Microdocumentary: 4 Major Boom And Bust Cycles Explained

Most believe that expansionary monetary policy helps ease crises. Austrian School economists argue that central banks don’t help in smoothing the amplitude of the cycles, but rather are the cause of cycles. In this microdocumentary video, we look back at four major busts in the last 100 years and explain how central banks created them. We also clarify why we believe the next bust is just around the corner. This video will not explain the mainstream view, but rather the view of the Austrian Business Cycle Theory (ABCT).
Austrian economists argue that business cycles are a direct cause of excessive credit flow into the market. This is facilitated by an intentionally low interest rate set by the government. This situation gives the false impression that money originally saved for investment has increased and the pool of investable funds is bigger. This creates an illusion and leads to misallocation of investments or ‘malinvestments’.

This post was published at GoldSilverWorlds on October 8, 2014.

EU Commission to Reject Hollande’s Budget

Hollande is in deep trouble. His socialistic policies are destroying France. The European Commission in reviewing the budgets of the French Government find that they violate EU rules and no run the risk that they will be rejected by the EU. The Commission will ask the government in Paris in late October to submit a new budget plan for 2015. The EU Commission just may for the first time request changes to a draft national budget according to the surrender of France’s sovereignty to Brussels.
According to the plans of the French government debt will be 4.4% in 2015 and 4.3% of gross domestic product (GDP) this year. Also in 2016 the minus 3.8% are still be well above the EU ceiling of 3%.

This post was published at Armstrong Economics on October 8, 2014.

Gold Seeker Closing Report: Gold and Silver Gain About 1% While Miners Surge 7%

The Metals:
Gold climbed $9.82 to $1220.42 at about 5:30AM EST before it fell back to $1205.12 by early afternoon in New York, but it then shot back higher after the release of today’s fed minutes and ended with a gain of 0.98%. Silver rose to $17.471 before it slipped back to $17.062, but it then bounced back higher in the last couple of hours of trade and ended with a gain of 1.22%.
Euro gold rose to about 959, platinum gained $22 to $1278, and copper fell slightly to about $3.03.
Gold and silver equities fell over 1% by midday, but they then stormed back higher in afternoon trade and ended with about 7% gains.

This post was published at GoldSeek on 8 October 2014.

Want To Score High On The SAT? Pick Rich Parents

While money (reportedly) can’t buy love, it appears, according to The WSJ, that it can buy brains. On average, based on calculations from FairTest, students in 2014 in every income bracket outscored students in a lower bracket on every section of the test. Rather stunningly, students from the wealthiest families outscored those from the poorest by just shy of 400 points. As WSJ’s Josh Zumbrun so poetically notes, perhaps SAT should more appropriately stand for Student Affluence Test.

This post was published at Zero Hedge on 10/08/2014.

Gold; a Simpleton’s View

First off, if you have an interest in the price of gold and have not already done so, I highly recommend you check out Steve Hochberg’s 2-part Elliott Wave video presentation on gold (disclosure: free sign up to Club EWI brings a small commission to yours truly ). With all his zigs, zags, waves and patterns he ends up at the same place I do with my simple version. I may use less cluttered methods, but I find this stuff very interesting.
With markets at a key juncture, the US dollar over bought (but bullish), the precious metals, commodities and increasingly, global markets over sold but bearish and US stocks acting as if October 2014 could at least recall memories of October 2008, I want to try to weave all this together around the simplistic monthly chart of gold, which is the asset that would provide liquidity for asset market refugees if the macro really were to get very negative.
It is important to simplify folks. Gold is not going to go up because of Modi and Indian Wedding season. It is not going to go up on China demand and it is most assuredly not going to go up because the US stock market is going up, as if it were simply an asset class that got left out of the party. Commodities actually would have a better chance at that than gold.
Gold is going to go up (at least in relation to most assets) when confidence in policy making starts to wane… period. I am going to keep this simple monthly chart on radar going forward because it has long-since broken the Triangle and it is a gauge on the macro.

This post was published at GoldSeek on 8 October 2014.

The US ranks #36 in the world for respecting property rights. Is this freedom?

Santiago, Chile
In 1863, the United States of America was in the midst of a devastating civil war.
Thousands of people had just lost their lives at Gettysburg, and Sherman was preparing for his march to the sea, laying waste to Atlanta in the process.
New York City was embroiled in the most violent riots in its history.
The southern economy was in shambles with the prices of staple food items skyrocketing, and citizens of the Union were stuck paying income taxes for the first time ever.
Much of the country had still not recovered from the Panic of 1857. And just when it seemed that things couldn’t be any more chaotic, the President would be assassinated soon.
All in all, it seemed that the whole world was on fire. This was United States in the 1860s.
And had you been born at this time amid so much chaos, death, and pessimism, most people would have thought your future prospects would be pretty dim.
But that’s not what happened. Instead, that would have been an incredible time to be born.
Rather than floundering in its rubble, the United States became the wealthiest and most powerful country in the world in the fifty years that followed.
Indeed, the latter part of the 19th century was an extraordinary time to be alive.
Economic freedom abounded in the US. There was no insane government regulation. No income tax. No gun-toting agents ready to kick in your door, shut down your lemonade stand, tell you what to put in your body, or arrest you for collecting rainwater.
Personal responsibility was valued. Everyone accepted that there was danger in the world. And it wasn’t up to the government to ‘protect’ people from every last one of them.
Yet despite so much ‘danger’, this was one of the greatest periods of wealth creation in history,

This post was published at Sovereign Man on October 8, 2014.

The Calm Before the Storm in the Gold Market

US Dollar Index vs Spot Gold

Again this week the gold price tested the $1,200 level dropping below it on higher US dollar against most fiat currencies. It is assumed that a stronger US dollar against the euro and other fiat currencies is also negative for the price of gold. However gold is not a hedge against the US dollar but rather against all fiat currencies. Even though gold’s price has been falling, in India and China gold premiums have increased signifying a rising demand. We have also seen a substantial increase in silver and gold coin sales in the US. Actually gold coin sales doubled in September compared to August.

This post was published at Gold Broker on Oct 8, 2014.

“Dr. Bitcoin Venezuela” Wages ‘Economic War’ Against Maduro’s Currency Controls

“Even though bitcoin is volatile, it’s still safer than the national currency,” said one young ‘tech-savvy’ Venezuelan, who as Reuters reports, is looking to bypass President Maduro’s dysfunctional economic controls. “I’m teaching people to use bitcoin to bypass the exchange controls,” said Gerardo Mogollon, a business professor who styles himself as “Dr. Bitcoin Venezuela,” speaks at conferences and appears in online videos to urge Venezuelans to adopt the crypto-currency.
Even small dollar transactions are out of the question for most Venezuelans since capital controls mean acquiring hard currency now means either requesting it from the state, which struggles to satisfy demand, or tapping a shadowy black market.
While bitcoin prices have fallen this year, Venezuela’s own Bolivar has also plunged against the US dollar (and a black market dollar costs 16 times more than the government rate) and so two Venezuelan-born brothers are launching ‘SurBitcoin’ exchange this week to match local buyers and sellers, explaining “In Venezuela, we have a gold fever: a bitcoin fever!”

This post was published at Zero Hedge on 10/08/2014.

Not Just The Largest Economy – Here Are 26 Other Ways China Has Surpassed America

In terms of purchasing power, China now has the largest economy on the entire planet, but that is not the only area where China has surpassed the United States. China also accounts for more total global trade than the U. S. does, China consumes more energy than the U. S. does, and China now manufactures more goods than the U. S. does. In other words, the era of American economic dominance is rapidly ending. Global economic power is making a dramatic shift to the east, and that is going to have huge implications for our future. We already owe the Chinese well over a trillion dollars, and as our economic infrastructure crumbles we are feverishly borrowing even more money in a desperate attempt to prop up our falling standard of living. We can’t seem to match the work ethic, inventiveness and determination of China and other Asian nations and it is showing. If we continue down this path, what will the future look like for future generations of Americans?
In terms of raw GDP, the U. S. is still number one, at least for now. But according to the IMF, China is now the number one economy on the entire planet in terms of purchasing power…
The simple logic is that prices aren’t the same in each country: A shirt will cost you less in Shanghai than San Francisco, so it’s not entirely reasonable to compare countries without taking this into account. Though a typical person in China earns a lot less than the typical person in the US, simply converting a Chinese salary into dollars underestimates how much purchasing power that individual, and therefore that country, might have. The Economist’s Big Mac Index is a great example of these disparities.
So the IMF measures both GDP in market exchange terms, and in terms of purchasing power. On the purchasing power basis, China is overtaking the US right about now and becoming the world’s biggest economy.
When I first learned about this, I was quite stunned.

This post was published at End Of The American Dream on October 8th, 2014.

Gold Daily and Silver Weekly Charts – Quod Erat Demonstrandum

Gold and silver were under some serious pressure after a mid morning hit that was particularly blatant and clumsy.
The pressure continued steadily most of the day with silver really taking it hard.
The Fed minutes came out around 2 PM, and the equity and the precious metal markets headed north like scalded cats, because of the decidedly dovish flavor of the Fed talk.
Is there anyone, and I mean anyone, who reads what I write here who is surprised by this? If so, then I must not be doing a very effective job of explaining that The Recovery is not yet sustainable, and the Fed must continue ‘priming the pump’ in a somewhat neurotic attempt to invoke the appearance of growth and vitality where none exists.
And why is this? Because the system has not been reformed, and the financial sector and the one percent continue to take, by far, the greatest share of this monetary stimulus and shove it into their own tax avoiding pockets, and the public be damned.
After the Fed minutes came out, a few of us crossed emails saying, ‘is there any doubt why they hit gold and silver this morning?’
There is almost NO doubt in my mind that the Fed and their Bankster owners are actively managing market perceptions while they continue their failing policies, all in the virtuous name of ‘instilling confidence.’

This post was published at Jesses Crossroads Cafe on 08 OCTOBER 2014.

Oct 8GLD loses another 5.39 tonnes down to 762.08 tonnes/no change in SLV/gold and silver skyrocket on dovish news from the Fed/Yellen states that the dollar is too high/USA worried about global …

Gold closed down $6.40 at $1205.30 (comex to comex closing time ). Silver was down 18 cents at $17.01
In the access market tonight at 5:15 pm
gold: $1221.00
silver: $17.37
GLD :as of 6 pm est a huge withdrawal of 5.39 tonnes of gold at the GLD (inventory now at 762.08 tonnes).
SLV : as of 6 pm tonight we have no changes in inventory. (inventory now 349.071 million oz)
Today, the big news came from the Fed, in their beige book report stated that the dollar was too strong and the business climate throughout the globe was worrisome. This set gold and silver on fire at 2.00 pm.
We have other stories including the continuing crisis with Ebola. The USA’s first Ebola patient has died.
We will discuss these and other stories
So without further ado………………
Let’s head immediately to see the data has in store for us today.
First: GOFO rates/
we are moving closer to backwardation!!
All months basically moved a little closer to the negative needle. On the 22nd of September the LBMA stated that they will not publish GOFO rates. However today we still received today’s GOFO rates
London good delivery bars are still quite scarce.
Oct 8 2014
1 Month Rate: 2 Month Rate 3 Month Rate 6 month rate 1 yr rate
.055000% .0700% .082500% .1200% .2200%
Oct 7 .2014:
1 Month Rate 2 Month Rate 3 Month Rate 6 month Rate 1 yr rate
.0700% .08000% .09000% .1300% .227500%
Let us now head over to the comex and assess trading over there today,

This post was published at Harvey Organ on October 8, 2014.

Schizophrenic Small Caps Surge By Most In 3 Years, Day After Plunging

The S&P swung 44 points from low-to-high today as panic-buying lifted stocks vertically on the back of an utter VIXtermination (from over 18 to under 15). Nasdaq surged over 2.5% from its lows before FOMC Minutes – the biggest swing since May 2012 (and biggest daily gains in a year). 10Y Yields closed at 2.33% (2.3249% lows) – the lowest since June 2013. The TSY curve steepened dramatically post-FOMC with 5Y now -18bps on the week and 30Y -7bps. The Dollar fell for the 3rd day in a row (-1.6%) – its biggest such drop in 15 months. Initial weakness in commodities was wiped away post-FOMC leaving Silver 3.3% on the week (Gold 2.3%). Oil saw no bounce closing at April 2013 lows (WTI below $87.50). The S&P and Dow managed to get to green on the week in the last few minutes (only the S&P held it into close). So in summary: FOMC Minutes sent Stocks Up, Bonds Up, and Gold & Silver Up; VIX down, USD down, and Oil down.

This post was published at Zero Hedge on 10/08/2014.

Serious Financial Trouble Is Erupting In Germany And Japan

There are some who believe that the next great financial crash will not begin in the United States. Instead, they are convinced that a financial crisis that begins in Europe or in Japan (or both) will end up spreading across the globe and take down the U. S. too. Time will tell if they are ultimately correct, but even now there are signs that financial trouble is already starting to erupt in both Germany and Japan. German stocks have declined 10 percent since July, and that puts them in “correction” territory. In Japan, the economy is a total mess right now. According to figures that were just released, Japanese GDP contracted at a 7.1 percent annualized rate during the second quarter and private consumption contracted at a 19 percent annualized rate. Could a financial collapse in either of those nations be the catalyst that sets off financial dominoes all over the planet?
This week, the worst German industrial production figure since 2009 rattled global financial markets. Germany is supposed to be the economic “rock” of Europe, but at this point that “rock” is starting to show cracks.
And certainly the civil war in Ukraine and the growing Ebola crisis are not helping things either. German investors are becoming increasingly jittery, and as I mentioned above the German stock market has already declined 10 percent since July…

This post was published at The Economic Collapse Blog on October 8th, 2014.

Silver Offers More Value Than Gold In This Market

As silver prices started to decline last year, silver mining companies halted projects where costs were too high in relation to the new reality of silver prices.
According to a report produced for the Silver Institute and created by Thomson Reuters GFMS, in 2013, the silver supply fell to 985.1 million ounces, down from 1,005.3 million ounces a year earlier – a two-percent drop in production. (Source: The Silver Institute web site, last accessed October 1, 2014.)
But demand for silver was increasing over the same period.
While silver prices were declining (from the same report), demand for silver in 2013 increased 13% to 1,081 million ounces, compared to 954 million ounces in 2012. Demand for silver coins and bars jumped 76% in 2013 over 2012! As silver prices fell, investors bought more silver.

This post was published at GoldSilverWorlds on October 9, 2014.

Just What Is In The Fed’s “Doomsday Book”?

The what? That’s right: the Fed’s “doomsday book” such as here…
During more than six hours of testimony, Mr. Geithner’s was not the only book introduced. The other volume was the secretive compilation of the Federal Reserve’s legal powers, known internally at the central bank as the ‘Doomsday Book,’ which has never been made public. Judge Wheeler determined he would let the editions into evidence under a temporary seal, until a hearing to determine whether they should stay that way.
… and here:
The ‘Doomsday Book’ is essentially a private compilation of emergency measures that the Federal Reserve could take in the event of a financial crisis or other market-destabilizing event. The book has never been made public. It’s existence of the book isn’t secret: Treasury Secretary Timothy Geithner references it in his recent financial-crisis book, ‘Stress Test,’ calling it a catalog of ‘our actual firefighting equipment.’
But Fed officials have refused to release it, and Justice Department officials at a court hearing on Tuesday said the Federal Reserve Bank of New York wanted to keep the book under seal.

This post was published at Zero Hedge on 10/08/2014.

Name The Hedge Fund

Back in 2007, the issue of leverage in the investment banking community (which hadn’t mattered to anybody for many years) suddenly mattered to everybody and for the usual reason in such cases: people started to worry about losing money. Amazingly, having financial institutions levered 30x became something to fear seemingly overnight; and, of course, whilst things like that can go on for a long time, as soon as the fear takes hold, it’s game over…

This post was published at Zero Hedge on 10/08/2014.