This seems suspect to me. The Debt Clock is timed to cross the $16 Trillion mark during prime time news on the first day of the Democratic National Convention.
Monetary theorists of the Keynesian School are not all that worried. This theory sees the US Debt as the foundation for the world monetary supply and that paying down the debt would actually hurt the world economy.
The number that really scares me is the $120 Trillion in unfunded liabilities. The unfunded liabilities includes items like $21 Trillion for the prescription drug liability.
I suspect Keynesian theorists look favorably on the unfunded liabilities as well. Investors in the biotech sector will pay higher prices for pharmaceutical stocks knowing that the government will dish out $21 trillion for drugs.
My sympathies lay with the Austrian school which sees fault in the great nexus of contracts that make up the world economy. If things prove a house of cards, the economy could crash even worse than it is today.
Tuesday, September 4, 2012
Sunday, July 22, 2012
Audit the Fed
The enemies of free society seek to use the tools of the free society to destroy the free society.
This idea of structuring the capital system so that the capital system would become top heavy and collapse was the primary theme of Marx's Das Kapital.
Das Kapital was the single most influential economics text in history. Marx' Das Kapital lays the foundation for both Communism and CAPITALISM.
The term "capitalism" came in vogue after Das Kapital. Much of the thought about modern capitalism comes directly from Marx. and it is fundamentally flaw.
It is the most absurd thing EVER! We've let the enemies of the free society define our financial system. The result is that the financial system keeps collapsing and undermining our efforts as a free society.
It is pure idiocy.
It is cultural suicide.
Since antiquity the rogues of the world have known that the easiest way to destabilize an enemy is to debase their currency.
Conservative are such nimrods for their unwavering defense of Marx's distortions about how a financial system should work. It makes me want to scream.
The Federal Reserve, created in 1913, was produced by thoughts on how a ruling elite can control society through the manipulation of capital. The reserve attempts to control society through a fiat currency that it gradually devalues.
Since its inception, the Federal Reserve has devalued the currency about 99%. A 1913 penny had about the same purchasing power as a 2013 dollar. Add this to all the bankruptcy of our modern economy and the problem is much worse.
Fortunately, Ron Paul sees that the Federal Reserve magnifies business cycles. For the last several years, the good doctor has been calling for Congress to Audit the Fed.
According to Campaign for Liberty, the bill will hit the floor on July 24, and that it will need to get a 75% vote to pass.
It is worthwhile to contact your representative to ask that we audit the federal reserve.
The enemies of the free society seek to destroy the free society by debasing its currency. In response, the defenders of the free society need to stand up and defend its currency.
This idea of structuring the capital system so that the capital system would become top heavy and collapse was the primary theme of Marx's Das Kapital.
Das Kapital was the single most influential economics text in history. Marx' Das Kapital lays the foundation for both Communism and CAPITALISM.
The term "capitalism" came in vogue after Das Kapital. Much of the thought about modern capitalism comes directly from Marx. and it is fundamentally flaw.
It is the most absurd thing EVER! We've let the enemies of the free society define our financial system. The result is that the financial system keeps collapsing and undermining our efforts as a free society.
It is pure idiocy.
It is cultural suicide.
Since antiquity the rogues of the world have known that the easiest way to destabilize an enemy is to debase their currency.
Conservative are such nimrods for their unwavering defense of Marx's distortions about how a financial system should work. It makes me want to scream.
The Federal Reserve, created in 1913, was produced by thoughts on how a ruling elite can control society through the manipulation of capital. The reserve attempts to control society through a fiat currency that it gradually devalues.
Since its inception, the Federal Reserve has devalued the currency about 99%. A 1913 penny had about the same purchasing power as a 2013 dollar. Add this to all the bankruptcy of our modern economy and the problem is much worse.
Fortunately, Ron Paul sees that the Federal Reserve magnifies business cycles. For the last several years, the good doctor has been calling for Congress to Audit the Fed.
According to Campaign for Liberty, the bill will hit the floor on July 24, and that it will need to get a 75% vote to pass.
It is worthwhile to contact your representative to ask that we audit the federal reserve.
The enemies of the free society seek to destroy the free society by debasing its currency. In response, the defenders of the free society need to stand up and defend its currency.
Wednesday, April 11, 2012
Canadian Penny
In March, the Canadian government ordered their mint to stop production of the Canadian penny. The US Penny is soon to follow.
The Federal Reserve (established in 1913) created a policy of institutionalized inflation. Institutional inflation favors big finance over small main street shop. The 1913 penny had about the same purchasing power of the 2013 dollar. There has been close to a 99% devaluation of the dollar. Basic postage cost a half cent in 1913. Apples were about a penny a pound, etc..
Rather than wating for the mint to discontinue the penny, I think Main Street merchants should use the devaluation of the penny as an opportunity to show displeasure with a financial system that favors big finance over the people.
On the site RoundDown.US, I advocate that businesses keep only quarters in the change draw and start rounding cash transactions down to the nearest quarter.
If the bill is $12.34 and the patron gives a $20.00; the merchant would give $7.75 in change. Rounding down means the merchant absorbs the cost of rounding.
Rounding down costs an average of 12 cents a transaction. This is lower than the credit card fee.
This technique is really easy. All you have is quarters; so your clerks will give out zero, one, two or three quarters.
Rounding down to the dollar is even easier. To round to the dollar, the clerk has only paper currency. You simply count out the dollar amount. Rounding down to the dollar would cost an average of fifty cents per transaction.
The Federal Reserve has devalued pennies and nickels to the point they cost more to produce than their face value.
The United States will follow Canada's lead and discontinue these coins in the near future.
Merchants can wait for the government to force a change or be proactive and just start making the change on their own.
Customers will appreciate being freed of hassles of small change.
Being proactive and rounding down before the mint's actions will allow Main Street merchants to stand with their customers and say express displeasure with financial policies that favor large institutions over small See RoundDown.us .
The Federal Reserve (established in 1913) created a policy of institutionalized inflation. Institutional inflation favors big finance over small main street shop. The 1913 penny had about the same purchasing power of the 2013 dollar. There has been close to a 99% devaluation of the dollar. Basic postage cost a half cent in 1913. Apples were about a penny a pound, etc..
Rather than wating for the mint to discontinue the penny, I think Main Street merchants should use the devaluation of the penny as an opportunity to show displeasure with a financial system that favors big finance over the people.
On the site RoundDown.US, I advocate that businesses keep only quarters in the change draw and start rounding cash transactions down to the nearest quarter.
If the bill is $12.34 and the patron gives a $20.00; the merchant would give $7.75 in change. Rounding down means the merchant absorbs the cost of rounding.
Rounding down costs an average of 12 cents a transaction. This is lower than the credit card fee.
This technique is really easy. All you have is quarters; so your clerks will give out zero, one, two or three quarters.
Rounding down to the dollar is even easier. To round to the dollar, the clerk has only paper currency. You simply count out the dollar amount. Rounding down to the dollar would cost an average of fifty cents per transaction.
The Federal Reserve has devalued pennies and nickels to the point they cost more to produce than their face value.
The United States will follow Canada's lead and discontinue these coins in the near future.
Merchants can wait for the government to force a change or be proactive and just start making the change on their own.
Customers will appreciate being freed of hassles of small change.
Being proactive and rounding down before the mint's actions will allow Main Street merchants to stand with their customers and say express displeasure with financial policies that favor large institutions over small See RoundDown.us .
Monday, March 12, 2012
Inflation v. Fuel Policy
The Republicans had a winning issue: Repealing ObamaCare.
2012 would have been an easy win if any Republican candidate presented a viable alternative to PPACA.
Instead, all we got was nonsense.
For example, candidates would yell "States Rights" in one sentence and demand that we be allowed to buy insurance across state lines in the next. (Insurance is a legal product, so buying insurance across state lines violates state sovreignty)
I really like Herman Cain. His candidacy burned out with an absurd 999 gimmick.
I also favored Newt Gingrich ... his campaign is flaming out on an absurd claim that he could return the price of gas to $2.50 a gallon.
It is true that Obama has an energy policy that is hostile to oil. It is likely that Obama's policies have increased the cost of oil.
However, the Federal Reserve has been pursuing an inflationary monetary policy.
The United States uses a credit economy. In a credit economy (fractional reserve lending) money is made by a combination of printing money and lending.
With fractional reserve lending, banks only have a fractional reserve for each dollar loaned. This magnifies the monetary supply.
Because banks aren't lending and people aren't eager to take on new debt, we have not yet experienced the full brunt of the inflationary monetary policies.
Because energy is in demand, inflation will show up in energy first, then in and in wages last.
It is possible that the Federal Reserve will pull the trigger on interest rates at the perfect moment to create price stability. Our loose monetary policy could easily result in an unexpected doubling of prices.
Because we don't know how much of the current high gas prices is the result of money policy, how much is the result of international tension and how much is the result of energy policy, it is absurd to make claims like Newt's claim to $2.50 gas.
In conclusion, the government should not be in the position of setting wage and price controls. I was disappointed in seeing Mr. Gingrich pursue the line he did with the $2.50 gas claim.
2012 would have been an easy win if any Republican candidate presented a viable alternative to PPACA.
Instead, all we got was nonsense.
For example, candidates would yell "States Rights" in one sentence and demand that we be allowed to buy insurance across state lines in the next. (Insurance is a legal product, so buying insurance across state lines violates state sovreignty)
I really like Herman Cain. His candidacy burned out with an absurd 999 gimmick.
I also favored Newt Gingrich ... his campaign is flaming out on an absurd claim that he could return the price of gas to $2.50 a gallon.
It is true that Obama has an energy policy that is hostile to oil. It is likely that Obama's policies have increased the cost of oil.
However, the Federal Reserve has been pursuing an inflationary monetary policy.
The United States uses a credit economy. In a credit economy (fractional reserve lending) money is made by a combination of printing money and lending.
With fractional reserve lending, banks only have a fractional reserve for each dollar loaned. This magnifies the monetary supply.
Because banks aren't lending and people aren't eager to take on new debt, we have not yet experienced the full brunt of the inflationary monetary policies.
Because energy is in demand, inflation will show up in energy first, then in and in wages last.
It is possible that the Federal Reserve will pull the trigger on interest rates at the perfect moment to create price stability. Our loose monetary policy could easily result in an unexpected doubling of prices.
Because we don't know how much of the current high gas prices is the result of money policy, how much is the result of international tension and how much is the result of energy policy, it is absurd to make claims like Newt's claim to $2.50 gas.
In conclusion, the government should not be in the position of setting wage and price controls. I was disappointed in seeing Mr. Gingrich pursue the line he did with the $2.50 gas claim.
Tuesday, January 31, 2012
Nothing Says Long Term Relationship like Silver
Nothing says long term relation like gold and silver. In this age of economic uncertainty, silver coins make a wonderful Valentines Day gift.
The whole point of coins is that they contain a known amount of precious metal. Old US coins are popular because they contain a known amount of metal.
The new Liberty Dollars contain exactly one ounce of silver. So, they are even easier to value. Every household should have a few hundred dollars in silver on hand in case there is a disruption in the monetary system.
Silver tends to hold its value. In 1913 an ounce of silver would buy a romantic dinner for two.
Silver is currently (1/31/2012) trading at around $33. Three ounces of silver bullion coins costs around $100. (Coin dealers tack on shipping costs and a premium). I tend to buy coins on eBay. Here is my list of online coin shops.
If you buy silver at a local coin dealer, tell them you have absolutely no interest in numismatic values and just want silver coins ... they will give you a better price.
The whole point of coins is that they contain a known amount of precious metal. Old US coins are popular because they contain a known amount of metal.
The new Liberty Dollars contain exactly one ounce of silver. So, they are even easier to value. Every household should have a few hundred dollars in silver on hand in case there is a disruption in the monetary system.
Silver tends to hold its value. In 1913 an ounce of silver would buy a romantic dinner for two.
Silver is currently (1/31/2012) trading at around $33. Three ounces of silver bullion coins costs around $100. (Coin dealers tack on shipping costs and a premium). I tend to buy coins on eBay. Here is my list of online coin shops.
If you buy silver at a local coin dealer, tell them you have absolutely no interest in numismatic values and just want silver coins ... they will give you a better price.
Wednesday, December 7, 2011
Capital Gains on Inflation
The first step to re-establishing gold and silver as an alternative currency is to remove capital gains tax from gold and silver transactions.
Gold and silver prices fluctuate in relation to our current common currency. If you sell gold, you are required to pay capital gains tax. In some places you have to pay sales tax.
The cost of this extra tax work makes the use of gold and silver in trade untenable.
Goldbugs argue that the "capital gains" of gold are an illusion created by the devaluing of the currency.
CoinInflation reports that the current price of silver in a silver dollar is $25. So, if you held a silver dollar from 1964 to present, you would have to pay capital gains on $24.00.
However, the price of the silver dollar tracks other baskets of goods. You used to be able to get a haircut and shave for two bits (a quarter). A quarter of $25.00 is $6.25. Most barbers these days charge $10 for a haircut.
A basic meal at a sit down restaurant cost two bits as well. It is hard to find a meal at a sit down restaurant for $6.25.
Entry level wages used to be around a dollar a day. Today's minimum wage is around $60 a day.
Since silver is tracking the price of goods, there is a strong argument that gold and silver have not increased in value. One is paying a "capital gains tax" on inflation.
It is an ugly affair. The central authorities devalue the currency by printing dollars. They then tax the people on the inflation that they created. They are taxing the inflation that they created.
This institutionalized dishonesty benefits the rich as the cost of the middle class and poor.
There is a strong argument that the capital gains associated with gold and silver are the result of the devaluation of the currency.
The argument for reviving gold and silver as alternative currencies focuses attention on the inherent dishonesty of the Federal Reserve system.
Gold and silver prices fluctuate in relation to our current common currency. If you sell gold, you are required to pay capital gains tax. In some places you have to pay sales tax.
The cost of this extra tax work makes the use of gold and silver in trade untenable.
Goldbugs argue that the "capital gains" of gold are an illusion created by the devaluing of the currency.
CoinInflation reports that the current price of silver in a silver dollar is $25. So, if you held a silver dollar from 1964 to present, you would have to pay capital gains on $24.00.
However, the price of the silver dollar tracks other baskets of goods. You used to be able to get a haircut and shave for two bits (a quarter). A quarter of $25.00 is $6.25. Most barbers these days charge $10 for a haircut.
A basic meal at a sit down restaurant cost two bits as well. It is hard to find a meal at a sit down restaurant for $6.25.
Entry level wages used to be around a dollar a day. Today's minimum wage is around $60 a day.
Since silver is tracking the price of goods, there is a strong argument that gold and silver have not increased in value. One is paying a "capital gains tax" on inflation.
It is an ugly affair. The central authorities devalue the currency by printing dollars. They then tax the people on the inflation that they created. They are taxing the inflation that they created.
This institutionalized dishonesty benefits the rich as the cost of the middle class and poor.
There is a strong argument that the capital gains associated with gold and silver are the result of the devaluation of the currency.
The argument for reviving gold and silver as alternative currencies focuses attention on the inherent dishonesty of the Federal Reserve system.
Sunday, December 4, 2011
An Alternative Currency
The gold standard is a losing argument.
"Standard" is a synonym of "regulated." With the gold standard, countries tried to regulate the economy by controlling gold. The regulators failed.
The enemies of freedom use the failure of the gold standard to project the failure of their regulations on an inanimate object.
The wise goldbug recognizes that attempts to regulate the economy by manipulating the price of price metals are doomed to failure.
Rather than arguing for a return to the gold standard, the wise argue to re-establish gold and silver as free floating alternative currencies.
Re-establishing gold and silver as alternative currencies would create a more diverse economic landscape in which commoners could easily place their cash holdings into precious metals.
Re-establishing gold and silver as alternative currencies would also facilitate free trade as people can trade in the commodities without the complications of national currencies.
Re-establishing gold and silver as alternative currency is simply a matter of removing certain taxes and restrictions on the trade in gold and silver.
The Founders of the United States used gold and silver as currency. They were trading in worn pieces of eight that were of different sizes and of dubious origins. The primary goal of the first coinage act was to set standard weights for the coins; so that people could trade in confidence.
Gold and silver were traded as currency up unto the heady days before the Civil War when it was outlawed and heavily taxed.
Allowing people to trade gold and silver as currency would, arguably, lead to a more diverse economic landscape and greater economic stability.
Having more than one currency in play would help Americans become more savvy in their personal finances as people would face on a regular basis decisions about which currency to hold. Greater economic awareness would help improve the conditions of the middle and lower classes.
"Standard" is a synonym of "regulated." With the gold standard, countries tried to regulate the economy by controlling gold. The regulators failed.
The enemies of freedom use the failure of the gold standard to project the failure of their regulations on an inanimate object.
The wise goldbug recognizes that attempts to regulate the economy by manipulating the price of price metals are doomed to failure.
Rather than arguing for a return to the gold standard, the wise argue to re-establish gold and silver as free floating alternative currencies.
Re-establishing gold and silver as alternative currencies would create a more diverse economic landscape in which commoners could easily place their cash holdings into precious metals.
Re-establishing gold and silver as alternative currencies would also facilitate free trade as people can trade in the commodities without the complications of national currencies.
Re-establishing gold and silver as alternative currency is simply a matter of removing certain taxes and restrictions on the trade in gold and silver.
The Founders of the United States used gold and silver as currency. They were trading in worn pieces of eight that were of different sizes and of dubious origins. The primary goal of the first coinage act was to set standard weights for the coins; so that people could trade in confidence.
Gold and silver were traded as currency up unto the heady days before the Civil War when it was outlawed and heavily taxed.
Allowing people to trade gold and silver as currency would, arguably, lead to a more diverse economic landscape and greater economic stability.
Having more than one currency in play would help Americans become more savvy in their personal finances as people would face on a regular basis decisions about which currency to hold. Greater economic awareness would help improve the conditions of the middle and lower classes.
Friday, December 2, 2011
Gold and Fractional Reserve Banking
Bankers, and the ruling elite, love fractional reserve banking. With fractional reserve banking, bankers lend multiples of the dollars held in savings.
In the case of gold, bankers would lend out multiple bank notes for the gold they have in reserve. This works great in boom times. It makes them even boomier.
When the market spooks and people run in to redeem their gold certificates, they discover that the bank doesn't have sufficient reserves to cover the notes and chaos ensues.
Banks that use precious metals to back a fractional reserve currency almost always fail.
Our progressives friends love to point to the failure of gold banks using fractional reserve currency and claim it as proof that precious metals cannot work as a currency.
Goldbugs should point to this failure as indication that fractional reserve banking fails.
Central banks printing a fiat currency provide some relief for banks using fractional reserve lending. When a run on a bank occurs, the central bank can simply print up a pile of notes. This externalizes the failure of fractional reserve banking on society at large.
The fact that our unstable system of fractional reserve lending works better with fiat currency than with gold does not mean fiat currency is intrinsically better than hard currency.
The fact that fiat currency allows banks to temporarily mask a corrupt money supply has proven a major defect in that it turns depressions into recessions or into periods of hyper inflation.
Advocates of precious metal currencies need to argue against fractional reserve lending.
For that matter, the reason I am interested in reviving precious metals as a currency is that I realized that fractional reserve lending magnifies business cycles and leads to economic harm to the people at large.
I am not attracted to the glitter of gold. I am attracted to gold to the extent that it is a more honest currency that fiat money.
Fractional reserve banking multiplies the debt of the people and has proven itself, time and time again, to be toxic to a society. Re-establishing gold and silver as currencies directly challenges the financial structures built around fractional reserve lending.
In the case of gold, bankers would lend out multiple bank notes for the gold they have in reserve. This works great in boom times. It makes them even boomier.
When the market spooks and people run in to redeem their gold certificates, they discover that the bank doesn't have sufficient reserves to cover the notes and chaos ensues.
Banks that use precious metals to back a fractional reserve currency almost always fail.
Our progressives friends love to point to the failure of gold banks using fractional reserve currency and claim it as proof that precious metals cannot work as a currency.
Goldbugs should point to this failure as indication that fractional reserve banking fails.
Central banks printing a fiat currency provide some relief for banks using fractional reserve lending. When a run on a bank occurs, the central bank can simply print up a pile of notes. This externalizes the failure of fractional reserve banking on society at large.
The fact that our unstable system of fractional reserve lending works better with fiat currency than with gold does not mean fiat currency is intrinsically better than hard currency.
The fact that fiat currency allows banks to temporarily mask a corrupt money supply has proven a major defect in that it turns depressions into recessions or into periods of hyper inflation.
Advocates of precious metal currencies need to argue against fractional reserve lending.
For that matter, the reason I am interested in reviving precious metals as a currency is that I realized that fractional reserve lending magnifies business cycles and leads to economic harm to the people at large.
I am not attracted to the glitter of gold. I am attracted to gold to the extent that it is a more honest currency that fiat money.
Fractional reserve banking multiplies the debt of the people and has proven itself, time and time again, to be toxic to a society. Re-establishing gold and silver as currencies directly challenges the financial structures built around fractional reserve lending.
Thursday, December 1, 2011
The Gold Standard Failed
The gold standard failed.
The reason for this failure has more to do with "standard" than with the word "gold."
"Standard" is a synonym of the word "regulated."
Using gold as the backing for a nation's currency leads directly to attempts to regulate the economy by manipulating the price of gold. These attempts to regulate economies through buying or selling of gold quickly slammed against harsh economic realities.
Fiat currencies allow extra room to manipulate the economy. If you can convince people that inflation is all well and normal, then the introduction of fiat currencies greatly expand the ability to manipulate the economy.
The history of fiat currencies is bleak, with a large number of deep recessions and currency failures. The extra room that fiat currencies give to manipulate the economy has not led to niravana.
The problem is clearly not the backing of the currency but the attempts to regulate the economy.
Proponents of the free market need to be wary of any discussion involving the term "gold standard." This term implies attempts to regulate the economy by governments and central banks holding large amounts of gold.
A free marketeer must start from the position that the price of all items fluctuate.
Advocates of the regulated economy will goad people into conversations about the gold standard and then start slapping you silly with evidence that shows attempts to regulate the price of gold systematically fail.
When a progressives successfully draw a goldbugs into defending the "gold standard," they manage to draw the goldbug into the corner inwhich the goldbug is forced to defend economic regulation.
The goldbug who understands the nature of this trap can take the data progressives use to attack the "gold standard" and show that it was the attempts to regulate gold that led to economic turmoil and not an inherent property of precious metals.
The reason for this failure has more to do with "standard" than with the word "gold."
"Standard" is a synonym of the word "regulated."
Using gold as the backing for a nation's currency leads directly to attempts to regulate the economy by manipulating the price of gold. These attempts to regulate economies through buying or selling of gold quickly slammed against harsh economic realities.
Fiat currencies allow extra room to manipulate the economy. If you can convince people that inflation is all well and normal, then the introduction of fiat currencies greatly expand the ability to manipulate the economy.
The history of fiat currencies is bleak, with a large number of deep recessions and currency failures. The extra room that fiat currencies give to manipulate the economy has not led to niravana.
The problem is clearly not the backing of the currency but the attempts to regulate the economy.
Proponents of the free market need to be wary of any discussion involving the term "gold standard." This term implies attempts to regulate the economy by governments and central banks holding large amounts of gold.
A free marketeer must start from the position that the price of all items fluctuate.
Advocates of the regulated economy will goad people into conversations about the gold standard and then start slapping you silly with evidence that shows attempts to regulate the price of gold systematically fail.
When a progressives successfully draw a goldbugs into defending the "gold standard," they manage to draw the goldbug into the corner inwhich the goldbug is forced to defend economic regulation.
The goldbug who understands the nature of this trap can take the data progressives use to attack the "gold standard" and show that it was the attempts to regulate gold that led to economic turmoil and not an inherent property of precious metals.
Wednesday, October 26, 2011
Move Your Bank Day
Thugs on the left are engaged in a peoples struggle demanding that people take their money out of X bank and put it in Y bank. (MoveYourMoneyProject.
I used to believe that Savings and Loans were good things and banks evil. Then the Federal Savings and Loan Insurance Corporation (FLSIC) imploded and I learned that Savings and Loans were every bit as corrupt as banks.
The problem is not the business structure, but the fractional reserve system created by the Federal Reserve.
The FLSIC was a federal insurance company that socialized the risk of private companies. The result was a large number of risky loans in overbuilt communities that all came crashing down on the taxpayer.
The move your money movement is based on the naive notion that it is the business structure of banks that causes economic problems. Banks use a corporate model while credit unions are buyer's co-ops.
I would have sympathy for the Move Your Money movement if it had a sound reason to move money. But, the problem is the systemic debasing of the currency caused by fractional lending of the Federal Reserve.
Fractional Reserve lending is as likely to take out a credit union as it is to take out a bank or savings and loan.
It is always wise to diversify. But moving money out of an institution for a political statement is apt to do more harm than good.
ADVERTISEMENT: If you are diversifying, it is probably good to have some money on hand in physical or gold coins.
Why, there just happens to be a Buy Gold page on this site with affiliate ads.
If you want to get your mortgage or your savings out of the system, you might try the Lending Club. The Lending Club coordinates person to person loans.
I used to believe that Savings and Loans were good things and banks evil. Then the Federal Savings and Loan Insurance Corporation (FLSIC) imploded and I learned that Savings and Loans were every bit as corrupt as banks.
The problem is not the business structure, but the fractional reserve system created by the Federal Reserve.
The FLSIC was a federal insurance company that socialized the risk of private companies. The result was a large number of risky loans in overbuilt communities that all came crashing down on the taxpayer.
The move your money movement is based on the naive notion that it is the business structure of banks that causes economic problems. Banks use a corporate model while credit unions are buyer's co-ops.
I would have sympathy for the Move Your Money movement if it had a sound reason to move money. But, the problem is the systemic debasing of the currency caused by fractional lending of the Federal Reserve.
Fractional Reserve lending is as likely to take out a credit union as it is to take out a bank or savings and loan.
It is always wise to diversify. But moving money out of an institution for a political statement is apt to do more harm than good.
ADVERTISEMENT: If you are diversifying, it is probably good to have some money on hand in physical or gold coins.
Why, there just happens to be a Buy Gold page on this site with affiliate ads.
If you want to get your mortgage or your savings out of the system, you might try the Lending Club. The Lending Club coordinates person to person loans.
Monday, September 26, 2011
Open Source Exchange
I did not get very far writing articles for the Utah Monetary Summit.
A twitter conversation reminded me about how much I dislike the University of Utah and I lost my appetite for writing.
Readers of this blog might remember a few years back I wrote about stock market reform. I suggest the best way to start a general discussion of market reform would be to launch an open source project to create a new exchange.
I called the project the Open Source Real Time Exchange.
Even if the exchange never became a reality, the act of creating a model would help spawn a discussion about market reform.
The second proposal I had for the Utah Monetary Summit was to launch an Open Source project to create an exchange for gold and silver.
Specifically I was interest in creating a project that developed an open source exchange for trading shares of precious metals stored in Nature's Vault.
Such a project would intrique young idealistic minds.
Imagine the excitement of working on a project that combined open source development, the protection of natural resources along with financial reform!!!!!
People would love the idea.
I've been treated like dirt by Utahans for so long, I simply cannot imagine any scenario in which I could communicate a very simple yet compelling idea.
The meeting starts in a few hours and I am sitting here unable to sleep and feeling like I am about to get sick.
A twitter conversation reminded me about how much I dislike the University of Utah and I lost my appetite for writing.
Readers of this blog might remember a few years back I wrote about stock market reform. I suggest the best way to start a general discussion of market reform would be to launch an open source project to create a new exchange.
I called the project the Open Source Real Time Exchange.
Even if the exchange never became a reality, the act of creating a model would help spawn a discussion about market reform.
The second proposal I had for the Utah Monetary Summit was to launch an Open Source project to create an exchange for gold and silver.
Specifically I was interest in creating a project that developed an open source exchange for trading shares of precious metals stored in Nature's Vault.
Such a project would intrique young idealistic minds.
Imagine the excitement of working on a project that combined open source development, the protection of natural resources along with financial reform!!!!!
People would love the idea.
I've been treated like dirt by Utahans for so long, I simply cannot imagine any scenario in which I could communicate a very simple yet compelling idea.
The meeting starts in a few hours and I am sitting here unable to sleep and feeling like I am about to get sick.
Saturday, September 24, 2011
Nature's Vault
You may not know this, but I just happen to be an "eco-jabbering meadow muffin."
Give me a chance to jabber about ecology and I will jabber all day.
My primary objection to reviving the gold standard is that I really dislike the environmental damage done by cyanide-leeching gold mines.
If you could make a gold-backed currency without having to dig it up, I would go for the gold standard.
The fact that my local store is willing to accept Federal Reserve Notes which are backed by nothing less than promises of an independent central bank suggests that people are happy to trade in abstract monetary units.
IMHO a bank note that referenced physical gold in the ground would be a step above a currency note backed by a promise.
My first proposal for the Utah Monetary Summit is a thing I call "Nature's Vault." In this program, one would issue currency backed by mineral resources in an environmentally sensitive area.
The program would buy up the mineral rights for an area, then issue currency based on the estimates of the mineral resources of the area.
I believe that such a currency would be valued by environmentally minded investors seeking a way to hedge their investments ... without the environmental damage done by mining.
Give me a chance to jabber about ecology and I will jabber all day.
My primary objection to reviving the gold standard is that I really dislike the environmental damage done by cyanide-leeching gold mines.
If you could make a gold-backed currency without having to dig it up, I would go for the gold standard.
The fact that my local store is willing to accept Federal Reserve Notes which are backed by nothing less than promises of an independent central bank suggests that people are happy to trade in abstract monetary units.
IMHO a bank note that referenced physical gold in the ground would be a step above a currency note backed by a promise.
My first proposal for the Utah Monetary Summit is a thing I call "Nature's Vault." In this program, one would issue currency backed by mineral resources in an environmentally sensitive area.
The program would buy up the mineral rights for an area, then issue currency based on the estimates of the mineral resources of the area.
I believe that such a currency would be valued by environmentally minded investors seeking a way to hedge their investments ... without the environmental damage done by mining.
How Motivation Affects the Process
I will be going to the Utah Monetary Conference on Monday. If I get any time this weekend, I will write up some proposals on how to make the monetary conference successful.
I don't know the people running this conference. All I know is that there is interest in Utah in minting precious metal backed currency.
The end form of the program will be determined by the motivations of the people engaged in this effort.
If it is a bunch of Machiavellian wanks seeking a way to leverage off the investments of others. Then they will create another ugly, captured exchange like Bernie Madoff's NASDAQ.
If it is people sincerely looking to provide a sound money. Then the conference could lead to great good.
Much of American banking law and practices were created by powerful insiders seeking a way to leverage off the American people. The whole concept of financial leverage is one in which a central group leverages off the people at large.
Fractional reserve lending is a game of leveraging. When a bank can lend multiple dollars for each dollar saved, then the rich bankers can leverage off the people at large.
This has two negative effects. First it devalues the money of the people who actually produce in a society. Second, the process of fractional lending multiplies the debt of a people and eventually reduces an entire society into a state of default.
So, the biggest question I have going into this conference is: Are the people running the conference sincerely looking to create a sound alternative to the leveraged systems, or are they just a bunch of power players trying to find ways to use the anger in the nation to leverage their way onto the playground?
Anyway, I will place my proposals for a real sound money on the site UtahGold.us. I will post a discussion of each of the proposals on this blog.
The proposals will be written for an audience that is sincerely looking for a sound currency alternative to the Federal Reserve and the captured central exchanges that dominate the American financial market.
I don't know the people running this conference. All I know is that there is interest in Utah in minting precious metal backed currency.
The end form of the program will be determined by the motivations of the people engaged in this effort.
If it is a bunch of Machiavellian wanks seeking a way to leverage off the investments of others. Then they will create another ugly, captured exchange like Bernie Madoff's NASDAQ.
If it is people sincerely looking to provide a sound money. Then the conference could lead to great good.
Much of American banking law and practices were created by powerful insiders seeking a way to leverage off the American people. The whole concept of financial leverage is one in which a central group leverages off the people at large.
Fractional reserve lending is a game of leveraging. When a bank can lend multiple dollars for each dollar saved, then the rich bankers can leverage off the people at large.
This has two negative effects. First it devalues the money of the people who actually produce in a society. Second, the process of fractional lending multiplies the debt of a people and eventually reduces an entire society into a state of default.
So, the biggest question I have going into this conference is: Are the people running the conference sincerely looking to create a sound alternative to the leveraged systems, or are they just a bunch of power players trying to find ways to use the anger in the nation to leverage their way onto the playground?
Anyway, I will place my proposals for a real sound money on the site UtahGold.us. I will post a discussion of each of the proposals on this blog.
The proposals will be written for an audience that is sincerely looking for a sound currency alternative to the Federal Reserve and the captured central exchanges that dominate the American financial market.
Thursday, September 22, 2011
Hammering Silver
Silver was hammered today ... falling some ten percent into the $36/troy-ounce range.
The spot price of silver is determined on centralized exchanges where the price is manipulated by future contracts and margin requirements ... and only loosely related to real world demand.
The hope that people can escape the ravages of currency manipulation by buying gold and silver falls to the wayside when one realizes that the price of the precious metals is held captive to the same corrupt centralized financial structure as the rest of the economy.
Precious metals simply have on degree of separation from the rest of the insanity.
The spot price of silver is determined on centralized exchanges where the price is manipulated by future contracts and margin requirements ... and only loosely related to real world demand.
The hope that people can escape the ravages of currency manipulation by buying gold and silver falls to the wayside when one realizes that the price of the precious metals is held captive to the same corrupt centralized financial structure as the rest of the economy.
Precious metals simply have on degree of separation from the rest of the insanity.
Monday, September 19, 2011
On The Gold Standard
Several months ago, I was asked one twitter if I favored a return to the gold standard.
The answer is "No!"
The great flaw of the gold standard is that the standard leads governments and political rogues to manipulate the price of gold and other precious metals.
One need only follow the spot price of gold and silver for a few months to realize that the central exchanges setting the spot price are highly manipulate.
The Coinage Act of 1792 turned out to be greatly flawed. This attempted to set the ratio of silver to gold at 15 to 1. This ratio fluctuates. It is currently something like 44 to 1, though no-one knows why.
I favor a sound monetary policy. I prefer the price of the common unit or currency to be set to a basket of goods.
I would favor a program that accepted trade in silver and gold as legal currency.
Apparently, Americans were trading old silver pieces-of-eight as legal tender into the 1850s when such trade became illegal.
My ideal system would be a sound money system with a common currency based on a basket of goods that allowed people to trade in physical precious metal coins at the precious metal value. (The basket of goods might include precious metals and fuel).
Accounting, taxes and such would be done in the common currency. One simply has an option to use precious metal coins as legal tender.
I favor this because I think it would create a more dynamic market.
There would not be an obligation to accept coins just as there is not an obligation for businesses to accept checks or credit cards.
For that matter, I would expect that most mainstream businesses would avoid trading coins. Allowing people to use coins as legal tender is more likely to help sole proprietorships and companies operating on the fringe.
Having multiple types of legal tender on the market would make for a savvier consumer. People who carry both precious metal coins and dollars would develop a better understanding of the way that prices fluctuate.
Attempts to revive the gold standard would restore the paradigm in which governments tried to regulate precious metals. Simply allowing people to trade precious metal coins at spot price would make for a more robust economy.
BTW: While I was at LPAC, I used one of my two silver dollars to buy books. I am now down to just one silver dollar. I bought a number of silver quarters on eBay.
The answer is "No!"
The great flaw of the gold standard is that the standard leads governments and political rogues to manipulate the price of gold and other precious metals.
One need only follow the spot price of gold and silver for a few months to realize that the central exchanges setting the spot price are highly manipulate.
The Coinage Act of 1792 turned out to be greatly flawed. This attempted to set the ratio of silver to gold at 15 to 1. This ratio fluctuates. It is currently something like 44 to 1, though no-one knows why.
I favor a sound monetary policy. I prefer the price of the common unit or currency to be set to a basket of goods.
I would favor a program that accepted trade in silver and gold as legal currency.
Apparently, Americans were trading old silver pieces-of-eight as legal tender into the 1850s when such trade became illegal.
My ideal system would be a sound money system with a common currency based on a basket of goods that allowed people to trade in physical precious metal coins at the precious metal value. (The basket of goods might include precious metals and fuel).
Accounting, taxes and such would be done in the common currency. One simply has an option to use precious metal coins as legal tender.
I favor this because I think it would create a more dynamic market.
There would not be an obligation to accept coins just as there is not an obligation for businesses to accept checks or credit cards.
For that matter, I would expect that most mainstream businesses would avoid trading coins. Allowing people to use coins as legal tender is more likely to help sole proprietorships and companies operating on the fringe.
Having multiple types of legal tender on the market would make for a savvier consumer. People who carry both precious metal coins and dollars would develop a better understanding of the way that prices fluctuate.
Attempts to revive the gold standard would restore the paradigm in which governments tried to regulate precious metals. Simply allowing people to trade precious metal coins at spot price would make for a more robust economy.
BTW: While I was at LPAC, I used one of my two silver dollars to buy books. I am now down to just one silver dollar. I bought a number of silver quarters on eBay.
Utah Monetary Summit
I registered to attend the Utah Monetary Summit. This summit will discuss the possibility of using gold and silver as legal tender.
The summit is next Monday, so I will spend the week working on gold related projects.
I have several really cool gold related ideas in the works. I hope to get some interesting posts and programs online this week.
The summit is next Monday, so I will spend the week working on gold related projects.
I have several really cool gold related ideas in the works. I hope to get some interesting posts and programs online this week.
Wednesday, August 17, 2011
Grubbing the Gold
Leftists love to ridicule people who invest in precious metals ... yet it is one of the first things grubbing leftwing politicians grab at.
The People's hero Hugo Chavez is nationalizing the gold industry in Venezuela. The article reports that the Socialist nation has $29.1 billion in gold reserves as Chavez proves once again that socialists are far more interested in amassing wealth and power than in caring for the people.
The People's hero Hugo Chavez is nationalizing the gold industry in Venezuela. The article reports that the Socialist nation has $29.1 billion in gold reserves as Chavez proves once again that socialists are far more interested in amassing wealth and power than in caring for the people.
Monday, June 27, 2011
Four quarters is less than a whole
The Coinage Act of 1792 attempted to set the ratio of gold to silver.
The California Gold Rush flooded the market with gold changing the premium of gold to silver, creating a run on silver. So, in 1853, Congress reduced the size of small silver coins. The quarter shrunk from 6.68 grams to 6.22 grams. The dollar remained the same.
After 1853, the two-bit coin (the quarter) no longer had two bits of silver. In 1857 Congress forbade the use of foreign coinage in trades, effectively ending the use of pieces-of-eight as an international monetary supply.
The mint later raised the weight of the quarter back to 6.25 grams. 20th century coinage has the oddity that 4 quarters weigh 25 grams, while the dollar weighs 26.73 grams. 4/4 < 1. I am working on a project which calculates the price of two bits. I've been in a quandary about whether I should use the weight of a quarter of dollar or the weight of the quarter (the two-bit coin) for my calculations.
I finally decided to use the weight of the quarter as written in the 1792 coinage act. It is closer to the weight the US Founders would have experienced in colonial days. The Coinage Act says a quarter will "contain ninety-two grains and thirteen sixteenth parts of a grain of pure [...] silver." There are 480 grains in a troy ounce. A bit weighs 92.8125/480 troy ounces. At market close on 6/25/2011 a troy ounce of silver sold for 34.73. So, two-bits is $6.72.
I wonder if I could get a shave and a haircut for two-bits?
The California Gold Rush flooded the market with gold changing the premium of gold to silver, creating a run on silver. So, in 1853, Congress reduced the size of small silver coins. The quarter shrunk from 6.68 grams to 6.22 grams. The dollar remained the same.
After 1853, the two-bit coin (the quarter) no longer had two bits of silver. In 1857 Congress forbade the use of foreign coinage in trades, effectively ending the use of pieces-of-eight as an international monetary supply.
The mint later raised the weight of the quarter back to 6.25 grams. 20th century coinage has the oddity that 4 quarters weigh 25 grams, while the dollar weighs 26.73 grams. 4/4 < 1. I am working on a project which calculates the price of two bits. I've been in a quandary about whether I should use the weight of a quarter of dollar or the weight of the quarter (the two-bit coin) for my calculations.
I finally decided to use the weight of the quarter as written in the 1792 coinage act. It is closer to the weight the US Founders would have experienced in colonial days. The Coinage Act says a quarter will "contain ninety-two grains and thirteen sixteenth parts of a grain of pure [...] silver." There are 480 grains in a troy ounce. A bit weighs 92.8125/480 troy ounces. At market close on 6/25/2011 a troy ounce of silver sold for 34.73. So, two-bits is $6.72.
I wonder if I could get a shave and a haircut for two-bits?
Tuesday, June 7, 2011
An International Regulatory Regime
The price of silver went up. It then went down again.
Bloomberg reports that this fluctuation resulted in cries for the United Nations to stomp a regulatory boot down on the throats of investors in silver and gold.
A contemptuous unnamed Marxist at the United Nations sniped:
I know for certain that the writer is a Marxist because he has the market backwards. Marxism is based on skewed visions of the market.
The idea of the free market is that people are engaged in an ongoing process of adjusting their portfolios. As billions of people actively adjust their investments, they end up providing better information than one gets from a top down regulated market or in a fully socialized economy.
In the free market people make decisions based on their immediate surroundings. These personal decisions create a market that adjusts to global supply and demand better than a planned economy.
The unnamed Marxist in this post projected an absolutely absurd assumption onto the free market. The participants in a free market do not base their decisions on global analysis of supply and demand. They make their investing decisions based on their personal situation.
Global demand is determined by a summation of all of these individual decisions. The price of silver goes up when people feel it is better to have their cash in a precious metal than in a fiat currency.
The snit at the United Nations has the efficient market theory backwards.
The second idiotic assumption that the writer makes is that precious metal markets are not regulated.
The markets are highly regulated.
The "spot market" that people cite when pricing precious metals is produced by centralized exchanges like COMEX.
When I buy a coin at the coin store, the clerk looks up the price at the central exchange. The central exchange does not look at my purchase. The price I pay for coins is directly affected by the spot market. There are several degrees of separation between my local purchase and the centralized exchange.
The people on these exchanges are trading highly regulated contracts and futures. The regulations include short selling and margin positions.
When we look at the spike in silver prices we see that in the build up to the bubble the regulators at the exchange had very loose margin requirements.
The regulators at the exchanges tightened the margin requirements which reduced the money on the table for the trades. The tightened margin requirements led to a steep drop in prices.
The bubble was a direct result of the regulations in place.
The spike in prices is better explained as a result of actions of the regulatory regime, than as the result of a failure of the free market.
Bloomberg reports that this fluctuation resulted in cries for the United Nations to stomp a regulatory boot down on the throats of investors in silver and gold.
"Commodity markets need international oversight, more transparency and intervention to deflate bubbles because increasing speculation means prices are no longer driven by supply and demand, the United Nations said."
A contemptuous unnamed Marxist at the United Nations sniped:
“Contrary to the assumptions of the efficient market hypothesis, the majority of market participants do not base their trading decisions purely on the fundamentals of supply and demand,” the UN agency said. “They also consider aspects which are related to other markets or to portfolio diversification.”
I know for certain that the writer is a Marxist because he has the market backwards. Marxism is based on skewed visions of the market.
The idea of the free market is that people are engaged in an ongoing process of adjusting their portfolios. As billions of people actively adjust their investments, they end up providing better information than one gets from a top down regulated market or in a fully socialized economy.
In the free market people make decisions based on their immediate surroundings. These personal decisions create a market that adjusts to global supply and demand better than a planned economy.
The unnamed Marxist in this post projected an absolutely absurd assumption onto the free market. The participants in a free market do not base their decisions on global analysis of supply and demand. They make their investing decisions based on their personal situation.
Global demand is determined by a summation of all of these individual decisions. The price of silver goes up when people feel it is better to have their cash in a precious metal than in a fiat currency.
The snit at the United Nations has the efficient market theory backwards.
The second idiotic assumption that the writer makes is that precious metal markets are not regulated.
The markets are highly regulated.
The "spot market" that people cite when pricing precious metals is produced by centralized exchanges like COMEX.
When I buy a coin at the coin store, the clerk looks up the price at the central exchange. The central exchange does not look at my purchase. The price I pay for coins is directly affected by the spot market. There are several degrees of separation between my local purchase and the centralized exchange.
The people on these exchanges are trading highly regulated contracts and futures. The regulations include short selling and margin positions.
When we look at the spike in silver prices we see that in the build up to the bubble the regulators at the exchange had very loose margin requirements.
The regulators at the exchanges tightened the margin requirements which reduced the money on the table for the trades. The tightened margin requirements led to a steep drop in prices.
The bubble was a direct result of the regulations in place.
The spike in prices is better explained as a result of actions of the regulatory regime, than as the result of a failure of the free market.
Saturday, June 4, 2011
Coins as an Anti-Investment
There are many pundits writing about gold and silver as an investment.
I find that coins are better understood as an "anti-investment."
The reason to buy coins is because you want to take some money off the table to be held in physical form.
As the proud new owner of two silver dollars (one just happens to be in the coin pocket of my jeans at the moment) I've determined that coins are something different from a typical investment.
Perhaps it is better to think about coins as an anti-investment. My two coins are an asset that I am holding off the active market.
Pulling money out of the market is a good thing. Disciplined investors routinely pull money out of risky investments into cash positions when they feel uncertain about the market. Taking a cash position when the market appears overheated is not an investment. It is a decision to back away from investments.
Buying physical coins is like a cash position twice removed. One buys physical coins to pull some assets out of the active trading market.
I am now bullish on precious metal coins, but I am not thinking of them as an investment. I think of the coins in a more fundamental way. I see them as something that I own which retains more value than the other things I own. My jeans will grow old and wear out. The coin in the coin pocket was minted in 1879 and will likely be holding value as a silver coin in 2079 ... when my jeans are decomposing in the landfill.
As I hold this coin, I am thinking at a more fundamental level than I think of other investments. This precious metal coin holds value through time as it is traded, hoarded or carried about.
I find that coins are better understood as an "anti-investment."
The reason to buy coins is because you want to take some money off the table to be held in physical form.
As the proud new owner of two silver dollars (one just happens to be in the coin pocket of my jeans at the moment) I've determined that coins are something different from a typical investment.
Perhaps it is better to think about coins as an anti-investment. My two coins are an asset that I am holding off the active market.
Pulling money out of the market is a good thing. Disciplined investors routinely pull money out of risky investments into cash positions when they feel uncertain about the market. Taking a cash position when the market appears overheated is not an investment. It is a decision to back away from investments.
Buying physical coins is like a cash position twice removed. One buys physical coins to pull some assets out of the active trading market.
I am now bullish on precious metal coins, but I am not thinking of them as an investment. I think of the coins in a more fundamental way. I see them as something that I own which retains more value than the other things I own. My jeans will grow old and wear out. The coin in the coin pocket was minted in 1879 and will likely be holding value as a silver coin in 2079 ... when my jeans are decomposing in the landfill.
As I hold this coin, I am thinking at a more fundamental level than I think of other investments. This precious metal coin holds value through time as it is traded, hoarded or carried about.
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