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Physical gold and digital gold: two sides of the same sound coin

  • 20 Novembre 2018
  • by Blogger

Venezuela, where bitcoin trading is at an ATH and the socialist government has issued its own cryptocurrency amid record-breaking inflation and other economic woes, has been denied access to its own gold reserves by the BoE. The justification used for denying the country’s request to repatriate 14 tons of gold, worth about $550 million, is that there are fears that Nicolas Maduro, president of Venezuela will liquidate the gold for private gain. This situation is at the heart of the Bitcoin philosophy and technology. Bitcoin cannot be censored, and it cannot be stopped so long as there is legitimate dedication by its users to keep it going. The tired out phrase “be your own bank” shouldn’t be advertised to any government, but in the case of Venezuela, it would have served well having done so. They should have sold their physical gold for digital gold well in advance of any sanctions.

Francesco Simoncelli

Fiat money: an endless supply of lies, Part #2

  • 17 Novembre 2018
  • by Blogger

The monopoly over money is fading. New kinds of money replaced M-1 and its components: currency in circulation and checking accounts. We got M-2, then M-3, then MZM. They vary. The experts do not agree on which is “the real money.” They are not sure which has the greatest influence. The central banks do not control them directly. Sometimes, as today, central banks do not seem to control them even indirectly. Central bankers had lost control over money and the economy. New information technologies have undermined any centralized control.

Fiat money: an endless supply of lies, Part #1

  • 12 Novembre 2018
  • by Blogger

Look for “Inflation Calculator.” It’s the second entry under “Inflation & Consumer Spending.” Click the link. Up will pop the inflation calculator. Enter the figure 1000 in the box, and then click the down arrow to enter the date: 1913. Then click “Calculate.” You will see how much money, after taxes, you would need today to equal the purchasing power of $1,000 in 1913, the year of creation for the FED. To compare the success of the FED’s monetary policy, recall that gold today is about $1,200/oz. In 1913, it was $20. That is, gold today is 60 times more valuable, as assessed in dollars, than it was in 1913. Compare this to the resulting figure in the Inflation Calculator. I’m not going to tell you. You should do this exercise for yourself.

It was the abandonment of the gold standard that made modern barbarism affordable

  • 07 Novembre 2018
  • by Blogger

The gold standard is seen as the product of voluntary exchange. The State’s enforcement of the laws of contract leads to the development of a commodity money. The commodity usually is gold or silver. Whatever commodity is portable, widely recognized, divisible, and has a high value in terms of weight and volume can function as money. But gold and silver are the common winners in the competition for money. Money is therefore initially not the product of State action. It is the product of voluntary exchange. This is the view of Austrian School economists: Mises, Rothbard, Hayek. The other view of gold argues that money is the product of State declaration, i.e., fiat announcement. Money is anything that the State says it is. This has been the view of all governments from the beginning of coinage in the sixth century B.C. The State’s gold standard can be extended as a result of military conquest. The victorious nation steals the gold hoard of the defeated nation. While the empire is expanding, the gold standard is possible. When the empire shrinks, gold is abandoned. The costs of empire led to the debasement of the currency.

The gold standard made possible much of the civilization of the ancient world

  • 02 Novembre 2018
  • by Blogger

The British economist, John Maynard Keynes, is famous for one aphorism, “In the long run, we are all dead,” which he applied to the operations of the price system, and one phrase: “barbarous relic,” which he applied to the gold standard. He believed that the free market needed to be policed by bureaucrats to be made efficient. He also believed that the gold standard’s restriction of State power is a great evil.

We're not waving, but drowning

  • 30 Ottobre 2018
  • by Blogger

Federal Reserve Chairman, Powell, has been openly criticised by President Trump; whilst this may not cause the FOMC to reverse their tightening, they will want to avoid going down in history as the committee that precipitated an end to Federal Reserve independence.

There is a great chance that the S&P 500 will decline further. Wednesday’s low was 2652. The largest one month correction this year is still that which occurred in February (303 points). We are not far away, however, a move below 2637 will fuel fears. I believe it is a breakdown through the February low, of 2533, which will prompt a more aggressive global move out of risk assets. The narrower Dow Jones Industrials has actually broken to new lows for the year and the NASDAQ suffered its largest one day decline in seven years this week.

Why having physical gold is the safest way to hedge your savings

  • 27 Ottobre 2018
  • by Blogger

The free market created money. Civil government spotted an opportunity and took it. The State granted itself a monopoly over money. It did so in the name of law: the defense of society from unscrupulous cheats and counterfeiters. From the day King Croesus (rhymes with “greases”) asserted authority over the new invention of the round metallic device that we call the coin, the State has muscled into monetary affairs. For 2,600 years, the public has accepted this arrangement. It worked for 1,100 years in Byzantium: 325 to 1453. It has not worked anywhere else for longer than a century or two.

Praxeology explains us why Uncle Sam is broken

  • 24 Ottobre 2018
  • by Blogger

Historical data cannot produce much information about the facts of reality without a theory that “stands on its own feet” and is not derived from the data. Gazing at the data cannot assist an analyst in establishing causes in the world of economics. All that gazing will do is to help describe things. To ascertain the underlying causes one requires an explanation that can be made by a logically worked out theory. The role of historical data in all this is just to illustrate things but not to serve as proof. One example that Mises liked to use in his class to demonstrate the difference between two fundamental ways of approaching human behavior was in looking at Grand Central Station behavior during rush hour. The “objective” or “truly scientific” behaviorist, he pointed out, would observe the empirical events: e.g., people rushing back and forth, aimlessly at certain predictable times of day. And that is all he would know. But the true student of human action would start from the fact that all human behavior is purposive, and he would see the purpose is to get from home to the train to work in the morning, the opposite at night, etc. It is obvious which one would discover and know more about human behavior, and therefore which one would be the genuine “scientist”. That man pursues purposeful actions implies that causes in the world of economics emanate from human beings and not from outside factors.

Hedging against financial tailwinds

  • 21 Ottobre 2018
  • by Blogger

The nineteenth century was the first stage of an international sting operation. As in the case of every con game, the con man must create a sense of trust on the part of his mark. Whether it is a Ponzi scheme or a more traditional scam, if the targeted sucker distrusts the con artist, he won’t surrender his money. For the con game to work, the con man must create an illusion of reliability. In short, he must present himself, economically speaking, as if he were “as good as gold.”

The era of limited government led to enormous economic expansion. It also led to the mass production of high-tech weapons. Governments had to get their hands on these weapons in order to defeat other governments. There were few Third World nations in 1885 that could afford fifteen minutes of ammo for a Maxim machine gun. The big governments, in the words of nineteenth-century New York City politician George Washington Plunkett, “seen their opportunities and took them.” The age of modern empires began in earnest.

To regain freedom we have to join forces

  • 17 Ottobre 2018
  • by Blogger

When two giants shake their hands, we can be sure that something big is happening. In our case, the most important tools that free markets brought to us can join forces to demolish once and for all central planning and fractional reserve banking. Economic laws are a priori, thus cannot be violated. Yes, they can be temporarly circumvented, but there is a price to pay. Add today's price is very high given the fact that central bankers are flying blind and run the most dangerous monetary experiment never seen before in monetary history. Market are dynamics while central planning is static, and as we can see economic laws are presenting the bill. There are errors that need to be cleaned. Chapter 11s to be filed. But, most of all, there is freedom to be regained. Therefore, let's explore all the ways that can bring us to that final goal and let's appreciate again what means thriving by means of market forces. A second industrial revolution is coming, and if you don't care about economics, the latter will deal with you.

Francesco SImoncelli

 

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