central banks

The Banksters are Worried that the Swiss Gold Initiative Will Pass

rafifarber Economics, Gold and Silver, The Jewish Libertarian Blog , , , ,

The vote is in two weeks, November 30th, and it could be a day for the financial history books, reversing the infamy of August 15, 1971. More important than any election about which group of politicians is going to tell you what to do.

They’re starting to squirm now. The head of the Swiss National Bank, some guy named Something Jordan, was quoted as saying that the Swiss Gold Initiative would be “fatal” for the bank. Usually, this kind of jargon is hyperbole, but in this case, Something Jordan is right. If a central bank must keep something that it cannot print or its buddies cannot print as a certain percentage of its holdings, then by definition that central bank is tethered and restricted from printing beyond a certain point.

The money supply becomes stable and moves only with an increase in gold supplies, and inflation stops. The Swiss Gold Initiative only requires a 20% ratio of gold to Swiss Francs, but it doesn’t matter what the ratio is. As long as there is any requirement to hold something physical in proportion to monopoly money at a fixed percentage, the amount of paper that can in theory be printed becomes limited, and the central bank dies. Unless, of course, it cheats, as the Federal Reserve did from 1913 until 1971 when it finally defaulted on its last gold payments.

If this referendum passes, and with God’s help it will, then the first central bank in the West will go down. The Swiss Franc will shoot up like a rocket, bringing down other currencies in relation to it, and the Swiss people’s purchasing power will double, triple, who knows how high it will go. They’ll be able to buy a lot more stuff with their paper and they will notice it. Then other countries will notice it too and start demanding sound money and declare war against their respective central banks.

The snowball will be fast and furious and central banks will fall like flies. Gold and silver will move up fast and leave paper in the dust. The shot heard round the world will be fired in Switzerland, incidentally, exactly where Zionism began in 1897. I haven’t found much of a link between those two things. I just think it’s cool.

I have already discussed my investment strategy for gold in an article on TheStreet. The most leveraged way to play this is to buy way out of the money calls on GLD going out to 2016 and 2017, which will pay out 1750:1 at current prices assuming gold does what it did in 1980 by January 2016 or 2017, depending on your strike date.

That means that for every $1,000 you put into GLD 225 2016 Calls, you will get $1.75M in return if gold quintuples as it did from 1978-1980. Of course, you could also lose it all if gold does nothing by then.

But if the Swiss Gold Referendum passes, we will be in the end game, a year or two away at most.

Central banks will fall like flies. Incidentally, I swatted three flies today in my house.

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A bank story from the past

rafifarber Humor, The Jewish Libertarian Blog ,

I wrote this 4 years ago before we were married. As true today as it was even before it was written. Before you begin, be aware that we currently have an account at Discount that we have been trying to close for 6 months, sitting there accruing Shas child welfare stipends I refuse to touch, so instead I just gave them to Feiglin’s Knesset election campaign yesterday. We now have an account at Bank Yahav, a tiny nothing pisher bank we use as little as financially possible.

Now let’s go back to 2008…

There are three major banks in Israel. Bank Discount. Bank Leumi. And Bank Hapoalim. They’re all really, really bad. A combination of incompetence, greed, robbery, redundancy, and incompetence have congealed themselves in these banks to create a new level of grossness. If you’ve ever moved your oven to see the kind of decades-old sludge of thousands of uneaten meals that’s behind it that you have to clean with oven cleaner that’s so corrosive that even the idea of it touching your skin will burn you like Holy Water assuming you’re Satan and it still won’t go away, that sludge is like these banks, but at least you can eat the sludge if you’re starving to death. But not if you’ve already sprayed it with oven cleaner.

We will begin with Bank Hapoalim. Bank Hapoalim, in order to protect its customers from fraud and signature forgery, steals from said customers by committing fraud based on the assumption of signature forgery. Case in point, about a month ago, when we signed the lease for an apartment, we had to give the landlord a check for a certain amount of money. The check was signed. A few days later, said landlord is notified that the check was refused. Hapoalim has this policy that any refused check costs the account holder and the recipient a 20 shekel fine. Therefore, we are fined 40 shekels, for we will have to pay the landlord back the money that Hapoalim stole from him as well.

We call the bank. We are told that her signature does not perfectly match the signature she had 3 years ago. This is very dangerous, because if her signature changes slightly, that could mean someone is trying to forge it. Thank God for Bank Hapoalim. She is told to go into the bank to “change” her signature. She does so. She finds out the next day that the check has been refused again. Another 40 shekels – BAM! And more security! We are saved from theft! She calls the bank again. They tell her to come in and change her signature. She says she DID that. They say, “Oh, yeah. It’ll go through next time.”

She finds out that it was refused. Again. Another 40 shekels! WAP! Is security tight at Hapoalim? Is a frog’s butt watertight? Not as watertight as Bank Hapoalim! “Hapoalim – Where security is so tight, not even our customers can get past it.”

She asks about the fees. She is told that “Nothing can be done.” Of course not. The money was rightfully stolen. How could such a question be asked?

Back to Discount. “Discount – We specialize in turning your potential banking card into a paperweight.”

Bank Discount calls me. They want to know if I want a credit card. This is funny, because I have no income yet. But I don’t tell them this, because they’re going to send me one anyway, and I’m betting on the fact that it won’t work, just like the PIN they sent me months earlier. I say, “Sure, whatever, credit card.”

Sure enough, they send me the credit card. They want me to dial *6111 to activate it with the PIN number they sent me. I do that. I put in my ID number. I put in the PIN number. It doesn’t work. I do it again. It doesn’t work. I deliberate between, on the one hand, talking to a person, who will probably send me to a branch to get the problem sorted out, who will probably redirect me when I get there to the *6111 hotline for malfunctioning PIN numbers, who will probably charge me 20 shekels for using the hotline twice in a month. I decide not to bother. I cut up the credit card and throw it out and burn the remains with thermite plasma. I don’t actually burn the remains. But it would have been cool. A few weeks later I get a call.

“We see that you have not activated the credit card we sent you. Would you like us to activate it?”
“No, I would not like you to activate the card.”
“May I ask why not?”
“Because I destroyed the card.”
“Oh, may I ask why?”
“No. But I’ll tell you anyway. You would not let me activate the card.”
“So do you want us to cancel the card?”
“No, I want you to activate a card that doesn’t exist. Of course I want you to cancel the card.”
“OK, so we will cancel the card.”

A week later I get a letter that says I am charged 2 shekels for canceling a credit card.

“Israel Discount Bank – We discount the amount of money in your account for reasons WE can’t even understand.”

OK. On to Leumi. Now this one’s a real kicker. It happened nearly two years ago (6 now in 2012), when Natasha became a student. She was advised that, since she had student status and was exempt from all bank theft, to open accounts at all the banks to see which one was the least grotesque. So one of the bank accounts she opened was at Leumi. She goes there 2 years ago to put money into her account, which is what one usually does when one has said account in said bank. They inform her that there is a “problem” with the account, and she should see the front desk. She sees the front desk, who tells her the problem will be fixed and to come in some time later. She comes in that some time later to try to put money in her account. She is told that there is still a glitch and the computer will not allow money to be put into the account. She goes back to the person who deals with this stuff, who says they are trying to fix the problem. She says that she would much rather just close the account, because she has other accounts that actually sort of work.

The lady does not let her close the account.
Natasha insists. The lady insists that she will not close the account for her. This goes on for maybe 10 minutes.
She says fine, whatever, and leaves.

2 years later, about 2 weeks ago now, she gets a call from Bank Leumi. They insist that Natasha now owes them 80 shekels in fees. She tells them:
A) I have student status
B) I was not allowed to put money into the bank
C) I was not allowed to close the account
D) You people are completely insane, and I’m not paying anything

The guy on the phone says he “Doesn’t see why she can’t close the account.” That’s because he’s reading off of a paper like a telemarketer, probably. He insists that she pay the fees. She insists that she will not pay any of the damn fees. He says to come in to close the account, and then she responds, on my insistence, by hanging up the expletive phone.

“Leumi – The bank that’s actually a front for a drug-smuggling ring.”

(The good news is that Leumi called back a few weeks later and said that it was their fault, that she has student status, and is exempt from all theft. The account, however, remains open.)

Is democracy as we know it a failure?

rafifarber The Jewish Libertarian Blog , ,

I’ve been pondering this question for some time now as western civilization continues to crumble. The western idea of democracy, as it moves further and further from God and more towards government as an end in itself, seems to show that democracy as we know it is indeed a failure.

As government grows and grows, people rely on it more and more, which encourages it to grow and grow until people lose any sense of personal responsibility for their actions. As government continues to collapse under its own weight, the people demand more and more protections from the government, unable to realize that they cannot be provided.

You can tell people 1000 times that there is no money for medicare, social security, and wars, and it simply won’t register. Of course there’s money. The government can just cut a check.

So people unaware that they have personal responsibilities, keep voting for the person who promises to take it away from them in exchange for promises of money and benefits fed by a printing press of money backed by nothing but the word of the government itself, a logical loop of death and inflation.

Money starts to overflow the system. But people will never vote for the guy who promises to flush the system clean. This involves way too much pain and coming to terms with reality. The government has to take care of you, take care of the system, so the money has to keep flowing.

At some point, and this will be soon, reality will take effect regardless of whether people want to acknowledge it or not. This creates more pain than would have been necessary to have been endured had people chosen to recognize reality by free choice, which is arguably the entire purpose of the human race on planet earth.

The reality is that money is only a medium that is reflective of work done. Real money is real stored work in liquid form that can be exchanged. When someone lends you real money, they lend you the work that they did that they do not need at the moment to survive. It’s extra. You have to pay it back by working harder in return. If you don’t pay it back, that work was lost. This is debt. Lost work. If there’s too much of it, there’s not enough productivity to support the population in debt and they collapse and go back to zero. This is a default.

You work hard at your business, you earn money, you store it in an account. You accrue capital. That stored work can be exchanged for other goods and services, or lent on the expectation that it will be repaid in interest.

But the printing press and money backed by the false word of governments has replaced “work”. And reality will catch up in the form of that money losing its pretend value as the assumed storage unit of work done.

When the dominoes fall, all printed money will totally outnumber the amount of actual work done in the world, as the amount of work done in the world shrinks in real terms as people go unemployed. Without productive work, people starve. Increasingly, the money in the world is reflective of handouts by governments rather than work. Money reflective of nothing will lose all value. That’s when the system will become unsustainable.

All the financial tricks done by world banks to play around with money they actually did no work with – produced no food, no thing of actual value, no goods, will be recognized as paper pushing. It will suddenly be discovered that the amount of money in the world way outstrips the amount of real work done in the world.

Work adds value and prosperity to the world. A printing press does not. When the amount of work vs printing press money becomes apparent, that’s when the system falls.

There is no way you will get a majority of people to understand this. They will keep voting for the money until they drown in it.

This is why democracy has failed for now. Unless you can get a majority of humanity to accept reality, which seems a really long shot.