On May 6, 2016, an anonymous source contacted German newspaper Süddeutsche Zeitung (SZ) reporter Bastian Obermayer expressing a desire to “make these crimes public.” He forwarded 11.5 million leaked documents that detail financial and attorney-client information for more than 214,488 offshore entities. The documents became known as the “Panama Papers” because they originated from Panamanian law firm and corporate service provider Mossack Fonseca. According to Farlex, flight capital is defined as “funds transferred abroad in order to avoid high taxes or to provide for a person’s needs if flight from the country becomes necessary.” The International Monetary Fund (IMF) researchers estimated in July 2015 that profit shifting by multinational companies and shell companies, costs developing countries around US $213 billion a year. In the United States, the Miami Association of Realtors of Miami, Florida said that cash sales accounted for 90% of new home sales in 2015, for example.
Today, most of us who are awake realize that our economic system needs revision. Sure, we acknowledge a Deep State within our government, but what enabled the Deep State to prosper and grow? The political corruption is only eclipsed by our economic corruption. It’s not an American problem, but a world problem. Today, we have a class of elites who wish to siphon wealth from our governments at the behest of everyone else. The problem with offshoring is that even if you have decent laws back home on your domestic front, capital flight occurs because the lack of transparency, the lack of international regulations and we’ve lacked the resolve to enforce such regulations that could prevent such corruption.
To clear a trade is to settle a trade by the seller delivering securities and the buyer delivering funds in the proper form. Prior to 1973 the National Securities Clearing Corporation (NSCC) was responsible for ensuring proper delivery of physical stock certificates and payment. The Depository Trust Company (DTC) changed all that. See, as of 1973 the DTC — a privately owned consortium of brokers and banks — replaced the NSCC. The idea was to hold all paper stock certificates in one centralized location and to automate the trade by keeping exhaustive records of each trade. This, thereby, eliminated the need to physically deliver the actual stock certificates back and forth across Manhatten. As of July 31, 2017, the DTC retains custody of more than 1.3 million active securities issues valued at USD $54.2 trillion. So, when one broker sells to another, the trust company simply makes an adjustment to its record to symbolize delivery.
This electronic system encouraged many innovations, one of which was short-selling or betting against a stock. It’s completely legal, however, in 1993 an economist with the DTC was approached by a group of corporate transfer agents who had a complaint. Transfer agents are the people responsible for identifying who owns which stock for the purpose of voting in corporate elections. According to this economist, Susanne Trimbath, “What the transfer agents saw, when corporate votes came up, was that they were getting more votes than there were shares.” Upon investigation, Trimbath came to an uncomfortable conclusion. The fact that short-sellers no longer must deliver their shares meant two or more people could think they own the same stock — in other words — shares could have multiple owners.
The above has huge implications for fraud, especially corporate election fraud. In 2005, a trade group called Securities Transfer Association analyzed all 341 shareholder votes taken that year and found over-voting occurred in every single election of that year. To short a stock, you don’t even have to buy it, but borrow it from perhaps a brokerage house like Goldman Sachs. In essence, you could sway a corporate election for free! Simply borrow a vast amount of stock shortly before an election and those voting rights come with the stock. However, the corruption doesn’t stop here. Sure, it could influence corporate voting, but Trimbath also realized back in 1993 that this had huge implications for possible stock counterfeiting. In other words, it wasn’t only possible to manipulate corporate elections, but also the price of stocks too. This is inevitably what happened to Bear Stearns and Lehmann Brothers in 2008. It was used as a weapon against them.
Today, we have a digital economy that functions with little to no oversight. The institutions tasked with enforcing regulations and ensuring laws are adhered to are largely compromised. Mark Cuban even openly remarked that he thinks the Securities and Exchange Commission (SEC) is worthless. Honestly, I don’t think he’s speaking in jest or in hyperbole. I think he means it. Of course, after his insider trading trial, he’s much more intimately aware of what the SEC is and what it does than the typical person.
Today, we have a banking system that calls itself a “fractional reserve banking system.” Only three percent of America’s money actually exists, the other ninety-seven percent is purely digital. The Federal Reserve — largely a private corporation — prints money on behalf of the U.S. government. The U.S. bonds that the U.S. government uses to “trade” for the “Federal Reserve Notes” is an instrument of debt. The government is essentially promising to pay the Federal Reserve back. Remember, the engine of Capitalism is said to be “interest.” Why else would someone who has a surplus of capital stored in the bank agree to share that capital with someone who has a deficit of capital? Those lenders are allowed to profit from their surplus by way of “interest.” So how much money does our government owe the Federal Reserve? The amount owed to the Federal Reserve will ALWAYS exceed the amount of money in circulation. In essence — it’s a Ponzi scheme.
Today, we see disparity. Today, we see a dwindling middle class. Today, we see the Gini index and other metrics that measure wealth distribution and income inequality reveal alarming numbers. These numbers have prompted many economists to take a harder look at our system. Around 2008, you heard liberals screaming, “See, Capitalism is broken!” Luckily, economists like Peter Navarro, Mark Blyth and Thomas Piketty can help us laymen understand what went wrong. Sure, Thomas Piketty’s “r > g” (return on capital is greater than economic growth) is alarming and serves to provide many people confirmation that our system is truly broken. In other words, if you rely on capital gains (you’re living off the interest earned from all your investments) rather than working for a salary — your earnings will always outpace the growth of the economy. However, can our present banking system be fixed? Of course, it can.
Then what are our options? What could possibly replace the economic system we have today? Let’s look at three alternatives:
Gold Standard — Returning to the older conventional economic model created millennia ago.
PROBLEM:
Confining yourself to physical/tangible assets. To exchange stocks and options, instead of the digital exchange, will we require all trades to confirm a tangible “note” or “certificate” in-hand before the trade? At what point would we allow digital transactions? What about “credit”? Would you abolish credit?
Blockchain (e-currencies and e-contracts) Embracing a truly digital economy.
PROBLEM:
How to prevent corruption and/or cheating (hacking)? Sure, the blockchain ledger is transparent and it’s extremely unlikely to hack cryptocurrencies. However, just because this may be the situation today, could it remain as secure tomorrow as it is today? Transparency remains the best defense of the system’s integrity and assists in preventing and fighting corruption.
Resource-based economy
PROBLEM 1: How to measure value? If Capitalism inherently embraces scarcity in order to retain (or boost) value/profits, what if the society stopped embracing scarcity and instead embraced abundance?
PROBLEM 2: It’s NEVER been tried before. Can people adjust to asking, “Do we have the resources?” instead of “Do we have the money?” Would people accept the idea that no one should live in those old structures (castles) of Europe or Asia? Would people embrace the idea that we’re ALL REALLY EQUAL? Do people believe it, or is it just a talking point to remain Politically Correct? Would people give up their pie in the sky dreams of owning a 50-foot yacht, say, and instead allow corporations to produce in quantities that would allow access for all to the luxuries of life? Like Uber’s fleet of self-driving cars could replace car ownership in the future, why not a fleet of anything and everything? Abundance.
PROBLEM 3: Do we actually have the resources/technology to make such a model viable? A more methodical analysis would have to be conducted. Right now, a sizable percentage of the populace still believes the “catastrophic anthropogenic climate change” PSYOP/MISO. By buying into this narrative they have embraced the paradigm that the world’s resources are finite, thus “Zero Sum Game.” Again, it comes down to the question: “Are the people ready for such a paradigm?”
PROBLEM 4: What about incentives? We’ve all been taught that monetization of an economy is necessary to incentivize the masses because no one would do anything unless they profit from it. How then could we measure “profit”? Again, it comes down to the question: “Are the people ready for such a paradigm?” However, I was taught to take pride in my work. When I truly believe in my product, I gladly devote my time to my job/task and would even do it without pay. This argument is based upon an assumption that people are too lazy to do anything which I say is ludicrous and insulting.
Today, people may not be ready for such a paradigm shift, but could they? Just because it’s always been that way doesn’t mean it’s right. See, those who gained power throughout history have seized power from a hierarchy already in place. Once in power, no one challenged the paradigm. However, why should they? If the hoarding of resources guaranteed my empire grew stronger and wealthier while depriving competing empires were deprived of those resources, why buck the system? Once in power, I’d want to stay in power, so they took advantage of the hierarchical system already in place. Who says that one day we won’t move away from a hierarchical model? Can we truly realize a society where equality is the mantra of every citizen and every institution?
If Capitalism is the epitome of Competition (competing for all resources, zero sum game) and Communism is the epitome of Cooperation (sharing all resources, as envisioned by Marx — I’m not talking about the models in existence today). John Nash mathematically proved both Adam Smith and Karl Marx wrong. Remember, Capitalism is — quoting Adam Smith, “rational self-interest and competition.” In other words, Capitalism can be summarized by saying, “The best result comes from everyone in the group doing what’s best for himself.” This is exactly the reason Ayn Rand said, “It’s OK to be selfish.”
If Capitalism can be phrased this way, then Communism could be summarized as, “The best result comes from everyone in the group doing what’s best for the group.” Of course, this presumes everyone to act altruistically. Of course, James Madison said, “If men were angels, no government would be necessary.” Since men are not angels, that’s the whole purpose for government, if you believe Thomas Paine. He distinguished the difference between ‘Society’ and ‘Government’ in “Common Sense,” and he said that government was the result of people’s vices. However, John Nash’s “Nash Equilibrium” can be interpreted this way: “The best result comes from everyone in the group doing what’s best for HIMSELF AND THE GROUP.” In other words, a hybrid — not Capitalism, not Communism.
If Socialism can be defined as “the redistribution of wealth,” then a tax system of any kind is Socialism. Who would build the roads, dams… the infrastructure of a society without taxes? Are you truly ready for the paradigm shift? Was George Orwell correct when he said, “For if leisure and security were enjoyed by all alike, the great mass of human beings who are normally stupefied by poverty would become literate and would learn to think for themselves; and when once they had done this, they would sooner or later realize that the privileged minority had no function, and they would sweep it away. In the long run, a hierarchical society was only possible on a basis of poverty and ignorance.”
Could the hybrid simply be a Capitalist society with a sound tax policy with smart regulations and ample checks and balances (i.e. transparency) to prevent the corruption we saw in the 20th Century? If we’re really going to evolve and replace the existing paradigm, I say go all the way. I say try something that’s never been done before. Can a society truly abolish money? I believe that those are our choices: either abolish money or offer a scheme that guarantees transparency and oversight while still preserving people’s rights to pursue their own interests.
I can only surmise or speculate what occurred in the meetings between John D. Rockefeller and Andrew Carnegie, but I have a pretty good guess that their alliance was based upon profit. I think that everything that we see today is a result of them — and others — making a commitment to make money on anything and everything. If there could be a way to profit from any enterprise, they resolved to make it theirs. If anyone deserved those profits, they did. I base this hypothesis on the fact that every discernable industry and enterprise does, in fact, have their fingerprints all over it… even medicine and education.
CRITIQUE OF A CASHLESS SOCIETY
Critics of Jaques Fresco’s Resource-based Economy would make the argument that there are two ways to distribute resources within a community. First, is what we have in Free Market societies which is pricing. You price a product based upon its scarcity and the ‘demand for’ (value of) that product. This pricing works as a means to make less abundant resources unattainable by the typical citizen. The second is what you find in authoritarian or totalitarian regimes which is rationing. Technically, without money it would have to be a form of rationing. Would people be willing to submit to such a paradigm? Also, if government’s role in society is restricted to mediation and arbitration (or as the society’s referee) could government adequately regulate corporations? Hopefully, we can all agree that the corruption of the 20th Century needs to be prevented from ever occurring again.
In the existing paradigm we’re taught “Supply & Demand.” ‘Supply’ is pretty straight forward. If it is built, created, grown or imagined it is said to be produced. Demand — on the other hand — involves some sleight of hand. Scarcity guarantees profitability. The fact that Capitalists invented “planned obsolescence” at the beginning of the American Industrial Revolution shows that they were desperate to keep scarcity within the equation. In other words: they’ve been keeping resources artificially scarce. Corporations can pursue their “business models.” In doing so they’ve chosen to sabotage their own products. If they make a toothbrush or car too effective or too efficient, they’ll put themselves out of business. They need their product to become obsolete in a reasonable amount of time, so you come back and buy another one.
Evidence suggests just that. What if we could produce ladies’ stockings that never run? What if we could produce a lightbulb that could last 100 years? What if we could make everything abundant — so abundant, it’s practically free? Would you be willing to live in a modest home if it meant living without war? Would you be willing to forego car ownership if it meant ridding the world of those who prey on our children? Today, we have the technology to make such a society possible. However, would people agree that nobody needs a 200-room mansion? I don’t want to shame people into compliance, but if the only reason you resist transition away from money is because you think you deserve the grandest of luxuries then I think you need to reevaluate your priorities. Language is replete with the possessive form of speech (mine, yours, hers, his, theirs). Am I saying you must relinquish that too? Of course not! However, if the aim of the society is to provide everyone with security, peace of mind and abundance/prosperity for all, then transparency, cooperation and sharing of resources should be paramount.
Other critics would say, “If it sounds too good to be true, it usually is.” Sure, ridding the world of poverty or ridding the world of war has been sought since man had a — oh wait, a hierarchical society! The problem has ALWAYS been with us because we’ve ALWAYS maintained a hierarchical structure. No one has ever challenged the hierarchical paradigm before — except, perhaps, the Athenian Republic. However, within a few centuries after putting Socrates to death for his promotion of Elitism — around 399 BC — it remains abundantly clear that the Elitists won that battle in ancient Greece. The lineage of kings of Macedonia would eventually lead to the reign of Alexander the Great in 336 BC. Alexander the Great died in 323 BC. At the time of the terra cotta army were produced for the first emperor of China, Qin Shi Huang, approximately 210 BC, or about a century after Alexander the Great’s death. Although it may sound too good to be true, I say, now is the time!
We learned in school that there are four functions of money. Let’s look at what money does for a society. Upon closer look, you will notice that the four functions of money are based upon the assumption that value will always be expressed the same way — through possessions. Are there other ways to express value? What are these four functions?
FUNCTION 1: Medium of Exchange: Money is used in exchange for goods and services. It replaced bartering which required a double coincidence of wants which resulted in a high transaction cost. The second obvious advantage of money as a medium for exchange is its divisibility. Because we recognize many denominations of money ($1, $5, $10, $20, $100, etc.) we say it’s “divisible.” With a barter system, it’s hard to justify selling half a horse or half a house.
Resource-based economy: Would a medium of exchange even be necessary? If barter was the exchange of items which had value, that value was derived from its scarcity. In essence, the only way a resource-based economy could work is within a paradigm of abundance.
FUNCTION 2: Unit of Account: All goods and services are priced in terms of money. This allows for easy comparisons of relative value thereby reducing information costs.
Resource-based economy: Would it be necessary to even record a material good or service’s value if the aim of the society is to make all goods accessible to all people? Again, money is a tool that functions very effectively in a paradigm of scarcity but would be unnecessary in a paradigm of abundance.
FUNCTION 3: Store of Value: People are willing to keep money in their possession because it retains its value over long periods of time. Of course, being paper, it’s also fairly durable. Additionally, during high inflation we observe some form of currency substitution — like what we observed during Germany’s hyperinflation of the early 1920’s.
Resource-based economy: Regardless if we have a regime based upon money or based upon resources, quality will hopefully be part of that paradigm. Hopefully, planned obsolescence will become a thing of the past.
FUNCTION 4: Standard of Deferred Payment: Debt obligations and contracts are written in terms of money values. If you sign a contract, you won’t have to promise to give up your firstborn child. If you break the law, you won’t necessarily go to jail or do community service. You can instead pay a fine.
Resource-based economy: Perhaps sentences for crimes could instead require a form of community service. However, how we would avoid corruption of the system would be a challenge. Hopefully, with the abolishment of money would also mean the abolishment of debt and credit — because it would no longer be necessary. I don’t know what prisons will look like in the future. I’m only one person. If this paradigm truly interests other people, please weigh in.
We could transition in phases to the new paradigm. We don’t have to jump directly into such a foreign concept. See, the central banks have run their course. They are basically treading water just to keep their heads above water. China, for instance, is USD $40 trillion in debt. According to Bill Holter, the only asset that the central banks can mark up to cover the “black hole” (debt) is gold. Also, according to Bill Holter, although China’s official store of gold is around 2,000 tonnes (metric tons) of gold, he’d done the math and has figured that they have ten times that — or 20,000 tonnes, at least. To remain solvent, they have been hoarding gold. If curious, another economist who also has an excellent track record regarding China is Michael Pettis of the Carnegie Endowment for International Peace.
Concerning the flight capital, the structure guaranteeing transparency and oversight should probably entail an international agreement/treaty to truly prevent offshoring because offshoring is an international problem that would best be addressed with international law. One sovereign nation could not presume to police the world, nor would the other sovereign states allow such a hegemony. The other sovereign states would cry that any such attempt was a violation of their sovereignty and rightly so. This is one reason I suggest that multilateralism is not dead. I see people call for the abolition of the United Nations (UN), but flight capital is just the type problem an institution like the UN was created to resolve. I too recognize the UN itself is a corrupt institution primarily due to the Rockefeller family’s affiliation with its creation. However, if it’s possible to save the institution, it should be spared from total destruction.
CHALLENGES TO A CASHLESS SOCIETY
Let’s say you wanted to volunteer to go live on a Martian colony. How would the best candidates be chosen to go to Mars? A lottery? First Come, First Served? A competition of some kind? I’d probably advocate the competition — time permitting.
This will most likely be my last article here. I was hoping to make this a book, each article a chapter. Of course, many of the articles would need some revision. I have served my purpose. Besides, the great irony is that I too have a family and need to focus on making some money. Good luck to you all. WWG1WGA! Remember, #FactsMatter! Whatever path we take, we take it together.
LINKS:
International Consortium of Investigative Journalists — “Panama Papers” https://www.icij.org/investigations/panama-papers/
Documentary -“The Spider’s Web: Britain’s Second Empire” https://www.youtube.com/watch?v=np_ylvc8Zj8
Rolling Stone article by Matt Taibbi “Wall Street’s Naked Swindle” https://www.rollingstone.com/politics/politics-news/wall-streets-naked-swindle-194908/
Federal Reserve Bank of Chicago’s “Modern Money Mechanics” https://en.wikisource.org/wiki/Modern_Money_Mechanics
Peter Navarro White House National Trade Council/Hudson Institute https://www.youtube.com/watch?v=hEHPfMrpHp0
Mark Blyth interview with Jimmy Dore https://www.youtube.com/watch?v=a0q_Ww1q1j8
Thomas Piketty TED Talk https://www.youtube.com/watch?v=JKsHhXwqDqM
Bill Holter (also see Jim Sinclair) interview with Greg Hunter https://www.youtube.com/watch?v=-5BBBROruxs
Blockchain and Distributed Ledger Technology (DLT) — https://www.youtube.com/watch?v=3xGLc-zz9cA
Documentary — “Zeitgeist: Addendum” — https://www.youtube.com/watch?v=c-M_kVZTf50
The Corbett Report — “Climate Change is Unfalsifiable Woo-Woo Pseudoscience” https://www.youtube.com/watch?v=huKY5DzrcLI
Volshebny — Thomas Paine — “The True Founder of Social Evolutionism” https://www.youtube.com/watch?v=M6j2Jl3zcc8
Documentary — “The Light Bulb Conspiracy” — https://www.youtube.com/watch?v=kdHIqa53-tY
The School of Life — Why Socrates Hated Democracy — https://www.youtube.com/watch?v=fLJBzhcSWTk
Greeks May Have Influenced China’s Terra Cotta Army — https://www.history.com/news/greeks-may-have-influenced-chinas-terra-cotta-army
Corruption of the Medical Industry & Eugenics https://www.youtube.com/watch?v=tdSJrRBMQMM