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The Logic of Interventionism, or How to Wake up in a Prison

June 18, 2015

The Logic of Interventionism, or How to Wake up in a Prison

Archaic Financial Freedom

The mainstream press is still full of articles about the alleged evils of cash, which we regard as a typical “trial balloon” launched by the powers-that-be. The way this works is that they get a repressive measure they indent to implement out there, not only to propagandize in its favor, but also to gauge the reaction of the serfs. Is there an outcry? Does anyone care? If not, they quietly go forward with putting the measure into practice. If there is a great deal of pushback, they will simply wait for a better opportunity. A useful emergency always comes along after all. The Charlie Hebdo attack in France is a pertinent recent example: Under the false pretext that this is needed to “fight terrorism”, all cash transaction exceeding €1,000 have been banned in France.

 

1773

 

German daily Frankfurter Allgemeine Zeitung, has recently published an article about the “hoarding of cash” by citizens of Switzerland and the euro zone. With interest rates either at zero or negative, the cash currency component of the money supply has increased significantly, as more and more citizens prefer to hoard money under the proverbial mattress. The new European “bail-in” regime, so vividly demonstrated in Cyprus, is a major motive as well. Most recently, Greek citizens have resorted to withdrawing their deposits, with mainly small savers withdrawing cash (large depositors are more likely to simply transfer money to other parts of the euro area that seem safer).

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

 

 

Corporate America’s Millstone of Too Much Cash

April 24, 2015

Corporate America’s Millstone of Too Much Cash

Corporate America is flush with cash. Amazing amounts of cash.

According to research house FactSet, the combined cash balances of just the 500 companies in the S&P 500 is sitting at a record $1.4 trillion.

That’s a mountain of cash, but here’s some perspective on just how much money we’re talking about. $1.4 trillion is enough money to buy all the shares of Berkshire Hathaway… and Facebook… and Apple… and still have money left over.

That amount increases to almost $2 trillion if you expand the universe to include all publicly traded stocks.

A publicly traded company has five options when it comes to deploying that cash:

  1. Pay down debt
  2. Buy other companies
  3. Pay out dividends
  4. Buy back its own shares
  5. Let it sit in the bank and earn interest

The last option—let it sit in the bank and earn interest—isn’t very attractive in this day and age of zero interest rates, and most companies with gigantic cash hoards have already paid down most, if not all, of their debt, so the only viable choices are numbers 2, 3, and 4.

 

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

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