3/27/2013 Portland, Oregon – Pop in your mints…
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.
Stay tuned and Trust Jesus.
Key Indicators for March 27, 2013
Copper Price per Lb: $3.45
Oil Price per Barrel: $96.69
Corn Price per Bushel: $7.35
10 Yr US Treasury Bond: 1.85%
FED Target Rate: 0.14% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,605 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*: 0.25%
Unemployment Rate: 7.7%
Inflation Rate (CPI): 0.7%
Dow Jones Industrial Average: 14,526
M1 Monetary Base: $2,368,600,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base: $10,521,800,000,000