Home » Posts tagged 'acting-man'

Tag Archives: acting-man

Inflation from Useless Ingredients

The cause of rising prices is not always monetary. Before Covid, we wrote a lot about mandatory useless ingredients. This is when regulators and taxinators force producers to add things to their products, which buyers do not care about (and often do not know about).

There has been a steady march of added useless ingredients over the decades. But, like watching a child grow taller every day, you may not always think about the big change compared to five years ago (or 50 years ago, in the case of useless ingredients). It would be very difficult to estimate how much useless ingredients have added to the prices of each good.

How much do all the required airbags add to the cost of every new car? How many costs are added by all the emissions gizmos, and safety devices? The same is going on, in the fuel you pump into the car, the tires you drive on, and everything you put in the trunk when you go shopping.

The cost of these useless ingredients is high and rising. Before Covid, this was the biggest driver of inflation.

Image via rte.ie

Inflation from Trade War

For a few years prior to the virus, another driver began to emerge. Trade war. For us, this is a broader term than just tariffs. Though, there have been many tariffs added in recent years. Some readers may assume these are targeted at China due to its military threat, but there have been American tariffs imposed on Scotch whiskey, Canadian lumber, and many other things. Like useless ingredients, the consumer is often unaware of tariffs and how they drive up the price of the 2×4’s they buy. So they assume that the cause is simple money printing.

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

Inflation and Gold: What Gives?

December 23, 2021

Inflation and Gold: What Gives?

In the last Supply and Demand update, we discussed some different theories which attempt to explain what causes the gold and silver prices to move. We mentioned the:

“…attempt to hold up a famous buyer of metal, while ignoring the thousands of not-famous sellers who sold the metal to said famous buyer.”

Since then, Ireland has bought gold for the first time in over a decade. And predictably, most voices in the gold community see this as a bullish sign.

By the way, we did not see any data about the prices paid on what dates, but the articles on December 1 mention a series of buys over a few months. Assuming a few means two, it looks like Ireland may have paid more than the current price.

The Different Theories on What Moves Gold and Silver Prices

Back to the common bullish view of Ireland’s wisdom, what of the opinions of the 64,300 people who sold their gold to Ireland (assuming the average seller sold an ounce)? Surely, these people believed the price will go down?

Famous and Anonymous Price Movers

There are two competing theories for how to interpret the conflicting views when one market participant is famous and the other is a bunch of anonymous people. One is the “famous buyer” theory, and the other is the “incompetent bureaucrat” theory. The latter was used to explain the sale of half of Britain’s gold between 1999 and 2002.

How could we have known that the UK government was foolish to sell back then, and the anonymous 12,699,250 buyers were right? Whereas today, the Irish bureaucrats are right, and the 64,300 sellers are wrong?

This is just a bias towards bullishness.

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

Perversity: Thy Name is Dollar

November 17, 2021

Perversity: Thy Name is Dollar

If you ask most people, “what is money?” they will answer that money is the generally accepted medium of exchange. If you ask Google Images, it will show you many pictures of green pieces of paper. Virtually everyone agrees that money means the dollar.

Image credit: Cildo Meireles

Breaking Down the Dollar Monetary System

What does it mean to have a dollar? If you hold a piece of paper with green ink on it, which says “ONE DOLLAR”, you may notice that it also says, at the top, “FEDERAL RESERVE NOTE”. Note is a word for credit. The dollar bill (bill is also a word for a credit instrument) is a credit of some kind, the credit of the Federal Reserve. The paper itself has no value, apart from that it is the obligation of a party whose full faith and credit is beyond question. It would be something like the fallacy of reification, to confuse the green piece of paper with the monetary value it represents.

Banking, Lending and the Fed

Most holders of dollars do not hold them in the form of actual pieces of paper. For reasons of convenience, and safety and security, people deposit them in a bank. That is, they may think of it as having dollars in a bank (just as they think of the paper as the money). But let’s drill down into that. Most people know that the bank does not just put all the green pieces of paper into a vault. The bank holds a small amount of paper cash, based on what it expects to pay during the business day. The rest, well, the bank does something–or–other with them…

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

India’s Experiments with COVID-19

April 4, 2021

India’s Experiments with COVID-19

Shooting from the Hip

Reminiscent of his demonetization effort in 2016, on 24th March 2020, Indian Prime Minister Narendra Modi, appeared on TV and declared an immediate nationwide curfew. No one was to be allowed to leave wherever he or she happened to be. All flights, trains (after 167 years of continual operation) and road transportation came to a complete, shrieking halt.

Stranded in India… [PT]

Tens of millions of people — myself included — got stuck wherever they were.

People were not allowed to leave their homes, not even for grocery shopping, the latter of which was amended after a few days when the government realized that people needed to eat. In a country of 1.38 billion people, the initial policy was a shot from the hip, without any consultation or planning, as if prepared by primary school kids.

Hunger Games, Day-27, India; The irony is that it is the poor who have done slightly better are the most vicious towards the poor. It is women who are most misogynistic. Having been given a blank check, those somewhat better off are putting to action all the sadism they have. pic.twitter.com/4IVXX8qKCV

— Jayant Bhandari (@JayantBhandari5) April 19, 2020

Those, particularly the poor, who ventured out to get food, were ruthlessly beaten by police.

Hunger Games, Day-8; Hundreds of millions are desperate. Lines are growing. In economics, this is a sign of shortages. So is “Price gouging”. In the dystopia of India, beating up shop-keepers is believed to relieve shortages. In a police state, the police also becomes the judge. pic.twitter.com/AWRPFzSHrD

— Jayant Bhandari (@JayantBhandari5) April 1, 2020

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

Jayant Bhandari, acting-man, india, covid, pandemic,

“In America Money Does Grow on Trees”

October 5, 2020

“In America Money Does Grow on Trees”

Full Commitment

This week provided additional confirmation that America is fully committed to a program of currency destruction. Decades of terminal intelligence have gotten us to this special place. We will have more on this in a moment. But first some words on being fully committed.

Say hello to the provider of bacon… lots of bacon, in this case. [PT]

We have never gutted a hog. But we hear it is a bloody mess. The volume of blood that gushes out – as in, ‘bleeding like a stuck pig’ – is profuse.

Contemplating a bacon and egg breakfast plate reveals two types of commitments. That of the chicken. And that of the pig. You may know this allegory. The chicken is involved in providing for the breakfast. It provides the eggs. But the pig is fully committed to it. For the pig must perish to provide the bacon.

America is presently bleeding like a stuck pig. Public and private debts are hemorrhaging a bloody mess. For example, the budget deficit for fiscal year 2020 which concluded on September 30 was $3.3 trillion. By this, the federal government spent double what it generated via tax receipts and other confiscatory measures. And the federal debt held by the public is now well over 100 percent of GDP.

The federal budget deficit, quarterly, as of Q2 2020. [PT]

There is no way the debt will be honestly paid. It is mathematically impossible. Nor will it be paid through an honest default. That is politically unacceptable.

The debt, however, will be paid dishonestly. It will be paid through dollar debasement. America is fully committed to this. Here’s why…

Words of Omission

Tuesday’s presidential debate has been called many things. Most descriptions have cast it in a negative light. Some political pundits used French to describe, in colorful terms, what type of show it was.

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

Central Planners At Work

August 25, 2020

Central Planners At Work

Consumption without Production

“Every man is a consumer, and ought to be a producer”, observed 19th century philosopher Ralph Waldo Emerson. “He is by constitution expensive, and needs to be rich.”

Ralph Waldo Emerson (May 25, 1803 – April 27, 1882), who inter alia opined on consumers and the need to not only consume, but also produce. The latter activity has recently become even more severely hampered than it already was. And yet, government is spending like a drunken sailor. [PT]

These days Emerson’s critical insight is being taken to its extreme. Consumers, many whom lost their jobs due to government lockdown orders, no longer produce. Yet they still consume. They are expensive. Not rich.

What’s more, this consumption is not funded through personal savings. Nor is it funded through government transfer payments. Rather, it is funded via the printing press.

Emerson, no doubt, was lacking in the unique perspective we are presently granted. He did not have the special opportunity to watch his government destroy the economy in short order. Perhaps if he had, he would have penned a neat axiom to distill the essence of what happened.

The world today looks nothing like Emerson’s day. The 19^th century was an age of honest money. Central bankers did not roam the land.

Printing money to buy bonds and stocks, and to sprinkle on people, would have been quickly dismissed. The experience of the Continental Congress during the American Revolution, and their over-issuance of paper “continentals”, had shown that resorting to the printing press was an act of suicide.

Promises, promises… “not worth a continental” became a saying after this early experience with paper money. [PT]

Currently, printing press money is considered enlightened central banking policy. Inflation targets, zero interest rate policy (ZIRP), direct bond purchases, twisting the yield curve, unlimited credit. This is merely a partial list of the trouble central bankers are up to.

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

The Dollar Is Dying

August 10, 2020

The Dollar Is Dying

Insulting the Captive Audience

This week, while perusing the Federal Reserve’s balance sheet figures, we came across a rather curious note. We don’t know how long the Fed’s had this note posted to its website. But we can’t recall ever seeing it. The note reads as follows:

“The Federal Reserve’s balance sheet has expanded and contracted over time. During the 2007-08 financial crisis and subsequent recession, total assets increased significantly from $870 billion in August 2007 to $4.5 trillion in early 2015. Then, reflecting the FOMC’s balance sheet normalization program that took place between October 2017 and August 2019, total assets declined to under $3.8 trillion. Beginning in September 2019, total assets started to increase.”

Directly below this note is the following chart:

Total assets of the Federal Reserve since 2008 – never-ending expansion (shaded areas indicate recessions) [PT]

Does this look like a balance sheet that expands and contracts over time?

Quite frankly, the Fed’s balance sheet chart, and the extreme dollar debasement that it illustrates, is a disgrace. The fact that the Fed had to add this flagrantly false note as preface to its disgraceful chart is an insult.

This is a direct offense to anyone who has built a modest savings account by exchanging their time for dollars. The time and effort put to obtaining these dollars is being stolen by the insidious process of central bank engineered money supply inflation. Year in and year out, these earned dollars will be worth less and less.

Moreover, normalization is a Fed lie. It never happened. Yes, $700 billion was contracted from the Fed’s Balance sheet between October 2017 and August 2019. But that was in the wake of a $3.5 trillion expansion. And it was quickly followed by another $3 trillion balance sheet expansion this spring.

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

Silver “Scarcifies” – Precious Metals Supply and Demand

July 31, 2020

Silver “Scarcifies” – Precious Metals Supply and Demand

On Monday, Silver got Scarcer – and Simpler

On 23 July, we said:

“Well, it’s complicated.”

The action on 27 July was not.

Silver spot price vs. September basis

Notice the big drop in the basis starting around midnight (London time). It falls from over 7% to under 2%.

To refresh: Basis = Future(bid) – Spot(ask)

For the first two and half hours, the spot price is not moving. So, the only way the basis can drop is if the price of the September silver future is dropping. In other words, selling of futures. But while that was going on, there was enough buying of spot to keep it steady.

Then, perhaps some market participants became aware of the buying of spot. Or perhaps some other buyers got excited. Somebody was buying in size, because between around 2:30 and 3:00am, the price shot up from around $23.10 to $24.40. +$1.30.

After that, the price jitters sideways but ends up to about $24.65. And the basis ends up around 3%. There are periods when the basis correlates with price, e.g. from 10:00 to 14:00. During these periods, the price was driven by speculators in the futures markets positioning and repositioning.

And there are also times when they move in opposite directions, e.g. from 6:00 to 7:30. This means that price was driven by buying and selling of physical metal.

Receding Abundance

It is important to note that the price of silver went up, a lot, while the abundance of the metal to the market went down a lot. The Monetary Metals silver basis reading for Friday was 5.3%.

We have written a lot in recent months about the absence of the market makers. This is why the basis has been so high. If the market makers came back, we would expect the basis to be pulled in quite a bit.

We do not believe that this occurred, suddenly, between midnight and 3:00AM Monday morning in London.

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

US Money Supply – The Pandemic Moonshot

June 15, 2020

US Money Supply – The Pandemic Moonshot

Printing Until the Cows Come Home…

It started out with Jay Powell planting a happy little money tree in 2019 to keep the repo market from suffering a terminal seizure. This essentially led to a restoration of the status quo ante “QT” (the mythical beast known as “quantitative tightening” that was briefly glimpsed in 2018/19). Thus the roach motel theory of QE was confirmed: once a central bank resorts to QE, a return to “standard monetary policy” becomes impossible. You can check in, but you can never leave.

Phase 1: Jay Powell plants a happy little money tree to rescue the repo market from itself (from: “The Joy of Printing”).

It is easy to see why. Any attempt to seriously reduce outstanding central bank credit will bring about the very situation QE was intended to prevent, i.e., falling asset prices and an economic bust. Seemingly no-one in officialdom ever stops to ask why that should be so. What happened to “self-sustaining recoveries” and “achieving escape velocity”? Could it be the economy is neither a perpetuum mobile nor a space ship?

Before we consider this question, here is what has happened since then: shortly after the double-plus-uncool novel SARS-2 corona-virus traversed several ponds and made landfall in the US, Mr. Powell and his fellow merry pranksters decided to water the money tree with super-gro. Or maybe it was hyper-gro:

The “QE” roach motel, illustrated by the history of the Fed’s balance sheet.

That is a rather noteworthy bout of inflation. Readers may have noticed that in the realms of finance and economics there has also been an inflation of verbiage describing never before seen extremes. By its very nature, one would normally not expect to hear the term “unprecedented” very often, but it has become disconcertingly commonplace in connection with monetary pumping, deficit spending and debt growth.

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

In Gold We Trust, 2020 – The Dawning of a Golden Decade

June 4, 2020

In Gold We Trust, 2020 – The Dawning of a Golden Decade

The New In Gold We Trust Report is Here!

The In Gold We Trust 2020 report by our good friends Ronald Stoeferle and Mark Valek was released last week. It is the biggest and most comprehensive gold research report in the world. As always it contains a wealth of new material, as well as the traditional wide-ranging collection of charts and data that makes it such a valuable reference work for everything of interest to gold investors or indeed for anyone interested in precious metals (a download link to the report is provided below).

Left: casting gold bars. Right: using gold as a shield against assorted slings and arrows.

Here is a brief overview of the main subjects discussed in the report:

– A review of the most important events in the gold market in recent months
– An analysis of the impact of the Covid-19 crisis on the price of gold
– The increasing importance of gold in times of de-dollarization
– Silver – ready to fly high?
– Gold and cryptocurrencies
– Gold mining stocks: The bull market has started
– Outlook for the gold price development in this decade: A gold price of around USD 4,800 suggested by our quantitative model, even with a conservative calibration of the parameters.

As an aside, yours truly has also contributed a brief chapter to this year’s report, namely the chapter on capital consumption starting on page 192.

As this year’s IGWT report is published, gold has finally clearly reentered a bull market. Of course, with hindsight it is obvious that a bull market was underway ever since the mid-cycle correction ended in late 2015, but it was initially a very labored, halting affair, a “stealth” bull market if you will. And while gold may not yet be at a new all time high in US dollar terms, it has reached new highs in numerous other major currencies:

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

In Gold We Trust, 2020 – The Dawning of a Golden Decade

June 2, 2020

In Gold We Trust, 2020 – The Dawning of a Golden Decade

The New In Gold We Trust Report is Here!

Left: casting gold bars. Right: using gold as a shield against assorted slings and arrows.

Here is a brief overview of the main subjects discussed in the report:

– A review of the most important events in the gold market in recent months
– An analysis of the impact of the Covid-19 crisis on the price of gold
– The increasing importance of gold in times of de-dollarization
– Silver – ready to fly high?
– Gold and cryptocurrencies
– Gold mining stocks: The bull market has started
– Outlook for the gold price development in this decade: A gold price of around USD 4,800 suggested by our quantitative model, even with a conservative calibration of the parameters.

As an aside, yours truly has also contributed a brief chapter to this year’s report, namely the chapter on capital consumption starting on page 192.

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

Tag Archives: acting-man

Content

Post categories

Economic Links

Energy/Resource Links

Environmental Links

Geopolitical Links

Liberty Links

News Links

Other Links

Survival Skills

Post Archives by Category

Words of Omission

Latest Posts