As the Passover nears and we paint the blood of the lamb over our doorway (figuratively, of course, our better half just painted the doorway a gorgeous blue and let’s just say that literal blood would be frowned upon), we await, along with the rest of the world, the promises of our Lord, the I AM, revealed to us in Jesus Christ.
We will celebrate the New Year tomorrow at the GSM Good Friday service, where we step out of time for the three hours that our Lord hung on the cross, pouring Himself out to bring mankind the only thing it truly needs.
The forgiveness of sins.
Yes, on the Passover, our thoughts are Jesus and the forgiveness of sins. Not the forgiveness of just mine or yours, but the forgiveness of the sins of all of humanity.
For three holy hours tomorrow, we will remember, embrace, and look ahead without fear. For the blood of the lamb has washed away the sins of the world.
At 3pm Pacific time, the Shofar Horn will blow, ushering in the new year. There is much turmoil to come, as well as much opportunity. May the Lord’s will be done, and may His Kingdom come.
At long last, the much anticipated fifth volume in our “Why what we use as Money Matters” series is available in on Amazon’s Kindle and over at Smash words.com for your immediate reading pleasure.
The volume has a hero, Luca Pacioli, the Franciscan Monk who not only taught mathematics to Leonardo Da Vinci but dissimenated to Western Civilization nothing short of an economic super power.
It also has a villian, Central Banking, born of the super powers of dual-entry accounting, it uses this super power against humanity and has become dual-entry accounting’s arch nemesis.
How will it end? At this point, you’ll have to shell out $0.99 and a couple hours of your time to find out. However, by doing so, you may end up changing the world for the better. Not a bad return on investment!
We pray you will enjoy it.
Today, Bitcoins traded near $100 USD, silver and gold continued to mysteriously get crushed, and US stocks, perhaps more mysteriously, continued to defy gravity. What does it mean?
The events in Cyprus have once again caused a sort of flight to safety. Unfotunately, the flight to safety is a very crowded trade, and is causing the US Dollar to suffer from an unwelcome bout of strength, or potential deflation.
Bernanke and the Fed will never stand for it. US Dollar strength cannot be tolerated, and will be swiftly dealth with. As it is dealt with in the coming weeks, Bitcoins, gold, and silver will seem like a steal at today’s prices.
Then there is the matter of the brewing war in Persia, but speculation on that scenario must wait, for the Passover is at hand.
Today, we present to you the “postre” of our most recent eBook offering, which we have entitled, after much deliberation,
Pacioli’s Gift or Bernanke’s Curse?
It is slated to arrive on digital shelves this evening. What started as a book about the irony of dual-entry accounting enabling central banking, therefore making man’s greatest wealth producing innovation the agent of his greatest wealth destroying menace.
While it accomplishes this, it naturally spreads its tentacles into sound money, economic thought, and monetary history.
Enjoy desert, the main course will be available shortly.
While free markets and Free Banking represent mankind’s best hope for averting disaster, many people look at the scene on the water bed and side with the 300 pound man, who represents the central bankers of the world. After all, isn’t he the only one taking action to capture and sedate the 800 pound gorilla, whom in our metaphor represents the world’s financial markets?
What this analysis fails to recognize is that the best course of action when dealing with an 800 pound gorilla is to observe it from a distance. Once the gorilla feels like it has an understanding of its surroundings, it will become docile and predictable unless it gets hungry or senses danger. If the gorilla gets hungry, one should let it find something to eat. If it senses danger, one’s reaction should not be to calm the gorilla, rather, to focus on the source of the gorilla’s agitation and act accordingly.
The 800 pound gorilla is not the problem. In fact, it can often be counted on to recognize threats and, even though its reactions may seem unpredictable, gyrations in financial markets serve as early warning signs to potential economic problems on the horizon. Once recognized, economic imbalances can be recognized and remedied.
To silence the gorilla, or the gyrations in the financial markets, is to rob mankind of an important early warning system. Circa 2013, as the efforts of the world’s central bankers to sedate the gorilla by force escalate, many a Chihuahua (our metaphor’s personification of the government) is getting trampled and the water bed of world economic activity is on the verge of springing any number of leaks.
This is an outcome that Luca Pacioli could not have envisioned, for he lived in an age and in a place where Free Banking and free markets were more or less givens. It was an age where capital formation was accelerating and the capital base from which we still operate today was being formed. All thanks to Pacioli’s unwitting effort to disseminate the methods of dual-entry accounting throughout western civilization from his humble Franciscan abode.
While it is a great irony that a Franciscan Monk, sworn to poverty, would refine and articulate the greatest wealth generating innovation known to mankind, it is an even greater irony that this innovation would enable the large-scale employment of man’s greatest threat to this wealth, modern central banking.
The unconventional measures employed by the world’s central bankers in increasing measures over the past 100 and are not only failing to achieve their stated goals of increasing employment and economic growth, they are triggering what is quickly becoming an unmitigated disaster in the fixed income markets. These markets, once the bedrock of global finance, have now been conditioned to do nothing more than attempt to front run the central banks’ interest rate cues up and down the yield curve.
Fortunately, the choice of whether to use Pacioli’s gift for good or for evil is always at hand. Even as the world suffers under the grip of modern central banking, the ultimate solution of Free Banking, the banking that Pacioli and the Venetian merchants had assumed would always exist, is waiting in the wings to save mankind from its own penchant for error. In fact, Free Banking is not something that requires a great deal of compromise and administrative rule writing as most modern legislation does.
Free Banking operates under the rules of natural law, and it can be implemented via a simple political decision to get off of the water bed and leave the gorilla alone.
Unfortunately, it is a political decision that modern governments, whose fate and existence depends upon the modern central banking model, will never take on their own. In the absence of political action, it will take the wholesale collapse of the central bank itself to rid the world of its menace.
It is the catastrophe to come, and it will leave the fortunes of many laid waste as it indiscriminately dismantles the erroneous divisions of labor and implied daily activities that it has caused mankind to organize itself under.
It is not a question of if, but when. For modern central banking will eventually give way to Free Banking out of necessity. When it happens, mankind will be allowed to continue its self-correcting path toward civility and peace.
And Luca Pacioli, if not Christopher Columbus, will be vindicated.
Today, we offer a second course on the menu of our upcoming eBook release, Pacioli’s Gift vs. Bernanke’s Curse, it is a chapter on the importance of a monetary constant when employing the methods of dual entry accounting. Enjoy!
The Presumption of a Monetary Constant
Luca Pacioli was first and foremost a mathematician. He understood that mathematics relies upon certain constants to remain, well, constant in order for the calculations that depended upon them to be meaningful. Whether or not Pacioli was conscious of the fact, implicit in his presentation of the methods of dual entry accounting is the assumption that the money in which he was directing merchants to keep their accounts on the basis of was sound money. The use of the monetary unit as a unit of account implies that he understood that money was to the economic world what constants were to mathematical calculations.
Also implicit in his assumption was that the monetary units which were to be used as units of account on the accounting ledger contained a constant weight of silver or gold which existed in the natural world. Silver and gold that had been hewn out of the ground and struck into coinage of a set weight and metallic alloy by the men at the old Zecca, the Mint of Venice in the Rialto district which preceded its famous successor was completed in 1545. This was an important assumption, as dual entry accounting only works when the accounts balance. By design, it implies that physical goods are in existence or are reasonably expected to come into existence and become available for exchange.
When Pacioli penned Summa, the Venetian Zecca was one of the largest and most reputable mints in the world. This reputation was born in no small part of a scandal at the Zecca which consummated with the Doges, who ruled Venice at the time issuing a decree on the 11th of November, 1457 against then noted variations in the weight and purity of the gold and silver coins that the Mint at Venice. As a result of this renewed commitment to monetary purity, the coins which circulated in Pacioli’s time and locale, the Silver Ducat, Soldo, Lira Sequin, and Gold Ducat, served as the standard of trade in the world known to Pacioli.
Given that the Venetian merchants could count on this sound monetary standard on which to base their accounts and, by extension, their choice of activities, their use of dual entry accounting not only benefited their own interests, but had the side effect of benefiting all who circulated and traded the Venetian coinage, whether or not they had mastered the art of dual entry accounting.
For those who had mastered the art of dual entry accounting in this environment, the ability to properly recognize and record their transactions and to make sense of the results gave them a sort of super power. This super power, the ability to recognize the value of transactions over longer time horizons and therefore direct investments over longer time horizons, was further refined by Pacioli, who employed the use of Arabic numerals and proposed a system of mercantile accounting that could apply uniformly to all trades and nations.
However, dual entry accounting, as mankind is now coming to understand, is a two-edged sword. For dual entry accounting to work in favor of those who practice and/or rely upon it, the unit of account must hold a stable value. The assumption of the relatively stable value of the monetary unit in relationship to the natural world is essential for interpreting the primary output of dual entry accounting, the profit or loss signal. The stable unit of account is also essential when evaluating the worth and employment of items that are represented by entries to the balance sheet, upon which the profit or loss signal ultimately depends.
In short, the stability of the monetary unit of account was essential if dual entry was to be relied upon for sound decision-making.
For the Venetians, this requirement was met by virtue of their relatively stable monetary unit. As such, the Venetian Mercantile class rose to dominate the Western world. Indeed, with few notable exceptions, dual entry accounting has rendered an invaluable service to mankind and has allowed human progress to follow a generally upward trajectory in terms of material well-being ever since Pacioli made his bequeath to mankind.
As a stable currency enables the super powers of dual entry accounting to operate, an unstable currency, of which there are numerous examples in the largest economies in the world today, circa 2013, is its kryptonite. A currency that does not have a relatively stable value over long time horizons, specifically the time horizons required for large-scale investments of capital to be planned with the precision required for them to be successful, serves to render the gift of Pacioli powerless.
In doing so, an unstable currency threatens to take mankind from the comfort of their large screen televisions, sofas, and smart phones, and throw them back into the dark ages, from which the world that Pacioli lived in had recently emerged.
In the irony of ironies, mankind has unwittingly made use of Pacioli’s gift to create the largest system of unstable currency that the world has ever known, the one that has operated for the past 100 years. This disastrous invention is known as central banking, and it has quickly turned the world’s economy into an unmitigated catastrophe waiting to happen.
As events in the Cyrus experiment continue to unfold. here at The Mint we are watching from a distance, aghast at the implications. The sacred rule of the Financial Crisis, the one that shielded most banking clients from taking direct losses as a result of holding their funds in a weak bank in a sovereign nation without the means or the control over its currency to bail them out, has been broken.
Anyone who was unfortunate enough to be holding over 100,000 Euros in a Cypriot bank at the close of business on March 15, 2013, now stands to take a 40% bath on all “uninsured funds.”
This is a warning shot, and if you are reading these words and do not yet understand, let us spell it out loud and clear. Funds held in banks or financial institutions are sitting ducks for bankrupt governments to line their pockets with. Any wealth that one wishes to maintain must be kept close at hand in something tangible and trade-able. Bank accounts are no longer risk free assets. They never were.
How has the world come to this place, where a government would directly confiscate assets and assume that there would not be severe repercussions?
We have been editing our latest e-book, which will hit digital shelves later this week if all goes well. It is volume V in our “Why what we use as Money Matters” series. In it we explore how humanity came to this point in history, what is wrong, and most importantly, the solution.
As an appetizer, we present to you the introduction. Enjoy!
Pacioli’s Gift vs. Bernanke’s Curse
In response to what has become known as the Financial Crisis of 2008, the Central Bankers of the world have employed nearly every form of monetary alchemy at their disposal in a desperate attempt to maintain the status quo. The status quo, which in this case means that all commercial banks and sovereign governments remain both liquid and solvent, has become increasingly difficult to maintain as each attempt to stimulate economic growth via ultra low discount rates and quantitative easing has seen a diminishing marginal return in terms of economic growth. The longer the Central Banks of the world engage in these and other forms of financial alchemy, which in the end serve as futile attempts to defy immutable natural laws, the greater the danger of a complete economic collapse becomes.
The unconventional measures employed by the World’s Central bankers in increasing measures over the past five years are not only failing to achieve their stated goals of increasing employment and economic growth, they are triggering what is quickly becoming an unmitigated disaster in the fixed income markets. These markets, once the bedrock of global finance, have now been conditioned to do nothing more than attempt to front run the FED and other Central Banks up and down the yield curve.
The action in the financial markets is akin to a 300 pound man, who represents the Central Banks, chasing an 800 pound gorilla, who represents the financial markets, around on a queen sized water bed. The action is becoming completely unpredictable and downright dangerous. Throw in the chaotic interventions of a 10 pound chihuahua, who represents the sovereign governments’ meddling in the market financial market mechanisms via commercial banking regulation and tax policy, and the entire situation is a basement flood waiting to happen.
As the chaos on the water bed, which is a metaphor for the wealth of the real world, continues to unfold, it is important to examine and understand, to the extent possible, how humanity has arrived at this critical juncture in history, where a fat man chasing a gorilla while dancing around a chihuahua on a water bed can threaten to damage the wealth of nearly everyone on the planet.
It is the aim of this volume to explore two of the oft overlooked elements that have, each in their own way, given rise to the system which enables a relatively small group of persons to the ability to destroy the accumulated wealth of mankind’s 9,000 years of toil in just over 100. Dual entry accounting, which we refer to as mankind’s greatest invention, and Central Banking, which we refer to as mankind’s greatest catastrophe.
In the end, we present what is known as “Free Banking” as the antidote for the curse of Central Banking, and the ultimate solution to the current and future financial crises that the world will suffer at the hands of well-meaning Central bankers who, it would appear, are oblivious to the destruction that their chosen profession inflicts on humanity.
The conversion to the Euro, for most practical purposes was a long, drawn out process which took two years to implement, starting with the final exchange rate peg to the Euro and culminating with the coin and bill conversion which Tom so eloquently described.
Today, thanks to the prospect of forced bail ins, the term for a levy or tax (depending upon your preferred term for asset confiscation) such as the one proposed in Cyprus which would bail out the government and/or banks, there is a run on banks throughout Iberia.
The reason is that the preference for the bail in solutions are now popping out of central banker’s mouths like pop corn. Even Ben Bernanke, slave master of the US currency, has uttered that it would be a possibility.
However, this is the twenty-first century, and bank runs aren’t what they used to be. For one thing, banks now have instant access to all of the digital currency they could possibly want. It is a simple ledger entry for the bank to replace the customer’s deposit with a Central Bank liability.
However, there is still the matter of cold, hard currency. As the Spaniards begin to withdraw currency en masse, the bank branches are bound to run out of Euros. Thanks to technology, holding Euros, either in physical or digital form, is no longer an absolute necessity and, at this point, it is extremely undesirable.
As the monetary authorities are just now beginning to understand the practical implications o
f forced bail ins, the peoples of the world are not content to stand pat while their leaders sqauble over how much to confiscate from whom. Thanks to digital solutions like the Bitcoin, Spaniards and people the world over are making a run on banks from the comfort of their own homes on their smart phones. The Euro, which took two years to implement, may be largely replaced in commerce in a matter of weeks.
Even so, the Bitcoin has its limits, as wealth held digitally has a flight risk of its own. Silver and other hard currencies do not have this problem, and the first stages of the next leg up in Silver and Gold is commencing in lockstep with the Bitcoin app downloads in Iberia. Either way, it is a unanimous democratic process whose end result will be the Euro being voted off the continent.
While the monetary authorities prepare their familiar mantra, “Keep Calm and Carry on,” the response in Iberia is ringing back “I’m Latin, I can’t Keep Calm!”
Neither should you. Here at The Mint, we have taken the step of accepting Bitcoins in exchange for silver coins to deal with this contingency. We ship worldwide and guarantee your satisfaction. If you are interested, please email us at the address below for a quote as we have yet to fully automate this process.