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Understanding Real Economics – Part #2

February 21, 2012

Why DIGITAL money will destroy Capitalism in a few years!

Those of us who understand the principles of Capitalism know that sound ‘money’ is a core principle of this System. We also know that Capitalism is built upon the concepts of Wealth creation and then the distribution of this ‘wealth’ via the concept of VALUE. Since we own property under Capitalism we need to exchange and trade our units of production in the greater marketplace. All this is done with the understanding that a reasonable VALUE will be received for one’s labor and effort. Money is the concept which serves as our ‘proxy’ for VALUE in the Capitalistic System. Sound ‘money’ creates confidence in the exchange process and it also serves as a ‘store of value’ over long time periods.

Today, however, our money units have evolved into DIGITAL units that have ‘no value’ and no ‘substance’. Digital money creates continuing volatility in ‘prices’ and it also destroys the incentives for investing over long time periods. The other negatives about ‘DIGITAL money’ are centralized control over the money creation process and constant ‘money manipulation’ by the Central banks to influence ‘prices’ and ‘trends’. These actions create an environment of uncertainty, instability, and a desire for short-term decisions. Who, in their right mind, would want to invest their hard-earned funds long-term (say a 30 year mortgage) when the ‘money units’ are so volatile, unstable, and lacking in substance.

The history of Capitalism has demonstrated that ‘money units’ need to be some THING viewed as having VALUE. We can go back in history some 5,000 years to the Sumerians and then move forward to as recent as 1971 to ascertain that ‘money units’ have always been some THING of substance. The Sumerians adopted a silver coin as their money. The Hebrews, as early as 1700 B.C., also desired mostly silver as their ‘money units’ which they named the Shekel (which originally was a measure of barley). The Greeks adopted ‘money units’ of iron, bronze, and eventually they adopted silver for their unit called the ‘Drachma’ (all these units were viewed as having VALUE based upon the weight of the metal in each coin that was minted). VALUE is the core concept underlying the real economics of Capitalism!

As we continue our voyage through history we can discern that all Cultures and Civilizations adopted various ‘money units’ that were based on some item from NATURE (iron, copper, bronze, silver, and gold emerged as the chosen items). These ‘money units’ were mostly minted into coins which included a given unit of weight of the metal as their unit of VALUE. Value is the core concept which underlies all ‘money units’. When Political leaders, Kings, or Finance Authorities tried to diminish the metal content within the ‘money unit’, this always led to a rejection of the ‘money unit’ in time. The most recent example is the Zimbabwe dollar of 2009-10.

Never in the history of ‘money’ have political and finance authorities attempted to impose ‘valuless’ or ‘imaginary’ money units upon the marketplace (as today). Even the ‘paper’ money units (of the past) were always backed to some degree with an item that the people viewed as having VALUE. When the people in the marketplaces became AWARE that their ‘money units’ were totally debased, they immediately started to reject these ‘money units’. This is what is now happening in our current marketplace. Traders, investors, lenders, and many informed patriots are now rejecting our DIGITAL ‘money units’…which a few elite MONEY CHANGERS (our Central Bankers) are now imposing upon the markets. Many are going back to a real THING (gold, silver, or equivalent).

As AWARENESS grows among the public and the global trading markets, I am convinced that all the Bernanke, King, Draghi, and similar Central Bank DIGITAL ‘money units’ will also be rejected. Money is the ‘lifeblood’ of our Capitalistic Economic System and the debasement of our MONEY units will eventually DESTROY real Capitalism totally. Digital money units now represent some 96% of all money transactions in the global marketplace. Some 4 trillion of digital dollar equivalency are now traded daily via the global currency markets. Practically all government securities have now been converted to digital instruments. Direct electronic trading now makes up most of all the Exchange Markets globally.

Capitalism is doomed as an economic System given what is now occurring in the global markets. The ONLY political person who seems to understand the evolution of money (and its impact on Capitalism) is Ron Paul, Congressman from Texas, USA. All the other candidates and most financial pundits seem totally UNAWARE of what has taken place in recent years (mostly since 1990’s). The vast majority of financial pundits and media ‘experts’ also seem confused and unaware of our monetary history and the importance of sound MONEY as the real ‘proxy’ for all asset VALUES.

Given the nature of our monetary problems globally, it is now unlikely that any meaningful CHANGE can occur to salvage our current PONZI financial system. DIGITAL money units have now been imposed upon the markets and the new HFT computers are now endemic within our current non-system. The END of CAPITALISM is now present to those who are AWARE and informed. IMAGINARY money is what we now must live with until the current non-system collapses.  The coming COLLAPSE is assured (based upon history and human nature). Get prepared for the coming COLLAPSE in the next few months. The collapse process may take a few years to  fully play out…but 2012 is likely to be the beginning of this process. The internet is a perfect medium to learn about what is emerging!

A few websites that confirm this viewpoint are:,,,,,,

If you want to learn about ONE alternative to Capitalism you can research this website: Enjoy and get prepared for real CHANGE in the coming years…after the collapse!

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