We are facing a very interesting financial crisis that has never before been witnessed because this is how the Socialist Utopian Society will crash and burn. We are beyond all economic theories for nobody from Keynes back to Adam Smith ever contemplated what would happen with the deadly theory of Quantitative Easing constructed upon the Quantity Theory of Money. This is the backdrop as to why there has been no hyperinflation and why gold has floundered in the wake of what everyone was touting as hyperinflation.

We are simply off the charts, as they say, in terms of markets and economics. We are entering one of the most challenging periods perhaps in the history of financial and economic forecasting. So bring your thinking caps to this year’s 2019 WEC in Rome.

QUESTION: Martin,
Washington State DOT is planning to bond against toll revenue generated by express toll lanes on or highways here in Western Washington. These express toll lanes were created by our DOT by stealing a general purpose lane and turning it into a toll lane.

The pricing strategy is to keep the roads moving at 45 mph most of the time, so the toll raises as more people use the lane. Sometimes the toll gets as high as $10.

Is bonding against tolls something that governments do? It sounds like our DOT is borrowing money on congestion, aka our misery. So, if their job is to keep our vehicles moving, what incentive do they have now that they depend on tolling express lanes which people take to avoid congestion in the general purpose lanes? Don’t they now have an incentive to keep traffic bad?
Thanks,
A

ANSWER: This is a scheme to raise money. Originally, there were lanes people used to encourage car-pooling. This has given way to the idea that they can charge a toll. Then to raise money, they issue bonds backed by future expectations of tolls. Once again, this is a new scheme to get more money using the future right now. The problem is they do not think about the future. It is always whatever they can grab for the immediate budget. Next year becomes another scheme they come up with until they have borrowed against everything possible.

They are already confiscating property for taxes and then they bundle the tax-liens as selling them to investors who can then confiscate people’s homes based upon the back taxes owed. This has been taking place in New Jersey and Florida. The bonds are backed by tax-liens on private property.

QUESTION: You have written about the collapse of the Byzantine monetary system. I also believe it fell to the Europeans in 1204 and the story was that the Germans were being aggressive back then demanding tribute. Was this also another monetary crisis at that time?

Thank you

JY

Alexius III AV Hyperpyron

ANSWER: Yes, there was the Great Monetary Crisis of 1092. But nearly 100 years later, there was another monetary crisis sparked by a tax rebellion. The tax imposed was by the Byzantine emperor Alexius III in 1197 in order to pay the German Emperor Henry VI (1165 – 1197) a tribute of 1,600 pounds of gold.

Henry had originally demanded 5,000 pounds from Alexius in 1195. In order to get support for taxing Constantinople, Alexius called a meeting of the Senate, the clergy, and the members of the trade guilds. He proposed property taxes, but they rejected it as being contrary to custom. The assembly then began to revolt, accusing Alexius of wasting public money. Alexius was forced to abandon the tax. Alexius then tried confiscate gold and silver objects from the churches. The clergy then revolted and he abandoned that idea. He then confiscated all gold and silver from the tombs of his predecessors but he spared that of Constantine the Great.

Alexius managed to gather 7,000 pounds of silver and some gold. To his great fortune, Henry VI died on September 28th, 1197, and the tribute was never sent.

The term “iliad” in Greek mean a series of miseries or disastrous events and “Odyssey” meant a long wandering or voyage usually marked by many changes of fortune. Welcome to the Economic Iliad & Odyssey. What we are facing is truly extraordinary. There is absolutely NO economic theory from Adam Smith to Keynes that ever addressed negative interest rates no less sustaining such a trend. There have been four major players who ventured into the negative interest rates territory but the disasters of this policy in Europe and Japan were implemented in hopes to stimulating the economy. In the case of Switzerland, they were seeking to prevent capital flowing into the Swiss franc as a safe-haven.

We are now on the threshold of the most PROFOUND economic event which has never before in history ever taken place. This is where opinion becomes worthless. All we can do is approach this on a collective basis internationally and without bias.