Last Updated: Oct 22nd, 2010 - 15:35:08 Newsletters : 2010 Newsletters : 25 June 2010 Thought for the Day There is a branch of mathematics called Operations Research (Management Science in America) which uses various mathematical techniques to solve business problems. One of these business problems relates to Inventory Control. This involves the careful (and scientific) measurement of demand for goods and their supply possibilities, and the prices of all aspects of the supply chain. Then using some probability theory and logical thinking we can express all the relationships in mathematical form so as to minimize the overall costs of the operation. We do not use Calculus as a suitable technique. When I first opened Paul Samuelson's Economics 101 text book many years ago I was struck by a number of things. Mostly his book seemed to relate to supply and demand of goods and services at various prices. So far so good. Unfortunately the book did not give any indication of evidence about collecting data concerning the relationships between these variables over time. We just started off with curves that might give an indication of how they related. Since I knew how they related in REAL Life and what mathematical functions could be used to express the various relationships I was surprised to see that these curves were used as the basis for using Calculus as a suitable mathematical tool to describe what was happening. Unfortunately Calculus requires that functions examined must be both smooth and continuous and the relationships I was familiar with regarding supply and demand and pricing were neither smooth nor continuous. The whole book is an exercise in an unreal world. I am not surprised that Paul Krugman (the Nobel Prize winning economist) said that everything he had learned over the past 30 years was a waste of time. Neither am I surprised that economic models used to predict the future economy never seem to know when a recession is due to start - until well after the event. This information is then of course not useful. Jun 25, 2010, 12:53 Newsletters : 2010 Newsletters : 25 June 2010 The Gold Standard: Generator and Protector of Jobs The world is currently learning (yet again) a very hard lesson. Hugo has the answer. [ Visit Website ] Jun 23, 2010, 12:01 Newsletters : 2010 Newsletters : 25 June 2010 Medvedev Promotes Ruble to Lessen Dollar Dominance Russia is building up its gold reserves. Now it is talking about the ruble being a reserve currency. [ Visit Website ] Jun 23, 2010, 11:11 Newsletters : 2010 Newsletters : 25 June 2010 Is Gold Really in a Bubble? Over the last few years I have come to think of economics as described by the Austrian school of economics as REAL Economics as opposed to economics as it is taught in our universities and explained by main stream economists, which is developing a distinct air of unreality about its predictions. Main stream economists are stuck with the ideas of Keynes and Samuelson (of Econ101 textbook fame). They are further hampered by the use of calculus on functions that are neither smooth nor continuous. I am now beginning to notice some other writers referring to REAL Economics - like the staff writer at The Daily Bell, for instance. After all, REAL Economics explains the real world in a perfectly satisfactory way but standard economics fails in this necessary requirement. You see the standard computer model of our economy failed to predict the last major recession that started in January 2007 until June 2007 - five months after the event. What use is a model like that. You will be relieved to know that New Zealand economists are predicting normal GDP growth of 1%, 2% or 3% for the next year. I think we will be very lucky indeed if the second wave of the "W" recession doesn't hit America and Europe this year. What chance do we then stand of having a growing economy? [ Visit Website ] Jun 22, 2010, 17:24 Newsletters : 2010 Newsletters : 25 June 2010 Gold Reclaims its Currency Status as The Global System Unravels Sometimes a person's debts become too large and they are overwhelmed by their inability to pay them off. At that point they are bankrupt. Countries have the same problem! [ Visit Website ] Jun 21, 2010, 17:37 Newsletters : 2010 Newsletters : 25 June 2010 Walker's World: The Euro Makes Enemies The Europeans have fronted up with a Trillion dollar package of borrowed money which didn't seem to impress anyone and are now opting for AUSTERITY. This is sure impressing the Americans. [ Visit Website ] Jun 18, 2010, 12:16 Newsletters : 2010 Newsletters : 25 June 2010 Spain Plays High-Stakes Poker Game With Germany as Borrowing Costs Surge It very much looks like the Euro is beginning to unravel. The trouble with paper money is that it is backed by nothing but a political promise that tax-payers in the future will somehow make the paper good. The PIIGS are in trouble so the "Euro Bank" invents a trillion dollars worth of money to support them. No wonder that money markets using real(?) private money are becoming alarmed! [ Visit Website ] Jun 18, 2010, 11:03 Newsletters : 2010 Newsletters : 25 June 2010 Uncertainty Restores Glitter to an Old Refuge, Gold The main stream press is starting to catch up. [ Visit Website ] Jun 16, 2010, 13:12 Newsletters : 2010 Newsletters : 25 June 2010 Doug Casey Revisits the Greater Depression and Explains the Realities of Investing in the 21st Century Doug is getting quite a following. I cannot fault his thinking. We are living in interesting times and they are about to get a whole lot more interesting. [ Visit Website ] Jun 16, 2010, 12:52 Newsletters : 2010 Newsletters : 25 June 2010 Worried About Their Dollars, More Are Turning to Gold AS governments print more paper money more and more people are starting to see that this will lead to inflation. Maybe not immediately but sooner or later it will happen. This thought has entered the mainstream press and of course the question is, "If saving paper money will reduce my wealth then what can I buy that will maintain my wealth?" At some stage this thought will become urgent as money depreciates at an increasing rate and gold increases in value. The demand for gold will increase and since it is already in short supply the problem of finding REAL gold to use as a store of wealth will also become urgent. This can only compound into a mania phase and we will witness the gold bubble just as George Soros predicted. The "ultimate bubble", he called it, as after this one there will be no more bubbles for a long time. Jun 15, 2010, 17:14 Newsletters : 2010 Newsletters : 25 June 2010 Building the Ruling Elite A little history about the rise of mercantilism. Economists often refer to this phenomenon but very rarely do they define it. This is a short explanation of why, how and where it began - and you can see why it has such an effect on the economics of a country. [ Visit Website ] Jun 15, 2010, 11:52 Newsletters : 2010 Newsletters : 25 June 2010 Gold's Rise Puzzles Bernanke But Not This Fund Manager Is Bernanke discovering the hard way that paper money must eventually disintegrate? Jun 14, 2010, 14:31 Newsletters : 2010 Newsletters : 25 June 2010 Quote for the Week We have tried spending money. We are spending more than we have ever spent before and it does not work. We have never made good on our promises. I say, after 8 years of the Administration, we have just as much unemployment as when we started... and an enormous debt to boot! Henry Morgenthau, Secretary of the US Treasury during the New Deal; May 1939. May 25, 2010, 12:51