Why Bogpaper?

Why Now?

Have you ever wondered where all the money comes from?

The £22 million, say, it cost to evict an encampment of Irish travellers from their illegal site at Dale Farm in Essex?

Or the £600 million the Ministry of Defence forks out annually for compensation claims ranging from £81,000 to four soldiers who’ve been given badly fitting boots to the £3 million paid out to the family of an Iraqi who died after being beaten by British troops in Iraq?

Or the £18.3 billion the government is committed to spending every year “decarbonising” the economy under the 2008 Climate Change Act.

Or how about the £850 billion or more spent by the government on the 2009 bank bail-out?

I’m not after value judgements here: just answers to a basic question I don’t think any of us ask nearly often enough. Who pays for all this stuff?

If you’re anything like me you’d probably rather not know. At least that’s how I used to be till quite recently. The way I’d rationalise the smaller figures would be something like: “Well the population is about 60 million, the working population must be around 30 million and 30 million times lots of tax pounds is enough to take care of that kind of thing.”

And the way I’d rationalise the larger sums, like that £850 billion – or, worse, the £5 trillion or so which constitutes Britain’s national debt – would be to bury my head under my pillow and hope that all this horrid nightmare stuff would eventually be magicked away by someone, somewhere who knew what he was doing.

But then came the event which opened my eyes to the terrifying truth. It was a small meeting in a Committee Room in the House Of Commons, attended by no more than five MPs, a few economists and a handful of bloggers. Blink and you’d have missed it. What I heard there was so appalling – but made so much sense – that it spurred me into immediate, drastic action. First, I put our much-loved family home on the market; second, I resolved to devote my energies over the next months and years to warning as many of you as I can of the disaster which lies ahead of us.

What kind of disaster? Not even our greatest economists know the precise answer to that one but then, did they ever? All we can say with certainty is that’s going to be ugly.

Best case scenario is that we experience years of stagnation, rising unemployment and falling wages. Worst could be anything from Weimar-style hyperinflation to riots, shortages and civil war leading to the emergence of the kind of totalitarian regimes which seized Europe in the 1930s and 1940s. Currently, we’re in a kind of limbo, muddling along as best we can, hoping someone will find a solution, somehow and that it will all get back to normal. Unfortunately, that’s not going to happen. Before things start getting better they’re going to have to get a whole lot worse.

Why? Because, for four decades, we in the West have been inflating the mother of all credit bubbles. We’ve been maxing out on cheap credit, spending money we don’t have, borrowing far more than we can ever afford to repay – and now we’re about to get the shocking bill.

Sure we can keep trying to put off the evil day using all sorts of devious cheats – money printing and artificially low interest rates appear to be the current favoured options – but in the end it’s not going to save us. What our governments are doing now is the equivalent of forcing us all to drink more booze to stave off our hangover: the longer we put off facing the inevitable, the more painful it’s going to be.

So far so very obvious. It’s not as though you can’t read similarly dire predictions every day on the internet. All that was different about this meeting was that it explained, in a way that had never been really clear to me before, exactly why we’re in the mess we’re in.

The meeting was organised by the Cobden Centre and the main speaker was Detlev Schlichter, author of Paper Money Collapse. Schlichter is a follower of the great Austrian school economist Ludwig von Mises, who foresaw not only the first Great Depression but also the new one fast approaching now.

Von Mises wrote:

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

One of von Mises’s great bugbears was “fiat currency” – the kind of money that governments are able to create at their whim. (As opposed to money whose supply is limited by being linked to a scarce commodity, as happened in the era of the “gold standard”). And von Mises had a point: every paper money system in history from China’s Southern Song Dynasty onwards has ended in failure. If it wasn’t brought voluntarily to an end, then the currency inevitably collapsed, invariably accompanied by social unrest and economic hardship.

Perhaps you’ll have worked out by now why we called this site Bogpaper. One of the reasons, anyway. Another is that it’s salacious and snappy. Another is that for such a cool name we got it surprisingly cheap. Another is that we can help promote it with amusing taglines like “Bogpaper: we’re here to save your arse!” and “Bogpaper: getting you out of the shit since 2012.” To which we might add, Bogpaper: not just about Austrian economics and fiat currency.

Because it’s not. Sure, you’ll like Bogpaper if you’re interested in those things.

But you’ll also like it if:

You believe – as we all do here – in free markets, free speech, liberty, personal responsibility and limited government.

You probably don’t believe in: bank bail-outs; the European Union; the Federal Reserve; crony capitalism; corporate rent-seeking; political correctness; HS2; wind farms; PFI; Man-Made Global Warming.

You’ve looked at the GOP shortlist and realised: America, at least as much as Europe, is toast.

You’ve accepted we’re all toast but you’d prefer to be lightly browned rather than charred.

You’re worried government spending has got completely out of control and that we’re entering an Atlas-Shrugged-style disaster zone where the productive few are bankrolling the feckless many.

You’ve sensed for some time that everything’s about to go tits up but you’d like it if someone could explain to you why.

You want to find out how best to protect yourself, your friends, and your family from the worst effects of the coming economic armaggedon.

You think people like us should stick together and build a community where we can exchange goods, services, ideas.

You want it all to be over soon so you can pick up the pieces and get on with your life and build a better future for the kids.

You – now you think about it – don’t merely want to survive this economic armaggedon but  actually to come out of it much wealthier and more successful. (Yes it’s possible: we can point you in the right direction).

You like Alex Jones, Zero Hedge and Telegraph blogs.

You have a remote shack in the hills, next to a clean water source, surrounded by razor wire and claymores, with a year’s supply of dried food, plus plenty of ammo for your M4 and your shotgun. Or at least you do in your fantasies.

You’re a goldbug. (Duh!)

You believe that revolution is too important to be left to the left.

You’re a confused member of Occupy in need of enlightenment.

You’re middle class and well educated and frankly pissed off because you can’t earn enough to give yourself an even half-way decent standard of living any more.

You’ve got stuff to say, pithily and entertainingly, on any of these subjects and you’d like to blog on it for us.

You want to know the answer to the question I asked at the beginning.

Yeah. Where does all that money come from?

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13 comments on “Why Bogpaper?

  1. OzWizard
    June 8, 2013 at 7:34 am #

    So, “Where does all that money come from?”
    I thought you were going to answer your own question.

    If you don’t, it seems no one knows … except the guy who actually pays it out. Have you found him/her yet?

    Or is answer too unpleasant for publication?

    Please provide a link to your answer, for the benefit of us numbskulls.

    • tyler durden
      August 2, 2013 at 1:10 pm #

      For the benefit of just one numbskull (you) sit down, strap in and try to comprehend. For one to ask the question “where” does all that money come from underlines the fundaMENTAL misconception you have harboured (who knows for how long – shakes head in dismay).

      If like the rest of the sheeple, you perceive money as some real world output from the process of production then switch off. You are not woth it. Money for what it is DOES NOT COME FROM ANYWHERE. Thats the point. Money is NOT a measure of value, it is a debt token. We consent to use it to represent value even thought it is competelely DECOUPLED FROM THE PROCESS and ENERGY that is required to produce commodities. It is just paper so we can print as much as we like with QE and pretend to withdraw it from circulation when the banksters eventually bleed it out to the hamsters who run on their wheels everyday.

      I could go on but I cant be bothered. I have been trying educate tv watching sheeple for 7 years.

      You deserve whats coming.

      • Johnny
        August 6, 2013 at 6:43 am #

        I thought it was a valid question you cunt!

      • OzWizard
        August 12, 2013 at 12:15 pm #

        Dear Tyler,

        Thanks for trying, but you seem to have missed the point. I didn’t ask the question. The article did, rhetorically.

        Three of your statements about “money” are simply wrong and the fourth is unhelpful. I already knew WHAT money is and hoped the author of the article might have answered his (her?) own question.

  2. Peter Gardner
    July 18, 2013 at 9:48 pm #

    Two books worth reading: Extreme Money by Satayajit Das and The Great Degeneration by Niall Ferguson. They both express more formally what you are saying here. Being who you are, you have probably read them already. However, Ferguson points to the degeneration of the institutions of law, civil society, government as the common causes of the failure of once great civilisations. The current government is actively hastening the demise of the UK by for example redefining marriage.to include gays and lesbians. etc etc. Green Energy is the next great legalised Ponzi scheme after National Insurance and, as Das might argue, represents the financialisation of the nation. Excessive debt is a symptom, not a cause. Question is, does the symptom need its own specific cure while other treatments are directed at the causes?

  3. Frank Peters
    July 24, 2013 at 8:15 pm #

    As long as people accept the morality that it is right to serve others, politicians will make that happen even when it leads to the destruction of people.

  4. brian
    August 3, 2013 at 4:40 pm #

    The problem isn’t Fiat Currency per se — even a metal-backed currency is fiat at some level. The problem is that we allow criminals and thieves to run things. Even if we had a pure metal coin for currency and no paper instruments at all, the group of thieves in charge would make the economy crash, and by the same mechanisms.

    If you think that merely getting rid of the Federal Reserve and instituting a gold-based currency is going to solve anything, you’re not thinking Chess.

    The core problem is that people have tuned out for so long that we have an entirely criminal class running literally everything while the people distract themselves with toys.

    Fix that first, or you’re just chasing your tail.

  5. Graham N Booth
    August 4, 2013 at 10:51 am #

    Regarding the ‘criminal class’ now running the west (especially the UK and USA), it is surely a product of the much-vaunted yet fundamentally flawed concept of democracy – at least in its fully-flowered Jeffersonian form. ‘One man (or woman) one vote’ will, over time, lead to the emergence of a professional class of politician, whose key function will eventually come to lie in pandering to the dross enfranchised to elect them. More, the key to success for such politicians will be identified as consisting in the establishment of tame client groups from within the nether regions of the electorate.

    Inevitably, the left has a huge advantage here. Most people are, by definition, ‘normal’: they are not Thatcher’s ‘engines of prosperity’, and the lower echelons of society are far more likely to support the left-leaning parties. Thus the Democrats in the USA and Labour in the UK are ideally placed to establish such a client electoral group, by seducing them with state handouts. High taxes don’t concern such people, as they are never going to earn enough to qualify for the higher tax rates, and indeed many will never earn a wage at all.

    Thus, in the Blair/Brown years, for the first time, a specific, if covert policy was embarked upon to yoke in as many voters as possible from the voting underclass using benefits, and from the working class through the establishment of a bloated public sector. No matter to these professional politicians that their eventual legacy to the country they were nominally elected to ‘serve’ involves disaster. They are, to a man, animated by the short-termist imperative of keeping their jobs, and will embark upon any course calculated to fulfill this desideratum. Unsurprisingly, Blair recognised the hereditary House of Lords as a threat tot he new professional class. These were legislators who were in no need of re-election, and had nothing to lose by espousing unpopular, yet vital policies. The day the hereditaries lost their automatic right to a seat in the legislature marked the final triumph of the new class. A black day for England (yet most, like sheep, bleat the dismal mantra ‘elected good, hereditary bad’, in spite of the fact that the natural condition of mankind lies in rule by some hereditary principle).

    One of my favourite quotations by a politician is that of Chou en Lai, who, when asked what he thought of the French Revolution, replied that he thought it was still too early to say! Well, one-man-one-vote democracy is a far more recent phenomenon than the events of 1789, and yet we are already seeing what happens in its wake, when the parasite outgrows the host.

    Prior to the great Reform Act of 1832, the franchise in England was extended to ‘forty shilling freeholders’. This meant that all men whose property attracted an annual rateable value of forty shillings or more had the vote. As Disraeli memorably observed, there was far more that a duke and a small shop proprietor had in common than that which differentiated them. Both looked to their holdings, and discharged their responsibilities with a common end in view. If politicians looked only to voters who had demonstrated that they had a meaningful stake in society, the temptation to implement policies they knew to be disastrous would largely disappear. Establishing humane systems to protect the most vulnerable would be sensibly implemented, without recourse to counter-productive bribes. That the present system has trapped the underclass in a world from which they are unable or unwilling to escape is clear. That mass immigration has occurred in order to fill jobs which the underclass needn’t trouble themselves in applying for adds further to the sense of disunity and alienation.

    And bog-paper? I’m no economist, but a look at informed commentary, such as on this excellent website, persuades me that these same professional politicians have paid for their client-bases in a way far more deleterious to society thn ever were the rotten boroughs and pot-walloper constituencies.

    • Frank Peters
      August 21, 2013 at 1:47 am #

      GB: Above you said, “fact that the natural condition of mankind lies in rule by some hereditary principle” Do you really subscribe to this notion?

  6. OzWizard
    August 12, 2013 at 12:33 pm #

    Look guys, I once stood for election to the House of Reps in Australia as an Independent candidate (1988). I only had two policy items: One was to answer that fundamental question, which all other candidates had avoided, namely: “Where will the money come from?” (The other was to encourage electors to think for themselves.)

    I had hoped to get a second opinion from people here who seemed interested in the topic, that’s all. If nobody knows the answer (except me) there’s not much point hanging around here. You’re all talking high level jargon (or philosophy) and avoiding the basic practical question.

    • Frank Peters
      August 21, 2013 at 1:28 am #

      OzWizard: I’ll bite. What is your answer to the question, “Where does all the money come from”? I thought that Graham Booth answered it by saying, “…we in the West have been inflating the mother of all credit bubbles”.

      In the States, FDR outlawed citizens from owning and using gold as money. His New Deal forcibly put whim over reality. He already could leverage the Fed but his new measure couldn’t survive nor could the Fed unless he made gold money illegal. By Executive Order, he denied the right to property and in doing so, he saved the Fed. Ever since, the Fed has effectively exported the scheme the world over. Fast forward to Mr. Booth’s statement about the mother of all inflation over the last four decades and here we are.

      You said that you were hoping to get a second opinion from those interested. What else is there to say? Great minds and small have said it in one form or other for generations. Crooks took over the law, denied us our property rights, forced upon us their counterfeit money and continually taught most of us to believe that they were right.

      Would “the man behind the curtain” care to share his thoughts on the question? Also, what in your opinion is the basic question that we avoiding?

      • OzWizard
        September 8, 2013 at 2:53 pm #

        Frank: The question being avoided ties into the assumption that a “money price” (interest rate?) can be calculated as though money were a commodity – which it is not – and that the market sets this price based on the law of “Supply and Demand”. This leads to the “Money Supply Question” and the implicit justification for a “money price”, related to the scarcity of this supposedly “valuable commodity”.

        In my opinion, the real financial catastrophe is that most people go off-track mentally as soon as they regard money as a “commodity”, and one which should have a scarcity-price attached to it at all. Like length or time units (inches or seconds), exchange value units need a name (e.g. “Dollar”, “Pound”, etc.) but today’s ‘currency’ names are simply words, as they are no longer tied (by legal definition) to a measureable “exchange process”, the way inches and seconds are tied to physically realizable quantities.

        Answering such a vague question as, “Where does all the money come from?” is further complicated by the lack of coherent definitions of key economic terms. We first need a coherent definition, like: Money is the symbolic representation of “exchange values” on an arbitrary scale with an un-defined unit which varies over time.

        This variable value of the fundamental exchange value unit is the real problem, as it is currently tied to the supply (or shortage) of these exchange units. Having flexible values for our various currency units invites (nay, inevitably causes) inequity over time. The question should not be, Where will the money come from?, but, Why is there a continuous shortage of such critical measurement units? If we knew where it came from, we could ask “the supplier” why he refuses to meet the “real demand”.

        It is interesting to ponder the fact that the length of “1 inch” does not change, even if 1,000,000 new tape measures are manufactured and sold. Neither does the duration of “1 second” change when any number of clocks or wrist watches is manufactured and distributed for use. So why does the “value” of the unit of exchange measurement change with the “number of units” produced?

  7. Peter Gardner
    August 12, 2013 at 10:09 pm #

    The basic question needn’t be answered until a sufficient number of people or countries call in their debts to cause the debtor serious embarrassment. At that stage, if everyone agrees, as they do, to forgive a debt at that stage rather than enforcing it, the money never has to come from anyone except the original lenders. But if you lent it in the first place, you didn’t need it for any purpose other than to earn a relatively very small sum in interest. All that has happened is that the interest is a bit less than forecast. If you need money to exchange for goods or services you can also borrow if you don’t have it sitting around somewhere. If you never pay it back you, too, will be forgiven after you have been sufficiently embarrassed. Basically if we all want to live happily ever after all we have to do is to agree never to fight too hard over money because in absolute terms money is ultimately not worth anything. Perhaps, debts that are called assets on the bankers balance sheets should be depreciated in the same way as goods and property are but without the tax allowance. This turns accounting principles on their head so something else would need to change too.

    It is hard to identify where all the money comes from because it comes from the original lenders, who are not repaid. They get it from organisations or individuals and the organisations get it from individuals. When debts are called in in a way that threatens the circulation of money, governments short circuit the system and take money directly from the individuals within their jurisdiction in the form of taxes or confiscated savings.

    I haven’t answered the question except to say that whoever is playing with the money, it comes ultimately from individuals. If everyone agrees to forgive debts, as the world organisations always do, money remains worthless so it doesn’t matter where it comes from. What really matters is barter in goods and services.

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