly doubled at 91 percent; copper prices increased 29 percent and lumber prices grew 8.4 percent.
• Last August factory orders fell 3.3 percent, the largest drop since January. Orders for core capital goods—goods businesses purchase to produce goods for the marketplace—fell 0.5 percent; shipments fell 1.6 percent; inventories slipped 0.1 percent and; unfilled orders rose 1.2 percent. Orders for durable goods fell 4.9 percent while orders for non-durable goods fell 1.6 percent.
• Global volumes in credit derivatives, the placebo of placebos, grew 32 percent in the first half of 2007 and are up 75 percent for the year. Volumes surged to $45.46 trillion, from $34.42 trillion at the end of 2006.
• Interest rate derivatives also grew 21 percent with volumes increasing 38 percent to some $285.73 trillion. Volumes in equity derivatives grew 39 percent in the first half of the year, and are up 57 percent over the past year to $10.01 trillion.
• Meanwhile, the average four-year college tuition jumped 6.3 percent for the 2006-2007 school year and a first-class postage stamp increased 8 percent this year.
What is the root cause of such inflation? Literally, fiat economies are "inflated" by the infusion of excess cash, with the "profit" going to the issuing banks and/or their partners in governments around the world. Russia inflates with new cash in excess of 50 percent annually. Asian central banks produce new cash at rates between 12 percent and 20 percent each year.
The FED in the United States has been pumping it out it out between 11 percent and 14 percent per annum. That figure has been increasing though it is hard to say by how much since the FED stopped issuing M-3 money supply reports detailing "the froth at the floodgates."
The U.S. dollar is losing its reserve currency status—no longer will it be the storehouse of wealth and the iconic standard throughout the world. It is losing value faster than other currencies, but almost all nations have succumbed to some form of placebo money. Fiat systems dominate the world. The U.S. dollar is simply devaluing faster presently—the others haven’t been left out in the sun as long and have a slower melt rate.
The euro appears as the current favorite to replace the dollar as the world’s reserve currency. Greenspan said that the dollar is still slightly ahead in its use as a reserve currency, but added that "it doesn’t have all that much of an advantage" anymore.
The euro, which was at a parity with the dollar in August, 2003, is now trading at over $1.40 U.S.
What does it mean? Our national treasury, which depends primarily on the sale of Treasury Bills to keep afloat, will be increasingly challenged to sell more bills while the world will be selling out of the ones already floated. What happens as these dollar-based T-Bills are being dumped by foreigners? They flow back here to saturate our economy and devalue the dollar even further—too many sugar pills floating around will make "US" sick.
Add a major trade deficit between the U.S. and much of the rest of the world, combined with a foreign policy of baseless, pre-emptive, military aggression (at a cost of another $50 billion or so a year) and we have a recipe for disaster.
Iran: the axis of evil
Iran, the world’s 4th largest oil exporter, has slashed the use of dollar payments for its oil exports to 15 percent. Sixty-five percent are now carried out in euros and 20 percent are in yen. No wonder we have five carrier groups in strike range and a media in full-blown, "propagenda" generation mode. These Iranian evil-doers, err, euro-dealers, are attacking our sacred "dollar."
China backs up the dump truck
Why are the Chinese ready to "dump" their dollar holdings? Since March, 2006, the FED quit publishing "M3" data—the money in circulation—so no one knows for sure how much cash is being printed to "inflate" the placebo economy. There are no U.S. plans to reduce deficit spending or pay down the existing debt other than printing more money to pay it off. In the recent slide, the U.S. dollar has lost at least 30 percent of its value against foreign currencies, so China has lost an estimated $300 billion by holding U.S. "dollar" reserves. China reportedly told the U.S. delegation; "we are the largest holder of U.S. currency and if the rest of the world unloads theirs before we unload ours, we will lose our shirts."
Last August, Chinese government officials explained how China’s massive U.S. dollar holdings support the value of the U.S. currency. They stated they could use those holdings as a political weapon to counter congressional calls to revalue the yuan and impose trade sanctions on Chinese goods. Chinese state media referred to the country’s stockpile of U.S. dollars as its economic "nuclear option," capable of destroying the dollar at will.
Beijing also signaled it would begin "diversifying" out of its $1.34 trillion U.S. currency reserves, which are mostly U.S. bonds. Beijing has already created a $300 billion investment fund to use those dollars to purchase U.S. hard assets, including real estate and infrastructures, with more $billions on the way, as the U.S. garage sale continues.
The danger, as The London Telegraph noted, is that China "risks setting off an unstoppable stampede, in which other nations would seek to dump their holdings before China swamps the market."
Ambrose Evans-Pritchard stated in the British press, "A sharp drop in foreign holdings of U.S. Treasury bonds over the last five weeks [mid-September] has raised concerns that China is quietly withdrawing its funds from the United States, leaving the dollar increasingly vulnerable."
Data released by the New York Federal Reserve shows that foreign central banks have been net sellers of U.S. treasuries, with $48 billion having been sold since late July, and $32 billion in the first two weeks of September.
Hans Redeker, currency chief at BNP Paribas, an influential European bank, said, "we won’t know if China is behind this [sell off] until the U.S. Treasury releases its TIC data in November, but what it does show is that world central banks are in a hurry to get out of the U.S. dollar."
Meanwhile, the U.S. government and the Fed under Chairman Ben Bernanke will not protect the dollar. Instead, the U.S. money supply is increasing almost five times faster than GDP growth.
Venezuela’s vaquero vanquishes the vampire—err empire
Steven Bodzin of Bloomberg News Service reported September 17, 2007, that "Venezuelan President Hugo Chavez instructed Petroleos de Venezuela SA, the state oil company, to convert its investment accounts from dollars to euros and Asian currencies to reduce risk. Venezuela moved some of its reserves into euros last year, along with other oil producers including the United Arab Emirates, Kuwait and Qatar. The $50 billion Qatar Investment Authority said on Sept. 4 that it was looking for options in Asia to counter a weak dollar.
"Chavez, in his weekly address on national television said the U.S. has bought goods from around the world, paying with paper that is ‘a bubble.’
"President Chavez said he instructed Energy and Oil Minister Rafael Ramirez to change currencies after the FED increased the U.S. money supply to alleviate a shortage of cash sparked by concerns about debt backed by sub-prime mortgages.
"Ramirez commented recently that, ‘The world’s oil trading system has primarily used dollars for decades. Iran in July requested yen rather than dollars for all shipments to Japan, boosting that currency. Petroleos de Venezuela had $23 billion in current assets, including $1.88 billion in cash, $848 million in restricted cash and $9.55 billion in accounts receivable at the end of 2006, according to its audited financial statement. In addition, the company finances the national development fund known as Fonden, which held $27.3 billion as of May 11.’
"Chavez speaks frequently about the need to increase his country’s independence from the U.S., which he calls ‘the empire.’ He has sought to diversify his country’s customer base for oil by signing supply contracts with Japan and China. Oil Minister Ramirez said Sept. 11, 2007, that Venezuela and China will work together on a $10 billion project to build six refineries and a shipping company to make Venezuela one of China’s most important suppliers. Still, the U.S. continues to import 1.36 million barrels a day of crude and refined products from Venezuela, more than half its estimated 2.4 million barrels a day of output."
Cheney and Saudi Arabia
Reportedly, vice-President Cheney is so enamored with the dollar that he has completely liquidated his dollar assets. Ironically, he administers the policy of U.S. global hegemony and FED dollar dominance, yet he has divested his personal million$. What does he know, that we should?
The London Telegraph reports that Saudi Arabia "has refused to cut interest rates in lockstep with the U.S. Federal Reserve for the first time, signaling that the oil-rich [Persian] Gulf kingdom is preparing to break the dollar currency peg" it has long maintained. Such a move could risk "setting off a stampede out of the dollar across the Middle East."
Intentional controlled collapse?
Greenspan, now retired from the FED chairmanship, is still pontificating anyway. He says the dollar is plunging and the euro may replace the dollar. The lira, mark, franc and other national currencies have fallen to the euro, even though the globalists’ EU merger appears to be failing.
Why is Greenspan prophesying doom and blaming it on Republicans? Even though retired, the financial realms still hang on his every word. Is the dollar meltdown just natural market forces at work or an engineered collapse that is part of a larger agenda?
Revisiting the past, it was the low interest from the Greenspan era, which created the housing bubble. Then higher rates and adjustable rate mortgages pushed many borrowers beyond their means—creating the sub-prime "crisis."
The result? Foreclosure conveys property to the banks as American homeowners join the ranks of the family farmers, industrial manufacturing, textiles and mom and pop retailers.
Or, as Bob Chapman of The International Forecaster states, "As Ben Bernanke, via his helicopter, brings us credit from above to bail out the banks and Wall Street, he smells repos in the morning. No matter what they do, they will have a very hard time dumping all their crappy paper. The whole world knows what they have to sell and they will have a hard time selling it."
Are Greenspan and Bernanke giving the economy a one-two punch to deliver a well orchestrated demise of the "dollar?" Is there a greater plan at work here?
Reserve currency to be replaced?
The "amero," which would be a regional amalgam currency of Mexican, Canadian and American dollars and pesos, has been quietly suggested, then denied, and recently admitted to, as a long-term goal, by former Mexican President Vicente Fox. American opposition might be overcome if the dollar weakens enough—and that may be the plan.
On the dark side, it appears as if we are headed for an economic earthquake. The weight and burden of our credit dollar, backed only by more printing and T-Bills is pushing heavily against a tectonic plate at ocean’s edge—the placebo economy could be gone as quickly as a coastal range and the economic tsunami could devastate distant shores, several oceans away. But that’s only the dark side.
A bad thing?
If the FED dollar is really a fraud and based on nothing, what is its real value? Do we owe something, when it came from nothing? What exactly do the Chinese hold over a trillion of? If they and other "wealthy" nations are caught holding a bag of worthless paper "at the end of the day," who will be to blame? Will a dollar collapse shine the light of day on all the other make believe fiat paper currencies in the other placebo economies around the world? Will the people in this world learn a final lesson about the evils of fiat currencies and the murder, mayhem and wretchedness that follows in their path?
Will it be a bad thing if all the make believe money in the world evaporates back into the void of creditory nothingness from which it came? The political powers that impose their various forms of global tyranny are intrinsically tied to such mythical money. At the very least, the global dominators will have to regroup and start over, giving humanity a fighting chance.
Our programmers have us thinking upside down and backwards. We have been trained to believe in the mythical dollar as if it were a standard unit of measure. The "dollar" is not a standard—it’s a fluid medium of exchange that is constantly being watered down. Prices aren’t going up.
Except for fads, trends and the higher value of technological advancements, the things we buy share a relative value to one and another. It is the "dollar" that changes.
Look at it from the value of things rather than the value of "the dollar."
How many dollars will an ounce of gold buy today? How about in 1900? If you had a new car in 1962 how many dollars would it be worth? What is the value of a new car today? If you built a home and sold it in 1962, how many dollars would the home bring? If you did the same thing today, how many dollars would you earn?
Gold hasn’t changed much. It’s one of the elements on the atomic chart. Houses are now larger and have more amenities. Cars have more options available and installed as standard equipment. There is a plethora of government-mandated emission and safety devices, which add value/cost to a modern automobile.
With size and technical advancement compensated for, their comparative values will be substantially unchanged when we leave the dollar out of the equation. How many ounces of gold would it take to buy a house or car, then and now?
I repeat, our programmers have us thinking upside down and backwards.
How can a make-believe, placebo economy collapse? We go to the medicine cabinet—our bank or the ATM for more sugar pills. As long as there is medicine on the shelf, the people will stay on their meds. Everything will be fine. Our economy is a belief system. It will only crash when the people’s belief in it crashes.
Placebo money comes from the stroke of the banker’s magic pen or keyboard. Economists and pundits maintain the illusion with an array of graphs, charts, indexes and "leading indicators." We are told what the economy is, and like good little placebo-eaters, we believe.
Who will Americans believe when the ATMs run out of sugar pills? Will we start taking "amero" brand sugar pills instead?
These are interesting times.
Silver! Silver! Silver!
Tired of sugar pill money that melts when the FED waters it down with another inflationary run of the printing presses? Want to sink your teeth into something real? Are you concerned with the present and coming meltdown of the FED dollar?
Silver, for many good reasons, was the nation’s choice for the original dollar, and for even more reasons is good choice for storing your wealth today, because silver is the monetary metal most likely to increase in value. Here are a few of the reasons why:
• In 1900 there were 12 billion ounces of silver on the planet. This has fallen to about 300 million ounces. That means that roughly 97.5% of the silver ever mined has been consumed by the global photography, technology, medical, defense and electronic industries.
• Silver is the best electrical conductor and reflector of light and heat, with more uses being discovered every day.
• World demand for silver now exceeds annual production, and has every year since 1990, with a demand deficit of 150,000 ounces per year.
• Since the end of WWII, the U.S. government has sold its 3 billion ounces of silver bars, below market value, effectively depressing silver prices.
• 20% of silver is new, 80% is recycled.
• Silver is five times more scarce than gold.
• Silver futures trade on the COMEX division of New York Mercantile Exchange, the largest physical commodity futures exchange in the world where, basically, people bet on what the price of silver will be in the future. These folks "short" silver, which means they sell it, even though they don’t own it. There has been a massive amount of "short selling" in the silver market. This short selling has kept the price of silver at artificially low levels. As of July 10, 2007, the four largest COMEX traders are short roughly 250 million ounces of silver. With a global silver supply of roughly 300 million ounces, there isn’t enough silver on the planet for the "silver shorts" to cover their positions! As former commodity trader and silver expert, Theodore Butler stated, "It is the existence of this concentrated short position that will, at some point, launch the silver price to the heavens."
Congress mandated a silver dollar in the Coinage Act of 1792, containing 371.25 grains of silver (77/100ths of a troy ounce) with another 37.125 grains of copper alloyed in for durability. This constitutional exercise of their power to "coin money" was violated with the passage of the Federal Reserve Act—the beginning of the slippery slope and the FED’s dollar slide.
To avoid falling with the FED, do as Vice President Cheney did. Dump your dollars before the Chinese do. Close out your dollar based savings and 401K accounts. Buy silver!!! Your wealth will then maintain and maybe even dramatically, increase its value compared to the FED dollar.
Hold physical silver—don’t buy "short" silver. And don’t put your silver in a safe deposit box at the bank. When the banks get hit with a run, your silver will be locked inside! When it’s time to do a little shopping, spend your silver directly or trade it for enough "cash" for the day’s transactions. Silver money shouldn’t be a foreign concept to real Americans!
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