Home » Posts tagged 'currency'

Tag Archives: currency

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Wrong for a different reason

Wrong for a different reason

Alexandria Ocasio-Cortez – A well-meaning but not particularly bright left-leaning US politician – made a stir earlier this week by wearing a figure-hugging dress emblazoned with the slogan “Tax the Rich” to the prestigious 2021 Met Gala.  Since the slogan was clearly political, it wasn’t long before the various political tribes took to social media to pass judgement.

“Hypocrisy!” was the charge made by the libertarian right.  As Amanda L Gordon at Bloomberg explains:

“The message itself wasn’t surprising — Ocasio-Cortez has been one of the biggest supporters of raising taxes on the rich to help pay for more social services and narrowing the massive wealth gap between America’s rich and poor. But the latest setting in which AOC — as she is known — chose to express it drew attention.

“The annual event at New York’s Metropolitan Museum of Art is the haunt of celebrities, designers, billionaires and various other members of the jet set that are willing to pay $35,000 a pop for the privilege to attend.”

But, the left ask, “where better to demand that the rich pay their fair share of taxes than in a gathering of the rich themselves?”  According to Hannah Selinger at the Independent, for example:

“The truth is, women have always used clothing — the most accessible medium — to express their politics. One might say that such choices in the everyday sphere have been more subtle. Ocasio-Cortez’s dress, of course, was anything but. And that was entirely appropriate for the space in which the statement was made.”

Ocasio-Cortez has also clarified that she did not pay $35,000 to attend and that the dress was borrowed for the evening:

“The time is now for childcare, healthcare, and climate action for all. Tax the Rich.

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

How long will the US dollar’s dominance last?

301 AD was a big year for the Roman Empire.

That was the year that, amid spiraling inflation, Emperor Diocletian issued his Edict on Maximum Prices, essentially fixing prices of just about everything across the Roman Empire.

The price of wheat, a day labor’s wages, a quart of olive oil, transportation rates– everything was established by the Emperor’s edict, and enforced under penalty of death.

Diocletian’s edict infamously didn’t work, and the empire plunged into even more severe inflation.

The other big event of 301 AD was the introduction of the solidus gold coin, roughly 4.5 grams of nearly pure gold.

And while the Romans had a history of debasing their other coins, like the silver denarius and sesterce, the government actually did a pretty good job maintaining the value and purity of the gold solidus.

Even hundreds of years later, after the western empire in Rome had fallen to the barbarians, and imperial power was concentrated in Byzantium, the gold solidus was still approximately as pure as it was in the early 300s.

That’s an extraordinary track record for currency stability. Confidence in the gold solidus was so high, in fact, that various tribes and kingdoms around the world used the coin for trade and savings.

This became a source of pride for the Byzantine Empire; Justinian I, who ruled in the mid 500s, stated that the solidus was “accepted everywhere from end to end of the Earth,” and that it was “admired by all men in all kingdoms, because no kingdom has a currency that can be compared to it.”

It wasn’t until the mid 11th century, more than seven centuries after the introduction of the solidus, that an Emperor began to debase the currency.

Just like Hemingway described going bankrupt, the debasement of the solidus was gradual… then sudden.

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

The Real Digital Plot

The Real Digital Plot

The move to end paper money and move toward a national cryptocurrency took a major step recently when the House Financial Services Committee task force expressed support for experiments to create a digital cryptocurrency version of the U.S. dollar. They argued that the United States had to keep pace with China, and in the process, they enable all Americans to access the digital economy. Neha Narula, who is the academic director of MIT’s Digital Currency Project, testified claiming, as they did in creating the euro, that the benefits of a digital dollar will lower costs within the electronic payment system. Of course, China also cracks down on protesters in Hong Kong. Obviously, the United States must crackdown on all dissent and cancel them from society to keep pace with China.

For years, I have watched behind the curtain how they operate. I believe that Bitcoin was “ALLOWED” to be created for the sole purpose of moving to a digital currency. Just as they float a balloon in first to see how the market reacts, which allows them to always deny it.

Nobody knows who invented blockchain. Don’t you find it curious that such a major invention takes place and nobody takes credit? Even the notorious government propaganda site, Wikipedia, states: “The blockchain was invented by a person (or group of people) using the name Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin.” This appears to be the perfect COVERT operation, for blockchain allows the government to trace every person who handled that Bitcoin.

This entire cryptocurrency has been sold as somehow circumventing the central banks, and it will defeat fiat currency when in fact it too is not backed by anything tangible…

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

The Most Lethal Act that Kills Governments

QUESTION: Mr. Armstrong. I heard you are the best when it comes to monetary history and systems. I found your comment that it was not the printing of money that created the German hyperinflation but they first confiscated 10% of everyone’s assets. My question is this the only such example? I have listened to two interviews you have done and you used the same example. Can you point to any other such events?

HF

ANSWER: You can buy the German bonds of December 1922 probably on eBay if you would like a piece of history. I probably have the best reference collection with respect to monetary history in the world. I do not makeup stuff, and I do not rely on modern history books. I prefer to also collect the reference materials of the era. I have bought newspapers bound in annual volumes from libraries over the years before digital. I have an extensive collection of both US and British materials. You will often see in my writings I publish articles from that period to show what they really said back then, not someone else ignoring or altering it to fit their agenda.

I have stated many times that I had to read Galbraith’s “Great Crash” in school. He was really a Socialist and never mentioned anything about a Sovereign Debt Crisis. Only when I found a rare copy of Herbert Hoover’s “Memoirs” in a London book store did I see all the evidence he put forth. My subsequent search of contemporary newspapers confirmed that the history books were all written by Socialists who supported Stalin back then. WHEN YOU DO THE RESEARCH TO DISCOVER WHAT HAPPENED, instead of trying to support a theory, you actually discover some very interesting facts. Hoover’s words applied to the 2007-2009 Financial Crisis and the collapse of Greece in 2010. Capital acted the very same way.

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

 

What Gives Value to a Currency?

QUESTION: Hello Martin, can you explain to me how a currency would sustain value for international trade if a country, like Canada (where I live), did what you suggested and stopped issuing debt and just printed money to level that was 5% – 10% of national GDP? would it depend on the attractiveness of what a country exports eg: Canada exports oil, lumber, crops like wheat/soy/canola, minerals – both precious and functional? What would happen to a country that didn’t have exports as a significant portion of it’s GDP? I am curious about how currencies would react to your restructuring plan that eliminated the need for a country to issue debt. Thanks for all your insights and theories. Very helpful.

Trapped in Canada with an egoistic misguided Prime Minister who doesn’t appear to like Canada (he keeps telling us how awful we are) or Canadians, he prefers spending time with global elites and is following their plan even though it damages Canada pretty significantly.
MB

ANSWER: Right now, every country spends more than it takes in. The deficits are funded by selling debt, which then competes against the private sector. The interest rates rise and fall on sovereign debt based upon the confidence from one week to the next. If they stopped borrowing, then the capital investment would turn to the private sector, creating more economic growth. If income taxes were eliminated, the economy would grow based upon innovation which is what it should be driven by.

The confidence in the currency would simply depend upon the strength of the economy, as was the case for Athens and Rome in ancient times. Their coinage was imitated because they were the dominant economies of their time. The value of a currency is the strength of its economy…

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

currency, currency value, money, martin armstrong, armstrong economics, money printing, debt,

Understanding the Persecution of John Law

COMMENT: Hi Mr. Armstrong…..this is a surprising (to me) summary, on John Law. Every piece I ever read about him, cast him as a complete scoundrel, yet you obviously write with admiration. Just another example of history depending on someone’s perspective. You never cease to surprise. And that’s good.

HS

REPLY: John Law was actually a brilliant man. His legacy is not so different from John Maynard Keynes. He advocated deficit spending ONLY in times of recession, but governments have spent relentlessly with deficits that never end. We call this “Keynesian economics” when in fact he never advocated such a system. Likewise, John Law never advocated what the French government did in creating the Mississippi Bubble.

It is true that John Law fled to Amsterdam, but this is when he studied real banking operations and saw that money was actually virtual. Because coins were counterfeited or their edges shaved, bank money was more valuable than coins. Once the coins were deposited, each had to be inspected. So the bank became a sort of guarantor of the validity of the coins. Here is an ancient coin from Lydia with numerous banking marks applied, verifying that the coin had been inspected by them before for the same reasons.

It was this first-hand observation that led John Law to see that money was actually virtual, whereby people preferred bank money to actual coins. John then returned to Scotland, where he published in 1705 his Money and Trade Considered, with a Proposal for Supplying the Nation with Money. Law would later publish a second edition in 1720. He attempted to use his writing to convince the Scottish Parliament to adopt his ideas about money, but they declined, giving rise to the adage that a genius is never acknowledged in his native land (i.e. Columbus, Einstein to just mention two)…

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

john law, currency, money, martin armstrong, armstrong economics, banking, banks,

Disoreder Will Come–As Confucious Warned

DISORDER WILL COME – AS CONFUCIUS WARNED

 

When bubbles burst, we will discover how very few superior men there actually are – as defined by Confucius:

“The superior man, when resting in safety, does not forget that danger may come. When in a state of security he does not forget the possibility of ruin. When all is orderly, he does not forget that disorder may come. Thus his person is not endangered, and his States and all their clans are preserved.” – Confucius

Superior man can exist at many different levels in society, not necessarily linked to money or investments. There will be many people without money who are prepared at an intellectual or psychological level. These people are probably the happiest since sadly many wealthy people worry about their money all the time rather than enjoy it.

In this piece I am talking primarily about preparedness in relation to one’s wealth.

PS Important Postscript at the end of the article.

FOCUS ON WEALTH PRESERVATION

The investors we meet in our business are people who are risk averse and therefore very much focus on wealth preservation. These investors buy physical gold because they are concerned about the excessive risks in markets. They want to protect and insure their wealth against unprecedented financial and currency risk. Like ourselves, these investors consider physical precious metals, stored outside a fragile banking system, as the ultimate form of wealth preservation.

But investment gold represents less than 0.5% of world financial assets. This means that a minuscule percentage of investors insure their wealth in gold. This is clearly surprising bearing in mind that over 5,000 years gold is the only money that has survived.

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

Egon von Greyerz, gold switzerland, inflation, risk, gold, precious metals, wealth, financial bubble, bubble, currency, banking system

Opinion v Fact

COMMENT: Marty,

Each day I read reports from so called reputable people expressing what they think might happen given the backdrop today. It is laughable. Most do this based on superficial analysis or cursory comparisons with things that appear to line up, appear to rhythm, to paraphrase M Twain. What a joke.

I say this here because as I relearn what I once thought I knew, analyze my mistakes using real data…it brings me back to you and your marvelous study of history, your database, which is incomparable, and your willingness…let’s call it humility, to let Socrates make the call. Just remarkable.

What this has done for me is save countless hours reading nonsense and instead focusing on the data. Not trying to push my opinions on a trade and expect the market will follow, but respect what is there and not force things. Nothing is absolute, no one is always right. But today there are so many people who are flat out wrong, who claim to be right…just give them time, it explains why the government fails repeatedly…because these are the people who, like Keynsians or socialists claim…just give it more money…it will work. Right. History always seems to tell a different story.

MS

REPLY: Thank you. What I try to get across is what I have learned from my clients. Because I was perhaps the only international analyst in foreign exchange back in the 70s and 80s, we ended up with the largest client base that was so diverse that it compelled me to look at the world through everyone else’s eyes. I remember doing an institutional conference in Zurich probably around 1982-1983. People started flying in to attend from around the world. There were people from the USA and Canada as well as Germany who traveled to Zurich.

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

 

Predictions Of The Dollar’s Demise Are Likely Premature

Predictions Of The Dollar’s Demise Are Likely Premature

Predictions of the dollar’s demise are likely premature and overblown. This post is in response to the rising interest in both precious metals and cryptocurrencies. Several factors are driving this trend. One is the idea governments have targeted cash and wish to move us towards a “cashless” society where they control our every move. Another is rooted in the idea inflation is about to raise its ugly head as currencies are debased. 

I contend that for several years currencies have been trading in a hyper-manipulated state. It should be noted that fiat money is often sheltered from the storm of volatility by both politics and because it exists in a rather closed system. Wealth is contained within this system of fiat money by laws and rules that discourage freedom of movement. It is the coordinated collusion of the major central banks that have allowed this charade to exist. The fact it has not been recognized or acknowledged does not alter or guarantee the system will continue. The failure or major repricing of any of the world’s four major reserve currencies will destroy the myth that major currencies are immune to the fate that has haunted fiat money throughout history. When the nations granting these currencies prove unable to control their budgets history shows their currency is destroyed and crushed under the weight of debt.

Central Bank Balances Have Exploded

One thing the global economy doesn’t need with all the uncertainty that is currently floating around is unstable currency markets. When you consider just how destabilizing currency swings can be it is easy to see how a strong dollar could obliterate the global economy. It should not be a surprise in our current situation that behind the curtain central bankers could be busy manipulating currencies so they trade in a narrow range that will not rock the boat.

Globalization and Financialization Are Dead, and so Is Everything That Depended on Them

Globalization and Financialization Are Dead, and so Is Everything That Depended on Them

Financialization was never sustainable, and neither was the destructive globalization it enabled.

All the happy-story analogies to past pandemics being mere bumps in the road miss the mark. A popular claim is that the 1918-1919 flu pandemic killed millions but no biggie, the Roaring 20s started the following year. It’s onward and upward, baby, once we toss the masks.

Wrong. Completely, totally, dead wrong. The drivers of the past 75 years of growth– globalization and financialization–are dead, and so is everything that depended on them for “growth”. (Growth is in quotes because once external costs and currency arbitrage are factored in, most of what’s been glorified as “growth” is nothing but losses covered by accounting trickery.)

Here’s what’s poorly understood: globalization and financialization die when they stop expanding. Just as a shark dies if it stops swimming forward, globalization and financialization die once they stop expanding, because their viability depends on expansion.

Globalization and financialization have been losing momentum for years. Under the guise of “opening markets,” globalization has stripmined every economy that can’t print a reserve currency and hollowed out economies globally as only globally competitive sectors survive globalization. The net result is that once vibrant, diversified economies have been reduced to fragile monocultures completely dependent on global flows of capital and spending for their survival.

Tourism is a prime example: every region that has seen its local economy crushed by global arbitrage and corporate hegemonies, leaving global tourism as its sole surviving sector, has been devastated by the drop in tourism, which was always contingent on disposable income and credit expanding forever.

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

Peter Schiff: Americans Are in for a Rude Awakening

Peter Schiff: Americans Are in for a Rude Awakening

On Jan. 13, Peter Schiff appeared on RT Boom Bust with Bubba Horwitz to talk about the yuan, the dollar, the stock market and the US economy. Peter said the dollar is eventually going to collapse and it’s going to be a rude awakening for Americans.

The Chinese yuan has been gaining strength against the dollar in recent weeks, in part because of optimism that there will eventually be a resolution to the trade war. But the Chinese currency is still over 17% lower than it was when the US imposed its first tariffs. Does this mean the markets are cautiously positioning for a deal, or is there still skepticism about the phase 1 deal? Peter focused on the bigger picture.

Well look, a phase one might happen because a phase one is insignificant. The real deal is supposedly phase two. That’s the one that’s not going to happen. So, if anybody thinks we’re going to have a substantive deal, they’re wrong. But the reality is, I think the Chinese yuan is undervalued relative to the dollar and I expect it to rise rather dramatically over time.”

Peter said this is not good news for the US.

It’s going to make imports more expensive for Americans, so it’s going to reduce our standard of living. And I do think ultimately, it’s going to push up interest rates as well, as the Chinese and a lot of other creditors are no longer lending money to Americans, and so we have to draw from our own savings pool, which is extremely shallow. It means the Federal Reserve is going to be printing a lot more money as it monetizes the debt that the Chinese and other nations no longer want to buy, and this is further going to lower the American standard of living.”

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

Rob Kirby-U.S. Dollar Rejection to Accelerate

ROB KIRBY – U.S. DOLLAR REJECTION TO ACCELERATE


Returning SBTV guest, Rob Kirby of Kirby Analytics, had a though-provoking conversation with us – he questioned the ridiculousness that the US has never had a failed bond auction given the poor fundamentals of the US dollar, even as de-dollarization sentiments are accelerating.

Discussed in this interview: 
02:07 Fed unwinding balance sheet to pre-QE levels is a pipe dream
06:19 Ridiculous that the US has never had a failed bond auction
10:15 US shale oil industry could be soaking up unwanted dollars
12:48 De-dollarization: Foreigners do not want dollars
20:31 Energy independence? US still needs Saudi oil
22:18 Oil is the main sustenance for the US dollar
22:45 The ridiculous paper gold market
26:21 World does not want dollar-denominated debt

Russia To Reduce US Dollars In National Wealth Fund As Putin’s De-Dollarization Continues

Russia To Reduce US Dollars In National Wealth Fund As Putin’s De-Dollarization Continues 

Russia’s de-dollarization effort is full steam ahead, in line with President Putin’s commitment to reduce the country’s vulnerability to the continuing threat of US sanctions.

Crossing the wires early Wednesday morning, Russian Deputy Finance Minister Vladimir Kolychev, was quoted by Reuters as saying the Russian sovereign wealth fund will reduce US Dollars and is considering adding Chinese yuan. 

  • RUSSIAN DEPUTY FINANCE MINISTER KOLYCHEV SAYS SHARE OF US DOLLARS IN NATIONAL WEALTH FUND WILL BE REDUCED 
  • RUSSIAN DEPUTY FINANCE MINISTER KOLYCHEV SAYS INCLUSION OF OTHER FOREIGN CURRENCIES INCLUDING YUAN IS BEING CONSIDERED
  • RUSSIAN DEPUTY FINANCE MINISTER KOLYCHEV SAYS FINANCE MINISTRY PLANS TO CHANGE NATIONAL WEALTH FUND’S FX STRUCTURE IN 2020 

Kolychev said the change to the foreign exchange structure of the wealth fund would occur in 2020.

Ukraine and Russian-backed rebels begin troop withdrawal in eastern regions

Last month, Russian Economy Minister Maxim Oreshkin told the Financial Times that the country would continue down the path of de-dollarization and begin trading some oil transactions in Euros and roubles.

“We have very good currency, and it’s stable. Why not use it for global transactions?” Oreshkin said in a recent interview with the FT.

 “We want (oil and gas sales) in roubles at some point,” he said.

Despite less than 5% of Russia’s $687.5 billion in annual trade being with the US, it remains that over half of that trade still relies on the dollar, according to Bloomberg figures.

US sanctions have been very selective as of recent, specifically targeting Gazprom, the country’s gas giant. Sanctions have banned any US company from supplying Gazprom with equipment.

Russia’s desire to abandon the dollar is a trend that continues to gain momentum and could be fully realized by the mid/late 2020s.

Our Currency, Your Problem

Our Currency, Your Problem

“Major movers” such as China, Russia and the European Union have a strong “motivation to de-dollarize,” said Korin, co-director at the energy and security think tank, on Wednesday.

“We don’t know what’s going to come next, but what we do know is that the current situation is unsustainable.”

–  Anne Korin, Institute for the Analysis of Global Security.

Irrespective of where you reside in the world, chances are you feel some sense of unease, a nagging concern for the future and a deep instinctual understanding that an era you knew and navigated your entire life is slipping away and won’t be coming back.

We’ve been witnessing widespread protest and unrest across countries with distinct political and economic systems, such as Hong Kong, France, Chile, Spain, Ecuador, Lebanon and Venezuela just to name a few. Those with vested interests and an ideological solution to sell insist it’s all because of socialism, capitalism or some other ism, but the truth is this goes far deeper than that. What’s actually happening is the geopolitical and economic paradigm that’s dominated the planet for decades is failing, and rather than address the failure in any real sense, elites globally are have decided to loot everything they possibly can until the house of cards comes crashing down.


This chart is almost as disturbing as the charts of negative yielding debt.
The entire financial system is a farce and a fraud. It’s all smoke and mirrors, a coverup machine for elitist looting.

Despite people with vested interests reassuring you this is normal, it is not. https://twitter.com/zerohedge/status/1189919094331588608 …


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

The monetary lessons from Germany

The monetary lessons from Germany 

Germany suffered two currency collapses in the last century, in 1920-23 and1945-48. The architect of the recovery from the former, Hjalmar Schacht, chose to cooperate with the Nazi successors to the Weimar Republic, and failed. In that of the second, Ludwig Erhard remained true to his free market credentials and succeeded. While they were in different circumstances, comparisons between the two events might give some guidance to politicians faced with similar destructions of their state currencies, which is a growing possibility.

Introduction

Let us assume the next credit crisis is on its way. Given enhanced levels of government debt, it is likely to be more serious than the last one in 2008. Let us also note that it is happening despite the supposed stimulus of low and negative interest rates, when we would expect them to be at their maximum in the credit cycle, and that some $17 trillion of bonds are negative yielding, an unnatural distortion of markets. Let us further assume that McKinsey in their annual banking survey of 2019 are correct when they effectively say that 60% of the world’s banks are consuming their capital before a credit crisis. Add to this a developing recession in Germany that will almost certainly lead to both Deutsche Bank and Commerzbank having to be rescued by the German government. And note the IMF recently warned that $19 trillion in corporate debt is a systemic timebomb, and that collateralised loan obligations and direct exposure to junk held by the US commercial banks is approximately equal to the sum of their equity.

Then we can say with some confidence that a major credit crisis is developing, and that it will almost certainly be far greater than Lehman.

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

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
Click on image to purchase