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It’s not just you: Gas prices are much higher than they should be, energy experts say

Gas prices are up by more than a third since the start of the year, a figure much higher than one would expect based on the slight rebound in oil prices, Bank of Montreal’s chief economist says.

Doug Porter noted Thursday that while everything connected to crude oil has looked execrable since the slowdown that started last fall, Canadian gas prices have been especially loopy because of the impact of the Canadian dollar.

A lot of the gasoline used in Canada is refined and processed in the U.S., where refineries price the base commodity in U.S. dollars. That makes Canadian pump prices doubly sensitive because they are heavily impacted by the value of the Canadian dollar.

Gas price jump ‘doesn’t make sense’ experts say

If you balance out the impact of currency fluctuations, “converting oil prices into Canadian-dollar suggests that the jump in gasoline has gone way beyond the move in crude,” Porter wrote. “So what’s up?”

It’s a question many Canadians have been asking themselves, with the average price of a litre of gasoline at $1.20 across the country. Porter noted there are indeed plenty of valid reasons for gas prices to be up a bit. In addition to the small rebound in crude oil, there are seasonal factors at play.

“In each of the past two years, the annual highs for gasoline prices were hit in the fourth week of June,” Porter said. We are right on track for that to happen again this year.

Demand is up

And demand for gasoline is legitimately higher too. Phil Flynn, the senior market analyst at energy research firm Price Futures Group in Chicago, said cheap oil prices last fall compelled most Americans to do what they normally do when that happens — drive more. “When oil prices crashed it stirred demand,” he said in an interview. “It’s the oldest story in the market.”

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

The Government and the Currency

June 12, 2015

The Government and the Currency

[Human Action (1949)] Reprinted from Mises.org

Media of exchange and money are market phenomena. What makes a thing a medium of exchange or money is the conduct of parties to market transactions. An occasion for dealing with monetary problems appears to the authorities in the same way in which they concern themselves with all other objects exchanged, namely, when they are called upon to decide whether or not the failure of one of the parties to an act of exchange to comply with his contractual obligations justifies compulsion on the part of the government apparatus of violent oppression. If both parties discharge their mutual obligations instantly and synchronously, as a rule no conflicts arise which would induce one of the parties to apply to the judiciary. But if one or both parties’ obligations are temporally deferred, it may happen that the courts are called to decide how the terms of the contract are to be complied with. If payment of a sum of money is involved, this implies the task of determining what meaning is to be attached to the monetary terms used in the contract.

Thus it devolves upon the laws of the country and upon the courts to define what the parties to the contract had in mind when speaking of a sum of money and to establish how the obligation to pay such a sum is to be settled in accordance with the terms agreed upon. They have to determine what is and what is not legal tender. In attending to this task the laws and the courts do not create money. A thing becomes money only by virtue of the fact that those exchanging commodities and services commonly use it as a medium of exchange.

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

Why the Bank of Japan Can’t Stop a Sudden Collapse of the Yen

May 29, 2015

Why the Bank of Japan Can’t Stop a Sudden Collapse of the Yen

On Friday morning in Tokyo, the Nikkei stock index was up again, at 20,600, highest in 15 years. Since “Abenomics” has become a common word in December 2012, the Nikkei has soared 128% on a crummy economy, terrible government deficits, and an insurmountable mountain of government debt. This 10-day run of straight gains, or 11-day run if Friday plays out, is the longest glory streak since February 1988 when Japan was in one of the craziest bubbles the world had ever seen.

The subsequent series of crashes had the net effect that the Bank of Japan became engaged in propping up the stock market not only by pushing interest rates to zero and dousing the market with money via waves of QE, but also by buying equity ETFs and J-REITs.

Prime Minister Shinzo Abe has made asset-price inflation his top priority. Under pressure from the BOJ and the government, state-controlled entities – such as the Government Pension Investment Fund with ¥137 trillion in assets – are dumping Japanese Government Bonds into the lap of the BOJ and are buying stocks with the proceeds.

Foreign hedge funds have jumped into the fray, which is the hot money that can evaporate overnight. But fear not, every time the Nikkei drops 100 points or so, the BOJ starts buying, or creates the perception that it’s buying, and within minutes, stocks shoot back up. It’s part of the BOJ’s relentlessly communicated policy to inflate asset prices come hell or high water.

And hell or high water may now be on the way.

Ultimately, monetary policies hit the currency. So the yen has sagged about 35% since Abe took over. On Thursday in Tokyo, it hit ¥124.3 to the dollar, the lowest since December 2002. Friday morning, after some jawboning by the government and the BOJ, it recovered a smidgen.

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

RFID-Chipped Banknotes Fit For “Remote Cancellation”

May 27, 2015

RFID-Chipped Banknotes Fit For “Remote Cancellation”

RFID Technology fur Use in Currency Becomes More Sophisticated

The 500 euro banknote barely circulates in Europe – this is to say, it is rarely seen in everyday commerce. However, it does exist, and makes the handling of large amounts of cash easier. Not surprisingly, it is said to be highly popular with various criminal organizations, although as far as we are aware, there is no hard evidence of this. Rather, it seems to be an assumption, if a sensible one.

Hitherto, the ECB was mainly interested in the possibility of employing RFID tags in banknotes for security reasons (to make forging them more difficult), and as passive tracking devices, ostensibly in order to be able to track money used by organized crime so as to prevent money laundering.

10 after mw

10 euro bill after 10 secs of microwave treatment

Image via dvd-svcd-forum.de

Work on this ‘feature’ started in 2001 already:

“In 2001, the European Central Bank started working with technology partners on a hush-hush project to embed radio frequency identification tags into the very fibers of euro banknotes by 2005.The ECB was deeply concerned about counterfeiting and money laundering. Counterfeiting of euro notes has been a problem in Greece and there have been cases in the new member countries too. In 2003, Greek authorities were confronted with of 2,411 counterfeiting cases and seized 4,776 counterfeit banknotes while authorities in Poland nabbed a gang suspected of making and putting over a million fake euros into circulation. Money laundering was also an issue of increasing concern, and that was probably one of the reasons that the higher denominations were considered for tagging (€200 and €500 notes).

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

A Vision of Monetary Hell …

May 23, 2015

A Vision of Monetary Hell …

… Troubles Our Sleep …

It is the vision of what the United States will be like when the authorities have obliterated almost three millennia of monetary progress and have their boots on our necks.

Here’s Peter Bofinger, a leading German Keynesian economist, in Der Spiegel magazine:

“With today’s technical possibilities, coins and notes are in fact an anachronism. They made payments incredibly difficult, with people wasting all sorts of time at the cashier as they wait for the person ahead of them to dig through their belongings to find some cash, and for the cashier to render change (rather than, for example, waiting for someone to find the right credit card, complete the transaction, and wait for approval).

[…]

But the additional time is not the largest benefit of the elimination of cash. It dries out the markets for moonlighting and drug trafficking. Almost a third of the euro cash in circulation consists of 500-euro notes. No one needs those for shopping; light-shy figures use them for their activities. [Also] it would be easier for central banks to impose their monetary policies. At this time, they cannot push interest rates appreciably below zero because the savers would hoard cash. If there is no cash, the zero bound is eliminated.”

They said they were going to make me an advisor ... Bofinger discovers they lied to him.

A Slide Back into Prehistory

Yes, dear reader, it seems to be coming – a dreadful slide back beyond the darkest ages and into the mud and slime of prehistory. Back then, modern “money” had not been invented. Using rudimentary credit and barter systems, you could only trade with people you knew – and on a limited scale.

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

George Soros Warns “No Exaggeration” That China-US On “Threshold Of World War 3”

May 22, 2015

George Soros Warns “No Exaggeration” That China-US On “Threshold Of World War 3”

While admitting that reaching agreement between the two countries will be difficult to achieve, George Soros –speaking at The World Bank’s Bretton Woods conference this week – warned that unless the U.S. makes ‘major concessions’ and allows China’s currency to join the IMF’s basket of currencies, “there is a real danger China will align itself with Russia politically and militarily, and then the threat of world war becomes real.”

Much in global geopolitics depends on the health and trajectory of the Chinese economy, was the undertone of George Soros’ comments as he spoke this week, but as MarketWatch reports,

Billionaire investor George Soros said flatly that he’s concerned about the possibility of another world war.

…

If China’s efforts to transition to a domestic-demand led economy from an export engine falter,there is a “likelihood” that China’s rulers would foster an external conflict to keep the country together and hold on to power.

…

To avoid this scenario, Soros called on the U.S. to make a “major concession” and allow China’s currency to join the International Monetary Fund’s basket of currencies. This would make the yuan a potential rival to the dollar as a global reserve currency.

In return, China would have to make similar major concessions to reform its economy, such as accepting the rule of law, Soros said.

Allowing China’s yuan to be a market currency would create “a binding connection” between the two systems.

An agreement along these lines will be difficult to achieve, Soros said, but the alternative is so unpleasant.

“Without it, there is a real danger that China will align itself with Russia politically and militarily, and then the threat of third world war becomes real, so it is worth trying.”

And while on the topic, Soros also spoke recently, as ValueWalk notes, on the situation in Europe…

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

“Cash Is Coined Freedom”: War on Cash Becomes Official in Germany, Reaches G-7, Draws Withering Fire

May 19, 2015

“Cash Is Coined Freedom”: War on Cash Becomes Official in Germany, Reaches G-7, Draws Withering Fire

It came from a voice that has, by law, the ear of the German government. Peter Bofinger is a member of the German Council of Economic Experts – the “Five Sages on the Economy” – which in its official function advises the government and parliament on economic policy issues. These folks are taken seriously.

So Bofinger told the German magazine Der Spiegel in an interview (full interview behind paywall) that cash should be done away with.

In Denmark, a new law was proposed that would allow shops to refuse cash payments. Officially, it’s to reduce the “administrative and financial burdens” of handling cash. Since it’s up to the shop to decide, the law sounds innocuous. But it would be another step to making money a purely electronic entity that can be seamlessly tracked anywhere. It would also be another step in granting the central bank the absolute power to inflict confiscatory monetary policies on any entity or person with money in the bank.

This law would come in handy. Danmarks Nationalbank has imposed a negative deposit rate of -0.75%, with the intent of flogging savers and confiscating their money until their mood improves and limiting the appreciation of the krone against the sagging euro. But to evade the wrath of negative deposit rates, savers can pull cash out of the bank and store it under their mattress. And this must be stopped – by making cash useless.

So, Der Spiegel asked, was this law in Denmark “a good idea?”

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

Money is Coined Liberty – The Latest Salvos in the War on Cash

May 19, 2015

Money is Coined Liberty – The Latest Salvos in the War on Cash

Another Keynesian Voodoo Economist Wants to See Cash Abolished

We have a few more bad news and for a change also some good news with respect to the ongoing attempt to prepare the ground for a ban of cash currency. By now everybody should know how this works: Whenever another step to curtail individual liberty further is in the preparatory stage, the ruling class starts trial balloons in the mainstream media, flanked by “expert” opinion pieces, to see how people react. If there is an uproar, they will pull back and wait for a better opportunity. If there is no uproar, you simply wake up one morning with yet more of your personal freedom taken away for the “collective good”.

This is why contrary to what some people seem to think, it is not a good idea to ignore what superficially appear to be outlandish notions. After all, as current EU commission president Jean Claude “we lie if we have to” Juncker once explained, this is precisely how the EU’s centralizers go about imposing policies which they suspect might be unpopular with voters.

big brother A cash ban would bring about even more thorough surveillance and be one step closer to total bureaucratic control

They float trial balloons and accompanying propaganda pieces in the media and then gauge the public’s reaction. If there is no major protest, they quietly implement yet more regulations, bringing us one step closer to their wet dream of a socialist superstate under complete bureaucratic control.

Abolishing Cash – New Age of Economic Totalitarianism

May 18, 2015

Abolishing Cash – New Age of Economic Totalitarianism

Europe is moving full speed ahead to eliminate all cash. Instead of reforming and tackling the economic problems, government always seeks to maintain the same course of thinking that now leads us to the totalitarian approach coming from Brussels. To maintain the euro, they must maintain the banks. However, the bank reserves are debts of all member states. As government becomes insolvent as in Greece, the banking system is undermined. The only way to prevent the banking collapse is to prevent people from withdrawing cash. Hence, we see this trend is surfacing in all the mainstream press to get the people ready for what is coming after 2015.75 – the elimination of cash. We are even starting to see this advocated in parts of Germany. We will not be able to buy or sell anything without government approval. That is where we are going, and it may be the major event that erupts after 2015.75.

The bail-in that took place in Cyprus managed to get away without bloodshed. The people just took it. This has encouraged governments everywhere, since now they know they can safely do the same thing and the people are like sheep – dumb and stupid. Just how much will society take before they say no?

Leading German Keynesian Economist Calls For Cash Ban

May 17, 2015

Leading German Keynesian Economist Calls For Cash Ban

It’s official: the world has gone central-planner crazy.

Monetary policy, whether in the form of “conventional” methods such as the micromanagement of policy rates or so-called “unconventional” measures such as QE, has proven utterly ineffective when it comes to both “smoothing out” the business cycle and reigniting economic growth in the wake of severe downturns. If anything, recent history has shown the exact opposite to be true. That is, the Fed helped to engineer the housing bubble and has now succeeded in inflating a similar bubble in stocks and fixed income. Meanwhile, the Japanese experience with QE has plunged the country into what we have affectionately dubbed “The Kuroda Zone”, wherein the BoJ has cornered both the stock and bond markets while failing to promote wage growth or meaningfully raise inflation expectations. In China, the PBoC has taken to cutting policy rates at the first sign of weakness in the stock market, helping to sustain what will perhaps go down in history as the second coming of the tulip bulb mania, while the ECB has taken the insane step of adopting a trillion euro bond buying program while simultaneously demanding fiscal discipline, meaning the central bank’s bond monetization efforts are set against a backdrop of meager supply.

In sum, the collective actions of the world’s most influential central banks have done wonders when it comes to inflating asset bubbles but have done very little to revive robust economic growth. In fact, far from smoothing out the business cycle and resuscitating DM demand, post-crisis monetary policy has actually had the exact opposite effect: it has set the stage for an even more spectacular collapse while simultaneously creating a worldwide deflationary supply glut.

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

The trouble with cash

May 15, 2015

The trouble with cash

When interest rates are zero and it costs a bank to look after your money it becomes an unattractive asset. Banks in some jurisdictions (such as Switzerland, Denmark and Sweden) are even charging customers interest on cash and deposits. And if you go to your bank and withdraw large amounts in the form of folding notes to avoid these charges you will be lucky if you are not treated as a sort of pariah. For the moment, at least, these problems do not extend to sound money, in other words gold.

There are two distinct issues involved with government-issued currency: zero-to-negative interest rates, which all but eliminate any interest turn on deposits for the banks, and a systemic issue that arises if too many people withdraw their money from the banking system. The problems with the latter would become significant if enough people decide to effectively opt out of holding money in the banks.

Conversion of bank deposits into physical cash increases reserve ratios, restricting the banks’ ability to create credit. However, while the banks are contractually obliged to supply physical cash to anyone who wants it, a drawdown on bank deposits is a bad thing from a central bank’s point of view. A desire for physical cash is, therefore, discouraged. Instead, if the option of owning physical cash was removed and there was only electronic money, deposits would simply be transferred from one bank to another and any imbalances between the banks resolved through the money markets, with or without the assistance of a central bank. The destabilising effects of bank runs would be eliminated entirely.

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

The 8 Paradigm Shifts at the Heart of REconomy

May 8, 2015

The 8 Paradigm Shifts at the Heart of REconomy

For the next two months here we will be talkingREconomy, looking in depth at this aspect of Transition which is about creating new enterprises, new economies, new livelihoods. We’ll talk to entrepreneurs, to people in local authorities embracing this approach, to people about to launch local currencies, to people around the world working to make this happen. Something remarkable and vital is happening, and we want you to be blown away by it.

When I visit Transition groups around the world, I hear many of the same questions over and over. “How do we engage a wider cross-section of our community?”/”how do we make a living out of this stuff?”/”how do we build stronger bridges to the local council and local businesses?”

REconomy is one of the best responses to all these questions, offering a series of activities, and a fresh way of thinking that meets more widely perceived needs, while also building a real relevance to far more people than just talking abstractly about “building local resilience”. It’s the invitation to shift our thinking, shift what we do, and step up in truly exhilarating ways.

Central to it is the idea that WE can do this, that creating the new economy that better meets our needs starts with us, here, now. In terms of what REconomy is, I will assume by this stage you are familiar with the general idea, and if not here is Fiona Ward to give you an introduction:

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

Oil rally makes loonie world’s strongest currency this quarter, BMO says

May 6, 2015

Oil rally makes loonie world’s strongest currency this quarter, BMO says

Canadian dollar over 83 cents US Tuesday, up from 78 cents 6 weeks ago

After cratering along with the price of oil in January, the Canadian dollar has quietly been mounting a rally and is now the world’s best-performing major currency in the past three months, Bank of Montreal said Tuesday.

In a brief note to clients, the bank’s chief economist, Doug Porter, observed that after losing nine per cent of its value in dropping from 86 cents US to 78 in January while oil was in freefall, the loonie essentially treaded water until the middle of March before mounting a comeback.

On Tuesday, the loonie was changing hands at 83.11 cents US, up almost half a cent on the day, before sinking back to 82.84 at the close. Six weeks ago, the loonie was at 78 cents, and that modest rally has been enough to make the loonie the best currency investment in the world since the start of February.

Changing fortunes

“It’s still been a tough year just because it was a brutal January,” Porter said. “But the loonie has had a wonderful spring after a tough winter.”

Evened out over the whole quarter, the loonie is up almost four per cent over the past three months. That’s normally nothing to write home about, but it’s almost twice as good as the second-place New Zealand dollar. It’s also much better than the British pound, the Swiss franc, the euro and the Japanese yen, all of which are in negative territory over that time span.

The reason for the loonie’s strength is a complex mix that includes a pullback in the U.S. dollar that had been gaining strongly, and a resetting of expectations as currency markets think it’s now less likely for the Bank of Canada to cut rates again.

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

The War on Cash: Transparently Totalitarian

May 1, 2015

The War on Cash: Transparently Totalitarian

George Orwell once wrote “If you want a picture of the future, imagine a boot stamping on a human face—forever.”

Not exactly a cheery thought, and one I don’t agree with.

While the forces pushing for centralization of power have been prevailing for decades, they haven’t won a total victory yet. Technologies that empower the individual and that tend toward decentralization—including the Internet, encryption, 3D printing, and cryptocurrencies—offer a powerful ray of hope, reasons to be optimistic about the future.

So the tug of war between the collectivists and the rest of us continues.

One thing that would tip the scales heavily in favor of the collectivists would be victory in the War on Cash. Their goal is to eliminate the use of hand-to-hand currency, so that governments can document, control, and tax everything.

It’s exactly like what Ron Paul said: “The cashless society is the IRS’s dream: total knowledge of, and control over, the finances of every single American.”

One way they are waging the War on Cash is to lower the threshold at which reporting a cash transaction is mandatory or at which paying in cash is simply illegal. In just the last few years…

Italy made cash transactions over €1,000 illegal;

Switzerland has proposed banning cash payments in excess of 100,000 francs;

Russia banned cash transactions over $10,000;

Spain banned cash transactions over €2,500;

Mexico made cash payments of more than 200,000 pesos illegal;

Uruguay banned cash transactions over $5,000; and

France made cash transactions over €1,000 illegal, down from the previous limit of €3,000.

I recently spoke about this with Dr. Joe Salerno, an Austrian economist with the Mises Institute. Joe is the best chronicler of the global War on Cash and is here to offer an Austrian rebuttal to the economic nonsense peddled by advocates of this war.

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

Prove You’re Not a Terrorist

April 30, 2015

Prove You’re Not a Terrorist

Recently, France decided to crack down on those people who make cash payments and withdrawals and who hold small bank accounts. The reason given was, not surprisingly, to “fight terrorism,” the handy catchall justification for any new restriction governments wish to impose on their citizens. French Finance Minister Michel Sapin stated at the time, “[T]errorism feeds on fraud, money laundering, and petty trafficking.”

And so, in future, people in France will not be allowed to make cash payments exceeding €1,000 (down from €3,000). Additionally, cash deposits and withdrawals totaling more than €10,000 per month will be reported to Tracfin—an anti-fraud and money laundering agency.

Currency exchange will also be further restricted. Anyone changing over €1,000 to another currency (down from €8,000) will be required to show an identity card.

Do you need to make a deposit on a car? That might be suspect. Did you just deposit a dividend you received? It might be a payment from a terrorist organisation. Planning a holiday and need some cash? You might need to be investigated for terrorism.

And France is not alone. In the US, federal law requires banks to file a “suspicious activity report” (SAR) on their customers whenever a customer requests a suspicious transaction. (In 2013, 1.6 million SAR’s were submitted.)

As to what may be deemed “suspicious,” it may be any transaction of $5,000 or more, but it may also mean a series of transactions that, together, exceed $5,000.

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

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