All the People Crying The Sky is Falling Fail to Understand There's Nothing New Under the Sun
Banks have been up to this sh*t since 12th Century Venice and before...Quit your Bitching about it!
By Jon Forrest Little
"The thing that hath been, it is that which shall be; and that which is done is that which shall be done: and there is no new thing under the sun."
As a modern adage, "there's nothing new under the sun" is often used as a world-weary complaint against life's monotony. However, when Solomon wrote the statement, he emphasized the cyclic nature of human life on earth and the emptiness of living only for the "rat race."
BANK FAILURES ARE NOTHING NEW
I chuckle at my peers in the gold and silver industry, hearing them cry
-Bankers are manipulating things!
-Governments are corrupt!
-Wall Street is rigged! (They privatize profits and socialize losses)
Damn, I've been the worst whiner in the World in the past two years, and I beg for your forgiveness. I've been a jerk.
Kitchen table talk is:
-The school system is failing kids.
-The government is failing citizens.
-Our church needs a better pastor.
-Customer service sucks; you can't talk to a person just a website.
-Kids today are lazy; they just stare at their iPhones and can't socialize.
-Insert new complaint
Guess what? Everything is flawed in institutions because, at our core, we are flawed.
So why do schools, institutions, governments, workplaces, and organizations fail?
This is precisely what we should expect from a bureaucracy, government, workplace, institution, police force or school ?
These organizations are made up of individuals, so it is just collective failure. Since individuals are flawed, a group of people are even more inadequate.
We should be more surprised when things run smoothly.
My father, Jack Little just died, and he would listen to my brother, mom or myself complain and immediately tell us to "KNOCK IT OFF"
Then seconds later, he would hear us break into a negative story about a mutual peer and would say "There should be no gossip between us."
He wasn't a saint, but he did live this way. While he was in the room, you had to stay positive, and gossip was not tolerated.
Difference between town gossip and gossip columns
We want public figures to fail. We live in a hero-worship society but what's even better is when public figures fall out of public favor. Louis C.K. , Kevin Spacey, Pee Wee Herman, Tiger Woods, et al.
Some of the best stories are when you hear about problems with people like Jim Bakker of the PTL network, Jimmy Swaggart or the typical "Evangelical anti-gay" preacher with a "boy" on the side, right? We love this because the so called spiritual leader is busted for being a sinner, how juicy. We yell HYPOCRITE!
Then there are the crazy new talking points that are becoming increasingly boring and stupid
Drag queens are ruining society.
That trans weirdo is ruining sports.
Those BLM protestors burned down Seattle.
NCAA football should have a tournament like March Madness.
TikTok is spying on me.
This is a financial newsletter, so let's get back to banking. Gold and silver enthusiasts love bitching about bankers.
BANKERS ARE CHEATING BUT THIS ISN’T A NEW BEHAVIOR
Swapping Paper Versions of Gold, an Ancient Scheme
In the 12th century, European bankers invented a scam that still haunts gold and silver investing today. What was the scam they created? Paper manifestations of silver and gold.
Bankers past and present devise creative schemes to manipulate finances. For example, European governments in the 12th century engineered the concept of funding through government debt.
In the Middle Ages Venice became wealthy through its control of trade between Europe and an area known as the Levant (Eastern Mediterranean/Western Asia.) The Republic of Venice built a large national shipyard, the Venetian Arsenal. Venice had the World's most potent fleets and took control over the eastern Mediterranean.
After that, Venice seized the opportunity to provide transportation for the Fourth Crusade. But the crusaders could not pay for chartering the ships. The Emperor of Venice offered to delay the crusader's payment in exchange for military support to capture troops that had rebelled against Venetian rule in 1183. Venice placed itself under the dual protection of the Papacy and the King of Hungary. Venice was successful in this 1202 war due to the help of 10,000 Byzantine soldiers plus 500 Knights and the service of the Byzantine navy (20 ships.) Finally, Venice received 200,000 silver marks to help pay off the Crusaders' debt that the Emperor had deferred.
When the Latin Christians of the Fourth Crusade detoured to Constantinople in June 1203 to install Prince Alexius Angelus on the Byzantine throne, they wound up pillaging the city.
The history of present-day financial instruments begins with the issuing of municipal bonds.
The Venetian government had banked large volumes of gold and silver. Venice needed a quick infusion of income for military purposes but did not want to part with its silver and gold.
Venetian bankers levied a compulsory loan on its taxpaying citizens. It promised the citizens five percent annual interest and allowed the "bonds" or contracts to become negotiable, creating a government debt market. Although these bonds had no specific maturity date, their market prices fluctuated wildly with the city's political and military fortunes. As a result, skepticism emerged regarding the likelihood that these "war bonds" would ever be repaid.
Similar practices quickly spread to the other Italian states and to Northern European merchant enclaves. For example, Holland largely financed their long war of independence against the Hapsburgs through forced loans. These manipulations of money creation caused inflation not the influx of bullion.
In the sixteenth century, merchants used bills of exchange to settle debts. As a result, government debt took on the following manifestations:
Bonds - the English strategy
Rentes - the French strategy
Juros - the Spanish strategy
These annuities became the real credit money of this age. These paper swaps changed everything.
Townsfolk and villagers were once independent. Now they were reduced to wage laborers working for those with access to these higher forms of credit. In Seville, bullion was taken directly to the warehouses of bankers in the Republic of Genoa. These deposits of bullion became the basis for complex credit schemes.
The value of the bullion was loaned to the Emperor to fund military operations in exchange for papers entitling the bearer to "interest-bearing annuities" from the government papers that could in turn, be traded as if they were money.
Bankers could almost endlessly multiply the actual value of gold and silver they held. In the 1570s, Seville in Spain was known for their" factories of certificates," and transactions were exclusively in paper.
This created increasing uncertainty because no one knew the outcomes of war. A paper promise was fragile because these notes were transferable. This was the introduction of counterparty risk.
There was significant counterparty risk surrounding the validity of paper notes. Paper notes were promises. It was unknown if the Spanish government could pay these debts, so the paper bills circulated at a discount. Bonds began circulating throughout the rest of Europe causing inflation.
You begin seeing this repeat over and over again. Bankers working closely with their client governments multiplied their gold and sold paper bonds that infected the population.
Things get even worse. The Bank of England starts circulating promissory notes instead of government bonds. At least some government bonds did pay. Moreover, promissory notes did not carry interest.
Forty London and Edinburgh merchants started the Bank of England. These forty men had already made loans to King William III. The viewpoint of these forty merchants was no one in the land could be considered a better creditor. So these forty men extended a £1.2 million loan to help finance a war against France.
Now they had leverage on the King. They convinced King William III to allow them in return, to form a corporation with a monopoly on issuing banknotes.
These were promissory notes for the money the King now owed them.
This was the first national central bank, and it became the clearinghouse for debts owed between smaller banks; the notes soon developed into the first European national paper currency.
Sealing of The Bank of England Charter 1694