Already in the 18th century the use of paper money rather than gold was startling a famous Venetian gambler, fugitive, seducer and impostor, who valued gold to pay his debts but was facing the English high-society who considered gold coins “indecent”, propagating happily the use paper bills instead. One reason was that some of the gold coins (the classic Guinee made from gold deriving from the English colonies in African Guinea) had higher value than the issued paper bills and therefore you spend more that you want in using them…
The dire consequences of “quantative easing” (QE) get foreshadowed in 1763 by Casanova who freshly moved to London where he intended to make a fortune and continue his successes with women – and maybe starting a lottery, like he did in Paris under the reign of Louis XVI. The Chevalier de Seingalt, as he called himself, loosely based on the Order of “The Golden Spur” bestowed on him by Pope Clement XIII and his own invention of “Seingalt”. An imaginary aristocrat family name he made up – probably when he naturalized in France and became a French citizen, which he later concealed – helping him to cover his tracks as a fugitive Venetian Casanova, developing a professional eye for the properties of money and mechanics of gambling while observing his times.
Being still angry at my rudeness that I had settled my debts by paying gold coins instead of paper money, he (Martinelli) instructed me in a very sensible way about the credit of the nation, by showing me that such a view was a sure sign of general prosperity; for, as the English prefer their paper to their gold, they declare that they have full confidence in their bank. This trust may be blind, but it is a source of wealth. However, this confidence can be shattered because the government can misuse the possibility of easily multiplying this wealth, which is only imaginary. Should this case, which is not impossible, ever happen, either by an unfortunate war or by some other kind of event, then a state bankruptcy would be the inevitable consequence, and how it would come then nobody can say.
Giacomo Casanova, Story of my life. Volume 4, Ninth Chapter, My Arrival in London, ca. 1763 (into English from the German translation of Heinrich Conrad by the author)
We are all living on credit, money invented out of thin air by the ECB (European Central Bank) copying the measure of the FEDs in the United States to counter the threat of recession as the consequence of the banking scandals and financial crisis since 2007 with injecting more money into the system. They do this illegally, as a German (!) court tries for years now to sue them for “subverted state funding”. The ECB is not allowed to do so in their role, but through secondary markets they do, unashamed. Sadly, whole Europe is profiting from that strategy of “inflation” trying to keep the demon of deflation at bay. Strong, limited currencies and lack of money / liquidity was singled out as the major factors which led into the World Economic crisis after the “Black Thursday” in 1929 ad the basis of the “Great Depression” in the 30ies. So, MORE money (for nothing, and the chicks for free, as Berlusconi exercised for two decades) is the one-stop-shop solution to counter the effects of high-risk speculation and credit fraud by big banks and the rating business hand in hand with governments who need their liquidity like an addict his/her heroin shots.
Three years ago at noon in the car in Berlin I listened to the extend of this “quantative easing” in a short 2,5min radio piece as part of the midday news (nothing special, right?) and my jaw dropped, because the numbers did sound insane: EVERY month the ECB is pumping 60 BILLION EUROS into the European monetary system through buying state bonds of all the members of the European union, no questions asked. For years. This 60 Bio EUR / month even got amped up in the mean time to 80 Bio /month, becoming a more staggering number. Where does this money come from? Well, from nowhere. With a push of a button the ECB can invent money in accounts made of zeroes and ones and buy bonds literally on the same day with that. It causes the Euro to inflate and that helps to keep exports cheap, government loan interests payable and sellers happy…and common people poor.
This “source of wealth” as Casanova puts it, can be created more easily than printing paper, which still is more complicated due to numbering it and making it more difficult to forge in the books. It is difficult to back such maneuvers with gold, as it is a limited, heavy resource. So Nixon did away with the then already only paper-based “Gold Exchange Standard” and not “Gold Standard” anymore in 1971-1974, the year I was born. Since then, fiction prevails. The printed FIAT money – the hint as for in “fiat lux” is scary enough – seems actually like a tame beast, only based on paper and promises. At least, somebody has to account for state-backed FIAT money – for book money, in effect, not really. 0 and 1 do not have a concrete limited property in the ledger and there is sheer endless supply only limited by will and imagination. The wealth of nations gets “multiplied” by it, which already caused trouble when the Chinese invented paper money and had to live through cycles of crumbling currencies based on inflating them by printing too much and explosions of forgery. Interestingly our Giacomo is pointing to governments as the culprits and not to the banks, knowing that government bodies make the law which enable these practices and legalise them. Well, almost, as the ongoing court case of German judges with spines who keep a hawkish eye on lawful action concerning monetary policies does show. But will they prevail? Do we know about it?
Still, QE is an ongoing policy but may not go on forever. The effect seems to be mild and does not make European economies grow. It seems rather only evening out the bad influence of fraudulent bank behaviour, still not properly regulated and punished for their crimes. Strangely enough all this unfolds under the presidency of Mario Draghi heading the fate of the ECB since 2011, a compatriot of Giacomo Casanova, Chevalier of Seingalt. In Italy Anti-European sentiments are notoriously abused and fostered, possibly to distract from the inner struggles against organised crime and the aftermath of 20years of Silvio Berlusconi who messed the legal system and media landscape with his Bunga-Bunga politics controlling the narrative and brainwashing people. The Italian Draghi who formerly worked for Goldmann-Sachs and boasts several honorary doctorates as well as being counted among the 10 most influential people worldwide may have his way and a lobbyist agenda to support the interests of a few banks and their business plans, maybe not getting steered by the best for Europe. Even though he commits to do everything for the “Euro” this may not mean it is good for the European citizens but for the income gap and securing real assets in private hands. Nations may profit from it big time, as well as some key players. Governments are now used to the influx of “free money” which they can use to make politics to accuse the European Union of all sorts of things, of course putting the subsidiary nature of the union under the rug in favour or nationalistic right wing agitation and propaganda. A mad world.
We can only hope that this short-sighted strategies fearing recession and raining “free money” in 0 and 1 will not have the “inevitable consequence” Casanova is deducing and that “how it would come then nobody can say”. Iceland showed a different way of more integrity and honesty, putting the culprits in jail. Irresponsibility and avoiding long-term concerns does already make us all suffer, in job prospects, wages and getting more and more under the joke of “leaders” with their nationalistic and populist agenda, cooking up emotions because this money is not reaching the hands of people, but only the debt system of states. The debt of people and their wealth of 70 years of peace is scrambled and ground away in the mean time. Nevertheless, it is safe to say that we are all (in theory) richer than ever – just the distribution and the sell-out of the commons pans out as horribly unjust – if you have time to think and add 0 and 1 together.
Maybe we should all start our own lotteries, currencies slash cryptoassets slash token economies, following in the logic and footsteps of our beloved countries and their exemplary behaviour. All hail to the biggest fiction of human society: book money.
PS: no, the gods are innocent and so are the glowclouds