The Panama Papers: This Is the Consequence of Centralized Money and Power

If we don’t change the way money is created and distributed, we will never change anything. This is the core message of my book A Radically Beneficial World: Automation, Technology and Creating Jobs for All.

The Panama Papers offer damning proof of this: increasing concentrations of wealth and power that are free of any constraint (such as taxes) is not just the consequence of centralized money and state power–this inequality is the only possible output of centralized money and state power.

Here is a graphic portrayal of just how concentrated global wealth really is: the top .7% (less than 1%) own 45% of all global wealth, and the top 8% own 85%.

Here is a depiction of wealth in the U.S.:

Here is my description of how centralized money and finance inevitably creates debt-serfdom as its only possible output:

Once the creation and distribution of money is centralized, the corruption of political power is inevitable, as wealth can always buy political favors, such as tax evasion schemes.

Concentrations of private wealth and the central state are simply two sides of the same coin. Private wealth, monopolies and cartels are all protected and enforced by the state/central bank: the status quo exists to protect the privileges of the few at the expense of the many.

<b<>Well-meaning but hopelessly naive people are constantly proposing “reforms” of the status quo–reforms that are doomed from the start because they fail to change the way money is created and distributed.

As long as central banks create and distribute money to banks, which are free to use the money for speculation and lend vast sums at near-zero rates of interest to corprorations and financiers, nothing can possibly change.

Recall that the central state enforces moral hazard: if banks reap vast profits on their gambles, they keep the winnings and can use a sliver of this wealth to buy political favors from politicos like Hillary Clinton.

If they lose the bets and are insolvent, the federal government and the central bank (Federal Reserve) bail them out by transferring the losses to the public or by rigging the system to funnel cash to the banks via paying interest on deposits held at the Fed (while slashing interest income to the serfs to near-zero).

There is another way to run the world: if money is decentralized, i.e. created by a distributed, decentralized system that pays people directly for their labor, rather than being distributed to banks to lend at interest, the sort of concentrations of wealth, power and exploitation enabled by central banking would no longer be possible.

Technologies such as the blockchain are enabling alternative ways of creating and distributing money outside central banks and states. I describe a labor-backed crypto-currency in my book A Radically Beneficial World. The potential of the blockchain to disrupt and bypass central banks’ monopoly of money creation is revolutionary, which explains why Goldman Sachs and their cronies are desperate to own their own versions of blockchain technologies.

But the cats are out of the bag, and central bankers and their cronies will have a difficult time herding these new technologies back into the enforced serfdom of central banking. The only way to bring down the corruption created by the concentration of wealth and power is to dismantle the monopoly of money creation held by central banks and their private-bank cronies.

The Future of Money

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7 Responses to The Panama Papers: This Is the Consequence of Centralized Money and Power

  1. diogenes says:

    This is excellent as far as it goes, Mr. Smith, and thanks for that. But it entirely omits discussion of the equally bogus and equally toxic nature of corporate finance, which does as much and more damage to the world and the lives of 99% of us as usury debt monetary creation does. On this see Part 2.1 of my Distribution of Wealth In America essay, currently appearing here, particularly the extended quotation from John Moody and the discussion of the “capitalization” of US Steel. The stocks being “bought back” with usury created funny money are equally fraudulent and toxic to begin with. America needs to drown Wall Street in the bathtub before Wall Street finishes destroying America.

  2. Brockland A.T. says:

    Fundamental error atop your pyramid; central and private banks lend most money in existence with a deceptive logical inversion; private banks buy public debt, bonds issued by the government, instead of the government printing money based on government credit.

    Governments like to pretend they are ‘borrowing’ from private banks, who can pretend they are ‘lending’, allowing open-ended access to larger volumes of currency. The government could just as easily print its own IOUs through a public bank and not pretend they are private bank IOUs. A sound system of democratic accountability would then prevent abuse of public bank functions by the government of the day.

    As described by Ellen Brown, credit needs to be run as a vital public utility. Decentralization would naturally follow as local public banks arose to meet local credit needs.

    Government credit, ultimately, is the ongoing past, present, and future potential goods and services of its economy. To become money, currency translates directly into the goods and services with little or no loss of value, such as found in barter. That’s what makes currency worth money.

    The future of money is in public banking and proportional democracy, where there is no room to hide pyramid schemes. Remove excess middlemen and speculators, and you have a real economy.

    Private blockchains seem more like appendages to the war on cash, trying to preserve abusive private wealth monopolies by creating pockets of unaccountability. The whole point of crypto ‘privacy’ thing seems to be about avoiding tax, sales tax in particular. Yet any gains made from speculation in crypto currencies is inevitably subject to tax when users resurface from the grey economy and need to covert crypto currency to legal tender or explain a surfeit of valuable goods.

    Crypto currencies seem as superfluous to the real economy as any other speculative scheme intended to cheat real value from a currency. At best a dicey form of barter.

  3. Assume that Jesus’ mother put a small gold coin weighing 3 grammes in Jesus’ retirement account at 4% interest in the year 1 AD. Jesus never retired but he promised to return. Suppose that the account was kept for this eventuality. Assume further that the end is near. So, how much gold would there be in the account in 2015?

    The answer is an amount of gold weighing 10 million times the mass of the Earth. The yearly interest would be an amount of gold weighing 400,000 times the mass of the Earth. There is a small problem. It would be impossible to pay out Jesus’ retirement account in gold coin because there just isn’t enough gold.

    The issue is not so much banking and central banking, as without banks and central banks, interest rates would be higher because financial markets would be less efficient and there would be a higher risk of financial collapse. The answer is not ending banks an central banks, but negative interest rates.

  4. Lincoln says:

    Apr 3, 2016 – The Panama Papers: Victims of Offshore

    The Panama Papers is a global investigation into the sprawling, secretive industry of offshore that the world’s rich and powerful use to hide assets and skirt rules by setting up front companies in far-flung jurisdictions.

    The Panama Papers · ICIJ

    Your guide to The Panama Papers.

    Leaders, criminals, celebrities

    A giant leak of more than 11.5 million financial and legal records exposes a system that enables crime, corruption and wrongdoing, hidden by secretive offshore companies.

  5. Lincoln says:

    April 6th, 2016 Global military spending increased in 2015

    Stockholm International Peace Research Institute report: Spending on weapons and other military costs grew by more than one percent in 2015, marking the first year of growth in total military purchasing by governments worldwide since 2011.Total military purchases reached $1,676 billion in 2015, or nearly $1.7 trillion, consuming some 2.3 percent of global gross domestic product (GDP), SIPRI found.

  6. Lincoln says:

    It is a Small World at the Top, and the largest banks hold a total of $25.1 trillion dollars or enough to fund the federal U.S. government for over 7 years or roughly $3500 per person on earth.

    Which Corporations Control the World?

  7. Lincoln says:

    Apr 6, 2016 Nullification Movement News

    A quick overview of a number of bills that have been moving forward: Protecting the right to keep and bear arms in Mississippi, Pushing back on FDA restrictions on terminally-ill patients in Maine, California, and Alaska, Rejecting the unconstitutional federal ban on industrial hemp in Alaska and Oregon, Taking action against a national license plate tracking program in Oklahoma.

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