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Floating Units of ‘Imagination’ – 1973 to 2014!

April 11, 2014

In  the 1971-73 period the Bretton Woods Monetary Agreement broke down and a ‘floating’ currency regime emerged thereafter. Starting in 1973 our dollar became (untied to gold) imaginary (merely a ‘number’ with no fixed relationship to physical reality). Our economists then created the Index Dollar and the Index Measures for all the various world currencies. This led to all the Indices which we use today for determining the relative values of all goods and services. The closing of the gold window in 1971-73 also made the concept of ‘derivatives’ necessary for hedging risks within this new Floating Currency Regime. Understanding this history is absolutely essential for understanding why our current monetary/economic system is about to collapse!

In the 1980’s and 1990’s the computer emerged as the key technology for advancing the trading of currencies and for deriving all our asset prices and valuations. This then led to our digital (virtual) currencies of today. Digitization of all paper instruments is now mostly complete and we now live with mostly ‘virtual’ instruments for our currencies, stocks, bonds, and derivative products. The Cashless Society is now here for the vast majority of Western citizens (consumers, producers, lenders, investors, traders, and speculators). This new regime of ‘floating’ units of imagination, called fiat currencies , trading within a relative environment (comparatively) is now the general model for all our international monetary and financial operations.

The important issue to understand is that the breakdown of the Bretton Woods Monetary System resulted in the Floating Currency Regime and the Index System which we now use. When the international community abandoned gold in 1971 (via the decision of President Richard M. Nixon) the result which emerged was an ‘imaginary’ system of floating names/numbers (which we call by ‘names’ like dollar, euro, yen, pound, ruble, krona, etc.). These ‘names’ are derived from our imagination/consciousness and the symbols and numbers which connect these ‘names’ are also imaginary and within our consciousness. Few seem to discern the nature of our current monetary regime as they assume that the ‘numbers’ within their computer screen ($1.00 and multiples thereof) represent real objects from nature. This lack of discernment is now leading to the biggest financial catastrophe of our financial history. We can witness the beginning of this catastrophe as we watch the volatile stock markets globally!

The breakdown of Bretton Woods (1971-73) led to the Floating Currency Regime (currency symbols, numbers, and names) ‘untied’ from physical gold. This led to our ‘imaginary’ (virtual) currencies of today!

In reality, ‘names’, ‘numbers’, and ‘symbols’ are not units from nature. They are units derived from one’s consciousness. Few seem to discern this reality. When ‘money’ was invented (some 5000 years prior to today) money was invented to serve as a tool for valuation. In other words, ‘money’ was a proxy/substitute for the concept which we call ‘value’. Since ‘value’ is a subjective concept and internal to our consciousness, physical ‘money’, like silver/gold provided a ‘tie’ to physical/material reality. We could trade these physical coins and bullion as proxies/substitutes for the ‘value’ we received from our counterparty. This made trade logical and sound (value for value) and these ‘ties’ also promoted confidence and stability within our markets.

Today, we witness the unraveling of this Floating Currency Regime and many discerning financial pundits are now recognizing that our currency units are ‘imaginary’ and fictional. This is leading to a major debt, stock market, bond market, and derivative market crash in the very near future. All the currencies and valuations which are carried on the books (now our virtual computer screens) will eventually revert to the mean (zero). Since all of these currencies are imaginary and the concept of ‘value’ is imaginary (within our collective consciousness) these units of imagination will eventually ‘disappear into monetary heaven. After this future event, we will end up with all the physical/material goods and products (outside our consciousness) but our prices and valuations will revert to zero (nothing). Few seem to discern that this is the trend now emerging globally.

If you desire to understand what is emerging and why, I would suggest that you take my workshop on the history of money and banking (now offered in Arizona). This workshop will enlighten you on all these concepts (their history) and why we now live with imaginary currencies and worthless units of imagination for pricing and valuation of all our goods and services. Understanding the concept of VALUE is essential for understanding money and currencies. Few, however, seem to discern the subjective nature of this concept that we call VALUE. Capitalism is based upon private property and the exchange of goods via the concept of ‘value in exchange’. My background was in the valuation profession and understanding this riddle called VALUE is the most important concept in all of finance, banking, investing, and trading. Give this missive some reflection at your convenience. I am:

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