Home » Economics

Category Archives: Economics

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai III: Cataclysm
Click on image to purchase

Trump Left Saudi Arabia Off His Immigration Ban… Here’s the Shocking Reason Why

Trump Left Saudi Arabia Off His Immigration Ban… Here’s the Shocking Reason Why

Trump Left Saudi Arabia Off His Immigration Ban… Here’s the Shocking Reason Why
On August 15, 1971, President Nixon killed the last remnants of the gold standard.

It was one of the most significant events in US history—on par with the 1929 stock market crash, JFK’s assassination, or the 9/11 attacks. Yet most people know nothing about it.

Here’s what happened…

After World War 2, the US had the largest gold reserves in the world, by far. Along with winning the war, this let the US reconstruct the global monetary system around the dollar.

The new system, created at the Bretton Woods Conference in 1944, tied the currencies of virtually every country in the world to the US dollar through a fixed exchange rate. It also tied the US dollar to gold at a fixed rate of $35 an ounce.

The Bretton Woods system made the US dollar the world’s premier reserve currency. It effectively forced other countries to store dollars for international trade, or to exchange with the US government for gold.

By the late 1960s, the number of dollars circulating had drastically increased relative to the amount of gold backing them. This encouraged foreign countries to exchange their dollars for gold, draining the US gold supply. It dropped from 574 million troy ounces at the end of World War 2 to around 261 million troy ounces in 1971.

To plug the drain, President Nixon “suspended” the dollar’s convertibility into gold on August 15, 1971. This ended the Bretton Woods system and severed the dollar’s last tie to gold.

Since then, the dollar has been a pure fiat currency, allowing the Fed to print as many dollars as it pleases.

Of course, Nixon said the suspension was only temporary. That was lie No. 1. It’s still in place over 40 years later.

And he claimed the move was necessary to protect Americans from international speculators. That was lie No. 2. Money printing to finance out-of-control government spending was the real threat.

 

..click on the above link to read the rest of the article…

Not Nearly Enough Growth To Keep Growing

 


Jackson Pollock Shooting Star 1947

It’s amusing to see how views start to converge, at the same time that it’s tiresome to see how long that takes. It’s a good thing that more and more people ‘discover’ how and why austerity, especially in Europe, is such a losing and damaging strategy. It’s just a shame that this happens only after the horses have left the barn and the cows have come home, been fed, bathed, put on lipstick and gone back out to pasture again. Along the same lines, it’s beneficial that the recognition that for a long time economic growth has not been what ‘we’ think it should be, is spreading.

But we lost so much time that we could have used to adapt to the consequences. The stronger parties in all this, the governments, companies, richer individuals, may be wrong, but they have no reason to correct their wrongs: the system appears to work fine for them. They actually make good money because all corrections, all policies and all efforts to hide the negative effects of the gross ‘mistakes’, honest or not, made in economic and political circles are geared towards making them ‘whole’.

The faith in the absurd notion of trickle down ‘economics’ allows them to siphon off future resources from the lower rungs of society, towards themselves in the present. It will take a while for the lower rungs to figure this out. The St. Louis Fed laid it out so clearly this week that I wrote to Nicole saying ‘We’ve been vindicated by the Fed itself.’ That is, the Automatic Earth has said for many years that the peak of our wealth was sometime in the 1970’s or even late 1960’s.

…click on the above link to read the rest of the article…

Tax Reform: The Good, the Bad, and the Ugly—Part One

Tax Reform: The Good, the Bad, and the Ugly—Part One

Vizzini: He didn’t fall?! Inconceivable!
Inigo Montoya: You keep using that word. I do not think it means what you think it means.

– From The Princess Bride

“A tariff is a scale of taxes on imports, designed to protect the domestic producer against the greed of his consumer.”
– Ambrose Bierce

“Vast possibilities matured into realities before their very eyes. Nevertheless, they saw nothing but cramped economies struggling with ever-decreasing success for their daily bread.”
– Joseph Schumpeter on the Industrial Revolution

The usual thrust of this letter is economics, finance, and investing. Lately, however, the political process has been invading my normal domain – sometimes to the dismay of some of my readers. I get that politics comes with the territory; and I think everyone, no matter their political persuasion, will agree that taxes, which are political in nature, have a major impact on economics, finance, and investment. And thus commenting on taxes is fair game.

My original intention for this letter was to do an analysis of the Republican tax reform proposals. My associate Patrick Watson and I spent two weeks doing a really deep dive into the proposed reforms. I had the privilege of talking taxes with the chairman of the House Ways and Means Committee, fellow Texan Kevin Brady, as well as his staff. The chairman was kind enough to allow his remarks to be on the record – but his staff made it clear that they were to be on background. We have also talked with numerous think tanks and other experts across the political spectrum.

…click on the above link to read the rest of the article…

The War on Cash Intensifies

The War on Cash Intensifies

Last month, the 2001 Nobel Prize-winning economist from Columbia University, Joseph Stiglitz, was quoted as saying: “I believe very strongly that countries like the United States could and should move to a digital currency.”

He argues that the move would give governments the ability to trace corruption, putting an end to illicit activities.

This falls in line with the thinking of Harvard’s Kenneth Rogoff. He has argued for two decades that a society awash with cash contributes to the growth of the underground economy. Rogoff believes large-denomination bank notes should be phased out.

He also argues that cash facilitates crime because it is anonymous. And big bills are especially problematic because they are so easy to carry and conceal.

But that’s not all …

India’s Prime Minister Narendra Modi has already removed 86% of his country’s currency from circulation in an attempt to curb tax evasion, tackle corruption and shut down the underground economy.

Here’s the bad news: It’s not going to work.

In 1969, the U.S. officially retired the $10,000 bill, along with the $5,000 bill and the $1,000 bill. Will all cash soon become extinct?

Sure, the bad guys would be inconvenienced for a while. But they would adapt, pushing their illegal activities deeper underground, out of sight, and further away from the watchful eye of the authorities.

Europe will most likely be next. The European Commission has already introduced a proposal enforcing restrictions on payments in cash.

And they’re pushing out all sorts of propaganda to do it, trying to get people to associate illegal activities with high denominations of cash.

But as I’ve said many times before the real reason behind this move to a cashless society is simple: Governments are going broke and these shenanigans are merely a hunt for more taxes.

…click on the above link to read the rest of the article…

This Is How the Status Quo Unravels: As the Pie Shrinks, Everybody Demands Their Piece Should Get Bigger

This Is How the Status Quo Unravels: As the Pie Shrinks, Everybody Demands Their Piece Should Get Bigger

Fragmentation, discord, discontent, class war: this is the inevitable result of a shrinking pie.

The politics of the past 70 years was all about horsetrading who got what share of the growing pie: the “pie” being cheap energy, government revenues and consumption, sales and profits.

Horsetrading over a growing pie is basically fun. There’s always a little increase left for the losers, so there is a reason for everyone to cooperate in a broad political consensus.

Horsetrading over a shrinking pie is not fun. Everybody is shrilly demanding their piece of the pie should either grow or be left untouched; any cuts must come out of someone else’s slice.

Everyone turns on their most compelling emotion-based defense: “we wuz promised” is a reliable standard, as is “we need more money to defend the nation from the rising threat of XYZ.” “Help those in need” plays the heartstrings effectively–as long as the “help” comes out of somebody else’s pocket.

Everyone sharpens their knives, the better to carve a slice off somebody else’s slice of the pie. A passive-aggressive free-for-all ensues as everyone reacts with aggrieved defensiveness to any attempt to diminish their slice, even as they launch shrill attacks on everyone else’s defense.

As the pie shrinks, the motivation to join a broad consensus vanishes like mist in Death Valley. Any cooperation is merely a brief tactical move designed to carve a big chunk off another player’s slice. Once that’s accomplished, the alliance quickly splinters as the survivors battle over the meager spoils.

Any victory is temporary, as a new alliance will arise to decimate the previous winner. Winners in the zero-sum game of divvying up a shrinking pie merely set themselves up as the juicy target for the next ferocious attack by the resentful losers.

…click on the above link to read the rest of the article…

The Globalists Strike Back With A Major Push Toward A Cashless Society

The Globalists Strike Back With A Major Push Toward A Cashless Society

The Beast System - Public DomainTheir agenda may be on the rocks in the United States at the moment, but that doesn’t mean that the globalists are giving up.  In fact, a major push toward a cashless society is being made in the European Union right now.  Last May we learned that the 500 euro note is being completely eliminated, and just a few weeks ago the European Commission released a new “Action Plan” which instructs member states to explore “potential upper limits to cash payments”.  In the name of “fighting terrorism”, this “Action Plan” discusses the benefits of “prohibitions for cash payments above a specific threshold” and it says that those prohibitions should include “virtual currencies (such as BitCoin) and prepaid instruments (such as pre-paid credit cards) when they are used anonymously.”

This new document does not mention what an appropriate threshold would be for member states, but we do know that Spain already bans certain cash transactions above 2,500 euros, and Italy and France already ban cash transactions above 1,000 euros.

This is a perfect way to transition to a cashless society without creating too much of an uproar.  By setting a maximum legal level for cash transactions and slowly lowering it, in effect you can slowly but surely phase cash out without people understanding what is happening.

And there are many places in Europe where it is very difficult to even use cash at this point.  In Sweden, many banks no longer take or give out cash, and approximately 95 percent of all retail transactions are entirely cashless.  So even though Sweden has not officially banned cash, using cash is no longer practical in most situations.  In fact, many tourists are shocked to find out that they cannot even pay bus fare with cash.

…click on the above link to read the rest of the article…

Whatever Happened to Inflation after All This Money Printing? It Has Arrived!

Whatever Happened to Inflation after All This Money Printing? It Has Arrived!

Workers, bondholders, savers get sacked. So what would Yellen do?

Consumer prices surged 0.6% in January from December, double the consensus forecast of a 0.3% rise. The sharpest monthly increase since February 2013, according to the Bureau of Labor Statistics.

Energy prices jumped 4% month over month, including gasoline which jumped 7.8%. Food prices edged up 0.1%. Within this group, “food at home” was unchanged, but prices for “food away from home” – restaurants, taco trucks, and the like – rose 0.4%. In just one month, the prices of apparel rose 1.4%, of new vehicles 0.9%, of auto insurance 0.8%, of airline fares 2.0%. Shelter rose “only” 0.2%, as the national numbers are now feeling the downward pressure on rents in some of the most expensive rental markets in the US.

This chart  shows just how sharp that jump in monthly price increases is, compared to recent years:

Compared to January a year ago, consumer prices as measured by CPI-U surged 2.5%, after having already jumped 2.1% in December. The rate of inflation has now accelerated for the sixth month in a row. It has surged one full percentage point over the past four months and hit the highest rate since March 2012:

So-called core inflation – which excludes food and energy – jumped 2.3% in January from a year ago. The consensus expected 2.1%. So you can’t just blame the rising costs of energy. This “core” measure of price increases has been above 2% since November 2015. Even during the Financial Crisis, when overall year-over-year CPI dipped briefly into the negative, core CPI remained in positive territory.

However much these inflation measures may understate actual increases in the costs of living that people experience in their daily lives, even those understated measures are now beginning to exude a lot of heat. And afterwards, the consensus will say that no one saw this coming.

…click on the above link to read the rest of the article…

The Art and Pseudoscience of Monetary Policy

Definitely Maybe

Everyone’s got a plan for sale these days.  In fact, there are so many plans out there we cannot keep up with them all.  Eat celery sticks and lose weight.  Think and grow rich.  Stocks for the long run.  Naturally, plans like these run a dime a dozen.

All social engineers who get to impose their harebrained schemes on the rest of the world through the coercive powers of the State, as well as all armchair planners regaling us with their allegedly “better plans”, should have this highly perceptive quote by Robert Burns tattooed on their foreheads. In case you’re wondering, “gang aft a-gley” is slightly old English for “usually turn out to be total crap”. The second part that points out that as a rule, we get nothing but grief and pain instead of promised joy, is applicable to interventionism in general; the so-called “unintended consequences” of interventions almost always turn out to be their main feature and defining characteristic.

Good plans, however, are scarcer than hen’s teeth.  You can’t possibly see them no matter how closely you look.  They simply don’t exist. This was the case on Capitol Hill this week, where money and politics collided at the biannual monetary policy gala.

Despite all the hubbub, no good plans were offered.  What’s more, on first glance, no bad plans were offered too. When Fed Chair Janet Yellen’s testimony was finally over, Congress knew less about the Fed’s plans than when it started.

For instance, when asked if the Federal Reserve would raise rates next month, Fed Chair Janet Yellen replied, “I can’t tell you exactly which meeting it would be.  I would say every meeting is live.”

What does this mean, really?  Does it mean she’ll definitely maybe raise rates?  Does it mean she absolutely ‘might could’ increase them?  Only time will tell.

…click on the above link to read the rest of the article…

Kyrgzstan’s Central Bank Urges Citizens To Own Gold

Kyrgzstan’s Central Bank Urges Citizens To Own Gold

Gold can be stored for a long time and, despite the price fluctuations on international markets, it doesn’t lose its value for the population as a means of savings,” Kyrgyzstan’s Central Bank Governor Tolkunbek Abdygulov said, “I’ll try to turn the dream into reality faster.”

A landlocked nation perched between China and Kazakhstan is embarking on an experiment with little parallel worldwide: shifting savings from cattle to goldAs Bloomberg reports,

One of the first post-Soviet republics to adopt a new currency and let it trade freely, Kyrgyzstan’s central bank wants every citizen to diversify into gold. Governor Tolkunbek Abdygulov says his “dream” is for every one of the 6 million citizens to own at least 100 grams (3.5 ounces) of the precious metal, the Central Asian country’s biggest export.

In the two years that the central bank has offered bars directly to the population, about 140 kilograms of bullion have been sold, Abdygulov, 40, said by phone from the capital, Bishkek.

“We are hopeful that our country’s population will learn to diversify its savings into assets that are more liquid and — more importantly — capable of retaining their value,” he said. In rural areas, cattle is still the asset of choice for investors and savers, according to Abdygulov.

What makes Kyrgyzstan unique is the central bank’s effort to win converts by providing infrastructure for safe-keeping and investment. The central bank produces bars of different sizes, varying in weight from 1 to 100 grams.

The central bank governor believes his plan is realistic, even though it means the population would own about 600 tons of gold, equivalent to 30 times the nation’s current annual output. Abdygulov declined to specify the timeframe for when his goal of 100 grams per person can be met.

…click on the above link to read the rest of the article…

Made For Each Other

Don’t be fooled by the idiotic exertions of the Red team and the Blue team. They’re just playing a game of “Capture the Flag” on the deck of the Titanic. The ship is the techno-industrial economy. It’s going down because it has taken on too much water (debt), and the bilge pump (the oil industry) is losing its mojo.

Neither faction understands what is happening, though they each have an elaborate delusional narrative to spin in the absence of any credible plan for adapting the life of our nation to the precipitating realities. The Blues and Reds are mirrors of each other’s illusions, and rage follows when illusions die, so watch out. Both factions are ready to blow up the country before they come to terms with what is coming down.

What’s coming down is the fruit of the gross mismanagement of our society since it became clear in the 1970s that we couldn’t keep living the way we do indefinitely — that is, in a 24/7 blue-light-special demolition derby. It’s amazing what you can accomplish with accounting fraud, but in the end it is an affront to reality, and reality has a way of dealing with punks like us. Reality has a magic trick of its own: it can make the mirage of false prosperity evaporate.

That’s exactly what’s going to happen and it will happen because finance is the least grounded, most abstract, of the many systems we depend on. It runs on the sheer faith that parties can trust each other to meet obligations. When that conceit crumbles, and banks can’t trust other banks, credit relations seize up, money vanishes, and stuff stops working. You can’t get any cash out of the ATM. The trucker with a load of avocados won’t make delivery to the supermarket because he knows he won’t be paid.

…click on the above link to read the rest of the article…

Jim Rogers: “We’re About To Have The Worst Economic Problems Of A Lifetime, A Lot Of People Will Disappear”

Jim Rogers: “We’re About To Have The Worst Economic Problems Of A Lifetime, A Lot Of People Will Disappear”

“Get prepared,” warns billionaire commodity guru Jim Rogers, “because we’re going to have the worst economic problems in your lifetime and a lot of people are going to disappear.” In this wide-ranging interview with MacroVoices’ Erik Townsend, the investing legend discusses everything from whether Russia is being scapegoated (“yes, ask Victoria Nuland”), the war against cash (“governments love it… they want to control everything”), to his views on gold and the demise of freedom.

Full podcast below:

Key Excerpts…

Are Russians the bad guys?

Well I do know that during the last administration, Mr. Obama’s administration as you probably remember we started, we tried to pull of an illegal coup in Ukraine, we got caught at it, what’s her name, Victoria Nuland, whatever the woman’ name the State Department they have there several pieces of evidence where we know she tried to instigate an illegal coup then of course the Russians outsmarted us and so the State Department started blaming it on the Russians and the hype against the Russians has gotten bigger and bigger ever since after we started– or tried to start, tried to instigate the illegal coup Crimea and Ukraine.

So yes we are certainly at fault to some extent and obviously you then, when you’re caught you’ve got to keep the rhetoric up and keep throwing more and more accusations and so the State Department has done that.

I know that before the illegal coup Obama, Bush everybody was trying to be friends with the Russians rightly so, cold war had ended long ago, the Russians wanted to be friends with America. We didn’t need NATO anymore.

…click on the above link to read the rest of the article…

What Form Will The Great Confiscation Take — And How Can We Prepare?

What Form Will The Great Confiscation Take — And How Can We Prepare?

Here, from 2012, is a representative warning from gold mining eminence grise Jim Sinclair:

My Dear Extended Family,

In bankruptcy of your bank, broker or fund, you can find your assets in the majority of cases are backing the liabilities of the entity in front of yourselves. This is why you must act to protect yourself.

No one in this financial world is going to do it for you, and few will have the courage to recommend you escape Street Name. You can wake up one day and find out that your investments are gone.

The insurance programs will function as long as the incidents of bankruptcy are isolated events.

In a systemic collapse the insurance funds are not capitalized to meet the potential obligations. The guarantor you are relying on will have to be bailed out.

For securities there are only three ways to hold them:

1. Street name.
2. Direct registration.
3. Certificate form.

Anyone advising you to stay with the Street Name option is a babbling idiot not interested at all in your welfare.

In street name the inferred ownership is the broker or bank, not you. In Direct Registrationand Certificate form, the distinct ownership is you.

In 99.9% of the cases of retirement accounts the answer is you are in Street Name.

How are your securities held? Do you even know? I dare you to ask!

Do you know what your broker’s capital ratio is? Find out as that number is the order of magnitude at which your broker is gambling on with primarily your money. I dare you to ask.

…click on the above link to read the rest of the article…

 

There Are 66,719 Empty Mansions In Vancouver

There Are 66,719 Empty Mansions In Vancouver

One year ago, when we first started discussing the Vancouver housing bubble, which as we first speculated – and was later confirmed – was the result of Chinese oligarch money-launderers parking “hot cash” in this offshore housing market (at least until a 15% property tax on foreign purchases made Seattle the new Vancouver), we said that Vancouver houses had become the de facto new Swiss bank account, and because of that the houses – once purchased – would remain a highly overprized, if vacant tribute to China’s soaring capital outflows.

Now, courtesy of data by urban planner Andy Yan of Simon Fraser University’s City Program, this has been confirmed because according to the latest census numbers, as of 2016 there were 25,502 unoccupied or empty housing units in the City of Vancouver. Expanding to include the entire metro area, Yan found that vacant or temporarily occupied dwellings have more than doubled since 2001 to 66,719 last year as neighborhoods have hollowed out.


A home sits empty, and awaiting demolition, at the corner of Parker Street 

and Victoria Drive in Vancouver on Wednesday

Yan compared census data for Vancouver over several decades to see how the percentage of “unoccupied” units or ones “occupied solely by foreign residents and/or temporary present residents on Census Day” has doubled during that time the Vancouver Sun reported. In 1986, it was 4%. By 2016, it had doubled to 8.2%.

“Exact definitions and measures have changed slightly over 30 years and patterns should be interpreted as directional,” Yan writes in a report released Wednesday.

The number of Vancouver’s prized, if vacant, mansions far outstrips other municipalities with 25,502 units that are either unoccupied or owned by temporary or foreign residents.

Yan said most of these were concentrated in three areas: Coal Harbour, Marine Gateway and Joyce-Collingwood. Surrey came in second at 11,195, Burnaby at 5,829 and Richmond at 4,021.

…click on the above link to read the rest of the article…

Carbon Taxes, Cow Farts, And Central Planning

Carbon Taxes, Cow Farts, And Central Planning

In a centrally planned economy decisions on what to produce, how to produce and for whom are taken primarily by the government.

The term is usually associated with communist economies. However, since US President Franklin D. Roosevelt implemented a robust range of government policies in the 1930s to counter the effects of the Great Depression, using principles that would be popularized by UK economist John Maynard Keynes, Western governments (along with their central bank consorts) have also taken on very interventionist roles in economic affairs.

But not even Stalin or Roosevelt could come up with a rather exotic tool that can take central planning to a whole new level: carbon taxes.

The reason why it is so powerful is that virtually all market activities produce some type of greenhouse gas, meaning carbon and other equivalents that contribute to warming our planet. Here’s the emissions breakdown by sector in the US according to the Environmental Protection Agency (as of 2014):

Virtually all economic activities (as well as most daily personal affairs in any modern society) produce some type of emissions. So by putting a cost on carbon any of them, from the most mundane to the most complex, would be impacted. Entire industries could be impaired with the stroke of a pen. Powerful stuff indeed.

Furthermore, the tax base could be greatly expanded as a result, at a time when governments are desperate for new sources of revenue.

Climate change skeptics, pointing to alleged gaps in the theory of manmade climate change (where carbon emissions resulting from human activity are primarily responsible for the rise in global temperatures since the 19th century) and the heavily politicized nature of the process have long argued that having such a powerful interventionist tool is really the ultimate goal of the politicians pushing for it.

…click on the above link to read the rest of the article…

The Coming Class Wars

The Coming Class Wars

The forces dividing us are overwhelming those that unite us 

In the modern era, the phrase Class War is rooted in the socialist/Marxist concept that the conflict between labor (the working class) and capital (owners of capital) is not just inevitable—it’s the fulcrum of history.  In this view, this Class War is the inevitable result of the asymmetry between the elite who own/control the capital and the much larger class of people whose livelihood is earned solely by their labor.

In Marx’s analysis, the inner dynamics of capitalism inevitably lead to the concentration of capital in monopolies/cartels whose great wealth enables them to influence the government to serve the interests of capital. Subservient to capital, the laboring class must overthrow this unholy partnership of capital and the state to become politically free via ownership of the means of production, i.e. productive assets.

This Class War did not unfold as Marx anticipated. The laboring class gained sufficient political power in the early 20th century to win the fundamentals of economic security: universal public education, labor laws that prohibited outright exploitation, the right to unionize, and publicly funded pensions.

(The alternative explanation for this wave of progressive policies is that prescient leaders of the capital/state class ushered in these reforms as the only alternative to the dissolution of the status quo.  Labor reforms began in Germany and Great Britain in the late 19th century Gilded Age, and another wave of reforms were enacted in the decade-long crisis of capitalism in the Great Depression.)

…click on the above link to read the rest of the article…

Olduvai II: Exodus
Click on image to purchase

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai III: Cataclysm
Click on image to purchase