EUROMART: MASS INFLATION/COUNTERFEITING

There has come into existence a financial entity which is exacting a destructive effect upon humanity and civilization. It is the Euromart. The Euromart or Eurobond market originated with the Soviet Union placing U.S. dollars in a Swiss bank account. The Russians did not want the U.S. claiming the dollars as payment for some old czarist debts. Once in the Swiss bank account, the Swiss bankers started lending the dollars out. Over the years, since the mid-sixties, billions of dollars have been added to this homeless mass of currencies called the Euromarket.

As noted previously, these currencies are lent without the restrictions or reserve requirements of domestic currencies. However, since the "Eurodollars" are still traded equally with U.S. dollars, the effect of these unregulated loans is the same as if they were domestic loans. Therein lies their destructive effect on a nation's official currency. If the loans are lent in counterproductive ways, then production will suffer. Furthermore, since Euromarket loans are not subject to restrictions, the frequency of loans are greater than is possible for domestic loans. This means not only that Eurobond market will grow faster than the domestic banking activity--see below--but the destructive effect will be greater.

The Euromart: A Baffling Subject

The positions of the writer on the inflationary effects of loans are not well-recognized by most necronomists. The amplification of the inflation through the Euromart is even less recognized. The following quotations reveal the perplexed lack of understanding among those elected or hired to stabilize all production, especially the common intermediate product known as currency. The quotations are from the article: "Experts at Wharton Euromart Seminar Concede Their Subject Baffles Them."

Euromarket, that invisible mass of dollars and other currencies on deposit outside their home countries.

The gross size reached $1.15 trillion last year-end, according to Morgan Guaranty Trust Co. The notion that the true total is zero (on grounds that deposit transfers ultimately take place only at home offices) wasn't defended at this seminar, but only about $175 billion "more or less fits the definition of money" by being deposits of "nonbanks" such as corporations, contends Henry Wallich, a federal Reserve Board member.

Whether it is "appropriate" to net out the huge amount of interbank deposits is an open and "interesting question," Mr. Wallich adds. And a scary one ....

From the Fed perspective, what matters is that the market (about 80% in U.S. dollars) has been growing by more than 25% annually in the last three years, far faster than the domestic money supply.

This collection of quotations from an article in the Wall Street Journal support many of the contentions about the Euromarket being a destructive economic blackhole. For one thing, necronomists are not sure how to classify the financial transaction. Are the transactions really in currency? Or something else? If they are currency then the amount was $1.15 billion (as of 80JL), a "scary" amount indeed.

While Mr. Wallich might find some tentative comfort in a figure of only $175 billion fitting "the definition of money", the reader should not. Why? because of the high liquidity of Euromarket loans through the financial means of "swaps", e.g., Citibank's capitalless New Zealand credit facility. Each of these loans can be (and are being) traded for other products of equal or near-equal product worth. These loans represent ownership of products or production, just as if one had a pocketful of greenbacks.

To hell with the traditional definition of money--if we're lucky. What counts in a system of production is what other products you can acquire with the products that you produce or possess. If a scribbled-on paper product can be traded for some other products, then that sopp is a form of currency. Since loans can be "swapped" for other loans or debts or assets, then they are a form of currency. As such, when one's domestic official currency is being used in foreign loan formation, one's currency is being counterfeited by foreign agents.

Counterfeited? All those loans on the Euromarket could be swapped for domestic U.S. products or production. Of course the holder of the foreign loan might lose a little in the swap. However, if he didn't pay anything for the loan in the first place, he didn't lose anything. It is analogous to someone running currency off in their basement on a printing press. Even if they sell it to a "launderer" at a 50% discount, then they have come out ahead.

Each time a foreigner uses a dollar to make a loan, he has expanded the U.S. money supply. The effect of foreign loans on the U.S. money supply is no different than domestic loans. And, if the reader can recall, the Federal Reserve attempts to control the money supply AND inflation through the money supply. Clearly, it should be evident that the Fed cannot do its job.

Furthermore, as noted above, the Euromart dollar mass is expanding at a faster rate than the domestic money supply. The Euromart has been expanding at a 25% clip while the Fed attempts to hold the U.S. money supply to 3% to 6%. Blind Fools. They would have to constrict the domestic supply by a goodly amount to compensate for the foreign expansion of the U.S. money supply through the Euromart. Why are the American politicians and necronomists allowing the U.S. currency to be counterfeited and inflated abroad. Corruption and/or incompetence!

What do these moral and intellectual short-comings mean?

Novel Approach: Eurobond Script

What are necronomists doing? Looking for new ways of getting something for nothing. Looking for ways to manipulate the symbols of production so that they, the manipulators, end up with more of the production each day than the people who are more integral to producing the wealth. Ignorantly or disgustingly, the necronomists do not realize how they are undermining the very systems of production on which their very existence depends.

The following quotation provides another example of human ingenuity gone to waste, of human production being qualified so to die the death of a thousand qualifications. A previous example was Citibank's New Zealand loan in which no capital was tied-up. Do they really think that they can get something for nothing, for merely putting their time into manipulating symbols? Only for a while.

"Novel Way is Found for the Sale of Bonds in Eurodollar Sector"

A London-based investment banking firm has come up with a novel way for corporations to issue bonds in the giant Eurodollar market: Sell the securities to investors on a trial plan ... under the plan, instead of putting down the full price for a bond, an investor puts down only 25%.

Talk about confidence: only 25% down. Buy bonds on margin in other words. That's not very novel, is it? Wasn't margin buying rampant in the late 1920s prior to the Great Depression?

Within this very article are statements indicating that the Euromarket involves the production of currency. In other words, the writers of the present text are not alone in viewing the Euromart as a manufacturer of currency. The writer of the previously-cited WSJ article wrote

For his 25% down, the investor actually receives what amounts to script, which together with the remaining 75% payment will get him the actual bonds at the end of the trial period.

In the context of the article and the sentence, the writer no doubt meant the contracted form of script, that is, scrip, which means "paper money" or "fractional currency". Unlike the Journal writer, ominous things are seen in private people printing up scrip.

What does this "novel" addition to the Euromart mean for the American producer and his counterpart in other countries? Inflation, unemployment, over-taxation, and violence as the control of his life is increasingly taken out of his hands and out of his country. While the politicians may be lubricating the loss of the producer's freedom from problems, it is the producers themselves who allow the soppy "leveraging" of their wealth away from themselves and their families. The leveraging is not tolerated from weakness of will, but from a lack of relevant knowledge. Hopefully, the producers will educate themselves. The leveraging non-producers are surely not going to lead and liberate the producers from ignorance which is no longer blissful.

Euromart Doubts, Crisis, and the Swiss Recall

There is another, indirect way of arguing that the Euromart is inflationary of the currencies involved. Consider which currency makes up 80% of the Euromarket and which major industrial nation has the highest inflation rate: The U.S. Does it not seem logical that the number one chump, the country which is having its currency counterfeited the most, should also suffer the greatest inflationary effects?

Counterproductive loans multiply the country's money supply. (Note the Euromarket is not the only cause of U.S. inflation, but is a growing factor.) The following quotations show how the U.S. suffers because its currency is being counterfeited the most outside its border.

"Key Industrial Competitors Outdo U.S. In Cooling Wholesale-Price Increases"
All three countries [Germany, Japan and Switzerland] are benefitting from strong currencies, which cut down on the cost of imported raw materials.

Wouldn't you expect those nations whose currencies were not counterfeited so much in the Euromart to have stronger currencies? Especially, if their bankers were able to counterfeit someone else's currency to subsidize raw resource imports through "swaps"? Whose the big chump that has allowed its official intermediate product to become 80% of the Euromart? The U.S. And who within the U.S. allowed the number of alien dollars to grow to over $1 trillion, a mass equal to or greater than the official National Debt? Who? See the chapter on "Monetary Colonialism".

Foreign governments and bankers are aware of the domestically detrimental affects when aliens make unrestricted loans with one's national currency. Consider the action of the Swiss. In an article entitled, "New Doubts about Eurocurrency Market Raised at Forum -- But Action Is Unlikely," a Swiss banker noted the Euromart's "susceptibility to crisis will also increase". How does his country expect to deal with the crisis? Current Swiss strategy, he said, is to attract directly to Swiss banks some of the Swiss franc financing that had moved out to the Euromarkets. In other words, the Swiss are attempting to eliminate foreign control of its official currency, to eliminate the de facto expansion and counterfeiting of the Swiss franc by foreigners.

Hot Issues

European bankers are not alone in being aware that they have a good thing going by being able to make unrestricted loans in foreign currencies. U.S. bankers are aware of it, as evidenced in the following quotations.

One of the hottest issues in banking this year has been the mounting influence of foreign banks in the U.S. financial system.

Lending by banks in the major industrial nations to other countries probably showed continued strong growth in this year's second half, after expanding 6.2% in the first half from the prior six months, the Bank for International Settlements said.

The important question is what will the necronomist do? Will they allow the counterfeiting to go on? Will they correct a financial system in which the symbols of production are manipulated independently of production? Or will they try to out "compete" with each other in the necronomic game of musical chairs, of something-for-nothing?

Unlike the average American citizen whose well-being is tied to stability, the professional financiers derive their income from instability that breeds opportunities for manipulating the vast array of scribbled-on paper products that they have concocted. Seemingly, the bankers, financiers, necronomists, and politicians would want to stop the counterfeiting of the U.S. dollar, since it is pushing the US toward economic collapse. However, if one considers the historical analogs of how the rats, who gnawed the holes in the hulls, were the first to leave the sinking ship of state, their actions are not without precedence, i.e., bloated with corrupt and incompetent greed. The next chapter provides supporting evidence for the bluntness of the previous sentence.

Warning: Anyone found stealing lifehours will be forever banned from participation in and rewards of Better Democracy and Capitalism.
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