Zbigniew Piekarski on The storm clouds gather
"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasury. From that moment on, the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy, [which is] always followed by a dictatorship."
- Prof. Alexander Tyler,
'The Cycle of Democracy' (1778)
Two weeks ago, up to a million people poured onto the streets of Berlin, Paris and Rome to voice their anger at European governments' plans to reform their pensions, health and labor market systems. Their protests will be in vain. All governments of post-prosperity cap-socialism are facing a common problem. The extent of this problem is outlined by Prof. Larry Kotlikoff and Scott Burns in their new book called The Coming Generational Storm (MIT Press, 2004) and it is much worse than the present generation of politicians admit.
In a few more years there will be 100 percent more retired people but only 18 percent more workers. To meet the liabilities that this shift in population will bring will require an increase in payroll tax and/or a reduction in the promised benefits. In Europe, Germany will suffer the most as it requires a 60 percent payroll tax rate to fund the combination of benefits to retired individuals promised by current government rules. This is before any other government spending. No matter what reforms are enacted, there are going to be some unhappy citizens in the coming decades.
The overwhelming and immediate need of all governments is to increase revenue from their existing citizen base, and the system through which control will be enforced is already at an advanced stage of development.
The first step was taken in the USA and involved repealing laws in order to enable their banks to provide all the financial services possible under one roof (the German universal model). Today, banks participate in savings, loans, insurance, real estate, securities, derivatives and commercial business - a course of action considered far too dangerous by the survivors of the 1929 crash in the States, who drew up laws separating these activities.
Then the banks were assisted in extending the demand for their services by low interest rates and easy credit. This had the effect of encouraging a large proportion of the population to take out loans, buy cars, inflate the price of assets and leave a detailed record of their personal data.
With the active collusion of the largest banks, the regulations relating to the financial system were tightened. All transactions above US$10,000 (zł.40,000) had to be explained and reported. The support of the citizen was gained by stating that only criminals who live off the proceeds of drugs and prostitution would be affected. Acceptance of human nature and decriminalization of the above cannot be on the agenda, as it would involve the unemployment of a large percentage of state agents, most of whom have psychopathic tendencies.
Then other reasons were added. Thus the funding of 'terrorist activities' became another pretext, even though insignificant amounts of money are required to perpetrate such acts and the likelihood of detection through the analysis of financial transactions is nil.
Countries not accepting 'The Rules' were, and are, accused of facilitating criminal activity, even though the larger financial centers, such as New York, Paris, London and Frankfurt, launder the greatest amounts. As the smaller countries surrender to blackmail, they become visible signs that the policy is working and possible sources of competition are eliminated.
In order to ensnare as many citizens as possible into the cashless society, further additions to the distribution channels are encouraged. This involves the largest and most established institution that already has outlets or one of its members in every corner of the territory - The Post Office. Postmen and postwomen become 'financial advisors,' distributing credit and saving schemes to all and sundry while keeping detailed records.
As the use of cash is untraceable, the possession of it (and cash equivalents, such as precious metals, traveler's cheques, bearer bonds and other negotiable securities) is made uncomfortable. Any individual who carries more than US$10,000 or zł.40,000 on his or her person must declare this fact on official documentation. Failure to do so becomes punishable by law.
The 'crime of omission' is now central to the whole process and applies to all citizens, in particular professional advisers. Thus, if a citizen fails to report his or her suspicion of money laundering by any other citizen, then they are liable to be prosecuted under the criminal code. Professionals have to abide by even more onerous rules as they are forced to pre-judge complicated situations at the peril of their reputations and livelihood. Criminals who inform on their colleagues are normally rewarded financially or by a reduction in the time they spend in prison. Citizens and professionals are forced, by law, to inform without reward, and should they not do so, they face a prison sentence of up to five years.
To date, there is little evidence that this authoritarian approach and all the new rules and paperwork are having any appreciable effect on crime or terrorism because there is an almost infinite number of ways to 'launder' money, and most organized terrorists and criminals are far more intelligent and inventive than bureaucrats.
On the other hand, smaller banks and businesses are at a competitive disadvantage because of the disproportionate effect of regulatory costs, providing added pressure on them to merge and consolidate with the megaliths and form one homogeneous system of increasing instability. The greater the concentration, the more difficult it is to avoid losses and the 'greater will be the sphere of irrationality.'
We are fast approaching the end of one of the largest credit cycles in history. All credit cycles end with the defaulting of the biggest borrower. Since the banking system is interconnected as never before, I would suggest that you keep three months of living expenses in cash and your eye on the European banking indices. In 1929, the Bear market started in the European banking sector and swept into the USA. It will do so again. Cycles repeat.
- Prof. Alexander Tyler,
'The Cycle of Democracy' (1778)
Two weeks ago, up to a million people poured onto the streets of Berlin, Paris and Rome to voice their anger at European governments' plans to reform their pensions, health and labor market systems. Their protests will be in vain. All governments of post-prosperity cap-socialism are facing a common problem. The extent of this problem is outlined by Prof. Larry Kotlikoff and Scott Burns in their new book called The Coming Generational Storm (MIT Press, 2004) and it is much worse than the present generation of politicians admit.
In a few more years there will be 100 percent more retired people but only 18 percent more workers. To meet the liabilities that this shift in population will bring will require an increase in payroll tax and/or a reduction in the promised benefits. In Europe, Germany will suffer the most as it requires a 60 percent payroll tax rate to fund the combination of benefits to retired individuals promised by current government rules. This is before any other government spending. No matter what reforms are enacted, there are going to be some unhappy citizens in the coming decades.
The overwhelming and immediate need of all governments is to increase revenue from their existing citizen base, and the system through which control will be enforced is already at an advanced stage of development.
The first step was taken in the USA and involved repealing laws in order to enable their banks to provide all the financial services possible under one roof (the German universal model). Today, banks participate in savings, loans, insurance, real estate, securities, derivatives and commercial business - a course of action considered far too dangerous by the survivors of the 1929 crash in the States, who drew up laws separating these activities.
Then the banks were assisted in extending the demand for their services by low interest rates and easy credit. This had the effect of encouraging a large proportion of the population to take out loans, buy cars, inflate the price of assets and leave a detailed record of their personal data.
With the active collusion of the largest banks, the regulations relating to the financial system were tightened. All transactions above US$10,000 (zł.40,000) had to be explained and reported. The support of the citizen was gained by stating that only criminals who live off the proceeds of drugs and prostitution would be affected. Acceptance of human nature and decriminalization of the above cannot be on the agenda, as it would involve the unemployment of a large percentage of state agents, most of whom have psychopathic tendencies.
Then other reasons were added. Thus the funding of 'terrorist activities' became another pretext, even though insignificant amounts of money are required to perpetrate such acts and the likelihood of detection through the analysis of financial transactions is nil.
Countries not accepting 'The Rules' were, and are, accused of facilitating criminal activity, even though the larger financial centers, such as New York, Paris, London and Frankfurt, launder the greatest amounts. As the smaller countries surrender to blackmail, they become visible signs that the policy is working and possible sources of competition are eliminated.
In order to ensnare as many citizens as possible into the cashless society, further additions to the distribution channels are encouraged. This involves the largest and most established institution that already has outlets or one of its members in every corner of the territory - The Post Office. Postmen and postwomen become 'financial advisors,' distributing credit and saving schemes to all and sundry while keeping detailed records.
As the use of cash is untraceable, the possession of it (and cash equivalents, such as precious metals, traveler's cheques, bearer bonds and other negotiable securities) is made uncomfortable. Any individual who carries more than US$10,000 or zł.40,000 on his or her person must declare this fact on official documentation. Failure to do so becomes punishable by law.
The 'crime of omission' is now central to the whole process and applies to all citizens, in particular professional advisers. Thus, if a citizen fails to report his or her suspicion of money laundering by any other citizen, then they are liable to be prosecuted under the criminal code. Professionals have to abide by even more onerous rules as they are forced to pre-judge complicated situations at the peril of their reputations and livelihood. Criminals who inform on their colleagues are normally rewarded financially or by a reduction in the time they spend in prison. Citizens and professionals are forced, by law, to inform without reward, and should they not do so, they face a prison sentence of up to five years.
To date, there is little evidence that this authoritarian approach and all the new rules and paperwork are having any appreciable effect on crime or terrorism because there is an almost infinite number of ways to 'launder' money, and most organized terrorists and criminals are far more intelligent and inventive than bureaucrats.
On the other hand, smaller banks and businesses are at a competitive disadvantage because of the disproportionate effect of regulatory costs, providing added pressure on them to merge and consolidate with the megaliths and form one homogeneous system of increasing instability. The greater the concentration, the more difficult it is to avoid losses and the 'greater will be the sphere of irrationality.'
We are fast approaching the end of one of the largest credit cycles in history. All credit cycles end with the defaulting of the biggest borrower. Since the banking system is interconnected as never before, I would suggest that you keep three months of living expenses in cash and your eye on the European banking indices. In 1929, the Bear market started in the European banking sector and swept into the USA. It will do so again. Cycles repeat.
