You Should Be Questioning the Very Concept of Money

Indulge me for a minute…

Because I quickly want to thank you for doing me that favour and providing me with some feedback on Money Morning as per my recent request.

The overwhelming response was positive, with some good ideas on how to improve things thrown in too.

Of course, not everyone was happy, but I suppose you can’t please all the people, all the time.

But the most pleasing aspect from my point of view was that you truly got it.

You guys really get what Money Morning is all about.

People wrote in from all around the country; from outback Queensland, country WA, as well as inner-city Sydney and Melbourne, all with the same type of response.

Which I’ll paraphrase as this…

‘I like reading Money Morning because you ask ‘why’. I don’t agree with everything you say, but at least it makes me think.’

Bingo!

It seems that this is the common thread that unites us — both the editors here and you the reader.

In this fast-changing world, too much analysis focuses on ‘what’ is happening and not enough on ‘why’, or what comes next.

‘House prices went up’, ‘stock markets fell’, ‘Fed Reserve just created $100 billion out of thin air’…yep, that’s great, but why?

And what does it really mean?

I think asking ‘why’ is what separates average investing decisions from great ones.

The sad fact is that most people don’t do that enough. They’ll go with the herd more often than not. Comfortably ignoring the impending reality.

That can mean missing out on huge opportunities, or heading into huge risks, blissfully unaware.

I liken it to the famous graph about the well-being of a thanksgiving turkey (see below) over time.


Money Morning

Source: Business Insider

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The thanksgiving turkey should have thought about why the farmer was fattening him up…

With that in mind, one of the most important places to be asking questions right now is right at the heart of the financial system.

Because there’s pressing questions on the very concept of money itself…

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The death of paper

Is it the end of paper money?

Well, that much is clear.

The answer is a resounding yes.

Money is going digital, there’s no doubt about it.

The Australian government is close to banning cash transactions over $10,000. Some European countries already have limits a lot lower than that.

Why the rush to ban cash transactions?

This is the most troubling aspect…

Though politicians will wheel out the usual bogeymen — terrorists, organised crime etc. — that’s not the real reason for this move.

It’s to shore up the big banks.

It seems the rush to ban cash is a precursor for a coming world of negative interest rates.

After all, if rates turn negative and people were charged for storing money in a bank, then people will naturally take their money out of the bank and put it ‘under the mattress’.

That would destroy the banks.

Don’t think the government would act to protect banks?

Well, consider this headline from the AFR today:

RBA could give banks cheap loans

The article goes onto explain how the government will deal with the fallout from negative interest rates:

Instead, in a paradox, Treasury suggested the RBA could provide cheap debt finance to banks either by buying their bonds or via direct lending. This would compensate for the “intense pressure” on profit margins and ensure lower borrowing costs flowed through to the economy.

I don’t know about you, but extreme government intervention to protect ‘intense pressure on profits’ doesn’t sound like free markets to me.

Anyway, in the same vein the cash ban is a pre-emptive attempt to protect banks by locking your money in them. I wouldn’t be surprised to see withdrawal restrictions sneak in at some point too.

An even more troubling reason, is that it is likely an attempt to allow big brother to snoop into even more of our private lives too.

Big government wants to have the ability to control what you do with your money. You’re already seeing that with talk of ‘welfare cards’ and the like.

In my opinion this is a total affront to our very liberty.

And will create a dangerous society where money is an even bigger tool of power than it already is.

My take?

It’s time to plan your escape…

 Crypto is our last chance at free money

Give me control of a nation’s money supply, and I care not who makes its laws.

Mayer Rothschild

While the powers that be try to dominate control of paper money, forward thinkers are looking to alternatives already.

Which means looking at opportunities in gold and cryptocurrencies.

From Mises.org:

The current fiat money system that originates from 1973 may be replaced by digitalised commodity-based currencies in the future,” Marc Friedrich, a German economist and bestselling author, told Sputnik.   

The Bank of International Settlements will introduce a rule on January 1, 2022 allowing central banks to hold up to 20 per cent of their deposits in gold, silver, and even platinum in order to stabilize their balance sheets, according to Friedrich.  

Bloomberg reports central bank gold buying in the first quarter was the highest in six years led by China and Russia.

Gold and commodity-based money certainly have hidden institutional support. A fallback plan perhaps?

But cryptocurrencies are a viable competitor too.

Consider this tweet:


Money Morning

Source: Twitter

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Crypto — in my opinion — is the people’s choice. It’s not controlled by big business or big government yet.

It’s our last chance at free money.

Gold and bitcoin have a scarcity value that cannot be eroded by financial elites. Not that said elites will relinquish their control so easily.

They’ll fight the transition. It’s about to get dirty, that’s for sure.

But, in my opinion, change is coming regardless…

Good investing,

Ryan Dinse,
Editor, Money Morning

PS: Bitcoin buyer’s guide: everything you need to know to buy your first bitcoin today. Download now.


Ryan Dinse is an Editor at Money Morning. He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur. With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle. Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.  


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