This is an important essay. If everyone understood the ideas here, it would clarify most of the reasons behind our financial mess.
My name is Hank Monrobey. In spite of my typically American name I am only a guest in your country as a result of my marriage with Marjory the American part of my small family. So forgive me when I am sometimes using typical continental European expressions and grammatical failures for which I normally use my partners to turn them into plain American English.
The problem of economic "scientists?" in the United States is that they use a collection of figures to enrich their knowledge that is mostly unworkable. The whole of the United States is too much to chew. In my humble opinion you can not learn anything from all those figures collected from the whole of the United States. To be able to learn the truth about the economy, you need in my opinion the following elements:You have to be able to have accurate day to day figures about the money creation.
You need to have the capability to measure exactly the velocity of money on a nearly monthly base.
You need the actual price level on a monthly base.
You need the GDP from the measured environment and that environment should be a stable economic environment where it is possible to investigate without much difficulties what is causing changes.
Well, such an ideal situation does not exist in the United States and I must be honest. At this moment there is not one place in the world where you can do this kind of research successfully. But until 15 years ago there were. Two countries, the Netherlands and France allowed before the mid eighties to research their economies with the possibilities to satisfy the needs as mentioned above. By the end of the eighties they changed their statistical method and after that the possibility was gone. The most ideal place to do that kind of research was before that change in the Netherlands and that is what we did in 1981. We went to the Netherlands to find economic knowledge.
We began to investigate what caused stagflation and we found the basic answer to that question in only five days and the answer is even simple to understand.
But before I give you the basic ingredients I want to make a remark about the real character of inflation.
We discovered that it has become a kind of bad habit to call every price increase inflation. As soon as something increases in price it gets the label INFLATED.
In April 1981 when our research in the Netherlands began and we took on to demystify the development of Stagflation, we discovered fast that stagflation got a chance to develop because we automatically called every price increase inflation. We have all clearly forgotten that inflation ONLY exists as a result of an oversupply of money.
An economy stagnates because of a lack of money and when then at the same time the prices go up you can not consider that inflation. There must be another reason. We found that reason. For those who need a reminder about the reason for the existence of the word Stagflation let me refresh your memory. Stagflation is developing when we become confronted with a stagnating economy while we observe at the same time inflation, thus rising prices.
In 1981 the Dutch monetary authorities were certain that they were dealing with inflation and fighting the inflation got priority above solving the stagnating economy. They began drastically to reduce the money supply. They fought, as you will understand a little bit later, the inflation fire with throwing economic kerosine on it. We informed the Dutch Government in 1981 that they were aiming for a million unemployed in 1984, without any real economic reason, but an economic mistake . The Minister of Finance wrote us that we were completely ill informed, went on with their Kerosene program and harvested as a consequence one million unemployed with a population of about 15 million in 1984.
This leads automatically to the question: Where did all the money go?
I want to give you a clear suggestion: Stop thinking about one economy. There is not one economy. There are two:
One economy is the real economy where we produce something, where we create real wealth. It is the PRODUCTION ENVIRONMENT.
The second economic environment, with a life of its own, is the FINANCIAL ENVIRONMENT, where they never have created any real wealth but where they hoard all the money that is pumped out of the production environment, because we developed the delusion that we can realize more profit in the financial environment.
In the financial environment we put all that money in a "straitjacket" and make certain that it stays in the financial environment to make a UNIQUE FORM OF REAL INFLATION and we call that INVESTING. We attract guileless people to become INVESTORS in guaranteed INFLATION.
We inflate the value of some remarkable assets. Stock, and real estate are the most important.
We use all that hoarded money to trade in a market with very little supply and without consumption and we screw the prices up to create fake wealth, because we begin with using all that hoarded money for the creation of massive inflation in a closed economic environment, called the UPPER LEVEL of the FINANCIAL ENVIRONMENT.
As soon as somewhere a money reserve develops in the production environment we pump it into the financial environment, because we have fallen for the believe that we can make there more profit.
Consequently, the place where we can make real profit with real wealth in the production environment can not compete with the fake profit in the financial environment. Making more than normal profit in the Production Environment is restricted to monopolists or semi monopolists.
Because not everyone get the same chance to build a superb monopoly like Bill Gates, the money flows automatically to the place where we think that we can make more profit, the financial environment. That profit is totally inflated and consequently not existing, not backed by any real value. So we get two different types of money, but we have no possibility to see the difference. Both dollar or guilder bills look exactly the same.
Money operating in the financial environment has probably less than one percent value of the money that operates in the production environment. As soon as money arrives in the Financial Environment it loses its capability to produce anything. Consequently it can not make any profit.
The capital hoarders make certain that the prices in their financial market will fluctuate regularly, because without fluctuation nobody will earn a dime in that environment. The consequences of this system makes certain that the rich become richer and the poor become poorer.
And here are the basic ingredients for the development of stagflation.
We pump all the money into the "straitjacket" environment of the UPPER LEVEL of the Financial Environment and use it exclusively to pump the prices in that environment up. We have there lots of money concentrated, all hunting for that remarkable profit without any body. Because it is nicely "straitjacket" it does not go anywhere else. We use it to buy a product that is not consumed. A product with a nearly eternal life that constantly changes its ownership and that has to change ownership when someone wants to make bubble profit.
This product "paper", represents a value of a business. That value is down to earth calculated by busy accountants and the IRS. The price of that paper in the form of "shares" or "deeds" is not in any form related to that "down to earth" character but is defined by the amount of "straitjacket" money that is available to buy.
So we create a bull market at the expense of the production environment where the money disappears. The joke is that the people who transfer their money to the UPPER LEVEL of the FINANCIAL ENVIRONMENT believe that they are really "investors" while they don’t invest a dime. They are only buying and selling paper to make the prices swing and most of them don’t have a clue about the reality that you can only make profit in the paper lane when the prices are swinging.
So, we create a shortage of money in the production environment and the "investors" forget mostly to invest in the only place where it makes sense to invest and that is in the production environment. They "pass" to do some real investing because you cannot make enough bucks in the production field.
Nobody, is aware of the very severe consequences of this remarkable behavior. Because the constant stream of money from the production environment to the UPPER LEVEL of the financial environment causes a lack of money in the production environment. Consequently, that lack of money causes stagnating economic activities in the production environment.
But we have a solution for that problem. We are going to create debt. We have to go to the LOWER LEVEL of the Financial Environment where they create money out of nothing for a price to solve the shortage of money developing for the businesses in the production environment. Of course, borrowing money costs money, lots of money.
Consequently, the costs of production goes up because of the higher capital costs.
Don’t forget that business "A" brought somewhere in the past an amount of money into circulation that should continue to work for business "A". The owners of Business "A" expected that their money would recycle and come back to them in the form of sales. That is the logical way of working of the economy. We really learned our lessons about money CIRCULATION.
However, someone decided to discontinue business "A"’s money recycling process. Of course, that someone did not know what he or she really was doing, but by simply taking money out of the production environment, you are simply transferring the life elixir from someone else into a non-productive environment, where it is not doing anything of value. By believing that you enrich yourself you are causing poverty and economic chaos to someone else and probably a little bit later to yourself.
So Business "A" sees clearly a decrease in its money reserves and has to go to the bank to fill the gap when the business wants to stay alive. Because their money turned somewhere in the supply chain into a reserve of another person or company and that person decided to let it disappear into the "straitjacket" environment of the financial world, the money is forever gone. And Business "A" has to reinvest the same amount of money lost to the UPPER LEVEL of the Financial Environment to stay alive. The reality is that every penny that becomes a part of the "straitjacket" forces in the upper level of the financial environment, returns rarely to the production environment. Consequently, the former owners of that money who brought it into circulation are now FORCED to go to their lenders and borrow new money at any price.
When anyone of you has ever served as a consultant to privately owned companies, as I have done since 1968, then you know how clients were forced to go to the bank, time after time to fill up their lack of liquidity. They never understood why they were forced to borrow more and more money. Not only that. They had to borrow money for any price.
Consequently the costs of production goes up, because business "A" is forced to increase its production costs with higher costs of capital. And of course, businesses "B, C, D, E .........up to Z" in the supply chain have all the same problem and experience. They are all forced to increase their prices because of higher capital costs. If you had not noticed it, but the accumulated costs for the financing of consumer products is in the Western world risen to more than 50% of the consumer prices.
When we in 1981 discovered this development and understood that the monetary authorities called those rising prices INFLATION, we were flabbergasted. Those price increase had not developed because of an oversupply of money, but because of an extreme increase in the costs of capital that became scarce in the production environment and played useless money games in the UPPER LEVEL of the financial environment, while the lower level of the financial environment made overtime in filling the gaps in the "plundered" environment.
When you think that I am joking here, then let me give you a small picture of some bitter experiences in a small really rich country. After completing our research in the spring of 1981, I traveled in the summer of 1981 through that country with a Dutch associate. We spoke with bankers, with industrialist, with politicians and Labor Union leaders. We got friendly receptions and big and friendly smiles but did not harvest any reaction that would turn the tide. We wrote letters and sent reports to those men and women who were unreachable for us, because they were too high placed on the political spectrum.
Today’s Prime Minister of the Netherlands Willem Kok, was one of those who got our message in writing. Kok appreciated my work and wrote so in a personal letter. At that time he was the chair of the association of labor unions of the country. But in his letter, Willem Kok expressed clearly the dilemma of understanding. He wrote that is was so clear that there was inflation in the country because the people had to pay more nickels (dubbeltjes) for their groceries. Willem Kok had not grasped the meaning of our message. I must confess, after twenty years I am much better equipped to explain what went wrong. This kind of reactions brought us to a last attempt to turn the tide for one million workers of that country who would become unemployed. I wrote a handwritten letter to Queen Beatrix of the Netherlands to warn her about the coming disaster. She answered that letter within 24 hours and wrote that she placed the letter in the hands of the Minister of Finance.
Six weeks later, I got a letter from a high ranked civil servant who taught me that I had to read the reports of the President of the Central Bank to become wiser. However, this President was the same man who had in my opinion caused the monetary mistake and had exported that mistake as well known economist to the United States during a dinner with John F. Kennedy in 1962 and later as President of the BIS in Basel (Bank for International Settlements) to his European Colleagues. I am talking here about a phenomenal idol Dr. Jelle Zijlstra who had become an internationally extremely well known expert about "The Velocity of Money." He wrote in 1948 a doctoral thesis about that subject and became the youngest Minister of Finance in Dutch history. Only six years after his promotion he gained already a Position as Minister of Social Affairs in the Dutch Government. It is very difficult to win a debate with this kind of power players, especially when the power player refuses a debate with an opponent who is not considered to belong to his class.
So, the world began to fight an inflation in the production environment THAT DID NOT EXIST. While inflation was rampant in the financial arena, specifically in the real estate environment and in the stock market, but did not exist in the production environment. However, they believed that the whole of the economy was showing inflation which means that the intelligentsia at the helm of the central banks began to increase the interest rates to curb the money supply. They did not have a clue that their increasing interest rates created an illusion of inflation that did not exist in the production environment.
This explains also why we did not see any really running inflation in the consumer prices lately. The only price increases that develop are resulting from increased capital costs and not as a a result of an oversupply of money. That over supply does not exist in the production environment. We enjoy that kind of inflation in the place where all the money goes and we enjoy it and made jubilant noises for television and radio when we were again excited about that great stock market. I have rarely seen in my life so much b......t.
The same story in a different form repeated everywhere in the world. I think that it should not be difficult for you all to complete the story and to understand where the money finally went and will stay Why? Well, guess whi will become the owners of all that money? Will it be you? Or will it be that 1% of the great Americans who already own 50% of the wealth of the nation? Guess which instrument made them the owners of that wealth!!!!!!
When beyond that the Governments allow that particular monopolies develop that lead to overcharging in prices, and the monopoly profit made, goes subsequently into that same financial market, you can forecast what will happen. Mr. Bill Gates will finally own everything in the world because one thing we as economists can do very well.
We can put one and one together and conclude that this will result in total slavery of those who will become dependent on Billies and their comrades.
When I look at the so called Budget surplus in practically every Western Country, purely developed from additional tax revenues from capital gains in the financial environment, thus completely financed with money without any value, then I have to ask myself: "Are they really that blind or only dumb?" You may give the answer.
We decided twenty years ago to do something about it. We were aware that we could not start doing something about it until the economic crowd would see the truth. I think we have reached that momentum.
We waited for twenty years to push the button to start protecting the innocent people, misled by US, you and I, the representatives of the economic profession who were not capable to see the truth in time to avoid a disaster.
When you want to know more about us you will find it on our website: <http://monrobey.com>
Two months ago Curtiss Priest wrote me that he would not stop ringing the alarm bell until this awful robbery system would be brought down. Of course, he wrote this nicely in Curtiss’ way. "So I seek a crash to end all crashes." I have given it a liberal translation.
He is most certainly one of those who I admire in bringing the truth on the table and in discussion. Those people are very difficult to find.
That brings me to the debt situation. We are, I mean the people working with the Monrobey Corporation, in the United States, Europe, South America, Africa and Asia the real experts in debt removal, whether you believe it or not. We remove debt at the heart. We know how to build a debt free society successfully and very profitably. It is so easy to understand that when we save the enormous amount of money that we have to pay annually to the hoarders and use if for ourselves, we don’t have to worry about retirement or recessions. We will have what we need.
It becomes time that we get a real economic science, where real science is applied instead of this caricature of science.
To make an end to this caricature we have started to send messages into the world, clearly expressing what we do:
Irving Fisher's Incomplete Formula.
Are you aware that removing interest from the earth would increase the wealth
Removing interest can decrease prices by as much as 50% doubling your income
interest-free economic environments everywhere in the world
A proven lack of economic know-how
The Disaster of the Value Added Tax
More Stagflation because of a failing money system
Always at your service
I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.