Home » Posts tagged 'money' (Page 2)

Tag Archives: money

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

Are You Prepared for the End of Fake Money?

What Is Money?

Today we begin with a fundamental question: What is money?  This, no doubt, is an important question.  And we ask it with clear intent and purpose.  Namely, we want to better understand how it’s possible for America to rack up such a massive trade deficit with China.

 

China-US imports and exports of goods. It has to be stressed that the most often cited figure is the trade deficit in goods, which is the “scariest” figure. The US surplus in services with China has grown rapidly in recent years. It was $33 billion in 2015, doubling from $16.5 billion just four years earlier. By 2017 it had grown to $38.5 billion. The idea that a trade deficit is somehow “bad” is highly dubious. “Countries” do not trade with each other anyway – individuals and companies do, and they obviously do so because they deem it advantageous for both sides. Moreover, these aggregate statistics obscure more than they reveal. The global supply chain is extremely complex – a single $3 t-shirt “Made in China” will contribute to the incomes of people in some 15 to 20 countries before a consumer in the US plucks it off a shelf at Wal-Mart. If we were to talk incessantly about the US capital account surplus – which offsets the trade deficit – would anyone complain? [PT]

America’s trade deficit with China, in 2017 alone, was $375 billion.  That’s a gap of over $31 billion a month – or $1 billion a day.  We believe having a better grasp on what money is will bring clarity to the nasty trade deficit that’s motivating today’s burgeoning trade war.

With respect to our initial inquiry we turn to Victorian economist William Stanley Jevons for edification.  In his 1875 work, Money and the Mechanism of Exchange, Jevons stated that money has four functions.  It’s a medium of exchange, a common measure of value, a standard of value, and a store of value.

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

Experts Warn Of Chaos For The U.S. Economy As China Declares That “The Biggest Trade War In Economic History” Has Begun

Experts Warn Of Chaos For The U.S. Economy As China Declares That “The Biggest Trade War In Economic History” Has Begun

Nothing is going to be the same after this.  On Friday, the United States hit China with 34 billion dollars in tariffs, and China immediately responded with similar tariffs.  If it stopped there, this trade war between the United States and China would not be catastrophic for the global economy.  But it isn’t going to stop there.  Donald Trump is already talking about hitting China with an additional 500 billion dollars in tariffs, which would essentially cover pretty much everything that China exports to the U.S. in a typical year.  The Chinese have accused Trump of starting “the biggest trade war in economic history”, and they are pledging to fight for as long as it takes.  As I discussed yesterday, the only way that one side is going to “win” this trade war is if the other side completely backs down, and that simply is not going to happen.  So there is going to be economic pain, and that pain is likely to intensify for as long as this trade war persists.  U.S. businesses that will be affected by foreign tariffs are already cutting back production and laying off workers, and CNN is reporting that 1,300 products have suddenly become more expensive for U.S. consumers.  There will be nowhere that anyone can hide from this trade war, and it will ultimately affect every single man, woman and child in the entire country.

Most Americans are not paying any attention to these ongoing developments, but the Chinese sure are.

Earlier today, the Chinese Ministry of Commerce called the U.S. tariffs “typical trade bullying”, and it warned that this trade war could trigger “global market turmoil”

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

Were the Crusades just for Plunder & Money?

QUESTION: Were the Crusades inspired by economics? You mentioned how Venice looted Constantinople.

Thank you for making history interesting

KR

ANSWER: To understand the Crusades, we have to first look at what was the original justification. The Catholic Church encouraged pilgrimages from the 4th century, but they began really during the 1st-2nd century and built in intensity. Pilgrimages became very popular once Constantine the Great became emperor. Contemporary historians reported that Roman Emperor Hadrian (117-138 AD) built a temple dedicated to the goddess Venus in order to hide the cave in which Jesus had been buried in hopes of ending early Christian pilgrimages. Constantine ordered during 325/326 AD that the temple of Venus be replaced by a church which has become known as the Church of the Holy Sepulchre. It was during the construction of this church that Constantine’s mother, Saint Helena, is believed to have rediscovered the tomb.  Socrates Scholasticus gives a full description of the discovery in his Ecclesiastical History. In her final years, Helena made a religious tour of Syria, Palestine, and Jerusalem, during which she allegedly discovered the True Cross.

 

The pilgrimages to the Holy Land really began to rise in mass going into the year 1000. As the year 1000 approached, the doom and gloom were pervasive. Everyone assumed that the world would end and this would be the last judgment. It became so common that the King of England removed his own portrait from the coinage and placed the Christian symbol of the lamb on one side and the Holy Ghost on the reverse. When the world did not end, he promptly restored his portrait to the coinage the following year.

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

Update on the Fed’s QE Unwind

Update on the Fed’s QE Unwind

With QE, the Fed created money to buy securities and pump up asset prices; now it sheds securities to destroy this money.

Here’s what the Fed’s QE unwind – or the balance sheet normalization, as it calls it – is all about: it reverses over an unknown span of years a large part of what QE had done over the span of five-and-a-half years. During QE, whose stated purpose was the “wealth effect,” the Fed amassed $3.4 trillion in Treasury securities and mortgage-backed securities (MBS). Just as the Fed spent a year tapering QE to zero, it is now spending a year ramping up the QE unwind.

Total assets on the Fed’s balance sheet for the week ending July 4 dropped by $29.4 billion over the past four weeks. This brought the total drop since October, when the QE unwind began, to $171 billion. At $4,289 billion, total assets are now at the lowest level since April 16, 2014, during the middle of the “taper.”

The Fed’s announced plan calls for shedding up to $420 billion in securities this year and up to $600 billion a year in each of the following years until the Fed considers its balance sheet to be “normalized” — or until something major goes awry. For June, the plan calls for the Fed to shed up to $18 billion in Treasuries and up to $12 billion in MBS. So how did it go?

Treasury securities

The balance of Treasury securities fell by $17.5 billion in June to $2,360 billion, the lowest since May 7, 2014. Since the beginning of the QE-Unwind, $105 billion in Treasuries “rolled off.”

The step-pattern in the chart below is a result of how the Fed sheds securities. It doesn’t sell them outright but allows them to “roll off” when they mature. Treasuries only mature mid-month or at the end of the month. Hence the stair-steps.

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

Inflation Rearing Its Ugly Head

Inflation Rearing Its Ugly Head

The world of finance and investment, as always, faces many uncertainties. The US economy is booming, say some, and others warn that money supply growth has slowed, raising fears of impending deflation. We fret about the banks, with a well-known systemically-important European name in difficulties. We worry about the disintegration of the Eurozone, with record imbalances and a significant member, Italy, digging in its heels. China’s stock market, we are told, is now officially in bear market territory. Will others follow? But there is one thing that’s so far been widely ignored and that’s inflation.

More correctly, it is the officially recorded rate of increase in prices that’s been ignored. Inflation proper has already occurred through the expansion of the quantity of money and credit following the Lehman crisis ten years ago. The rate of expansion of money and credit has now slowed and that is what now causes concern to the monetarists. But it is what happens to prices that should concern us, because an increase in price inflation violates the stated targets of the Fed. An increase in the general level of prices is confirmation that the purchasing power of a currency is sliding.

According to the official inflation rate, the US’s CPI-U, it is already running significantly above target at 2.8% as of May. Oil prices are rising. Brent (which my colleague Stefan Wieler tells me sets gasoline and diesel prices) is now nearly $80 a barrel. That has risen 62% since last June. If the US economy continues to grow the Fed will have to put up interest rates to slow things down. If it doesn’t, as money-supply followers fear, the Fed may still be forced to put up interest rates to contain price inflation.

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

Keynesian Economics Is an Artifact of Cheap Energy

Keynesian Economics Is an Artifact of Cheap Energy

Printing / borrowing money to generate the unsustainable illusion of “growth” sets up the collapse of the entire Keynesian edifice.
Of the many delusions of modern economics, perhaps the greatest is that the dominant Keynesian model reflects permanent dynamics of advanced economies. Economics, along with other social sciences, makes an implicit claim that its econometric claims are the equal of the “hard sciences” of physics and chemistry.
In other words, the econometrics of Keynesian economics is presented as possessing the same timeless validity of the natural sciences.
The reality is that Keynesianism arose in an era of abundant cheap energy, and it is an artifact of that brief one-off period in which industrialization, consumption and the human population were able to expand by leaps and bounds due to cheap energy and new technologies that leveraged greater value (“work,” output) from the cheap energy.
Once energy is no longer cheap or abundant, the Keynesian model of paying people to dig holes and fill them as a means of boosting “aggregate demand” falls apart. In the Keynesian model, “growth” as measured by consumption (gross domestic product) is assumed to be permanent and the highest goal of any economy.
If an economy starts contracting (i.e. recession), the one-size-fits-all solution in the Keynesian model is to boost consumption, i.e. “growth” by any means available: paying people to produce no useful output (building bridges to nowhere, etc.), distributing newly created money via “helicopter drops” into consumers’ laps via tax rebates, tax cuts, increased social welfare spending, etc.
This “solution” implicitly assumes the energy needed to fuel this unproductive labor, investment and consumption is permanently abundant and cheap. It also assumes that the quantity of energy available to fuel the economy will always expand, and as a result new currency (“money”) can be issued by central banks with few (if any) constraints.

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

What Life Is Like for Venezuelan Refugees: The Crisis Isn’t Over When You Escape the Collapse

What Life Is Like for Venezuelan Refugees: The Crisis Isn’t Over When You Escape the Collapse

I find the most difficult aspect of survival is to keep a positive mindset. Definitely, it is. The crisis is not over when you escape the collapse. While I expected when I got my family out, our struggles were over, they have just begun.  Once you have been a successful professional, with an entire life ahead of you, and a good amount of the road already left behind, and find as refugees in a foreign country…this is where you really know about how strong you can be.

Or how weak, in my case. Don’t misunderstand me, please. I have been much more fortunate than many of my people, and I give thanks to God for that.

Some reflections, some advice.

These days have not been easy. There are a lot of people already in the labor marketplace around here, working for less money than they should, and rents are increasing because of the people looking for a place…and somehow finding something to work close to home has been uphill. My reserves have been in a slow decrease, and I am starting to worry a little bit.

I have you, unknown friends, but a wonderful prepping community that has avoided that the water covers my nose, and I appreciate that much more than you would believe (Receive our blessings please!). I had some cash stashed away that worked for buying my ticket and left just in time. I hold a professional degree that many people would kill to have, and skills that made me earn some degree of respect everywhere I arrived to work at some facility. I wanted to use this opportunity to spend some more time with my young kid, as a regular engineering work consumes a lot of time, and I was without my son ¾ of a year…but you know how it is.

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

The Growing Pool of Real Savings Permits the Illusion That Central Bank Can Cause Economic Growth

Many commentators are of the view that the US central bank should pursue policies that will prevent the possible decline of the economy into a liquidity trap hole. What is this all about?

In the popular framework of thinking that originates from the writings of John Maynard Keynes, economic activity is presented in terms of a circular flow of money. Spending by one individual becomes part of the earnings of another individual, and spending by another individual becomes part of the first individual’s earnings.

Recessions, according to Keynes, are a response to the fact that consumers — for some psychological reasons — have decided to cut down on their expenditure and raise their savings.

For instance, if for some reason people have become less confident about the future, they will cut back their outlays and hoard more money. Therefore, once an individual spends less, this will worsen the situation of some other individual, who in turn also cuts his spending.

A vicious circle sets in – the decline in people’s confidence causes them to spend less and to hoard more money, and this lowers economic activity further, thereby causing people to hoard more, etc.

Following this logic, in order to prevent a recession from getting out of hand, the central bank must lift the growth rate of money supply and aggressively lower interest rates.

Once consumers have more money in their pockets, their confidence will increase, and they will start spending again, thereby re-establishing the circular flow of money, so it is held.

In his writings however, Keynes suggested that a situation could emerge when an aggressive lowering of interest rates by the central bank would bring rates to a level from which they would not fall further. As a result, the central bank will not be able to revive the economy.

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

The Dollar Dilemma: Where to From Here?

The Dollar Dilemma: Where to From Here?

money 750.jpg

 Introduction: Where We Are 

It’s a fallacy to believe the US has a free market economy. The economy is run by a conglomerate of individuals and special interests, in and out of government, including the Deep State, which controls central economic planning.

Rigging the economy is required to prevent market forces from demanding a halt to the mistakes that planners continuously make. This deceptive policy can last only for a limited time. Ultimately, the market proves more powerful than government manipulation of economic events. The longer the process lasts, the greater the bubble that always bursts. The planners in charge have many tools to perpetuate confidence in an unstable system, but common sense should tell us that grave dangers lie ahead.

Their policies strive to convince the unknowing that the dollar is strong and its status as the world’s reserve currency is secure, no matter how many new dollars they create of out of thin air. It is claimed that our foreign debt is always someone else’s fault and never related to our own monetary and economic mismanagement.

Official government reports inevitably claim inflation is low and we must work harder to increase it, claiming price increases somehow mystically indicate economic growth.

The Consumer Price Index is the statistic manipulated to try to prove this point just as they use misleading GDP numbers to do the same. Many people now recognizing these reports are nothing more than propaganda. Anybody who pays the bills to maintain a household knows the truth about inflation.

Ever since the Great Depression, controlling the dollar price of gold and deciding who gets to hold gold was official policy. This advanced the Federal Reserve’s original goal of demonetizing precious metals, which was fully achieved in August 1971.

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

How Much Money Do You Save by Cooking at Home?

This post is adapted from the blog of wellio, a Priceonomics Data Studio customer. Does your company have interesting data? Become a Priceonomics customer.

***

Intuitively, we all know there are benefits to cooking at home. You can use healthier ingredients, set portions to a reasonable size, avoid food allergies, and of course you can save money compared to ordering restaurant delivery or using a meal kit service.

But just how much money do you save by cooking at home? We decided to analyze our recipe data to find out the true cost of cooking at home from scratch, compared to delivery from a restaurant or a meal kit service. 

We analyzed data from Priceonomics customer wellio, a platform that breakds down millions of recipes into single ingredients and matching those to grocery items from local stores. That allows us to measure the ingredient cost for a wide variety of recipes. For 86 popular dinner recipes, we decided to look at the average cost per serving of cooking from scratch and compare it to the cost per serving of ordering from a restaurant or a meal kit delivery service.

We found on average, it is almost five times more expensive to order delivery from a restaurant  than it is to cook at home. And if you’re using a meal kit service as a shortcut to a home cooked meal, it’s a bit more affordable, but still almost three times as expensive as cooking from scratch.

When cooking at home, you’ll save a substantial amount of money on carb-based meals like pasta or pizza, and you’ll save the most on protein-based meals when compared to ordering from a restaurant or meal kits.

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

Confronting the money-power elite

Confronting the money-power elite

Those who control the creation and allocation of money are able to control every other aspect of society. Shouldn’t that be us?

Credit: Flickr/Liz West. CC BY 2.0.

The world today is controlled by a small elite group that has been increasingly concentrating power and wealth in their own hands. There are many observable facets to this power structure, including the military security complex that President Eisenhower warned against, the fossil fuel interests, and the neoconservatives and others that are promoting US  hegemony around the world, but the most powerful and overarching force is the ‘money power’ that controls money, banking, and finance worldwide. It is clear that those who control the creation and allocation of money through the banking system are able to control virtually every other aspect of society.

What can be done to turn the tide? How can we empower ourselves to assert our desires for a more fair, humane and peaceful world order? I believe that the greatest possibility of bringing about the desired changes lies in economic and political innovation and restructuring.

The monopolization of credit.

I came to realize many years ago that the primary mechanism by which people are controlled is the system of money, banking, and finance. The power elite have long known this and have used it to enrich themselves and consolidate their grip. Though we take it for granted, money has become an utter necessity for surviving in the modern world. But unlike water, air, food, and energy, money is not a natural substance—it is a human contrivance, and it has been contrived in such a way as to centralize power and concentrate wealth.

Money today is essentially credit, and the control of our collective credit has been monopolized in the hands of a cartel comprised of huge private banks with the complicity of politicians who control central governments.

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

The Federal Reserve: Public Enemy Number One

The Federal Reserve: Public Enemy Number One

When currency was backed by gold, a central bank’s main function was to maintain the value of the issued currency in terms of gold.  For example, if a central bank created too much money against the gold reserves in the banking system, an increasing number of people would begin to exchange their currency for gold.  To combat this, a central bank would be forced to raise interest rates and decrease the money supply.  The higher interest rates would incentivize people to exchange gold for larger savings on deposit that earn interest.  Banking reserves – gold – would return to the banking system and the economy would return to balance.  The prime reason for insisting on defining currency in terms of a precious metal was to provide a self-correcting braking mechanism to the creation of money.  As expressed by the great Wilhelm Röpke:

If in the production of goods the most important pedal is the accelerator, in the production of money it is the brake.  To insure that this brake works automatically and independently of the whims of government and the pressure of parties and groups seeking “easy money” has been one of the main functions of the gold standard.  That the liberal should prefer the automatic brake of gold to the whims of government in its role of trustee of a managed currency is understandable.”[1]

The US dollar was backed by gold as recently as 1971.  Any central bank in the world could present the Federal Reserve $35 and receive 1-ounce of gold in exchange.  However, on August 15, 1971 – blaming it on the “gnomes of Zurich” – President Nixon “temporarily” broke the dollar’s last link with gold.  Nixon closed the “gold window” and reneged on the promise to exchange an ounce of gold for $35.  Since then, the system of credit in the US has been under the Fed’s complete control.

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

The Real Economic Numbers: 21.5 Percent Unemployment, 10 Percent Inflation And Negative Economic Growth

The Real Economic Numbers: 21.5 Percent Unemployment, 10 Percent Inflation And Negative Economic Growth

Every time the mainstream media touts some “wonderful new economic numbers” I just want to cringe.  Yes, it is true that the economic numbers have gotten slightly better since Donald Trump entered the White House, but the rosy economic picture that the mainstream media is constantly painting for all of us is completely absurd.  As you are about to see, if honest numbers were being used all of our major economic numbers would be absolutely terrible.  Of course we can hope for a major economic turnaround for America under Donald Trump, but we certainly are not there yet.  Economist John Williams of shadowstats.com has been tracking what our key economic numbers would look like if honest numbers were being used for many years, and he has gained a sterling reputation for being accurate.  And according to him, it looks like the U.S. economy has been in a recession and/or depression for a very long time.

Let’s start by talking about unemployment.  We are being told that the unemployment rate in the United States is currently “3.8 percent”, which would be the lowest that it has been “in nearly 50 years”.

To support this claim, the mainstream media endlessly runs articles declaring how wonderful everything is.  For example, the following is from a recent New York Times article entitled “We Ran Out of Words to Describe How Good the Jobs Numbers Are”

The real question in analyzing the May jobs numbers released Friday is whether there are enough synonyms for “good” in an online thesaurus to describe them adequately.

So, for example, “splendid” and “excellent” fit the bill. Those are the kinds of terms that are appropriate when the United States economy adds 223,000 jobs in a month, despite being nine years into an expansion, and when the unemployment rate falls to 3.8 percent, a new 18-year low.

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

James Madison’s Essay on Money

The following is by James Madison, the primary author of the US Constitution and fourth president.

For those who wish to get a further view on this, here is a paper from the Cleveland Fed on Madison’s essay: https://www.clevelandfed.org/newsroom-and-events/publications/discontinued-publications/economic-review/1998-economic-review/er-1998q1-james-madisons-monetary-economics.aspx

Money

Observations written posterior to the circular Address of Congress in Sept. 1779, and prior to their Act of March, 1780.

It has been taken for an axiom in all our reasonings on the subject of finance, that supposing the quantity and demand of things vendible in a country to remain the same, their price will vary according to the variation in the quantity of the circulating medium; in other words, that the value of money will be regulated by its quantity. I shall submit to the judgment of the public some considerations which determine mine to reject the proposition as founded in error. Should they be deemed not absolutely conclusive, they seem at least to shew that it is liable to too many exceptions and restrictions to be taken for granted as a fundamental truth.

If the circulating medium be of universal value as specie, a local increase or decrease of its quantity, will not, whilst a communication subsists with other countries, produce a correspondent rise or fall in its value. The reason is obvious. When a redundancy of universal money prevails in any one country, the holders of it know their interest too well to waste it in extravagant prices, when it would be worth so much more to them elsewhere. When a deficiency happens, those who hold commodities, rather than part with them at an undervalue in one country, would carry them to another. The variation of prices in these cases, cannot therefore exceed the expence and insurance of transportation.

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

Ronald Stoeferle: Gold Is Dirt Cheap Right Now

And a new bull market for the metal is beginning
Fresh from releasing his exhaustive 230-page annual report titled In Gold We Trust, Ronald Stoerferle joins us to summarize his forecast for the yellow metal.

Stoerferle, an author of several books on Austrian economics and head of strategy and portfolio management at Incrementum AG, concludes that gold is extremely cheap right now in dollar terms. And he sees a new bull market beginning for the precious metal — one likely to quickly build momentum as the next (and long overdue) financial market correction arrives.

We’re at the beginning of a new stage of a bull market.

We’ve seen a massive correction with a big drawdown, but we’re now seeing the Commitment of Traders report suggesting that there’s been a washout. We’re seeing that sentiment is really negative. We’re seeing that nobody really cares about gold and mining stocks, and especially about silver. Silver is probably the biggest contrarian investment, though silver mining stocks are probably even more contrarian at the moment.

We all know that the herd behavior in the sector is getting more extreme. I think it has got to do with career risk in the financial industry, so nobody really wants to make a contrarian call. But once we go above this $1,360-$1,380 resistance, which is also the neckline of a large inverse head & shoulder formation, I think gold will hit $1,500, $1,600 pretty quickly.

The most important thing is: in comparison to all the monetary printing that we’ve seen in the last couple of years, gold got significantly cheaper. Gold, in monetary terms, is dirt cheap at the moment. We’re basically at the same levels like in 1971 when it comes to the gold backing of the US dollar. So gold is a bargain at this level.

…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