The Town Clerk of Britain

Should Britain decide to remain in the European Union on 23rd June, 2016, that clicking sound you hear behind you will be the door shutting on sovereignty.

The changes in voting mechanisms, the removal of the veto in so many areas, the primacy of the European Court has gradually emasculated the UK Parliament.

Yet more transfers of power will occur.

The EU would continue to draw power to itself and away from the nation states and your elected representatives. This makes the imperfect more so. The EU Parliament is a rubber stamp or, at best, an amending chamber not capable of rejecting, introducing nor repealing legislation.

The oft-denied plan to fold the British Armed Forces into a European military exists and will result in loss of independence in this area, partially, if not totally.
There are moves to unify taxation and expand into other competencies.

Welfare and health systems are due to be normalized.

The EU already has a de facto Foreign Office and Ambassador, even if ineffectual at this time.

In a short time, taxation, welfare, military, foreign relations will be out of the hands of the Prime Minister, Cabinet and UK Parliament.

Without control and a final say over such things, the definition of nationhood is stretched beyond absurdity as sovereignty is lost. Lost from the citizens via the Members of Parliament. That sovereignty is held in trust, and not to be handed over, but handed back. But if the nation votes Remain, it will most certainly be handed over. Maybe not right away, but gradually, carelessly or sometimes intentionally slipping between those representatives’ fingers. With that sovereignty goes the authority of the MPs and thus the authority of the person that is the Prime Minister.

If the nation votes Remain, one thing is certain, it will not remain a sovereign nation, but more a municipality. It will not have a use for a Prime Minister. The top job will have to change to match the remaining levels of authority and power.

Should the nation vote to Remain, I propose the top job title is changed to something more fitting: The Town Clerk of Britain.

Migration exposes systemic flaws: Will this be an opportunity?

If I were Syrian, I would almost certainly be trying to get to Europe by any means at my disposal. I would want my family safe, and to provide for them.

If Britain imploded, I would almost certainly be trying to get to another safe haven.

This is the motivation for many who try to enter Europe now, there can be no doubt.

Some say let them all come, others say keep them all out. Others sit somewhere in between.

Do I have the right answer? No I do not. But I do want to mention some things that I feel are important in regard to this matter.

Successive governments have built an apparatus that is not only incapable of adapting to rapid changes in demand, but, as it is constructed and implemented, has significant potential to cause shortages and resentment amongst those who feel they have a prior claim. This has already been the case, let alone if larger numbers of migrants arrive. This resentment could be leveraged by those who seek to divide, cause violence and reduce the freedoms and liberties of the population.

Defined benefit welfarism, housing, education and healthcare exist in the State dimension. Taxation, wage distortions and planning regulations are notable issues from a legal/regulatory one. These form an overall apparatus, now the nation functions, for good or ill.

It is my view that the current defined benefit welfare and associated apparatus and regulatory frameworks are incompatible with the free movement of people. If you asked me to choose between the two, I would choose the latter, not the former.

I do wonder if the time is getting close where people may wake up to the problems of a defined-benefit welfare system and the associated apparatus. It is rapidly becoming obsolete in a dynamic, fluid world. If we are honest, only with limited or no migration can it work harmoniously. We don’t, so it doesn’t. The honest and hard working arrivals, even after generations, are tarred with the same brush as moochers, which is an appalling situation.Worse that some moochers are as indigenous as they come.

Can we fix (or should I say un-screw-up) the system to allow for a changing world, to remove the seeds of resentment and to make it clear all those who arrive are doing so to truly escape chaos, not to get a free ride?

Will the removal or dismantling of the defined benefit concept mean people will not be as hostile to new arrivals?

I do think so.

A defined contribution system would, to me, be the logical evolution from where we are now to a place closer to where we might want to be. It would have more of a chance if pluralistic, to foster a market that will expand health and education, as well as housing, to meet demand.

Phasing in defined contribution could be just for new arrivals initially. This could be taken as being discriminatory, but one could logically extend “new arrivals” to be any newborns or those soon to join the workforce. The segue for the remaining population would need to be done by sector – housing, health, education, unemployment benefits, though not necessarily in that order. Items like healthcare can be evolved using a form of provision used elsewhere in Europe, such as Switzerland, though insurance for inability to pay might need further thought.Education needs plurality and funding to open up and gain efficiencies, via vouchers first, then direct funding. Pensions will almost certainly need a longer term plan.

There is also the option of voluntary contributions to support new arrivals. Such organisations could provide transitional services, but without the compulsion of a statutory “duty of care”, which can be exploited, claimed against, legally enforced and voted up by those who “care”, yet do not fund. Voluntary funding would remove much of the stigma and resentment, and can chose not to support those who are disruptive. The state is the obstacle in this case – blocking, monopolizing and distorting.

In all of this, the need to uphold property rights, the rule of law and prevent vocal totalitarian or bigoted groups from hijacking the situation is essential.

Apart from improving the mechanisms in the country at large, I am somewhat biased towards the formation of entrepreneurial city states, like Hong Kong or Singapore. A form of this is called a Charter City.

The key would be to have a plurality of costal areas, up to 1000sqkm, accessible to trade routes without hindrance, and free from the legal system of the erstewhile ruler of the land. Each area would set up their own system. This gives competition. No one system would want to be too rapacious or restrictive, as the other areas could poach the more valuable parts of a mobile workforce. It would need nation states to relinquish control of land, and for wealthy individuals or groups to build. I do not think a government could build it, as they would find it hard to resist interfering or leaking authoritarian laws into the domain.Letting go and not grabbing back would be a monumental challenge, too.

While one such Charter City on 1000sqkm of land could house the entire population of Syria, I would much prefer a plurality of Charter Cities, each open to all, so there is no concept of a dumping ground.

As to the Elephant in the room, war and ISIS, that is even trickier. Intervention is not an easy answer, or should I say an easy solution.

If all powers ganged up to take ISIS on, i.e.US and others fell in alongside the Russians and Iranians, then it could be done. The problem of who runs the place afterwards will then occur. Assad has rather torn up his own legitimacy to rule a people. There is no reason to doubt that similar groups will not arise elsewhere, or that the conflict then moves on to the issue of Kurdistan, in which sides are not so clear cut, and multiple existing nation states would see loss of chattel, I mean territory. An answer, as I said, but not a solution.

So, I have no single answer, no silver bullet, but I believe the UK is not in a position to be able to respond appropriately to migration, let alone mass migration, while it still has systemic dysfunction in its welfare and legal frameworks, a systemic dysfunction that needs fixing regardless of the migrant crisis.

Better to not have anyone want to leave their home in the first place. Unfortunately, we are beyond that already, but it does not mean we cannot get to that situaiton, if only by building new oasis of freedom.

An option for Greece

There is a succinct piece on explaining that Greece has 5, not 2 options before it. I want to put forward a sixth.

Before I do that, a summary of the other 5:

1. Greece stays in the Eurozone

2. Greece keeps the euro, but stays outside the eurozone – “The Montenegro Option”

3. A Currency Board – a new currency, but locked to the Euro.

4. A Dual system – a Drachma and the Euro circulates side by side

5. The New Drachma – possibly growing out of option 4, above, due to Gresham’s Law.

Option 6 – Currency Freedom

This is to end currency monopoly formally, not just to a dual currency arrangement, but a true acknowledgement of plurality, as decided upon by each member of the Greek citizenry.

US dollars, euros, RMB, gold, Bitcoin, anything, if agreed by both parties in the transaction.

It would be likely, IMHO, for the Greek govt to have its own currency again, free from external control by states or private sector banks, but this time it would be without a monopoly. The government can, of course, require payment of taxes in its own currency, and decide to pay suppliers and employees in it, too. This would add some heft to it.

What this will do, however, is not grant it as much power to print at the expense of savers, creditors and wage earners. It will impose much needed discipline and awareness of consequences. The government would need to become more like a going concern, able to raise funds for investment purposes that yield return, but the Government would find it hard to borrow on the never-never for ongoing overheads and obligations. A Drachma will be, more than most currencies, a share certificate in The Greek State Inc. And for those who think one cannot borrow/lend shares, well, one can, and many do already.

The role of the central bank would not go away, but be limited to institutions handling Drachma, as mentioned. Most banking organisations are operating under global agreements such as Basel3, anyway, and if taxes are paid in Drachma,

most banks will need to handle it one way or another and thus have a state license and deposits lodged at the Central Bank.

The freedom in currency will mean an organisation that has costs in us dollars can bill in us dollars. It means routinely,

savers need not keep their wealth hostage to one currency or politicians. Banking solutions can and would be found to handle the exchanges efficiently. It is not beyond the wit of banks to perform immediate, low margin, zero commission foreign exchange via multiple accounts in different currencies. In Hong Kong, my moderate transfers had a 0.3% spread 15 years ago. Multi currency credit or debit cards, or other payment solutions such as gold linked or bitcoin based, that detect the destination currency, would deduct the appropriate account or perform the necessary conversions.

With the 6th Option, people will be free of currency slavery. Even if they did continue to use the domestic State currency, it would be more exposed to reality, and thus give the State a moment of pause before they acted. Life could continue if a person chose to back out of its use partly or completely.

The state is, however, faced with a society that has, for all intents and purposes, pulled out on the implicit, if grudging, compact that sustains taxation. Taxation has to be seen to be fair not just by the majority, but also by those shouldering the burden. Flat? Land ? Consumption? A mix of all three? It is a problem that faces the nation, no matter what option was chosen.

 

 

Image © Alehins

For those thinking that a Cyprus-style outrage might happen here, I have bad news

The truth is that, worse has been happening in the UK for years beneath your very noses.

According to the first EU offer, those with EUR100k or more in deposits will have 9.9% of their balance converted into bank shares. Those with below EUR100k will have 6.75% converted. As time progresses, the wolf is tempting the sheep a little by suggesting 3% on amounts between EUR20k and EUR100k, with those under EUR20k escaping and those above getting punished with 15% – transforming a bad scheme into one even more unfair.

This is not straight theft, mind, but more of a unilateral renegotiation of a loan agreement. It is no less of an outrage for that.

What most people do not realise is, a bank deposit is not cash held at a bank, but a loan to it. Putting your money in a bank is to no longer have it. One’s bank statement does not represent the cash one has, more what the bank owes. The Cypriots have found that their loans have become 90.1% on-call loan and 9.9% bank shares of dubious value and liquidity. Given the capital controls, the 90.1% loan is rapidly losing its on-call status, too.

pick-pocket-from-short-film-thin-strip

This is bare-faced and in the open. If you want to see insidious, stealthy theft, look no further than the Bank of England, with its artificially low interest rates coupled with increasing Govt debt and money-printing, now called “Quantitative Easing” to spare their blushes. Those with holdings in Sterling, savers, in other words, have had the value of their wealth transferred away from them by these effects. Debtors gain that wealth. The State is a massive debtor, so it has a significant vested interest in such policies. It all happens gradually and under the surface so people hardly notice.

All across the world, people are shocked at the events in Cyprus, but, oddly, the very predicament Cyprus is in has forced the State to crawl out into the daylight and reveal its vile actions for all to see. Normally, it invisibly taxes by devaluing and diluting the currency, and everyone chews the cud as before. As one cannot hit the monetary base of Cyprus alone due to it being in the Euro, it is savers that are hit.

The cattle are all chained together in the Euro. The butcher had to do its slaughtering and skinning in plain sight of the other cattle, and the herd is now restless. We look on with concern, not knowing the slaughtering and skinning is being performed in the night, as Morlocks will stalk the Eloi.

Will there be widespread runs on the banks? If I were in Spain or Italy or Portugal, I would not have my money let out to an organisation that has the State’s chain running through its nose.

How long before people wake up one day to find their “savings” partly transferred into worthless UK Gilts or unwelcome RBS shares?

Desperate times require desperate measures. Desperate debtors, even more so.

Don’t ignore the benefits elephant

We have recently see a demand for a “benefits charge card”, one which would replace cash and control the items a benefits recipient is “allowed” to purchase.

This may seem seductive to some people and for very different, often almost diametrically opposed, reasons.

Some may object to misuse of monies that were taken by force from people of limited means, often unable to afford the items being purchased, and so want to control that spending so as to defend the interests of the hard-pressed taxpayers. Others see it as a way to prevent people from purchasing things they just plain object to or deem as wrong or luxurious, such as gambling, Sky TV, alcohol or tobacco. Who knows, others might, underneath it all, just want to control people.

For a while, some years ago, I held the first view, being exercised at the taxation of the lower paid and the indiscriminate way the State appeared to both spend and distort the choices that were presented to people. At the same time I also felt strongly that those who were often demonized were, in fact, rational actors, making the most of the options presented to them and so were not, in truth, “to blame”. They played the system, but the creation of a playable system was neither of their doing nor their responsibility. They were not MPs who thrust and elbowed themselves forward as law-makers and representatives. I demand the latter behave with an internal moral compass even when the rules are absent or even contradictory, to know when to do “what is right”, for how else could they be charged with repealing bad law or creating new, good law. I do not hold the former to that.

There is an inconsistency between the overall Libertarian view that the individual is the best person to decide how to spend the money they have and the concept of a Benefits Debit Card. Benefits may not be “earnings”, but it is income all the same. So, I feel, to be consistent, if one is to say that a person is entitled to benefits of a certain amount – putting aside the issue of welfare reform for a moment and keeping everything else the same – then that individual is best, all things being equal and on average across all recipients, to decide how to spend such benefits, how to spend the income they receive, not some official, nor some righteous Authoritarian. To best ensure that welfare given is spent as well as can be overall, one must therefore leave it to the individual recipient to decide – relying on the State, some committee or a central authority is certain to result in sub-standard choices and solutions just as it occurs across the board[1].

What of the fact that the money to pay for it was taken by force?

It is bad enough that people are forced to pay into a scheme. It is worse that the money they pay in might go to others who misuse it. But what is worse still is if someone is forced to pay into a system and then, when the State sees fit to “pay back”[2] some of that money, it demands to control how that person spends it. That is, to me, the final indignity. It presumes guilt and wrong-doing before any has been done. It forces the collection of wealth and then controls how any returns are spent. I suppose this is what some think of when they say “cradle to grave”. Considering that the vast majority of benefit recipients are or have been honest, hard-working and often over-taxed souls, the idea that you then control how they spend the benefits could be seen as a form of vile, feudal, collective punishment and control.

The very idea of a “Benefits Debit Card” is but a distortion upon a distortion. It is fundamentally wrongheaded for that very reason alone. If there is an error, fix it at the root, do not try to apply a further distortion to the dysfunction, least of all a distortion that affects everyone, not just those the distortion is intending (on the surface?) to target. If the Card is meant to rope in everyone, I suppose one could assert that it does affect everyone it is intending to affect, but then the idea fails even more miserably due to the fact that it intends to control the spending of all people who have been forced to pay in.

The root problem is that we have a State-enforced, monopolistic system of legally-binding, often dysfunctional entitlements funded by coercion that plays havoc with peoples life-choices, undermining their natural common sense and common feelings of fairness and decency. There is currently almost no link between contribution and benefits. There is currently no link between the giver and receiver, even if one is willing to hold one’s nose, look the other way and disable rational thought long enough to label a taxpayer as a “giver” to begin with.

 

While it might be an exercise to see how to remove distortions to the system, such as caps to benefits income either in total or to prevent one already on benefits amassing more over time by growing one’s family, it is, when one looks at the situation as a whole, a distortion to the distortion of open-endedness of benefits. It is, again, a distortion on a distortion. While it might function as a segue from “here” to “there”, a long term solution it is not, albeit infinitely better than a Benefit Debit Card.

© Thunderchild7

The real answer to a dysfunctional coerced monopoly is to shift to a voluntary, and thus highly likely to become a pluralistic, system, where individuals may (or may not) contribute to unemployment insurance and unemployment relief charities, the former to benefit themselves and the other to benefit those who are not covered as they are. In such an environment, the individuals use true democracy at the personal level to pick their providers and mechanisms for redistribution. Unless you are fundamentally an Authoritarian, a dictator or form of totalitarian, you would agree that most people most of the time will make reasonably good choices, this should produce a better outcome than any State system could in the long run. It will not produce a perfect system to look after everyone in the ideal way, but then again what we have does not either, even though people promise that one day it could do if only, if only…, which is, basically, a conceit, a lie.

What if an unemployment insurance company decides to implement a Debit Card? People who object would shift away to other providers. Others might want to remain, willing to have that trade-off between premiums and disbursements. The same goes for charities. Some would want to see their money used that way and that is their choice. Those applying to that charity would know the situation. Other charities might not use such a mechanism, and so those who objected to controlling those in receipt of their charity in such a way could direct their funding appropriately, or found their own charity that did not.

What if people did not sign up to any form of insurance? If you feel you are in the majority in thinking this might happen and you want something done for such people and feel most other people agree with you, the answer is clear – you contribute to a charity that looks after such cases. Do not worry, the charity will be well funded by the majority of well-meaning people who agree with you, unless you are being misled by a horde of hypocrites who do not put their money where their mouth is, but prefer to see the money of others put there, instead.

A pluralistic, voluntary system would satisfy the sincere in both camps – those who want to see such controls on spending and those who do not. Those who want redistribution of a certain kind and those who want it of another, and all points in-between. Well, I say satisfy, as there are some who do not wish to see any alternatives to their own totalitarianism, but, frankly, I refuse to entertain such people.

 

[1] I think the housing situation in this country would be improved dramatically if Housing Benefit was folded into benefits and people all had to rent in the market at market rates and the end to State and State-subsidized housing.

[2] yes, money is not in truth “paid back”, for the entire system is a massive, unfunded and rotten-to-the-core Ponzi scheme that would be illegal for any other entity to run if it were not run by The State. No, I withdraw that – it does not even qualify to be a Ponzi scheme, for even Ponzi schemes expect people to pay in before they join.

Towards Sound Money

The segue, how to get from here to there, has been a major part of my thoughts regards Libertarianism. One area is the issue of Sound Money and how to get away from a fiat system.

The route is well trodden: Free Banking, sound money and, ideally, gold-backed offerings.

Free Banking – the ability for entities to set up their own currencies and offer currency competition is basically the beachhead against a de-facto fiat currency geographic monopoly. In addition, banks should not be allowed to get away with the sleight of hand that is the fractionally-reserverd “demand deposit” account, however, without telling customers that their bank statement is just a record of lending to the bank and that the bank cannot guarantee to repay that amount on demand. This is basically down to an issue of misrepresentation, of basic contract fraud.

In all honesty, I do not believe enforcing transparent contracts in itself will solve anything. People will be blind to it. “Free” bank accounts offering near-current services will be offered and life would return to “normal”.

So, Free Banking in itself is likely not to be enough on its own. There needs to be Sound Money, even better, a fully-backed gold currency.

While a State-run gold currency can be a tempting option, it flies in the face of consistent Libertarian reasoning. If it will be viable, other entities will try, so State involvement is a distortion. If it is not, how to justify and fund a loss-making endeavour? Either way, it is still none of the State’s business. The only exception might be if the State decides to set up its own currency for the storage of its own wealth, so as to be independent of privately-run vaults. It would need good justification for doing so, but cannot be dismissed out of hand.

But what of migrating the existing currency from fiat to gold? As discussed many times, and most recently for me, here, the shift of a particular currency from fiat to gold has many obstacles. Apart from the basic logistical ones of conversion, pegging, convertibility and bank runs during the transition, the very concept of Free Banking and/or hard currencies are anathema to the State. It prevents governments from practicing invisible taxation via inflation and of pushing spending today onto the earnings of children as yet unborn.

Logistics are trifles compared to the politics of hard currency backed by gold that strips the State of arbitrary, opaque power. The State will not let go of such power unless it is prised from its cold dead hands.

There is no point just moaning about this or dreaming that the State will suddenly not think of its own narrow vested interests – solutions are required. Well, I want a solution, even if nobody else does!

A Taoist Approach

Taoists have been said to be the worlds first Libertarians. We need to not just think of a frontal assault, but work around the problem to achieve our goal. Not the end of fiat money, but an end to being forced to use fiat money and thus robbed by its controllers.

Setting up a new currency requires Free Banking and that, in turn, requires, I believe, a Libertarian victory in the polls or the overthrow of the State, for the reasons I have given above. Before even a chance of that, we are likely to descend into chaos if, or it is increasingly looking to be, when, the fiat money system collapses in on itself. I fear that the replacement of our existing system will not be kittens and cushions. It is as likely to be disorder, corruption and risk of a “Strong Man” gaining power to bring “order”. We have seen how Libya and Egypt have turned out. We saw how a convulsing Russia panned out from 1917 and Europe a few years later. In other words, it is unlikely to be very pretty.

But what if we could allow people to use gold as a store of wealth without all the downsides – risk of counterfeiting, storage and transportation? Something that applies to individuals, banks and to international and national trade alike.

One Potential Solution

I envision a series of vaults containing gold reserves accessible via a charge card.

As with currency reserves now, entities would conduct transfers between each other at a series of central clearing and settlement vaults, netting off transactions unless absolutely necessary, by electronically re-allocating the ownership of the gold intra-vault and inter-vault. Of course, lending of depositors’ gold to satisfy short term inter-bank or inter-vault shortfalls is not an acceptable mechanism unless the depositors are aware of the limitations on access and, one would suspect, commensurately rewarded. All parties would work to ensure as little lending as possible is needed, so as to reduce the need to secure sufficient time deposits of gold in advance. To lend without permission, to say gold is on demand when it was not, would be fraud and theft.

There would be no notes or specie in general circulation. The accounts would be accessed via a charge card. Just as a Sterling or Dollar-denominated credit card can buy goods in another currency, your gold card could buy goods denominated in any currency. All the apparatus for charging and conversion exists already. We have the means here and now to handle such operations.

All transactions can be performed in gold. If the seller wants to redeem in currency, then they have the option to do so at the point of exchange. It would smooth the adoption of the system if the seller could know precisely how much they would get in fiat currency, if that is what they wanted. Therefore, the option to have the sale performed by the buyer at that moment should be provided.

And what has Peter Schiff of First Pacific Capital done?

Peter Schiff has, via First Pacific Capital Bank, created a “real” gold and silver card, which is linked to a personal gold or silver trading account. It requires you to first buy your gold in this account, then sell your gold or silver to charge up your card in a particular currency when you wish to purchase something with it.

Half-way is better than no-way

The First Pacific Bank does not function as a clearing and settlement operation for gold exchange, and so its Gold Card relies on fiat currencies for the actual transaction. Each account is just for buyers, so direct buyer-seller transactions are not supported. However, the logical progression is there for all with eyes that see and wits about them. Introducing this card will stimulate others, who are in a position to do so, to make the logical steps necessary and provide more integrated services.

The vision of transferring wealth denominated in gold, electronically, from anywhere to anywhere, to use it to buy goods almost universally, has made a big step forward. The ability to be free from rapacious controllers of monopoly fiat paper currency gets closer.

Peter Schiff should be applauded.