Tuesday, March 26, 2013

Do Not Trust The Banks


As I have said time and again, you trust the banks if you want to commit a financial suicide. This is what the lesson everyone has to learn from the recent events, which are still unfolding, in the tiny island of Cyprus (read more about it here). The Cyprus government, in cahoots with and by the orders of the European Union and IMF officials, stole bank depositors' money to rescue the bankrupt banking sector of its economy. This heist of depositors' money began with an announcement of confiscation of 6.7% of deposit money of those with total deposits less than €100,000 and 9.9% from those depositors with deposits more than €100,000. This deal did not go through the Crpriot parliament, but they have now agreed on closing down two major banks - which means depositors in these banks loose all their money - and stealing deposit money of those depositors with more than €100,000 deposits. Cyprus government has also closed all banks since last one week and still there are no signs of banks opening soon. They have also announced capital controls which means even if the banks open, depositors can't take out all their money. ATMs also have daily €100 withdrawal limits in place.

Because of all these naked stealing of peoples' money by the government and banking officials, mini bank runs have already started in Cyprus, and there are fears that in future big bank runs can take place across EU and the whole world. If that happens, then, at least, I won't get surprised because bank runs are the logical end results of the illegal way in which today's banks function. In fact, some bank runs have already started in India e.g., during last month alone, in my home town Surat, there were two episodes of bank runs. First two pictures in below figure (from right to left), which I took from local Gujarati news paper, show the long queues outside two troubled local banks. Similar scenes were visible in Cyprus (see third and fourth picture in below figure, and here). We all should get ready to see such long queues outside banks globally in future. This is because today's fraud banks function on an unethical, immoral and illegal standard of 'fractional reserve' where they only keep a fraction of depositors' money in their reserve vaults; rest they loan it out to third parties. In legal term this phenomenon is called, embezzlement or misappropriation of depositors' private property. Banks are fiduciary institutions, especially deposit banks, and their main function is to safeguard depositors' money. But, instead of safeguarding, today's banks are stealing that money as the case of Cyprus now makes it totally clear. They were stealing money surreptitiously before via fractional reserve banking, but now they are so desperate that, with Cyprus case, they have openly started to rob their customers. This trend will accelerate in future as more and more banks go bankrupt openly.

Fig. 1 Bank Runs in India and Cyprus

As I said above, this was bound to happen. The lesson that people will have to learn from this on-going crisis is, that they should, in no event, keep more than necessary money in banks. Keep only that much money which is absolutely necessary for doing your business or other work for which you can not avoid banks. Apart from that, pull out all your money from the banks and keep it in other more safe alternatives like precious metals, Gold and Silver. Precious metals don't have any counterparty risks, and moreover, they both are real money. They both are now slowly moving into the world monetary system. Fiat paper currencies are dying their slow death and will become history soon.

In the end, I repeat again, DO NOT TRUST THE BANKs. Take lessons from what is happening around the world, and don't think that this is an isolated incident which can not take place in your country. All banks are globally connected and trouble in one country will surely spill over to other country banks. Take action now and safeguard your wealth and lives from the unscrupulous politicians and bankers.



Tuesday, March 5, 2013

My Brief Encounter with a Member of Prime Minister Manmohan Singh's Team of Economic Advisers

Today I attended the 23rd  I P. Desai Memorial lecture in Center for Social Studies, which is an ICSSR sponsored research institute based in Surat. They invited Padma Bhusan Prof. V S. Vyas (more about him here) to deliver the lecture this time, and I decided to attend this event because Prof. Vyas is a member of prime minister Manmohan Singh's team of economic advisers. Because he is a well known economist of old generation, and especially a high ranking official in the present government, he was obviously on my list of people with whom I want to logically discuss Indian government's policies. As a tax payer of this country and an economist myself, it is my right and duty to confront these high ranking government economists and officials.

Prof. Vyas was delivering a talk on 'Reaching The Unreached -To Make Poverty Eradication Programs More Effective'. His main thesis was, that so far all government poverty removal programs have failed, so how to make them more efficient! As can be discerned from the title of his talk above, his solution was to  make these programs more efficient, and introduce more such programs for that purpose!  This is typical thinking of a government adviser and a mainstream economist. This is the same old boring story of absurdity of doing the same thing over and over again and expecting different results every time! It was quite important to notice, that he, at least, accepted that the present system of government interventionism is a failure, but despite that he was not ready to abandon those failed socialist statist policies.

Because the event protocols did not permit me to ask many questions and do follow up inquiries, I restricted myself to only one fundamental question. I asked him, whether he sees any role of the instrument of 'Private Property Rights' in removing poverty? While asking my question, I cited the work of famous Peruvian economist, Hernando de Soto. Now, Soto is no bastion of 'Private Property Rights', but because I didn't want to create any kind of big stir in the seminar hall (it was full of sociology professors and other academicians with statist leanings), I didn't mention Murray Rothbard and his Anarcho-Capitalist system as the answer of the problem of poverty. I just wanted to hint towards the instrument of 'Private Property Rights' and its importance in poverty removal, so I cited Soto. Prof. Vyas gave very confused and evasive answer. He ended his reply with this statement: Let's not underestimate the role of government! And I told myself, because discussion was not allowed, I am not underestimating the role of government, but you are overestimating the role of government - which is nothing but a legitimate gang of thugs - beyond anyone's imagination. I only mentioned Hernando de Soto's work on private property rights, and he gave this answer. Imagine if I had talked about Rothbard's Anarcho-Capitalism, they would've thrown me out of their seminar hall!

The pomp with which he came to deliver an academic lecture on poverty removal - police security vans with sirens ringing and tax payer funded luxury government car - and other such  hypocrisies of all these government economists and other academicians is so nauseating.  They all have made their lives better in the name of removing poverty. Poor are still poor, but these people are now tremendously wealthy and powerful. My overall take from this and other such events is this, that as long as these people continue the discussion of removing poverty, poor people will remain poor. As long as they don't leave poor people alone to manage their lives according to their own wishes, poor will remain poor. As long as there is an absence of 'Liberty', poor will remain poor.

These government officials are totally oblivious to the plight of common man. They live in their own castles, and don't realize the speed at which the economy and society is descending in hell. It is obvious from their actions, that no matter what happens to us commoners, they are not going to give up their political power voluntarily. They are not at all interested in changing the status quo. These people live in their own ivory towers and think that they can easily subvert the laws of economics without facing any dire consequences! But they are surely mistaken. Laws of economics do work in the social world, and the present system of exploitation of productive class of the society by an unproductive class will crash and burn in the end, and the free market will overwhelm these state officials one day. I only wish that things will change for better after the coming collapse. People should forget about getting any help from these officials. Even if they honestly want to, they can't help you via the system of state. People should start to take responsibility of their lives in their own hands and protect themselves from the looting hands of criminal government.

Monday, March 4, 2013

Indian Budget 2013-14 and Economic Survey Analysis


Last week finance minister P. Chidambaram presented his government's annual budget and economic survey in parliament (full text of both is available here). As I explained in my previous post, the government has now embarked itself on a big looting spree of the tax payers. The idea of a balanced budget is an anathema for all governments, and the Indian government is no exception. P. Chidambaram made it crystal clear, that he is going to raise revenue via higher taxation. Cutting government expenses is totally out of question. Immediately the stock market tanked by 290 points, and people felt disappointed. In my below video I analyze the major issues related with this budget and economic survey. All in all, we all - i.e., the tax payers - should get ready to get robbed heavily by the government.