|Last Updated: Jul 3rd, 2017 - 15:54:31
Thought for the Day
"Austrian Economics teaches that a circulation-credit-fueled boom can only be sustained by ever-greater doses of credit and money expansion, provided at ever-lower interest rates. As soon as the growth rate of credit and the money supply slows down, the illusionary upswing collapses. Malinvestment is revealed, firms cut employment, and the economy goes into recession."
So says Thorsten Polleit; Honorary Professor at the Frankfurt School of Finance and Management.
We are witnessing this process happening all around the world. Yet it is possible to stop this destructive cycle.
Listen to some advice from Alan Greenspan:
"Deficit spending is simply a scheme for the 'hidden' confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights."
From "Gold and Economic Freedom" a 1966 Essay by Alan Greenspan which can be found on our website, here:
So it is quite clear to a range of people that paper money backed by government promises produces our boom/bust cycle and that the way to protect ourselves from the consequential loss of wealth is to adhere to a gold standard. No less a person than El Maestro, Alan Greenspan himself, assures us of that.
Another person who is having trouble going along with establishment thinking is James Grant:
"The dollar is a scrap of paper, or an electronic impulse, the value of which is anchored by the analytical acuity of the monetary bureaucracy that failed to predict the greatest financial crackup since the 1930s." - James Grant, Wall Street Journal, 20 September 2009
Oh dear. It sounds like we really are in trouble, doesn't it.
Paul Krugman was quoted in the Economist 13th June 2009 as saying, "Most work in macroeconomics in the past 30 years has been useless at best and harmful at worst."
And Paul Krugman is our latest Nobel Prize winner for economics!
Since we are into quotable quotes this week perhaps I can finish with:
"All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident."
Arthur Schopenhauer (1788-1860)
Feb 10, 2010, 11:25
I have discovered that a TV Journalist, Glenn Beck, from FOX News understands Austrian Theories of economics and is trying to explain to Obama how to get REAL. Channel 92 at 8pm, each night I think.
Last night he showed how the recession of 1920 in America was more precipitous than the 1929 crash but the government under President Harding kept out of the way and it was short and sharp but not a long drawn out disaster like we had in the 1930s with governments continually pumping in money.
Glenn Beck is entertaining as well.
Feb 12, 2010, 10:49
The Depression is Not Over
Ben Bernanke's theory (from Keynes) holds that the way to solve a recession (or the current depression in the USA) is to distribute freshly printed dollar notes as far and as fast as possible - even using a helicopter if necessary.
This is why some call him "Helicopter Ben".
If you thought that it is rather strange that one can generate prosperity by simply printing more paper money on the basis that it doesn't seem to make common sense - then you are right.
Here is a proper explanation of the problem and the solution. And the REAL solution is not Ben's solution!
[ Visit Website ]
Feb 11, 2010, 11:42
Vietnam Devalues Dong Again, This Time by More Than 3%
What's the bet that the Vietnamese government is printing more paper money than it should?
Feb 11, 2010, 10:10
China Orders Retreat From Risky Assets
America's policy of maximum interference in its financial downturn is changing it into a long lasting global depression.
Ludwig von Mises once said:
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
We have seen Zimbabwe's currency system collapse. We are seeing the beginning of America's currency problems. Will they manage to rein in the monetary expansion or will they hyper-inflate and collapse?
Zimbabwe didn't bother us at all, but the US Dollar is the world's reserve currency. That will bother us.
It is also beginning to bother China.
Feb 11, 2010, 09:51
Germany Backs Bailout For Greece as EU Seeks Expanded Power
"A good crisis must never be wasted." Advice to a tyro politician.
So the good bureaucrats of Europe will gain more power as they centralise money in the EU. How will Germany react to this loss of sovereignty? Will the euro become a good substitute for the shaky dollar?
Where is the world's money system going? Is anyone in charge? If so, who?
Feb 10, 2010, 11:06
After Buying Spree, China Owns Stakes in Top U.S. Firms
The American government has taken over GM, AIG, Fannie Mae and Freddie Mac at huge expense in an attempt to keep the good times rolling.
China has bought shares in Morgan Stanley, Bank of America, Citigroup and other successful American companies.
Is this the beginning of a cold war fought with money and "Buy Out" offers?
[ Visit Website ]
Feb 9, 2010, 15:19
Greek Crisis Escalates Into Global Margin Call
Our paper money crisis is becoming a whirling dervish. Faster and faster the Central Bankers spin. Faster and faster they produce paper money.
How fast can they go?
Feb 9, 2010, 11:27
Secret Summit of World's Top Bankers in Australia
Economies are natural things. They involve real people exchanging goods and services using money as the medium of exchange. Over 1000s of years people have come to learn and trust that gold and silver are most useful as money, not least because they are valuable in their own right and retain that value as a store of wealth.
Governments and bankers are interfering with that natural order by using paper as money and inevitably printing too much of it. This leads to artificial "growth" and the investment of cheap paper money into risky ventures that would not otherwise occur. The boom is on and eventually the natural market corrects this disturbance. Unfortunately we don't like this bust.
So our bankers and governments work together with advice from their economists on how they can stop the bust from occurring. This is not possible. It can be delayed as we see in Japan which has spent 20 years slowly deflating in a continual orgy of government debt. America is trying the same remedy and Obama is printing trillions of dollars which is supported by government debt.
This is inflation.
And so the world's central bankers meet more and more frequently as they try to solve the unsolvable.
It seems to me that they are just synchronising an ultimate bust where all western nations go bust together.
Feb 9, 2010, 09:37
Warren Buffett's Berkshire Hathaway No Longer Rated AAA
Are the rating agencies preparing to lower the rating of the USA from AAA? As I understand it they cannot have a company rated more highly than the country in which it resides.
Is the world really on the mend or are we merely in the eye of the hurricane? I think we will find out this year!
[ Visit Website ]
Feb 8, 2010, 10:51
Inscrutable? Well, maybe. I wonder what the Chinese leadership really wants?
[ Visit Website ]
Feb 4, 2010, 15:07
Gold - China's End Game?
As we have discussed before, China is advertising on TV encouraging its citizens to buy silver and gold.
Chinese bureaucrats have had long discussions with GATA about US depression of gold prices. The Chinese also used silver as a currency until 900 AD when they invented printing on paper and started using the world's first paper money. This paper lasted more than 100 years but ended in disaster as it has always done since. China then went back to using silver as money until the Americans persuaded them to try paper again in the 1930s.
China has been a sophisticated society for many many centuries. They must know what we have learnt about gold and silver as money and the inevitable demise of paper money.
China will win what Russia coveted without anyone knowing that there was a war!
Some others are starting to catch on. . .
The good thing about all this is that owning gold and/or silver provides REAL freedom for the individual citizen.
[ Visit Website ]
Feb 4, 2010, 14:51
20 Reasons Global Debt Time Bomb Explodes Soon
The Wall Street Journal contemplates the "Death Star" end to the American economy.
This is serious, and when the United States goes into financial melt-down in the near future the rest of the world will succumb to the Great Depression II - as they call it.
Debtors will be in serious trouble!
[ Visit Website ]
Feb 4, 2010, 14:32
Should Germany Bail Out Club Med or Leave Euro Itself?
Paper money produces continual instability. The Europeans are having fun and money matters are coming to a head.
Feb 1, 2010, 12:20
Why Gold Will Keep Going up For Years
I have consistently found that the best explanation of the REAL World is by top level investment advisers. John Embry is one such and his remarks at a recent conference in Canada are worth reading.
Jan 31, 2010, 19:20
Behind the Scenes
High level investment advisers know what is going on in the arcane Central Banking world.
This is a very illuminating interview.
[ Visit Website ]
Jan 31, 2010, 17:17
At Least Vietnam Admits Rigging Gold as Currency Intervention
HANOI, Vietnam -- The price of gold in Vietnam dropped by more than 5 percent on Friday from the day before after the central bank told the country's biggest maker of gold bars to sell bullion to help narrow the gap with world prices.
Saigon Jewelry Co. (SJC) sold 28,000 taels of gold (33,880 ounces) on Friday compared with 10,000 taels on Thursday, a company official said by telephone from Ho Chi Minh City.
"The state bank has asked SJC to sell gold so that prices can be stabilised in line with the world market," said the official, who declined to be identified.
Gold was quoted at around 24.9/25 million dong ($1,353.60/$1,359) per tael at around 1000 GMT, about 5.4 percent lower than the 26.37/26.43 million dong quoted late on Thursday, according to SJC's website (www.sjc.com.vn).
Gold prices in Vietnam have been higher than world prices because imports are controlled and taxed, and sellers charge a premium for the commodity, which is widely used as a second currency and reserve of wealth.
On Friday afternoon, after the price fell, gold in Vietnam was still higher than world prices by about $63 per ounce, or 6 percent.
A central bank statement later confirmed that it ordered SJC to sell gold and said it would "apply necessary supportive measures" during the process of stabilising gold prices. It did not give further details.
On the world market, gold prices hovered above three-month lows on Friday, a day after after posting their biggest one-day loss since 2008, with investors wary of taking risks amid mounting sovereign debt fears in Europe.
The amount of gold SJC sold on Friday was relatively large. By comparison, on slow trading days it sells 4,000-5,000 taels, the official said. When gold prices soared to around 29 million dong per tael, in early November, SJC was also ordered to sell bars and it offloaded 16,000 taels per day, he said.
He did not say how long the firm would sell at high volumes.
The nation is preparing for the Lunar New Year, or Tet, its biggest festival of the year. The government has committed to keeping prices stable and currency flowing during the period when there is traditionally a surge in consumption.
The central bank's decision also follows government orders to close all of the country's roughly 20 gold floors, which deal in non-physical gold and allow margin trading, and overseas trading accounts.
Vietnam's currency, the dong, is closely linked to the gold market. When gold prices soared in November, for instance, the dong sank on the black market because gold smugglers were buying dollars to take across borders to purchase new gold. (1 tael = 1.21 troy oz; $1 = 18,469 dong)
Jan 30, 2010, 11:22
Quote for the Week
I often think about the basic tenets of Economics as espoused by the experts of our day and this quote sums up my thoughts very nicely:
"... if it is a Miracle, any sort of evidence will answer, but if it is a Fact, proof is necessary."
Mark Twain - [Samuel Langhorne Clemens] (1835-1910)
And the last word to Thomas Jefferson:
”Everything predicted by the enemies of banks, in the beginning, is now coming to pass. We are to be ruined now by the deluge of bank paper. It is cruel that such revolutions in private fortunes should be at the mercy of avaricious adventurers, who, instead of employing their capital, if they have any, in manufacturing, commerce, and other useful pursuits, make it an instrument to burden all the interchanges of property with their swindling profits. Profits which are the price of no useful industry of theirs.” (1813)
Jan 29, 2010, 11:46
Creating Wealth and Keeping it
The New book by Phil Scott, President of the Foundation for Economic Growth.
"This book is good, damn good and no statistics!" Lindsay Gordon, MA, MSC, PHD.
Every serious economics student should have a copy and read this ground-breaking foundation of clear economic thinking. Real Economics explains how human actions shape our world and why so much seems to be going wrong for Western economies. This book will bring enlightenment for the general reader who will see why a few very wealthy are becoming exceedingly rich and the middle classes are on the road to serfdom.
See more: www.realeconomics.co.nz