Newsletter October 2002


More gold, more paper and more state-debt


Did metallic basis as international value standard

solve any of the problems it is throught of to do tomorrow

Part 2


Mainstream history continued:

The task of maintaining stability within the bimetallic system, through exercising control over the world's prices of gold and silver, fell to France. The performance of this function imposed few problems in the years between 1815 and 1850, when demand and supply conditions for both metals were fairly stable. There was some withdrawal of silver from circulation, as gold production steadily declined, and its value appreciated relative to that of silver, but France possessed relatively large reserves of both metals and was easily able to absorb silver at the expense of gold without actually moving to a silver standard. The United States was also legally on a bimetallic standard for most of the 19th century. Until the 1830s, however, the country really operated on a silver standard, because at 15 to 1 the Americans mint ratio of silver to gold undervalued gold and led to its disappearance from circulation (Greshams’ Law in details above). But a de facto silver standard was inconvenient for a country that traded primarily with another Britain, which was on a gold standard. It was probably for this reason that the Coinage Acts of 1834 and 1837 reduced the old content of the dollar and established a new mint ratio of 16 to 1. Since this ratio was above the free market ratio, which generally settle around the French mint ration of 15½ to 1, the previous trend towards a silver standard was replaced by a movement to a de facto gold standard similar to that found in Britain during the 18th century.

The pressure on the bimetallic standard mounted after 1850, when the discovery of substantial gold deposits in California[1] and Australia produced dramatic changes in currency dealings and metal markets. The relative price of gold fell, and the French mint ratio of 15½ to 1 proved to be inappropriate to the new world market situation for it overvalued gold. As silver appreciated relative to gold, France absorbed large quantities of gold and the French franc became a gold unit as Gresham’s Law became operable. In an effort to stabilize the situation and promote an international bimetallic system, France summoned a meeting of franc-using nations 1865. As a result of this meeting, France, Belgium, Switzerland and Italy agreed to regulate their currencies jointly (often referred to as the Latin Monetary Union (end of mainstream history) – analogous to the first stage EMS of the European Monetary Union). The agreement, however, did little to alleviate the monetary pressure exerted on the bimetallic countries.

Then prices on commodities rose generally. Inflation was active.

How inflation and speculation become possible, and how they are accelerated:

The private limited company was not really widespread until the 1800s. Also the bank houses of the Absolute Monarchy (which ruled in most states) were businesses owned by one man or by partners. The private limited companies are introduced en mass in the 1800s. Thereby you have to distinguish between physical and juridical persons, and at the same time distinguish between the responsibility of a physical person and a juridical subject. It was not my task to analyze the laws of private limited companies in different countries, but to show how the clear advantages of the private limited company turn to disaster for the society under the industrialism and the so-called democracies from the mid 1800s. All laws concerning the private limited company in the different countries are partly different, but a lot of the substance, of the rights and the responsibilities are rather common. Definitely common to such a degree that a rough outline will be described here:

The theory or principles of the private limited company:  

A juridical subject with its characteristics and rights. The private limited company gets a private life that has to be protected. Here the deciding is its position as owner of a business, its protection, and its free access to profit. The company owns some real goods, factories, land and products. The share holders are directly related to those goods, because they look upon themselves as members of a co-operative society, and because the business of the company was not bigger or more distant than they were able to keep the information up to date. The stocks and shares and share certificates were pieces of evidence for a certain share of the real goods of which revenue and profit were made. The participants of the circle of share-holders share interest of certain common aims. That is the reason why they join their efforts, and because each of the share-holder is not economic strong enough. They appoint some  participants – the biggest share-holders – to form a board of directors that appoints a director/a president, sometimes among the members of board of directors. In this way the board becomes some kind of a deputy for the shareholders; the board has some duties to the shareholders. It is not without some functions, but its whole existence is caused by the private company. The shareholders are in a way a kind of managers who are acting via delegation, but they feel and certainly have a responsibility, even outside economics.

The interest of the shareholders are certainly not profit due to appreciation, and he even feels some kind of moral responsibility that his goods must work in a honest pro-duction, not even the profit of the year is of his primery interest. The share-holders’ relation to the company are lasting, they do not sell the shares, the price of the share is just of interest in connection with inheritance or if misfortunes forces him to sell, and share is often solid fixed for life. The legislation concerning the private limited company was introduced several decades after the private limited company had become wide-spread, and describes the private limited company just as I did here. The task for the legislation then is to regulate the relations between the share-holders, to protect the minority and secure that the capital of share-holders is present considering the credi- tors. Gradually a breach of confidence from the board of directors from the management appears, and legislation then set up some common rules on documents of general meeting, on the authority of the company, and on some duties of the board, often expressed very vague.   

The reality of the private limited company:

Reality does not correspond to this idyll. Life has denied the thought that the private limited companies are just another kind of tradesmen. It has become a social organi-zation, created for the advancement of some productive tasks. It is like a municipality, it has a long duration, longer than the life of an individual, independent of the share-holders, the board of directors, the management, the labour. It is an expression of a wanted co-operation. It is something in itself, and it gets itself means, management and labour. The most obvious differences between the municipality and the private limited company is the way the organization is managed, its protected acces to profit, and in the advantages of whom it is working. The tasks are often different, but they don’t have to be. The company is not working primary to satisfy neither the shareholders’ need of profit nor the need of the board of directors to get higher salaries.

A company does not have a private life or soul, nobody that can go to prison and no reputation that can be sullied. In principle it is irresponsible and amoral, because it is just an idea when all is said and done. The tangible is its capital – that is limited and divided – but have to be present.

The share-holder has stopped being a manager, the intense connection between him and the company and his pointing out of his friends and good connections to the board of director has come to and end. He gives nothing to the company but the amount of capital represented by the share. Often he has not bought the share by subscription but from another share-holder. He has been reduced to be a lender, he is almost on the same footing as the owner of a bond.

This is underlined by the divided shares in different categories, preference-shares with cumulative interest, and ordinary shares with varying interest, and we have the share-bond, and the preference-bond which is a transition to bonds. We also have the deferred share[2] that does not yield profit from the moment it is issued. Some improvements have to take place, for example in the organization of sales or in the degree of monopol before profit is received. In 1926 France and Belgium consolidated the loose debt in form of state-bonds that supplemented the fixed interest with a share in the profit from state-railroads and state-monopolies. The company’s capital originated from loans, and in this way the primary difference between the share and bond disappeared.

The share is a borrow evidence with a varying interest and second-rate security and second-rate legal position, while the bond has a fixed interest or yield, but first-rate security and first-class legal position. Often the bond-capital represent the real values. The preference-shares often represent the most likely profit-possibility and the ordinary share the hopes. By this the share has stopped being a real evidence of some shares in certain real goods. It has become a letter of right to varying profit, which value has to be dependent of the amount of profit, its duration and security compared with the general rate of interest. In this way the varying price of the share is getting the primary interest, and speculations in the changing price is becoming the deciding foundation for the owner.

And remember that the right to vote at the general meeting has also been split-up following the splitting-up of the capital. The share has then been detached from its basic, the real goods of fortune that produces and at the same time (but in reality pretty independent of this) also yields profit. It dismantles further, and the “hot air-process” follows.

You will understand that the share-holder to a high degree has been separated from the business, from where he gets his profit. The example from the French railroads was just an illustration. There are numerous ways.

The worst happens when the public creates private limited companies or join those, and steal the majority with new-printed notes. Notice, some convincing justifications have always been carefully chosen in advance[3].

Anyway the holder of the ordinary shares will have difficulties to judge anything, and as a difference of a few percents in the company can lead to a doubling of the profit for the ordinary share-holder or totally disappear, and as the board of directors and the management know the total profit long before the share-holders, the last mentioned has actually been separated from the company.

But when the company – inspired by all the new capital as we shall explain below – that has to make an effort to yield interest, to make things effective (or monopolize) make business-fusions vertically and horizontally, then the trust (and the public control or lack of the same) has been really introduced to control what will happens then? Now the share-holder is just a lender, whos position is unbelievable weak.

The share has now character of the paper of gambling. The share-holder cannot monitor the distant company that really produces: “I, who own a share in a London finance-company that owns shares in South American diamond-trusts that owns shares in individual mines” has no means to know anything of the production and prospects. I have to buy after haven listen to rumours, and I sell I panic. I have no human interest together with real producing units in the company. Everything is unknown. You listen in City that they expect a certain profit next year, I have no interest in honest work anymore. The share has become a lottery ticket.

But the share is not even owned by somebody. Through margin-payments you can "own" a share by paying one tenth of the price, perhaps less. The stockbroker or lombarding bank is in reality the owner[4]. What is turned over is just the one tenth I paid. In this way the interest in the business is reduced further and my interest in the price of the share overwhelming strong. The trade-off between the interest, price-differences and the lending interest rate in the bank is what concerns me now.


The share-holder has stopped being a share-holder in the original sense. He has nothing to do in production. The non-speculating holder of share certificates, who owns and has paid his share entirely and has the share for years, has gone.


If you look at the administration of the company, you find share-holders at the general meeting who are entirely unprepared, and know nothing. The accounts are at best opaque, and often uncorrect. The share-holders are simpletons as lambs and are under normal conditions forced to be meek as such, because they know that critics of the management of company are going to press the price on their own shares. The share-holders therefore are incompetent to give their votes with any sound reason. But most of the votes given at the general meeting are not those of the non-speculators. The shares have been used to borrow money, and the right to vote has been transferred to the bank, or a group of finances by means borrowed in a bank which take possession of the majority of shares by the famous ten percent payment, or the board of directors take the power by buying the majority of shares in the days before the general meeting. The board of directors whos interests are not those of the company, and its actions are dictated by objectives that do not concern the running of the company and a reasonable management. The management is not a crowd of non-speculating representatives of shareholders. It has been elected by a group of power that certainly do not own the capital, but it has been able to pay just the tiny bit of the price of shares in majority. Often the financing bank – that has financed the majority - points out the management of company. Often the capital is simply owned by savers in the financing bank, without they know it and can have their legal right. The group of finances is certainly not the old type of share-holders and does certainly not represent those. They are professionals with means not owned by themselves, they act as irrelevant self-licenced masters of industry and are possessors of the community’s capital. The management that is not dependent of the board of directors leads to the fact that the management cannot act in the interests of the company in the long run. It has taken what the bank or financing group wanted, and seldom it is in the interest of the company.

A newer illustrating Danish example:

A report from one of the 4 directors of the former Kosan-Group: In 1989 an agreement was made between the 4 biggest sister-companies in the Kosan-Group (among other me who sign this report) that we should make a so-called MBO (Management Buy-Out), where we should buy our mother-company. In this connection an agreement was made (Agreement of 21 Mars 1989 (called a framework agreement in earlier publications)). We agreed that (the bank) SDS should advice us and lend us money to the buy. When Kosan had many hidden values, and the former owners would sell relatively unexpensive to us directors, SDS decided to use us as its front men and buy Kosan for itself. Relatively short after the buy the Kosan-Group was stripped totally, and almost all the daughter-companies had been sold. By this SDS earned a huge sum of money, but as it was clearly against the agreement we had made, we directors naturally made protests.   

One the former directors in the Kosan-group:                                                         

All the manouevres of SDS have had the one purpose to hide the break of the agreement and the unlawfullnesses of SDS towards the public and the authorities. Instead of dealing with Kosan-affair with the doors open in a courtroom it has been brought to an apply for arbitration.

We have told more details about the Kosan–Stripping and the judgment in Danish on:

In reality nothing has changed since the 1920s. Try a Danish horrifying example in line backward from Enron, Worldcom 2001-2002 a.o.: The (Danish) Agriculture Bank. In Denmark a president of the bank had to buy up the majority secretly to prevent himself from being thrown out. But it went further. To the central bank. To the minister of finances, to the government. Nothing new under the sun. The especially the small-holders and farmers had to bear the lost afterwards.

The board of directors is no longer a functioning group. It is not elected to do anything and it don’t. It represents outsider-interests (presidents of banks, Industrial

companies) that may be opposite. The board of directors is just formally elected by the the general meeting, in reality it is pointed out by the management that it actually should control. We have reached a point where members of the board can be called “guinea pigs” – at first harmless and functionless greedy animal and the seats of the board have become gifts between directors. One director gets a seat in one board and another pay for the seat by giving a seat to the other in another board. “Absentees” was a most describing name in the 1920s  

Via the last mentioned precaution combined with the fact that the finance-group has the right to vote we have reached the point, where our economic life has got into the hands of a clique who’s power is deciding in the community, stronger than every other power inclusive the state-power. It exercise power alone in its own interests, and it is the narrowest interest with the shortest term.

It is bad enough that the economic life has fallen into the hands of reckless crowd of men that do not even own the capital represented by their shares, and the original  share-holders have become “players of differences”. But the worst is the price of the share is not determined by the interior value (or physical value) of the company, not even by the value of the profit considering the security and duration. The share-holder forgets quickly. The worst is the prices have lost every sound basic but appear as results of manoeuvres.

New free shares will soon be delivered and with them the old and the new will perhaps even rise above the price of the old.

A little help is needed to do so, but we I shall explain it the next paragraph. From then on a company is not established of technical-economic reasons, but partly to collect power, partly caused by the founder’s profit. The founder has created the idea about the new company, eventually the union of more companies (eventually horizontal and vertical integration to get a position closer to monopoly). He has to gather the persons in one company, find a bank that will help, and find sponsors who will buy what cannot be subscribed, agitate, negotiate about buying businesses and companies, put them up with seats in the board and explain the expenditures of agitation. If he succeed – you can read in the American reports – what powerful blocks of shares he gets for his service with a seat in the board of directors too. Capitalization has been passed through on:

Upspeeding of the process:

The process of capitalization is speeded up in a society, where capital is an increasing condition for personal freedom and security in life. When I buy a factory and pay for its physical value, I vouch for society not just with what I own, but also for the profit that the capitalized goodwill - the advantage that the business-connections including the customers means - yields interest. Actually I work to get this interest of historical values been earned in the business.

If I succeed getting the profit up, I can hope to capitalize, what I have added to the goodwill and perhaps some of the future profit myself, when I convert the business to a private limited company or I sell it. But until then I have to make myself a slave of the past in order to make the future a slave of mine.

To succed I have to reserve a part of the result in advance. That means the prices on factors has to be reduced or the prices have to increased. This presses me towards the position of monopoly, especially when I have the factor-prices including the wages (except for my own) out of my grip. All businessmen are in the same position.

Imagine you sell a business that yearly gave you $6,000 besides wage and interest. You sell it for $100,000 more than you paid (in a period of no inflation). The business gives a profit of $6000, but the new owner will not accept this small profit, because he has $100,000 more (than you had) that have to yield profit. You have even capitalized you wage and some of the future too. A good bookseller got a few hundred thousands to join “The Nordic Publishing Firm”, when the Swedish Factories of Sugar was established a director got 3 mill. to give up his position to get the integration of the factories nearly 100 years ago. You go so far as to capitalize the profit you expect from the integration via better technique and organization. The most honest is just to issue “deferred shares” that do not yield profit automatically.

As you will understand incentive to get closer to the position monopoly, when big  fusions are made, is very typically. Fusions are one way of getting room for surplus capitalization resulting in all kind peculiar transactions. By issuing bonds is one way, and issuing of free shares is another. The masters’ finances usually accept the last mentioned, because it concentrates the power further, just like they accept high salaries and other unnecessary expenditures mostly related to the directors and their agents.

When capitalization (account the present values of a row of future expected payments and take the amount out to private or other objects) reach surplus capitalization, you simply capitalize without any consideration of security and duration. The buying public taught by television and newspapers found it  trendish for people to invest wild in IT-shares “with eternal lasting future production-power” in the beginning of the 1990s just like silver and gold mines together with railroads were the hits in the late 1800s. Propaganda of media made people believe without any understanding at all, believe in the game. All the capital received by the businesses have to yield a profit in one or the other way. But often it can’t within the limits of the company, mostly because very little truth has been told publicly about the businesses as such production-organizati- ons.Remember: when hear it on TV it is already much to late. But why do the shares still increase, you would perhaps ask.

Already a snow weather of paper demanding to be paid interest on. But businesses cannot show an account related to those prices on the market of shares. With a steady growth in the amount of money and the state-debt (that we will go through below the next golden heading) financed by an ever growing bunch of state-bonds, the mountain of paper just increases further.

The secret is that the steady growth of the private capital is deeply fateful for the society, and experiments to give tax-financed or false-financed subsidies to alleviate the effects of the economic oligarchy simply prevent the state to get rid of its debt. The result is inflation. Inflation is the best friend of the private capital outside the production and also the best friend of the professional politicians and their servants.  

Then the share-prices increase further caused by the false purchasing power. For those, who want to preserve the society is what count, to get the private capital reduced and real capital increased. At last the only way out is to destroy the real capital (the production), stop the state-machine. We have explained what can be done before this has to happen on:

American examples from the late 1800 and the beginning of the 1900:

The organ of the capitalization is the stock exchange. Its technique centralizes at the splitting of the possession: The capitalization of one company can may be expressed via 4-5 different papers: The share, formally a business-owner-part, in reality is a second-class bond with varying interest or yield, and a bond a first-class debt-evidence with fixed interest. In this sense the share- and bondowners are both passive capitalists[5], even though this term primary is used for the last mentioned. When $200 mill. in preference shares were exchanged in the American Steel Trust Morgan and his friends earned 4% in guarantee commission and 1% by buying preference shares at a price below par. Of the $1400 mill. - today they count these accounts in hundreds of billions cause by the problem that this reading is dealing with – that was the capitalized value of this more than $700 was hot air or water (call it what you feel like), and the other half was reality. Starters, underwriters and the financing banks got $150 mill. (Morgan, Moore, Carnegie and Rockefeller got a substantial part of this). Thanks to the position of monopoly they were able to pay interest on the capital, even though they had bought several mines that were not put in work for the time being. Between the valuation made by the management of the Steel Trust and the valuation made by the USA-Trust-Commission in 1910-12 of the possessions of the trust in 1902, there was a difference of $775 mill. (1457 - 682).

This huge surplus capitalization could not have been created without inflation created in advance by the state and the banks.

From 1898 to 1914 and 1920 the circulation of means, gold, silver, Greenbacks[6],  other certificates[7] and other bank notes increased from $2 bill. to respectively $3 2/3 and 6 1/3 bill. The circulation an individual accounted in a simple average was $17 in 1880, $35 in 1914 and $42 in 1924. On these amounts was founded a still increasing credit. So the private fortune that amounted $90 bill. in 1900 got closer to $200 in 1914 and $350 in 1920. The best helper of capitalization was the inflation. The private capital (held free from the real activity of production but allowed to earn profit) created by inflation is claimed by the possessors to be remained under and after the reduction of credit that followed (called deflation) and not by just by more the state-debt (this specific point will get a paragraph of its own below). To pay interest on an overdone capitalization every opportunity of monopoly are used, and that to such a degree that you making appropriations can press the water or the hot air out of the share and make substance (direct consumption-possibility) instead. In the first 10 year with the Steel Trust it earned $1100 mill. of which the owner of bonds got 284 and the share-holders $394 mill., while the $422 mill. were placed as profit.

For 14 years the profit of the Steel Trust was the same as its capitalization.

The capital of the Trust of Tobacco increased from 25 to $325 mill. from 1890-1910 of which $150 mill. represented goodwill. A single stick of plant under the Trust W. Duke & Sons was valued to $½ mill. in 1885. Without any other increase than appropriations.

The company was capitalized to $25 mill. before WWI, in 25 years there has been paid about $20 mill. to the share-holder and bond-owners. All in all Duke’s $½ mill has multiplied up to $45 mill. These amounts are mainly gone into the pockets of Mr. Duke and 8-9 men of finances. The procedure has been the same:

When competition dominates the profit is held down, thereafter a company is established. This company releases the share-holders of the small companies with its own obligations. When the competition has stopped and the monopoly has been established the profit is driven up in the new company. This extra-profit is then surplus capitalized in the way that ordinary shares, shares of preference and bonds of an enormous amount are issued on this basic. Then you continue the exchange of shares for bonds and the other way round to create a foundation for the manoeuvres that can give profit. The men of finances still get their original payment back, because the amount of bonds corresponds to it. They get their profit by selling the preference shares and still stay in power in the company by keeping the most of the ordinary shares by those the right to vote is left. To get the system to function optimal the right of voting have to be limited to relatively small circle. In many countries it is forbidden to separate the owner-ship of the shares from right to vote. In Denmark for example the right to vote connected to shares that have been borrowed on often have been handed over to mortgagee, mainly  the bank. To read how our industry (in USA or Europe) was financed earlier you can go to the (Danish) Bank Commission’s report of 1923. We have made a short summary: The same is happening right now (2001-2003).


The process of capitalization is made easier by the system with holding or trust companies and daughter companies. A holding company owns the majority of shares in a paper-trust and a cellulose-trust and eventually in a newspaper-trust and paper-machine-trust. Each of trusts often has one or more factories, but their most important assets is the majority of shares in each factory that again is able to secure the majority in each of their helping industries or the share-majority  in the industries, that buys their products. Most developed was the system in South Africas mining industry, where you often found a 4-5 links organization. 3-4 companies prevent outsiders from make a even a rough estimate of the value of the shares in the producing companies. The process of capitalization then runs without a reasonable participation from the side of the public. The Danish parallel to John Law’s Missisissippi-companies is without any doubt the Transatlantic Company, that went bankruptcy and took the (Danish) Agriculture Bank with in its fall 1923.  

The growth of private capital [8] by state-debt

Production in one end and consumption in another end. Consumption and taxes remove the real capital from production to private capital (outside production), and most of it to final consumption. There is dilemma concerning the capital formation. The capital moves to where it earns the most. So if state-debt (in form of bonds) yields the biggest profit, capital knows its destination. But while state-debt and inflation have their impacts, the money-owners are not especially interested in too much growth in the real capital anymore, because this decreases the rate of interest and leave the passive interest-earners with smaller incomes from passive interest-income.

The taxes and the public expenditures then (also if it has not been paid finally yet) drain the purchasing-power out of production, and the false means of inflation including stagflation filled hot air in the prices on the stockmarket and ends in private capital at last. It also removes the initiative away from the production that should have been serving the employment-purpose and the future consumption.  

You may use artificial snow, but at a moment you have to remove it again, and it is troublesome the more snow there is. Natural snow disappear without further. If it stays because the snow is still falling, then you can take it away in a wheel-barrow by running several times. You don’t have to remove the snow you already have removed.

If a war destroys the real capital of for example 500 billion the need for capital will lead to higher interest rate. In this situation state-loans are preferred by the money-owners. While the real capital is being destroyed the private capital as an interest-source is fixed, while the real capital is being re-established by issuing of 500 billion of traditional state-bonds. Perhaps even more is issued taken into account that the bond is issued at price less than 100, and because the state has consumed a lot of capital in the war exclusive the price of the destroyed real capital. The prices on commodities have then been driven up and to give bigger profits. A higher interest-earning from the private capital, and a bigger yield from the state-bonds that replaced the destroyed real capital as a source of earning.

The money-owner looks through the eyes of the bank and does not understand that not just the wages but also the profits are depreciated by the higher interest rate. His higher nominal interest earning simply gets a smaller purchasing-power, if he is not participating in the future pay-back. He simply acts as if he thinks: “I can eat the cake and still have a bigger piece of the cake left than before.”   

The world stands in the sign of the huge paper-fortune. From the state-power and the high finance there has been thrown hot air-filled papers of face-value out over the world. Those papers demand payments of interest, they don’t leave the actors of the active production any or enough scope. They disturb both the ideal and the material measures of value, and it also seems as if they make the so-called business circles swing more frequently and more severe with bigger amplitudes, and they threaten to end up by entirely disorganize the production. It had happened several times before. But not in your lifetime.   

The taxes and the public expenditures drain the purchasing-power out of production, and the false means of inflation including stagflation filled in the exchanges on stockmarket at last also removes the intiative, the production, the employment and the future consumption.  

Mainstream history:

The Bourgeois Kondratiev (1843-1897): After 1842, the boom reemerged and a new Kondratiev wave began, this one as a result of the railroadization in Northern Europe and America and the accompanying expansion in the coal and iron industries. The boom ended approximately in 1857 when it turned into a recession. The recession turned into a depression into 1870, which lasted until about 1885. The recovery began after that and lasted until 1897.

The Neo-Mercantilist Kondratiev (1898-1950?): The boom began about 1898 with the expansion of electric power and the automobile industry and lasted until about 1911. The recession which followed turned into depression in about 1925 which lasted until around 1935. We can assume, that this third wave entered into a recovery immediately afterwards the one that we might suspect lasted until around 1950. Is it not funny?

American crises late in 1800s and the beginning of 1900s:

By the time of the Civil War, the United States already had experienced two major economic depressions, the panics of 1819 and 1837. By 1873 postwar expansion, especially of railroads, a drop in European demand for United States farm produce, speculation and market manipulation by a few individuals, and the failure of the large banking house of J. Cooke brought on a depression that lasted from 1873 to 1878. (end of mainstream history)

Some people did want help from the federal government in controlling the business cycle. These people suggested the government should increase the money supply either by adding coins of silver to those of gold in order to increase the specie supply or by issuing paper money. Throughout the 19th century and until the United States abandoned gold as the basis of the money supply in 1933, there were many proposals for coining silver and issuing Greenbacks that were inconvertible paper money. At times these requests were accepted. For instance, the Union issued large numbers of Greenbacks to help pay for the Civil War. When these Greenbacks were recalled, and only specie became correct currency, there was a major impact on the money supply that helped precipitate the depression of 1873.

The government's concern for the debt payment and its desire to maintain a strong credit rating prolonged the crisis, which began with a fall in security prices, what today is called “a fast plunge” on Wall Street.

The inflation in the mid 1890s combined with high unemployment in USA[9] and continued into the 1900s is closely connected to new discoveries of gold in South Africa, Western Australia and Klondike between 1887 and 1896.

The causes of the 1873-depression was too much expansion, speculation, bankruptcy-make a pattern that has repeated itself throughout United States history, but in each case the details are somewhat different. After the New Deal in the 20th century, the federal government has been actively involved in attempts to avoid or control the ups and downs i.e. cyclical movement of the business cycle, but the cycle in the rest of the Keynesian world continues to move up and down. However, the 19th century business philosophy of laissez-faire, supported by the attitudes of the Social Darwinists (a link to Darwin in Danish), called for no government interference in the then unknown economic cycle, which in the following century, especially after Keynes was considered "natural", definitely close to a part of the law of nature. Is it not funny?

Now to the more or less incoherent financial facts of history:

Long before the Battle of Jena 1806 the elector of Hessen-Cassel Wilhelm IX and his ancestors had been the unofficial lenders to Princes of Europe. But the latest and most giving business was selling of young European tramps and soldiers of fortune to fight in the wars, and especially the War of (In)dependence in America on the British side. The British government financed the war with credit in form of bills of exchange.

Mayer Amschel was appointed to Agent of Court in Chief by the elector. Europe, towards the end of the eighteenth century, at the time of the American Revolution (The War Of (In-)dependence), was very different from what we know of the same area today. It was composed oil a combination of large and small kingdoms, duchies and states which were constantly engaged in squabbles among each other. Most people were reduced to the level of serfs - with no political rights. The meager 'privileges' that were granted to them by their 'owners' could be withdrawn at a moment's notice.

It was during this period of time that a young man appeared on the European scene who was to have a tremendous impact on the future course of world history; his name was Mayer Amschel Bauer. In later years his name, which he had changed, became synonymous with wealth, power and influence. He was the first of the Rothschilds - the first truly international banker!

Just before (Napoleon’s) Marschal Augereau occupied Frankfurt January 23th 1806 and required 4 mill. franc from the citizens who he claimed had been trading English products. Mayer Amschel (Rothschild) in Frankfurt had got the assignment to secure the fortune of the Elector. As the first Nathan exported secretly contraband to France and other countries on the continent occupied by Napoleon. Products of cotton, yarns, tobacco, coffee, sugar and indigo to sky-high black market prices. For ten years (1800-1810) the Rothschild family succeed with this business.

At the same time the European apparently was falling into the hands of Napoleon exorbitant sums had left for England, where one of Mayer Amschel’s five sons Nathan Mayer already resided as a prince of finances, and Wilhelm was brought in exile in Slesvig near the border to Denmark, later on in Denmark and in Pragh. All the states of Europe owed enormous - outside almost any imagination - amounts to Wilhelm, but Napoleon had now occupied almost every one of them.

From 1806 the fortune of Wilhelm IX and also the fortunes of other continential creditors had been moved to London, and a good deal of it in the hands of Nathan Mayer, one the Rothschild-sons that had moved from the textile area Manchester to London in 1804, N. M. Rothschild and Sons became the name of business. From the late 1810 the family transferred their investments – also the ones of Wilhelm’s, but in the name of Rothschild – to capital-investments. Nathan used the opportunities that Napoleon had given him. His highness got British state-bonds in returned.

Mainstream History:

Mayer Amschel Rothschild sent some of William's money to his son Nathan in London, and according to the Jewish Encyclopedia: "Nathan invested it in 800,000 pounds of gold from the East India Company, knowing it would be needed for Wellington's peninsula campaign. He made not less than four profits: (l) on the sale of Wellington's paper (which he bought at 50¢ on the dollar); (2) on the sale of gold to Wellington; (3) on its repurchase; and (4) on forwarding it to Portugal. This was the beginning of the great fortune." (end of mainstream history)

Gold bullions were also smuggled by Nathan and his brother James Rothschild in Paris to Wellington in huge amounts, so the small amount mentioned in the last paragraph soon seemed to be nothing. Every day he was out and in with the Elector’s British pounds. Nathan had been in England for 7 years then, and officially his fortune (but especially the one of the Elector’s) had increased enormously, his own credit as well.

In the period 1811-1815 Nathan Mayer Rothschild and J. C. Herries also transferred £ 42.5 mill. in gold safely to Wellingtons army in Spain with the help of Nathan’s brother James in Paris (established in Paris from Mars 24th 1811) and through France. Try for a moment to compare this amount with circulation of notes and the covering fond in England as a whole in the same years ( read the mentioned in part 1 and then just click “back”). While Napoleon fought and lost in Russia, the gold flowed through France to Wellington who also stopped Napoleon at Waterloo.

The Battle of Waterloo was fought from 11:25 A.M. until, about 10 P.M. on Sunday 18 June 1815. That Battle made England the leading power of Europe and Nathan Rothschild (1777-1836) the most influencial figure of his time. The hard work began long before. As soon as the five Rothschild–brothers were well established in Frankfurt, Vienna, Paris, Naples and London they began to develop their own news service (in London Rothschild could send his blue-dressed couriers to Rio, Toronto or Nairobi without warning until WW2). They simply built their own intelligence service much more effective than those of governments.

No news was as valuable to the speculators as the news of the outcome of the Battle of Waterloo. For several days London listened. If Napoleon won the price of English government-bonds inevitably would fall. Did England win Napoleon’s empire would fall and the bonds would rise. The fate of Europe was covered in smoke. At breakfast Monday 19 June 1815 a Rothschild-agent Rothworth went from Ghent to Folkestone on the English coast in a fast fisher boat. He reported to Nathan Rothschild at 2 New Court, St. Switin’s Lane in City, London, then dashed to lord Liverpool’s house in Westminster: the Prime Minister got the news at two in the afternoon. The dispath of Wellington, who had be active in the war the day before and rowed across the Channel, reached London at ten in the evening, went to Earl Bathurst’s House in Grosvenors Square, where the cabinet was dining, then went down to St. James’s to present the eagles to the Prince of Wales.

With this knowledge made public everyone would have known that the English government-bonds now would rise instead of fall (if Napoleon had won), so everyone else would have bought government-bonds. But Nathan Rothschild had planned to make a so-called corner. He began to sell government-bonds leaning to the pillar where he used to stand. His face was without any expression at all, so it was interpreted as an English defeat at Waterloo against Napoleon. All his agents, just known by himself, also sold bonds and other papers. “Rothschild knows”, it was whispered. He did know, but not what the others were meant to fear of. The prices went down and down, the market collapsed. The prices fell from minute to minute, there was no botton. The solid and strongest bank houses began to stagger. The papers literally did somersaults.

But the deathly pale Nathan (he had not slept the night before) was laughing in his mind behind his face. Secretely he ordered his agents (just known by himself) to begin to buy instead of selling. Seven hours after Rothworth had informed the British government of the outcome of the Battle of Waterloo Wellington’s dispath arrived with the same information and at the same time announced that Blücher had won at Ligny. Rothschild was the one who reported it for the Stock Exchange. The prices then went up rapidly and reached unknown highs till then.

This gave the Rothschild family complete control of the British economy. This was neither the first nor the last corner made by the World Champion of specu-lation and state-loans.

In the repercussions of the fine Congress of Vienna a now forgotten supplementary-congress had to be held in Aix-la-Chapelle (now the German Achen, where besides the Neanderthal man was found). Everything so-called necessary always (when you forget “thanks” and “apologizes”) has a financial side. The congress is called the forgotten one, so perhaps we were not meant to remind the reader about it.

November 1818:

Ludwig the Eighteenth literally borrowed the restoration of the Bourbon’s magnificence by Nathan and James Rothschild. He had received advances of British money orders to finance his glorious entry in Paris in 1814. In 1818 the old financiers had returned, and the Rothschilds were not counted in this connection. They were considered up-starts.

Napoleon started with a debt of about 2 billion francs. In 1815 the allied demanded 700 mill. francs of reparation and demanded 400 mill. francs to cover their expenditures of occupation. The new French government needed a loan of 350 mill. French francs. It was contracted by Ouvrard and British Baring Brothers. In 1818 the negociations about much bigger financial deal were started, an extra loan of 270 mill. francs. Again Ouvrard and the Baring Brothers were in favour, but the loan should finance some of the French reparation expenditures. The Rothschilds tried to buy some influence, but nothing apparently helped until the French state-bonds began to fall from 5 November after having been risen for the last year.

Another corner and still not the last.

Day after day the fall was steeper. Other value-papers began to stagger too. The collapse was threatening, not just in France but all over the European mainland.

Suddenly the scene in the Aix palace changed. The Rothschilds, who were patiently biding their time and waiting quietly in an ante room, were ushered into the presence of the king. They were now the center of attention. Their clothes were now the height of fashion. "Their money [was] the darling of the best borrowers." The Rothschilds had  gained control of France, and control is the precise name of the game! Benjamin Disraeli, who was the prime minister of Britain, wrote a novel titled Coningsby. The Jewish Encyclopedia, Vol. 10, pp. 501, 5O2 describes the book as "an ideal portrait" of the Rothschild Empire. Disraeli characterized Nathan (in conjunction with his four brothers) as "the lord and master of the money markets of the world, and of course virtually lord and master of everything else. He literally held the revenues of southern Italy in pawn, and monarchs and ministers of all countries courted his advice and were guided by his suggestions."

Furst Metternich, the duke of Richelieu, furst Hardenberg and even lord Castlereigh did what they had to do. A new era had begun.


Britain alone on some doubtful Gold Standard for 100 years without and 100 years with law:

With the growth of foreign commerce, financial innovations were quick to appear. The bill of exchange was introduced early, and by the fourteenth century a simple multilateral clearing system had been established. Multilateralism, at least of the a primitive type, had been a major feature of international economic relations for centuries. Much later, during the 17th and 18th century: The first “forwarded” exchange markets were developed to overcome the uncertainty of future movements in the ‘spot’ rate of exchange, so reducing the risks inherent in fluctuating exchange rates.

By this time Amsterdam had become the most important foreign exchange market in the world, closely followed by London, which was fast assuming a major and growing role in world finance in the 18th century. So foreign exchange markets were very developed in the beginning of 19th century, both concerning their operations, the financing of foreign trade and other international dealings. All commercial and financial transactions, including autonomous capital flows into and out of a country, investment income or simply goods in return. In the 19th century Japan became a industrial nation, and USA’s part of the world trade was growing strongly effected by the uniting of the American states to one nation and the inventions.

Britain was alone on gold standard de jure for both domestic and international dealings from 1821. Most other major trading nations at this time were operating either a bimetallic standard, for example France and the United States, or a silver standard, as were most other European countries.

Thus triangular payments system comprising the United Kingdom, Western Europe and the Baltic countries had dominated Northern Europe’s trade for many years, and the “slave” triangle, linking Britain, Africa and West Indies provided another example of this type of trading pattern. Other triangular trading systems developed during the first half of 19th century. By the 1860s, for example, Britain’s trade deficits with United States were largely covered by her surpluses with Latin America, and a British deficit in the trade with China was offset by the a surplus with India.

When foreign capital flows from one country to another, its transfer may be effected in several ways, for example through a shift of gold from lending to borrowing country, through an increase in the capital receiving country’s import from the lending country (or from other countries), or through a decline in the borrower’s export such that the trade balance becomes more unfavourable. Gold flows and reduced exports rarely effectted the transfers during the late 19th century, and for most part the transfers of capital from lending to borrowing countries took the form of increased commodity imports by capital receiving countries.

Nothing in the accounts from the 18th century and just a tiny bit from the 19th  shows us how much of the transfers of gold originated from an equalization concerning trade deficits and trade surplus on the balance of payment or from foreign investments or loans.

An answer to the question was given by the classical economists, David Hume, Adam Smith, and J. S. Mill, who worked out the price-specie-flow mechanism. According to this explanation, prices changes induced by gold flows were supposed to bring about the adjustment. Suppose a country develops a balance of payments deficit because of excessive imports and proceeds to export gold to cover this excess. This loss of gold will reduce the domestic money supply, since either gold circulates as money in the country or the banking system keeps the country’s internal supply of money adjusted to the quantity of its gold reserves. A decrease in the domestic money supply will lead to a decline in commodity prices, since less spending with output unchanged means lower prices. Lower prices for goods will in turn increase exports, as foreigners find the country a cheaper place in which to buy. Lower domestic prices will also reduce imports, since domestic substitutes foreign goods as they got cheaper relative to foreign supplies. In the gold-receiving country the process is reversed.

Those were the mainstream explanations.

A supplement of facts:

Systems of stability-funds that let the gold - in question deficits and surplus on the balances of payments - circulate between certain trading-partners and no circulation through other channels also existed. Read the next paragraph in the light of this.

Late in the 19th century this price-specie-flow mechanism was elaborated in a number of ways, the most important of which concerned the effects of gold movements on the monetary policy of the central bank. In Britain, in particular, it was argued that gold flows led to changes in the Bank Rate – the Bank of England discount rates – which were in themselves automatic and which formed part of the adjustment mechanism. Thus it was argued that, as gold exporters obtained gold from the Bank of England, the Bank’s ratio of reserves to liabilities would decline. If this decline persisted, the Bank would eventually raise its discounts rate (Bank Rate) automatically to prevent further depletion of its gold reserves. Such action would produce increased interest rates generally and a restriction of credit. This would have an adverse effect on business activity and employment and lead to a fall in the prices and wages, which would reinforce the direct effects of the price-specie-flow mechanism. On the other hand, when a gold inflow took place, the increased money supply would mean an abundance of credit and interest rates would fall. Declining interest rates would stimulate domestic activity and generate an upward pressure on wages and prices. If interest rate policy was, in this way, a ‘rule of the game’ requiring strict observance by monetary authorities, the gold standard mechanism would truly have been an automatic system. The combination of specie flows and interest rate changes would have produced an era of stable exchange rates, and, given a moderately large stock of monetary gold in each country, although its size was subject to fluctuations, it would not be in danger of permanent depletion, since a loss of gold would be automatically corrected by the operation of the adjustment mechanism.


Gold Standard:

During its relatively brief existence the gold standard was not the standardized or automatic international monetary system it was widely believed to have been in the 1930s and later on. There was various versions of the gold basic: thus Gold Coin Basic or Classic Gold  Standard, the Gold Exchange Standard and finally from 1840s the Flexible Gold Exchange Standard. They were all used, especially the last mentioned. And as we have seen reality was far away from the theories.

As for the other European countries, by 1870 they were either on a silver standard – the Germanic States, Holland, Scandinavia – or like Russia, Austria-Hungary, Italy, Greece, and more recently France, had been forced by wars and revolutions to issue inconvertible paper money. Outside Europe, the Orient and Latin America were on silver, and the United States had inconvertible and depreciated notes (Greenbacks), issued during the Civil War, still in circulation. By 1870, therefore, the gold standard was far from being internationally adopted. Britain alone operated on a legal gold exchange standard. Bimetallism existed legally in the United States and the Latin Monetary Union, and Germany, Holland, Scandinavia, Latin America and the Orient adhered to the silver standard.

There is another important development associated with the growth of the international economy between 1820 and 1913: Price-falls are certainly not the problem. Notice England in the 1800s, 80-90% of time alone under the gold standard. Here you actually find falling prices in the period 1817-1896 as a whole, but you find generally rapidly rising prices 1851-1854 and 1872-1873. Large deposits of gold were found in California and Australia between 1848 and 1855 (as mentioned earlier) that led to an substantial increase in the circulation of gold coins in Europe and elsewhere. Rapidly rising prices appeared in England when gold-coins dominated circulation. In England late in 1790s, in the United States in the 1850s under the gold-boom, Japan in the 1870s and Italy in the 1880s. It is basicly the same that happens today, when you exclude the more stable level of prices then, and the ending gold-basic in the 1920s. Price-falls are certainly not the problem. The reason is simply the productivity that increased quicker than the amount of money – and it has nothing to do with goldcoin or the later gold standard as basics. Industrialism was going quite well, very well. The price on gold rose measured in units of products. That stimulated the search for gold further. Such a developement lead automatically to rising real incomes (nominal incomes corrected for pricechanges). Larger profit-margens were created, larger than what could be eaten by the amount of money.

The easy-credits created the so-called boom in the 1920s. A more restrictive montary-policy would have prevented the Big Crash that happened via the shares-prices on stock market. The easy-credits seduce the investors to believe that a larger propensity to save has made more resources avaible for investment. Now (2002) the press on the prices was beginning to be shown, and profits fell. It is the question if the central bank (FRB) will put the brakes on. Perhaps, but it is precisely the opposite what is needed then, when it has happended (like in 1929 the wrong was done more of less expected).

Another sign is the speculation in share-price earnings that are beginning to go in and finance uneconomical unions of corporations. The same happened in 1899, 1902, 1924 and in 1929. The paper mill the Danish professor Laurids V. Birck called this practice.

You actually find falling prices in the period 1817-1896 as a whole, but you find generally rapidly rising prices 1851-1854 and 1872-1873. Large deposits of gold were found in California and Australia between 1848 and 1855 (as mentioned earlier) that led to an substantial increase in the circulation of gold coins in Europe and elsewhere. Rapidly rising prices appeared in England when gold-coins dominated circulation. In England  late in 1790s, in the United States in the 1850s under the gold-boom, Japan in the 1870s and Italy in the 1880s.

An example of competition on debt and on gold standard:

The unfree trade- and industrial competition on the European Continent, the competition on the seas and in the colonies, and at last on the land in Europe too. It was most of all financed by national debt. The German production of steel, which was concentrated in the Ruhr Districht, increased 12 times in the period 1880-1913. In the same period the German part of the world trade increased from 17 to 22 percent, while the British fell from 38 to 27 percent. The national debt in Germany was doubled from 1900 to 1910 (under the gold standard). Under the second increase of “the (German) Marine” income- and fortune-taxation were introduced in 1913 for the first time in the history of Germany. At the outbreak of the First World War the German steel production amounted 3 times the British.

State-debt under the international gold standard and immediately after WWI. Professor L. V. Birck was an eye-witness :

“In 1922 L. V. Birck could account in details the capital of the state in 'The World Crisis And Denmark' “... The income of the capital is the raising of loans and sold values, and its expenditures are the return of loan and in-vestment of money...About the future there is of my opinion 3 ways to go, and all ways are equally impossible for the moment, because the time has been missed" 1. "To do open and honest bankrucptcy. It is an awful unjustice against those individuals, who by accident have the papers". 2 "Then you can try to pay back". "Immediatly after World War I England paid down its national debt, the second year it paid its interest, and third an forth year it did, what other decent nations did, paid interest by increasing the floating debt' – short-run debt, as book-debt or debt in current account". 3."Finally you can destroy your currency", and try to do it just as quickly as other indebted nations. Just after World War I (1922) Birck wrote in the same book: "It does not help to believe that the world can go out of the war without looking different than before or that those people who have got these papers (debt-papers, German Marks and inflated and depreciated shares) should live secure from them, what they require.

Take the 1800s and the first quarter of the 20th century. State-debt flourished as it never did before and again until the 1980s. Inflation, deflation and unemployment the same except for in the 1930s.

WWI was carried through with a counterfeiting turned out in its caricature of a state-debt of mad dimensions. In the European- American economy the state-debt increased from 150 billions (accounted reliably in Danish Krones) to 1 trillion in 1918, 1½ trillion in 1919 and 2 trillions a little later. Regardless of the units you choose to count in, it’s relatively more than 13 times bigger today. And the state-debt of the nations of which the debt-lost was too astronomical was not included then.

From international high finance you then heard the words:

The national currency as close as possible to pari (accounted in gold) and preserve the debt as much as possible, certainly no instalment at once, but a slow amortization, born by the yearly ordinary taxes. You will gradually change the empty space of the state-debt with fill it with real capital.

The Danish state-debt-account after the first quarter of 20th century:

After WWI you could choose bankruptcy or continue the mortgaging of the land values  and the labour force of the nation that had already had begun. The debt of state was 2400 mill. d. kr (don’t mind the units) in 1923, when the debt of the municipalities and of harbors is included, and level of prices is the same. In the year 1900 the state-debt was about 200 mill. d. kr.. The debt is multiplied with factor 12 in just 23 years. To the state-debt should have been added the present value of burders of pension. In the official forum you compared such a state-debt with assets of the state and the municipalities. This sum showed 1800 mill. 1923, when Denmark was on the edge of bankruptcy.

The state-debt should from the mid 1930s be regarded just opposite because the nations had to bee indebted by the professional leaders of the states.

I should perhaps had complemented with repeating the reparation from France to Germany after the 1870-1871 war of borrowed 5.3 billions francs paid in German bills (with an interest-burden of 356 mill. a year) or the figures of paper-money-circulation in France in 1882 of 2430 mill. rising to 6 billions in 1914, 27 billions in 1918 and more than 38 billions in 1921. The total debt of France was 400 billions francs of which $7 billons was foreign debt in 1921. The French citizens were excellent savers in contrast to most European peoples, and the French capitalists separate class, mostly private investors investing abroad.

I could have told the history of the American paper mill in the 1800s, but the way it runs is the same as that of the European then and today.

The paper mill ruined the world then and did it again yesterday

These papers have to be destroyed in one way or the other, society can not exist, if it has to pay interest of these money, it is a crisis that is coming over the world in one or another way, and that will have to hit us even along the way of sympathy, because we are close connected to each other in Europe. The same can be said about the share-prices on the stock-market that are 1000 millions from, what they were at the maximum, and they have to be written down with 500 millions within the next 1½ to 2 years. But all the writing down of our values can only be done with individual losses". "I claim, what is happening now (1925) is a world revolution, which in reality is much bigger than that the Bolsheviks are making, where some citizens are killed and some workers are shot. The capital, as the world believes it has, is not present, it has to be written down with 30 to 40%. It may harm you and me, never the less it works in many respects very revolutionary. It has happened before" (unquote L. V. Birck in 'The World Crisis and Denmark', 1922).

Don’t be a bit surprised, if the monetary units change from billions to trillions in the period 1920s to 2000s, new figures, new names and expressions cover precisely the same fraud internationally.


"The Ability of a country to bear credit was in the opinion of the bank dependents of a serie of qualitative factors, such as for example laws, traditions, national character, structure of businesses. To connect changes in the currency-exchange-rates with problems of the balances of payments was, the bank considered, not durable, and it was a pure quantitative criteria that, if it was used, would lead to just crazy conditions".

Bank Of Norweig was perhaps right in 1944 a new and even more fateful international agreement of a new monetary system had been made .

How can we allow a country to make a devaluation just because its products are becoming too expensive to buy for other countries. Why should the country/state/the leaders not be forced to make a good order the economy of the country. The problem is the nominal currency-exchange-rates that was coupled to the balances of payments problem combined with the dollars-dominans steady allowing dollars to be exchanged for gold at constant price of $35 per ounce, while America made inflation more fateful than any other western nation. This has been gone through in details on:

Final conclusion:        

David Hume was right: “Money is not, properly speaking, one of the subjects of commerce, but only an instrument which men have to have agreed upon to facilitate the exchange of one commodity for another.” But it was a theory. Reality had long ago even then made money to commodities subject for commerce. And in the 1800s the money and other paper developed this characteristic to the atmost as I have shown. Hume was also right in considerations of money in circulation as the central problem to focuse on, when the value of the money was looked upon. Money is not the relative scarce silver and gold pieces if money is not commodities subjects for sail. It’s to go against reality to claim that in the same way that some ideologists maintain that the human being is created good. David Hume also demonstrates that both areas benefits from trade.

Both Adam Smith and David Ricardo were brilliant writers and famous and approved thinkers by the elite. They did not take the papermill much into attention, but rather left to the coming politicians to set the morals of the monetary regime. Some economists blithely assumed that no government of a civilized nation would use the gold exchange standard intentionally as an instrument of inflationary policy. And I shall not discredit their huge contributions, especially not the new theoretical knowledge centred round the price-parameter explored by Adam Smith, or for both their believing in the coming system based on gold and Britain.

The price-specie-flow mechanism: According to this explanation, prices changes induced by gold flows were supposed to bring about the adjustment. Suppose a country develops a balance of payments deficit because of excessive imports and proceeds to export gold to cover this excess. Combined with: Nothing in the accounts from the 18th century shows us how much of the transfers of gold originated from an equalization concerning trade deficits and trade surplus on the balance of payment or from foreign investments or loans.

It is obvious that the main problem of too much paper money have to solved by changing from nominal exchange rates to real exchange rate. How this could be done tomorrow you can read on: But it is not the only problem to solved properly. The problems of the irresponsible private limited company have to be solve by discussing the anonymous ownership  and limited responsibility have to be altered too.  


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A quotation from “The Truth Is (That) What You Believe In (?)” :


Debt, inflation and mass-unemployment are caused by that concentration of power and of ignorance that uninformed voters are letting themselves be ruled of. Business-owners may be greedy, unions just alike, but national debt, inflation as well as mass-unemployment they are not able to make, if government and civil servants, who cleverly live on these arrangements, do not play the game.


You find the creator of the following quotation by reading on




[1] 1851, Gold discovered in Australia. Along with the discovery in California 3 years earlier this leads to a huge expansion in the world's supplies of gold and then the supply of money.

[2] That yields profit after some time.

[3] That is what actually happens according to DRTV-text 2 October 2002. The idea in this connection in Denmark is that a lot of municipalities try to lend from the electricity companies. The Danish law of private limited companies forbids shareholders to borrow from the company. If this will be respected is difficult to say.

[4] The bank that lend out the sum against pledge.

[5] The word “capitalist” is as far as I know invented by Karl Marx and the illuminati Albert Pike who more or less dictated his writing. I have to underline that capitalism is if at all entirely connected to the paper-regime just described.

The real capital and the production organized as such is as far as possible from any ideology at all.

[6] $450 mill. inconvertible paper money was issued in the American Civilian War 1861-1865.

[7] Silver certificates issued according to Bland Allison-Bill 1878 in $10 against deposits in silver.  

[8] By private capital we understand money drawn out of the production in which the same money is called real capital.

[9] 1893, 1894, 1895, 1896, 1897, 1898 respectively 11.7%, 18.4%, 13.7%, 14.4%, 14.5% and 12.4%.