The Peso Turns Fake

[rtwngAvngr]

http://www.augustreview.com/content/view/13/5/

For 342 years, the Mint at Mexico City produced the world’s most stable currency. Only the Byzantine Empire holds a superior record.

In 1910, a “Régime Change” was ordered by William Howard Taft, 27th President of the United States 1909-1913, and consequently a revolution broke out in Mexico on November 20, 1910.

In 1918 the revolutionary president of Mexico, Carranza, minted a new Peso. The Peso’s silver content was reduced from 24.44 grams, where it had been for 342 years, to 14.5 grams.

In 1925, with U.S. coaching, a Mexican Central Bank was formed and named Banco de México. This organization was granted the Monopoly of issuing banknotes; up to that time each private bank issued its own banknotes under its own name and responsibility and redeemable in precious metal at sight to the bearer. (See sample, below).

As a final consequence of the creation of the Central Bank, the Mexican nation gave up real silver money. Through a series of accommodations to political circumstances we have arrived today at a simulated Peso, which circulates together with junk metallic coins and banking computer digits.

In cultural and human terms the use of simulated money has cost Mexico the disintegration of the institutions which have given shape to our nationality. The cultural and human stature of each Mexican has been severely reduced; we have all with no exceptions fallen into an endless race for survival. Simulated money is a merciless master who grants neither peace nor tranquility, and who imperiously and ceaselessly orders: “Work! Work! Work!” One hundred million Mexicans are submissive slaves of the system of simulated money.

Faced with a history of destruction of our culture, of our institutions and of the human dimensions of Mexicans, not to mention the impoverishment which has resulted from the devaluation of our currency, all attributable to the simulated Peso, the Central Bank remains supremely unconcerned; however, the consequences of abandoning real money in favor of simulated money are inevitable, not only for Mexico, but for the rest of the world as well, which is suffering the same destructive process.

During the 20th century silver rose in value propelled by monetary inflation around the world; besides the rise in value of silver in the world markets, in Mexico we experienced the creation of an astronomically large mass of simulated money lacking any substance, which devalued our currency. Thus the price of silver expressed in our Pesos rose even higher. Consequently, only ever smaller quantities of silver could be used to mint the Peso coins; the latest coins include only microscopically small amounts of silver in the Peso, the humble descendant of what was, in other times, the world’s most important currency.

The graph below shows us that the creation of simulated Pesos is still going forward vigorously. Money in circulation (M-1, coins, bills and bank deposits) has grown from $4 billion Pesos (of the same “new” Pesos we are currently using) in 1986, to $1,062 billion Pesos in 2006. M-1 has grown 265 times in 20 years, though our economy is by no means 265 times larger.

Chart

No reform of our monetary system is possible; there is no way to restrict and limit the growth of M-1 to the growth in the real economy, without causing a total collapse. Mexico, like all countries in the world, is addicted to simulated money. Our Peso will have to continue losing purchasing power.

All we can do is to insist that a quantity of real silver money must be put into circulation, in parallel with simulated money, so that Mexicans may have a small but important alternative for their savings, outside the banking system, which will inevitably go on inflating the monetary mass of M-1.

Let us heed the wise words of don Manuel Gómez Morín, founder of the Banco de México, the Central Bank, and founder of the PAN, the “National Action Party”:

“Silver coins have been, and for a long time yet will be, the last resort for our economy, impoverished or damaged by bad governments. For this reason, the silver coin is “the people’s money”. As long as a minimal part of our monetary savings remain in silver, the consequences of disasters will have a limit; it will be possible to avoid hunger and the desperation of the people, and there will always remain at hand the possibility of rebuilding the monetary system and the whole economy of the country”. “La Nación”, Year III – No. 144, 15 July 1944.

 

[90K]

you mean NAFTA hasn't done anything for the peso?

 

[rtwngAvngr]

you mean NAFTA hasn't done anything for the peso?

You tell us. Has it? Your point seems tangential at best.

 

[90K]

You tell us. Has it? Your point seems tangential at best.

I was being wise for starters. And it pretty much answered itself. It is a shame that the government couldn't do something to arrange for the currency to be some what competitive even if it were with other latin American countries. I mean they have have had generations wto work on changing the ideas and concepts of being competitive. Either way with all the money being pumped into Mexico in the factories of the US companies that moved down there that money is going somewhere and it isn't on the economy.

 

[rtwngAvngr]

I was being wise for starters. And it pretty much answered itself. It is a shame that the government couldn't do something to arrange for the currency to be some what competitive even if it were with other latin American countries. I mean they have have had generations wto work on changing the ideas and concepts of being competitive. Either way with all the money being pumped into Mexico in the factories of the US companies that moved down there that money is going somewhere and it isn't on the economy.

Money is technically worthless when it's fiat. Fiat currency is strictly a human control mechanism. You can never get off the treadmill if the money makers don't want you to. People retiring early and not working? Devalue the currency with a massive print run, drop their life savings to zero, reopen the mill. Or if you just want to keep them on the edge of poverty just to keep them powerless, that's cool too.

 

[90K]

Yeah but isn't monies value on what it provides as valuable? Like if you hold gold as the standard then it would go with the market value. If it were in say your export value and other countries bought up the money then it would hold value. Like the dollar against China since they have bought up millions of our dollars and hold it.

 

[rtwngAvngr]

Yeah but isn't monies value on what it provides as valuable? Like if you hold gold as the standard then it would go with the market value. If it were in say your export value and other countries bought up the money then it would hold value. Like the dollar against China since they have bought up millions of our dollars and hold it.

Exactly. non fiat currency has at the VERY LEAST, the redeemable face value. When it used to be backed by gold or whatever you were ALWAYS guaranteed that, plus whatever it could buy you as a currency. Now if the inflation spirals "out of control on purpose" or whatever, it can buy you little in the market place, and there is not a guarantee minimum value, like there was when it was backed by FIXED QUANTITIES OF PRECIOUS METAL.

 

[rtwngAvngr]

Long story short. At my jobs I insist on being paid in grain, or light sweet crude. Maybe that's why I keep getting passed over.

 

[90K]

Exactly. non fiat currency has at the VERY LEAST, the redeemable face value. When it used to be backed by gold or whatever you were ALWAYS guaranteed that, plus whatever it could buy you as a currency. Now if the inflation spirals "out of control on purpose" or whatever, it can buy you little in the market place, and there is not a guarantee minimum value, like there was when it was backed by FIXED QUANTITIES OF PRECIOUS METAL.

And we would agree fixed precious metals isn't the answer. How can mexico be in such bad shape? Really I never paid much attention to them because other than back strokes coming across the rio grande what else do they have that I'd want? All seriousness aside they have factories, Mexico city pollution is truth about that, and they have tourism and I'm sure a lot of sweat shops with slave labor. I'd think almost they want to remain like that because of the inner wealth they get. I'm not economically strong in my thoughts here but sounds to me if it ain't broke don't fix it from a selfish point of view.

 

[rtwngAvngr]

And we would agree fixed precious metals isn't the answer. How can mexico be in such bad shape? Really I never paid much attention to them because other than back strokes coming across the rio grande what else do they have that I'd want? All seriousness aside they have factories, Mexico city pollution is truth about that, and they have tourism and I'm sure a lot of sweat shops with slave labor. I'd think almost they want to remain like that because of the inner wealth they get. I'm not economically strong in my thoughts here but sounds to me if it ain't broke don't fix it from a selfish point of view.

Actually I'm working on a quantum dollar. It contains a fixed amount of energy which can be converted into fuel or dietary protein or other matter with various adapters. It must, however, be fitted with a very strong control mechanism to contain the energy, so it can't be used for terrorism.

 

[90K]

Actually I'm working on a quantum dollar. It contains a fixed amount of energy which can be converted into fuel or dietary protein or other matter with various adapters. It must, however, be fitted with a very strong control mechanism to contain the energy, so it can't be used for terrorism.

intersting. Terrorism now that is a whole subject in itself with regards to money and it's usage

 

[rtwngAvngr]

intersting. Terrorism now that is a whole subject in itself with regards to money and it's usage

Yes. And actually terrorism is being used to implement stricter money controls, and will be used to further outlaw weaponry and take away other freedoms. BUT. BIG BUTT. Terrorism really is an issue, that is true. Our government however, will take the wrong actions. They will use the excuse of terrorism to clamp down on "everyone equally" because that's the Politically Correct way. Terrorism will be used to justify taking away everyone's rights. We should simply stop all immigration of muslims into the country. Period. But that is simply off the table. In about 70 years, we will be an islamic prison state.

 

[rtwngAvngr]

WWIV- The Rise Of Shem

 

[90K]

Yes. And actually terrorism is being used to implement stricter money controls, and will be used to further outlaw weaponry and take away other freedoms. BUT. BIG BUTT. Terrorism really is an issue, that is true. Our government however, will take the wrong actions. They will use the excuse of terrorism to clamp down on "everyone equally" because that's the Politically Correct way. Terrorism will be used to justify taking away everyone's rights. We should simply stop all immigration of muslims into the country. Period. But that is simply off the table. In about 70 years, we will be an islamic prison state.

I agree that the hidden agenda of a free nation is really an excuse not to really clamp down on the groups that need clamping down on. Not all muzies warrant concern, but that doesn't mean the flood gates show remain open for them to live in sleeper cells in our country. Personal opinion on that subject. And yes if the G has it's way it would control us and allow other to be unregulated.

 

[rtwngAvngr]

I agree that the hidden agenda of a free nation is really an excuse not to really clamp down on the groups that need clamping down on.

But I don't think that. I never said that. Free nations should identify enemies and radicals who seek to destroy the freedom, and deal with them. We shouldn't pretend everyone is equally likely to be a terrorist. It is the religion of islam which is a despotic philosophy, it's not just a "misinterpretation by a radical few". This is the big lie. I would bet my life that there is not one moque in america that doesn't preach jihad.

Not all muzies warrant concern, but that doesn't mean the flood gates show remain open for them to live in sleeper cells in our country. Personal opinion on that subject. And yes if the G has it's way it would control us and allow other to be unregulated.

Your instinct to curb terrorist immigration is a good one. Go with that. Your opinion matters.

 

[rtwngAvngr]

Supposedly we're implementing homeland security, yet our border is wide open.
It's a joke.

 

[90K]

Yeah the muslim radicals are in our country and they aren't hiding, yet our govenment knows of them yet with these groups that include the ACLU we can't get rid of them because if speculation was right many would be getting jammed up. I personally don't like it, although trying to treat others like I would like to be treated isn't always rule of thumb when those others want to destroy my way of life.

 

[BaronVonBigmeat]

Yeah but isn't monies value on what it provides as valuable? Like if you hold gold as the standard then it would go with the market value.

This is a good point, you can go to kitco.com and see that gold has been on a bit of a rollercoaster ride the last couple of years. Some people will say that this is proof that gold is not stable, but it's the opposite. It's the US dollar that has been on a roller coaster ride, with investors getting mixed signals from the fed. Blaming gold is sort of like being on a fishing boat tossed about on a stormy sea and seeing the mountain bouncing around wildly, and assuming that it's the mountain that's moving. But that's not the case. The supply of gold that gets mined every year is a tiny trickle compared to existing supply. There's just no way to spike the gold supply in a short time frame.

If it were in say your export value and other countries bought up the money then it would hold value. Like the dollar against China since they have bought up millions of our dollars and hold it.

Yeah, the treasury secretary whatshisface and fed chaiman Ben Bernake are meeting with Chinese officials right now to basically beg like dogs so they don't slow down their accumulation of US dollars, or even worse, unload them. I wonder what concessions they are making right now. It's pretty clever on the part of the chinese; they've spent the last 10 years or so accumulating the economic equivalent of a nuclear bomb. Of course they couldn't hang us to begin with if we hadn't given them the rope to do it with in the first place.

edit: more on Mexico's movement to give silver backing to the peso, via a Libertad coin:

http://www.plata.com.mx/plata/plata/english.htm

It's not a classical metallic standard. In a classical standard, a peso is just a particular weight of silver. If they wanted that, they would have to take X amount of pesos and divide by however much silver the central bank has, and cease printing any more pesos unless they are backed by new silver. What they're proposing would be a coin with a variable face value, which is always higher than the value of the silver. (ie, $14 of silver is decreed to be legal tender of $20, until the price of silver exceeds $20, then they decree that it is $25, etc.). So basically, you might actually see these in circulation.

Won't it be funny/sad if Mexico ends up with stronger currency than the USD eventually?

 

[BaronVonBigmeat]

In 1925, with U.S. coaching, a Mexican Central Bank was formed and named Banco de México. This organization was granted the Monopoly of issuing banknotes; up to that time each private bank issued its own banknotes under its own name and responsibility and redeemable in precious metal at sight to the bearer.

Oooh, this is an important point too.

During the revolutionary war, the american colonies had a terrible experience with the unbacked paper money of the day, the Continental. Thus the term "not worth a continental". So, the value of the new currency was set to the same as the unofficial currency of the day: the spanish dollar. 371.25 grains of silver. The government was given the power to coin money, and define weights and measures. Note that the word "coin" back then simply meant an act of metal casting. You brought in raw silver, the government melted it into nice, uniform slugs. Great, now there's no haggling about purity and such when buying things.

People would deposit their metal at banks, and banks would issue their own notes, not unlike Disneybucks or whatever. Basically just checks with a preset redeemable amount of money.

Well it didn't take long before many banks starting engaging in fractional reserve banking. Let's say 1 BaronBuck = 1 oz. silver. So if there are 5,791 BaronBucks being passed around, I'd damn well better have 5,791 1 oz. silver tokens on hand.

But if I were a shady banker, I would issue notes in excess of my reserves. Oh I wouldn't just spend them, no no. That would be too obvious. Instead, I'd lend them out, and count on people to not redeem them. The trouble is, people would catch on eventually, and then you've got a banking panic. The more you overextend your bank--writing hot checks, basically--the more likely a panic becomes. And even if the public isn't aware of what you're doing...other banks are, and start demanding you pay up in silver. So honest banks could put grossly dishonest ones out of business.

So how does the dishonest banker get around this? Hmmm let's see, how about...a cartel? Yeah, that's the ticket. We'll all coordinate our inflation. The only trouble is, there's too many banks. And someone is always weaseling out of the agreement. Contrary to popular belief, this is what actually happened to most of the attempted cartels and trusts in the late 1800's.

So how can you make a cartel work? Get the government to enforce it. The heads of the Rockefeller, Morgan, and Rothschild banking interests met with key senators at a secluded retreat at Jekyll Island, Georgia in 1913 to do just that. This new creature, the federal reserve, would benefit both banks and the government. Government would be able to spend above what was collected with taxes, and banks could inflate more easily. WWI came soon after, followed up by the roaring 20's (money/credit expansion), and then the inevitable bust after they ceased inflating, the great depression. Recessions/depressions are a necessary adjustment period where bad investments (fueled by cheap loans) are liquidated, and the economy resets itself. Sort of like the hangover after the big drunken party.

You will hear some say that a metallic standard without a central bank caused the boom/busts and banking panics of the 1800's. No, fractional reserve banking--banks making money out of thin air--did that. It isn't necessary to have a central bank and a mountain of regulations; you only need to have a strict law against basic fraud--banks must have the reserves they are supposed to have. The government should not be able to inflate, and private institutions should not be able to either. Fraud is fraud, no matter who does it.