Money is fraud

You are enslaved by it

In a report by REDD-Monitor on Colombian Amazon carbon projects, it states that:

"But there is a deeper problem. Schmid and Osorio (in the journal Environment and Security) note the contrast between the world of business, contracts, payment schedules, and contract conditions, and Indigenous Peoples’ profound relationship with forest and territory."

“One community member told the authors that, ‘when they talk about money, everyone wants money. They create needs. . . . All the communities want to have their [boat] engine, their things, they have many illusions, which build up. The fights start . . .’”

When you spill money into this cultural milieu, money which represents profits extracted from other's resources and off other labourer's backs, it overrides, it nullifies, the people's relationships with their natural, living world and replaces it with the jingle in the pockets of the Easy Life and introduces the concept of poverty where previously there was natural wealth. Thus poverty enters the world just as Evil enters the world in Nietzsche’s Beyond Good and Evil (Jenseits von Gut und Böse. Vorspiel einer Philosophie der Zukunft) (C. G. Naumann, 1886).

This replacement of a culture of natural wealth, often demeaned as “subsistence living,” with a culture of money, moves the people away from their own version of sovereign wealth into a condition of being money vassals. Where once they were their own masters, now they serve the needs of others, and the various schemes of financialization of Nature try to put a (low) value on this deceptive change. If it were possible to communicate with uncontacted tribes, would they complain to you about their poverty? They know not of poverty until they are corrupted by money - it is not “the love of money is the root of all [kinds of] evil” (1 Timothy 6:10); money itself is the root of all evil - it is fraud. You see this fraud in every aspect of your life, but haven’t yet found the label for it.

Dear readers - sorry about the long delay to get this post finished. With the loose cannon in Washington, trying to explain what is really going on is not shifting sands but quicksand.

The above mention of sovereign versus vassal money is fleshed out in Nathan Tankus’s recent post on the Financial Crisis. You need to subscribe to Nathan Tankus’s newsletter www.crisesnotes.com to get the best information - he either knows what’s going on or has the deep connections to find out, very well worth a paid subscription, presently at a discount. The other good writer is Dominik Leusder on Jacobin, an economist and writer in London. Most of the other talking heads are grasping at straws.

You can feel the built-in fraud in the system of money in so many aspects of your life. Just one instance is the penalty placed on borrowing by rising interest rates, an extra expense when renewing mortgages (in Canada, there are no long-term amortizations).

First, a section on the desperate situation in financial transactions, then back to more on the fraud of money. The following is condensed from an interview Paul Krugman did with Nathan Tankus, you can click this link to see it. (1:06 hr)

After 2008-2009, in "Basil III" (Basil Committee on Banking Supervision), bank holding companies had to retain "high quality liquid financial assets" but are expected to not employ them even in times of stress, thus balance sheets were made more rigid so that finance could not slip into the non-bank operations of the bank holding companies.

With the billions in treasuries (Treasury bills, or government bonds) being bought and sold all the time, as convertible (normally) liquid assets, government bond-dealers at these large bank holding companies used to be a residual buyer, their balance sheets could expand or contract to absorb fluctuating volumes of bond transactions. But with the restrictions on their balance sheets at the big bank holding companies, they are not able to absorb these fluctuations, especially in erratic (Trump) market volatility, so other entities stepped in to fill the void in the marketplace, such as hedge funds. They are now the buyer of last resort, due to lack of foresight in regulation, which has constricted bank holding companies and allowed this hedge fund system to proliferate. And in a big way - while US Gov debt is around US$30T, these hedge funds, in credit defaults swaps, flip close to US$100T.

There was a financial-systems crisis in 2020 due to the pandemic, and government covered their asses, papering over what they did while you weren't watching, they told you they paid out all this money to people and businesses to make up for the COVID constraints. They were covering up the fact that they bailed out the big financial players (yet again) by central banks, especially the US Fed, buying up trillions of treasuries, just like they (again) bailed out banks after the 2008-2009 financial collapse. Except that, while other central banks were actually buying government bonds (and ruining their balance sheets), the Fed was actually using a technical waiver to the Federal Reserve Act to allow the bank holding companies to move money to the parts of their companies that needed more, in order to buy up these treasuries, since the hedge funds had backed off during the pandemic.

So now with Trump volatility, the hedge funds are not keeping up with demand, and are failing in their essential payments. Each step of supposed “progress” in banking regulations has been merely correcting the overlooked problems in the previous system; Basel III correcting Basil II, and now we have nothing in mind for correcting these massive errors in Basil III. Market pressures are telling parties that they need to “delever,” to sell assets to pay off debts, which shrinks balance sheets, yet at a time when balance sheets need to expand to accommodate the deleveraging that other parties hope to do. So you are captured in this loop where you have liquidity when you don’t need it (banks required to have liquid assets) and when you need it, it isn’t there. And with the hedge funds, they aren’t true funds dealers, licensed by the Fed, they exist to buy and sell, but when times are bad, they just aren’t there. The regulated banks are supposed to always be in the market; hedge funds are set up to side-step those responsibilities. And with the ongoing level of volatility, with liquidity drying up in many parts of the financial structure, there is no private-sector actors with big enough balance-sheets to absorb the ongoing sales of assets. Liquidity is disappearing in every sector. But how much of it truly existed beforehand? How much was over-leveraged and over-valued assets? The only assets the people assumed had permanent value were US Treasuries, but they are a debt-asset, not a property asset, and their value depends on market conditions, and market conditions depend on their value, which in “normal” conditions is fine, but in turbulence becomes a conundrum. And the same situation applies to “quasi-treasuries” which are bundled derivatives such as credit-default swaps, interest-rate swaps or FX (foreign exchange) swaps. And the FX swaps in 2024 ran up to US$300T, and 87% of that involved US$, since it is most often the intermediary currency in the swap (exchange) and most of these go through the big US bank holding company’s FX desks. US$ and big US banks remain central to international finance. And with Trump acting to dismember the international role of the US$, how could this possibly not result in instability? So ideally, other countries would learn to swap currencies among themselves, avoiding the intermediaries of both the US$ and US banks, but in this unstable situation, even foreign hedge funds have liquidity drying up. To do a currency exchange, someone needs the liquidity to be able to buy the first currency, then sell it to the receiving party. And they need to be certain that the parties along the way will actually pay the amounts owed. This was the problem in the 2008 financial crisis - insurance giant AIG took one side of credit-default swaps then couldn’t pay up. Of course, government was there with public money to bail them out! In “normal” markets, investors can make any manner of risks “swappable” to create an imaginary perfect portfolio, but when things go awry, with illiquidity everywhere, nobody is there to bail out another party’s risk, and payments end up going into default. “Normal” volatility can have an identifiable cause, and remedial actions taken, but this volatility relates back to one very stupid person.

The problem with all the volatility and illiquidity is that most likely, one or more firms came close to blowing up (as in Lehman Bros. in 2008) and still could, and not just in USA. Further financial damage can yet arise from the “Trump-Musk payments crisis” if Treasury can’t make payments with those young twerps in there re-writing the payments system. That, and their moronic attempt to move the Social Security System off of COBOL (old computer language) in just a few months. And what - run it off a laptop? On top of all that, the govt can now take money out of anyone’s accounts without a reason. And more crises too numerous to list, any of which could be a catastrophe. And from Jacobin:

“And while other countries require access to Western capital markets to be part of the global trading system, the possible demise of the dollar system opens up the door to an alternative financial and monetary system: one in which hedge funds don’t use public goods like government debt securities for speculative gain, or in which developing countries are not at the mercy of the arbitrary decisions of the Fed to raise interest rates — the reform of which was often stymied under US leadership.” (Dominik A. Leusder on Jacobin).

Back to the fraud of money. Apparently, Nathan Tankus is a neo-chartalist.

Wait, don’t go! Keep reading, this won’t be too difficult, I promise!

A neo-chartalist is essentially a supporter of MMT (Modern Monetary Theory) which is trying to replace Keynesian economic theory. Keynesian economics acknowledges budget constraints, while MMT argues they are less significant for governments with sovereign currencies. MMT is more radical in its view of the government's power to manage the economy, while Keynesian economics offers a more balanced approach that acknowledges the need for responsible fiscal policy.

Neo-chartalists posited that governments do not need taxes or borrowing for spending, since they can be the monopoly issuers of currency and can simply print as much money as they need. These monopoly-issuers of money would be money sovereigns, quite different from money subjects and money vassals (that’s you).

A little aside here regarding central banks. A goal of central banks used to be to manage their M1 money supply, that being their most liquid forms of money, but they have drifted into managing inflation within a certain bandwidth by adjusting prime interest rates with a secondary thought toward employment levels. But aside from the US Fed, the other central banks are not full money sovereigns, they are money intermediates. Yes, they can print their own money but all rely, in case of calamity, on the US Fed as their backstop. The US Treasury (along with US Fed) are the superior money sovereigns, they backstop all other central banks by being able to issue central bank swap lines to the other (lesser) central banks. But note that with the Navarro/Trump tariff nonsense trying to destroy the role of the US$ as world-reserve currency, they could carry this one step further and finish the job by having Sec Treasury phone up the US Fed and tell the Fed to cut the central bank swap lines, so that the “burden of being the world currency” stops being carried by USA. This would cut the foreign central banks loose, to sink or swim (likely sink) on their own.

In neo-chartalism or MMT, the thought is that the state should be able to use money to direct economic activity rather than money as a solution to barter or tokenize debt or for making payments. Thus they can choose to print as much money as they want, even to the point of providing a guaranteed annual income. Keynesian economics would call this irresponsible fiscal policy, and you can be sure that “The Market” would simply set a new floor for poverty, abolishing any purpose behind that move. And as I have said, don’t talk to me about minimum wage or guaranteed income until you tell me what is your currency peg, that being a simple basic item in the economy such as a loaf of bread. And if they could print money as needed instead of having to borrow it on the open market, why on earth do they essentially fine you for earning an income?

Another goal of a money sovereign is to restrict your access to other currencies, such foreign or block-chain, so that you cannot “run” from the local currency, in which you are trapped in a life-indentured relationship with. You must remain controlled as a money vassal, this reveals another sense of money being fraud. The money sovereign can print as much money as it wants, but imagine the life you could have if you, the money vassal could do the same! That’s why it’s illegal and why you are a slave.

Now back to the coming world-economic collapse.

Here’s a section from Nathan Tankus’s lecture¹.

“It is the extraordinary amount of dollar denominated debt which at once raises the monetary sovereignty of the United States above all others and pulls down the monetary sovereignty of other countries. This is what makes the U.S. the currency hegemon. Thus, anything that leads to more dollar denominated debts strengthens dollar hegemony and moves away from dollar denominated debt weakens dollar hegemony. However, it would take a truly massive structural change to the way international economics works to transform the current pattern of currency debts such that the U.S. was no longer the currency hegemon. This also means that, from a Neochartalist point of view, reserve currency status is an effect, not a cause, of dollar hegemony. Just as domestically people are willing to save in dollars even if they don’t personally have many dollar debts or even pay taxes because they know so many others accept dollars in payment, internationally countries are willing to accumulate dollars because they know dollars are internationally acceptable.”

Now note that again - “…reserve currency status is an effect, not a cause, of dollar hegemony.” Yet the Navarro/Trump tariff policies think that owning the world-reserve currency is sapping wealth from USA, while in reality, it has allowed them to live way beyond their means for decades. You cannot maintain this world-reserve currency status without causing a major flow of US$ out into the rest of the world, and to do that flow you need to run trade deficits and provide foreign aid. They are trying to cut both, and are too stupid to acknowledge any consequences. And the other tactic to constrain US$ as world-reserve currency is the Stephen Miran nonsense of trying to control and eliminate dollar-denominated debt (see first line in Tankus quote above) by removing the “maturity” dates for T-bills (so that the principle is not paid back to the holder at a certain date), but rather converting them to century- or permanent-bonds, meaning the bond value is never paid back. That, dear reader, is default. On top of that, they want to impose a “user fee” on existing bond holders, to pay an annual fee (actually a deduction from bond interest due) for the “privilege” of holding the US debt.

So I have said, if the US keeps up with these obscenely false economic ideologies, the US is looking at soft or hard default in the near future. But that never happened before, right? Wrong.

Earlier, people were wondering if there might be a recession coming. Now, the smarter ones are not saying “if,” but how deep and how long. I think they are still off the mark - I’m looking at default, either soft or hard. Yes, that’s a horse of a different colour, which doesn’t necessarily result in a markets downturn, but it certainly could go all the way to general world-wide depression. But you say the U.S. has never had to go thought a default. Yes it has, and if you are thinking along those lines, then we need to go through a bit of history. From Wikipedia, on the Triffin Dilemma:

“In August 1971, President Richard Nixon acknowledged the demise of the Bretton Woods system. Due to the run up in war-spending deficits and the declining economy at the time, various countries began to request their dollars be redeemed for bullion. A bullion run on the Federal Reserve had quietly started and France, famously, sent a warship to New York to take the gold back to France and was rebuked. He announced that the dollar could no longer be exchanged for gold, which eventually became known as the “Nixon shock.” Although it was announced as a temporary measure, it was to remain in effect. The "gold window" was closed and the United States had essentially "defaulted" on its debt.”

“Default in the sense that, originally countries had lent money to the United States (purchasing US government bonds) under the condition that these dollars were gold redeemable, but then following the Nixon shock they were not anymore, and in fact the dollars diminished in value versus gold itself (an increase in the dollar price of gold). Therefore, it may be recognized as a 'soft' default rather than an explicit default (a typical bond default where the borrower doesn't repay the bonds).”

But what we’re seeing in this Stephen Miran altering of bond maturities, is essentially, the US government is not going to pay back its bonds. Try to swallow that, but I can’t imagine what you can wash it down with.

If the US wants to move away from being world-reserve currency, you do that by negotiation with the other nations rather than just taking a chainsaw to the world economy. Again, from that Triffin Dilemma article:

“In the wake of the 2007–2008 financial crisis, the governor of the People's Bank of China explicitly named the Triffin Dilemma as the root cause of the economic disorder, in a speech titled “Reform the International Monetary System.” Zhou Xiaochuan's speech on 29 March 2009 proposed strengthening existing global currency controls, through the IMF.”

“This would involve a gradual move away from the U.S. dollar as a reserve currency and towards the use of IMF special drawing rights (SDRs) as a global reserve currency.”

“Zhou argued that part of the reason for the original Bretton Woods system breaking down was the refusal to adopt Keynes' “bancor” which would have been a special international reserve currency to be used instead of the dollar.”

“American economist Brad DeLong claims that on almost every point where Keynes was overruled by the Americans during the Bretton Woods negotiations, he was later proved correct by events.²”

“Zhou's proposal attracted much international attention; in a November 2009 article published in Foreign Affairs magazine, economist C. Fred Bergsten argued that Zhou's suggestion or a similar change to the International Monetary System would be in the best interests of both the United States and the rest of the world. While Zhou's proposal has not yet been adopted, leaders meeting in April at the 2009 G20 London summit agreed to allow 250 billion SDRs to be created by the IMF, to be distributed to all IMF members according to each country's voting rights.”

“On April 13, 2010, the Strategy, Policy and Review Department of the IMF published a comprehensive report examining these aforementioned problems as well as other world reserve currency considerations, recommending that the world adopt a global reserve currency (bancor) and that a global central bank be established to administer such a currency. In this report, the current issues with having a national global reserve currency are addressed. The merits, difficulties and effectiveness of establishing a multi-currency reserve system are weighed against that of the SDRs, or "basket currency" strategy, and those of establishing this new "global reserve currency". A new multilateral framework and "multi-polar system" for managing capital flows and national debts is also called for, but the IMF cautions that it prefers a gradual shift to this new framework, rather than a sudden change.” (Emphasis added)

But how would you reconcile the ideal of having a non-hegemonic reserve currency with the need for it to be a vector of debt? How do you support its value by selling bonds denominated in that currency? Who receives those funds and how can they be employed to generate income (growth) to pay the interest desired by the investors? In times of financial stress, investors look for a “safe haven.” If there is more than one, they will be ranked with one on top. America served as the investor’s safe haven for decades, but they failed to control their over-consumption and regulate the various derivatives instruments which naturally figured out how to run faster than regulators. It was simple greed that over-inflated this balloon, that didn’t have to happen, but it did, it’s over. It will take serious discussions at G20 and other forums by the best economists, exempting all morons, to figure out another world-reserve currency, or perhaps the BRICS countries can enable their own version.

At present, the Navarro/Trump tariff war directed at China causes a dilemma for China, similar to what happened in the Black Wednesday event in the UK, September 16, 1992 in which UK had two choices, support the pound sterling or not, with either choice likely ending with failure. China must support the renminbi or let it float. But China’s industrial capitalism will survive America’s neoliberal nonsense.

Another big part of the fraud of money lies with the legalized form of theft which involves investment funds and stock in emerging enterprises. At any moment, the issuers can choose to wipe their liabilities off their balance sheets, causing a loss for the investors. In the past several weeks, over US$10T has been erased from market values. But the actual money didn’t evaporate, if you follow the money, it was loaned to someone who became unable (or unwilling) to pay it back. It was spent, out into the economy. Wiping it off their books and leaving you with a loss is well-organized legal theft. But then, much of that US$10T was leveraged investment garbage such as the CLOs (collateralized loan obligations) and that bubble (among others) is ready to pop.

Remember that above quote from Dominick Leusder:

“And while other countries require access to Western capital markets to be part of the global trading system, the possible demise of the dollar system opens up the door to an alternative financial and monetary system: one in which hedge funds don’t use public goods like government debt securities for speculative gain, or in which developing countries are not at the mercy of the arbitrary decisions of the Fed to raise interest rates — the reform of which was often stymied under US leadership.” (Dominik A. Leusder on Jacobin).

That is an important point, in hedge funds using government debt securities for speculative gain, for their own profit. That’s where the American financial system derailed - private-sector oligarchs control finance. In China, the financial system is retained by government³ so that they can finance their own industries, finance public goods, which allows for lower wages to be able to compete in world markets.

For a one-of-many example of the power of the oligarchs, look deeper into the Black Wednesday event mentioned above. Most EU nations participated in the ERM (Exchange Rate Mechanism) which was established in 1979 as one of many work-arounds for abandoning the gold standard (1971). The UK was a shadow-participant until fully joining the ERM in 1990. The ERM, to reconcile exchange rates, required all participants to regulate their exchange rates within certain limits, with the central banks adjusting currency reserves to balance financial transfers. Apparently, the UK entered the ERM at a slightly too-high level, and George Soros saw an opportunity. He actually shorted the pound sterling, betting that the UK would have to drop the level of the pound below the floor level in the ERM. He bought up £10 Billion - yes, ten billion pounds sterling! Yes, an article by Bundesbank president Helmut Schlesinger reported in September 15th publications called for a “more comprehensive alignment” of currencies, following a recent devaluation of the Italian Lira. The UK tried to prop up the pound by massive buying on the currency markets. By 7 PM on the 16th, the UK announced departure from the ERM. George Soros made £1 billion on this deal and it cost the UK treasury a total of £3.3 billion. That’s another soft default. And that is the fine work of just one oligarch. If governments don’t acquiesce to the oligarchs, it can be expensive. Privatize the profits, socialize the costs. Then you see the advantage to China in maintaining the financial system within government. Obviously they will have a low ranking on the neo-liberal “Economic Freedom Index.”

References:

1) “The legal foundations of Dollar Hegemony, particularly focused on the role of non-reciprocal obligations” Nathan Tankus’s speech at University of Manchester Law School, June 6th, 2018.

2) - The reason why is simple enough to understand: To maintain the reserve currency status, money-as-debt must be created to maintain international liquidity (provide the money for transactions to take place). This debt accumulates over time, and eventually becomes large enough that international creditors begin to question whether or not it can ever be paid back. When that day comes, the status of that currency as a reserve currency is called into question. Hence the "dilemma" in the name. "Review of Robert Skidelsky, John Maynard Keynes: Fighting for Britain 1937–1946". Brad Delong, University of California at Berkeley.

3) - Michael Hudson interviewed by Ben Norton on Geopolitical Economy: "Trump's tariffs hurt the US much more than China - Economist Michael Hudson explains" with video, podcast and transcript

Dominik A. Leusder is an economist and writer based in London: https://jacobin.com/2025/04/trump-global-dollar-system-tariffs https://jacobin.com/2025/04/japanification-trump-trade-war-economy

Branko Milanovic: https://jacobin.com/2025/03/what-comes-after-globalization https://jacobin.com/2022/04/us-dollar-ukraine-war-global-dominance-currency-sanctions-russia