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Teach Your Grandchildren about Real Money

Apr 5, 2016


BALTIMORE - We live in a world of sin and sorrow, infected by a fraudulent democracy, Facebook, and a corrupt money system.

Wheezing, weak, and weary from the exertion of trying to appear 'normal,' the economy staggers on.

Last week, we gained some insight into the ailment. Something in the diagnosis has puzzled us for years: How is it possible for the most advanced economy in the history of the world to make such a mess of its most basic bodily functions - getting and spending?

Poison Money

By our calculations - backed by studies, hunches, and deep research - the typical American man (it is less true for women) earns less in real, disposable income per hour today than he did 30 years ago.

He goes to buy a car or a house, and he finds he must work longer to pay the bill than he would have in the last years of the Reagan administration.

How is that possible? What kind of economic quackery do you need to stop capitalism from increasing the value of workers' time?

What kind of policies and circumstances are required to stiffen its joints...clog up its innards...and rot its brain?

Globalisation? Financialisation? Bad trade deals? Too much red tape? Too many cronies? Too many zombies?

All of those things played a role. But our answer is simpler: poison money.

The bigger the dose...the sicker it got.

When you say you 'have some money', you usually believe that there is, somewhere, an electronic database in which it is recorded that you are the owner of some amount of currency.

You have $100,000 in your account, right?

Does it mean that there is a little cubbyhole somewhere, with your name on it, in which you will find a stack of 1,000 Ben Franklins?

Nope. Not even close.

No cubbyhole. No stack of money. No nothing.

Does it mean the bank is carefully guarding some 1s and 0s, digital information proving that it at least 'stores' your money in its database?

Nope again!

What it means is there is a financial institution of uncertain integrity...with a complex electronic balance sheet of uncertain accuracy...listing alleged financial claims and contracts of uncertain quality...

...and that you are one of the many thousands of entries on the debit side...with a claim to a certain number of dollars...which the institution may or may not have, each of uncertain value.

Today, banks - and this could be said of the entire financial system - no longer have 'money' They have credits and debits. Your deposit is your bank's liability and your asset.

But look at the balance sheet. You don't know how many of the claims shown on the left are right...or whether, when the other creditors get finished with it, any of the assets shown on the right are left.

All you know is that the system works. Until it doesn't.

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System Seizure

For many months, we have urged readers to prepare themselves for problems.

One day, the accumulation of contradictions, misinformation, and plain old 'trash' in the system will cause a seizure. You will go to the ATM, and it won't work. That day, your life could take a big turn to the downside...depending on how widespread the problem is...the cause of it...and how you prepared for it.

Of course, we don't know for sure that that day will ever come. We are always in doubt, especially about our own forecasts.

Still, the potential problem seems likely enough...and grave justify some minimal precautions. You might cross the street blindfolded without getting run down, but it is still a good idea to look both ways.

Usually, we look to the right...where we see the problems inherent in a credit-based money system.

The feds can create all the credit they want. But real people can't pay an infinite amount of debt service. Like a junkyard dog reaching the limit of his chain, the credit cycle has a way of jerking people back to reality.

Real Money

But there are other potential problems coming from the left...

An electronic, credit-based money system is fragile.

It can be hacked by thieves. It can be attacked by terrorists. It can be shut down by accident. Even a 'bug' could bring it to its knees.

And then what? How will you get money? How will you spend it? How will you buy gasoline or food?

Our advice: Keep some cash on hand. Make sure you own some gold, too - real gold, coins that you can hold in your hand and you can flip to your grandchildren.

'Hey kid,' you say with a knowing and superior air, 'take a look at this. This is real money. You don't have to plug it in.'

By the way... Gold just had its best quarter in 30 years.

Do buyers know something?


Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

Disclaimer: The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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2 Responses to "Teach Your Grandchildren about Real Money"

Girish Patkar

Apr 5, 2016

It is unfair on your part to hint at the possibility that inferior work may have being done by IVRCL to cut cost and increase profits. You may legitimately ask why a loss making company was allowed to continue with the project, but to allude to foul play is a bit going over the top like the 9 pm tamasha.

I think all commentators should verify their facts before making any statements especially in sensitive matters.

May I remind you that a similar incident had happened in DMRC a couple of years ago and DMRC was not a highly geared company or a loss making Company and I can give you several examples where mishaps happen due to design defects



Hemant K T

Apr 5, 2016

Dear All,

I had a detailed discussion with Prof Achyut Ghosh, a visiting professor and an eminent personality in Kolkata. He is the person who visited the accident site, a day after the collapse (on behalf of HT) and given his views, which was published in HT

Based on our discussion, I understand that there is no element of doubt that this flyover collapse has been triggered by the failure of Pier Cap. Whether it is faulty design or faulty material or faulty connection, is a matter of further probe, but apparently the depth of pier cap at pier face, for a 5 m cantilever appears too less and therefore design failure is a strong possibility and an intelligent guess.

I am told by Prof Achyut Ghosh that the structure has given sufficient warning 6 to 7 hours before the actual failure. The sequence of event leading to failure clearly demonstrates that any sensible and intelligent site engineer present there with some basic sense of engineering, could have understood the signal given by the structure and perhaps could prevent this calamity.

The failure occurred when concreting of deck slab above the steel girders was ON or concreting has just finished. The concrete was still in green state when the failure took place.

6-7 hours before the failure, when concreting was half way, the bolts in cross girder of the steel girders placed on cantilever pier cap sheared off. This apparently happened because of excessive deflection of the pier cap, over which these longitudinal girders were placed. Apparently, instead of trying to find out the reasons behind this bolt failure, instruction was given by the site in-charge to weld the bracing again and go ahead with concreting.

It's like ...when there is a tripping of electricity in your house, you are replacing the fuse with a thick wire instead of finding the fault due to which the tripping occured.

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