Posted Apr 7, 2020 by Martin Armstrong
QUESTION: Marty, for the people within the EU it is absolutely critical to know what will happen when they go digital! Will there be a currency devaluation for bank deposits and cash? And when is the most likely time for that transformation from cash-to-digital?
If there is a devaluation it would make absolute sense to buy some real stuff, not real estate now, before the money loses purchasing power. It does not make sense to buy stocks right now as the low seems not to be in place now and in the coming months. So there are real things like household-stuff, tools, garden stuff…
What is your wildest guess?
Please share your thoughts with us! This would help to reduce the unbelievable drama a little bit, which will follow in the next weeks/months.
Best and many thanks for your work and honesty!!
ANSWER: I do not think that they will devalue the currency. I believe they will simply convert everything to digital so they can tax at will and end hoarding, which they believe is why their Quantitative Easing has failed. They never look at themselves. Like I have always said, there are no mirrors in government halls.
If we look at Japan, its emperors kept devaluing all prior outstanding money and they eventually lost political power and control of the economy. This led to the Samurai Period where there was no coinage in Japan for 600 years. This is the serious risk that we face. Instead of reforming, those in power see this as a loss of power. Therefore, they will only act in their own self-interest according to Adam Smith’s invisible hand.
Unfortunately, that means we are heading into a tremendous loss of freedom all to protect their socialistic system that is collapsing in the very same manner as communism — corruption and unsustainable economic growth.
I do not think there will be a devaluation. What they will do is impose capital controls. Even when China saw that people were using bitcoin to get money out of the country, they immediately clamped down. As long as the United States has Trump, there is a high probability that the USA will remain as the reservoir for international capital. Remove Trump, and then we have career politicians who will act in the self-interest of government and all bets are off.
In my study of various forms of government, the very best was that of Genoa. The Dodge, who was like the president, rotated among the rich families. The post was for just one year. Therefore, they would never pass a law to which they themselves would be subjected to next year. The poor were fine because there was no real class warfare. The rich families ran the city-state as a corporation, competing against Florence and Venice. Therefore, everyone in Genoa benefited.
This is the only reason Trump is important. He came from the private sector and will return there. Career politicians enter poor and leave multimillionaires. Obama preached against global warming and rising sea levels to support carbon taxes, but then went and bought a house on the beach.
The Founding Fathers made the terms just two years and they met for only a few weeks because there were no salaries. Once they voted themselves salaries, Congress became full-time employment and the politicians lost touch with the private sector. It became them v us.
My concern will be the imposition of capital controls. The United States is NOT PART of the CRS so any account in the USA will not be reported to the EU. Stay away from the big banks who have offices in Europe. That means they must comply with EU laws and if they are told to report on any European account in the USA, they will turn them over on a silver platter.