An Adult Approach – I (Investing in a Vulgar Age) | Lee Quaintance & Paul Brodsky

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The Greek debt workout will establish a benchmark for sovereign debt haircuts across the Eurozone

I tried to reduce the size of this quote, but I kept on leaving important stuff out. The whole article is a must read, particular the point made earlier that the negotiations being finalised now between the ECB and private bond holders will ‘establish benchmark terms for other struggling Euro sovereigns as well. Thus, it is possible that the valuation of sovereign debt across all Euro nations will be established in relatively short order’. Anyway, this article by a couple of ‘humble investors’ provides plenty of clarity.

We have not reached the end of history. Mankind evolves, as does capitalism and its many brands. But not that much. An objective look at our modern economic ecosystem shows clearly one unified global banking system that is actually made stronger by predictable, publicly aired tensions among competing political and economic theorists and practitioners. As long as lawmakers and we, the people that must obey them, continue quarrelling among ourselves, those that control money are free to do as they like. When the people revolt against the symbols of political power (storm the Bastille, storm the winter palace), then the people succeed in forcing those that control money to alter the political structure. Only when lawmakers take steps to limit bank system access to the nation’s resources by indenturing the factors of production (dumping tea overboard, storming the Eccles Building), can the nation’s capital shift back to the people.

Today we have an oligopoly of central banks issuing the world’s baseless currencies and, by having successfully promoted substantial household and sovereign debt assumption, can now dictate resource allocation and fiscal policy terms. Against this power there is fragmentation – (mostly) democratically elected officials overseeing republics of generally obedient populations. Lenin knew; “by continuing the process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens”. John Maynard Keynes himself agreed: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose”.

We argue that indebted governments have ceded that power to banking systems without conscience or public accountability. If the global banking system has ultimate power over how global wealth is perceived, (as it does), and it is the only institution powerful enough to keep indebted governments in control of their societies, (which it is), then the only reasonable strategy for an independent investor is to think like a Rothschild. Don’t fight the Fed – bet on it.

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Donagh is the editor of Irish Left Review. Contact Donagh through email: