This post was published at SilverDoctors
What if bitcoin is a reflection of trust in the future value of fiat currencies? I am struck by the mainstream confidence that bitcoin is a fraud/fad that will soon collapse, while central bank fiat currencies are presumed to be rock-solid and without risk. Those with supreme confidence in fiat currencies might want to look at a chart of Venezuela’s fiat currency, which has declined from 10 to the US dollar in 2012 to 5,000 to the USD earlier this year to a current value in December 2017 of between 90,000 and 100,000 to $1: *** Exchange Rate in Venezuela: On 1 December, the bolivar traded in the parallel market at 103,024 VED per USD, a stunning 59.9% depreciation from the same day last month. Analysts participating in the LatinFocus Consensus Forecast expect the parallel dollar to remain under severe pressure next year. They project a non-official exchange rate of 2,069,486 VEF per USD by the end of 2018. In 2019, the panel sees the non-official exchange rate trading at 2,725,000 VEF per USD.
This post was published at Charles Hugh Smith on SUNDAY, DECEMBER 10, 2017.
Authored by MN Gordon via EconomicPrism.com,
There are many things that could be said about the GOP tax bill. But one thing is certain. It has been a great show.
Obviously, the time for real solutions to the debt problem that’s ailing the United States came and went many decades ago. Instead of addressing the Country’s mounting insolvency, lawmakers chose the expedient without exception. They kicked the can from yesterday to today.
Presently, there are no good options left to fix the mathematics bearing down on us all. Hence, in the degenerate stage of an overburdened nation-state, style over substance is what counts. Without question, Congress and President Trump played their parts to push the bill with much bravura.
On Tuesday, for example, President Trump, Senate Majority Leader Mitch McConnell, and House Speaker Paul Ryan held a White House meeting with two empty chairs. Apparently, Senate Minority Leader Chuck Schumer and House Minority Leader Nancy Pelosi didn’t want to participate in a ‘show meeting.’ Thus, they made a spectacle of themselves and ditched the meeting.
Indeed, their absence was all part of the show. Moreover, the entire episode was show; nothing more. At the time of this writing (Thursday night), the show continues on. The last we heard, the Senate vote had been delayed until Friday. By the time you read this it may be a done deal – or maybe not.
Regardless, the tax bill is all quite meaningless when you have a fiat currency that’s been stretched out like silly putty. No doubt, this has propagated immense financial speculation while outrunning actual economic growth. The effect has manifested in strange and unexpected ways.
This post was published at Zero Hedge on Dec 1, 2017.
Let’s face it, the trillions of fiat currency printed by Central Banks globally, which has been compounded by an even greater amount of debt issuance derived from the printed currency, has fomented multiple assets bubbles of historic proportions. Bitcoin is a bubble. The FANG stocks plus Tesla, among dozens of other daytrader and hedge fund momentum darlings, are bubbles. Novo Resources, for now, is a bubble.
This post was published at Investment Research Dynamics on November 20, 2017.
As the transition towards a blockchain based economy continues, the established financial powers are desperately trying to stay relevant. In an attempt to boost their credibility, analysts at Deutsche Bank are finally admitting that state-run fiat currencies are becoming obsolete. For years, blockchain entrepreneurs and other critics of central banking have been branded either conspiracy theorists or criminals. But recently, those controversial opinions about the inevitable changes coming to the world’s financial system are being echoed by mainstream pundits.
Deutsche Bank’s top strategist, Jim Reid, recently articulated a view on the economy that is shared by many but rarely talked about:
‘Central banks and governments which have ‘dined out’ on the 35 year secular, structural decline in inflation are not able to prevent it rising as raising interest rates to suitable levels would risk serious economic contraction given the huge debt burden economies face. As such they are forced to prioritise low interest rates and nominal growth over inflation control which could herald in the beginning of the end of the global fiat currency system that begun with the abandonment of Bretton Woods back in 1971.’
This post was published at The Daily Sheeple on NOVEMBER 15, 2017.
A surprise political move by Zimbabwean president Robert Mugabe, who fired his deputy Emmerson Mnangagwa, has played havoc on the US dollar/bond note parallel exchange rate, as well as on Bitcoin price in the country.
As CoinTelegraph reports, Bitcoin was already trading at a highly inflated rate in the troubled African country as its demand skyrocketed as a potential alternative to the dregs of a currency that Zimbabwe has left. However, that inflation has hit almost 100 percent as it trades about $13,000 per coin.
Trading on uncertainty
Unsurprisingly, with this latest political coup by the entrenched president, there is much speculation and worry about the already fragile and almost non-existent fiat currency system. Zimbabwe operates on bond notes linked to the US dollar.
Traders have been trying to move out of monetary assets as even on the dollar there is a 62 percent premium.
It has meant that investors are trapped by the currency shortages, seeking an alternative to exit the country – such as Bitcoin. Despite hitting a price of over $13,000 traders say that Bitcoin is booming as it is the strongest alternative.
This post was published at Zero Hedge on Nov 9, 2017.
Fiat currencies have had nearly a 46 year run of success. But with cryptocurrencies ‘all the rage,’ what Deutsche Bank Strategists Jim Reid and Craig Nicol call ‘inherently unstable’ fiat currency system without any commodity backing might be coming to an end, they assert.
The end of a demographic trend will usher in another inflationary period, Deutsche Bank asserts The idea of tying the supply of money to a commodity such as gold was that it kept government spending in check because money was in limited supply.
The US abandoned the gold standard in 1971, anchoring the currency’s value, not to a commodity but rather the faith in a government. This was followed by a sharp rise in inflation resulting in mortgage rates rising to near 20% annually by 1981. The resulting debasement of currency value and loss of buying power might have ended the fiat monetary system if it were not for the deflationary period that came along in the 1980s.
This gentle deflationary trend is about to come to an end, Reid and Nicol think.
This post was published at FinancialSense on 11/06/2017.
Do not mistake outcomes for control – remember, there is no such thing as control – there are only probabilities. – Christopher Cole, Artemis Capital
Central Banks globally have created a massive fiat currency fueled asset bubble. Stock markets are the largest of these bubbles – a bubble made worse by the Fed’s attempt to harness the ‘power’ of HFT-driven algo trading. At least for now, the Fed can ‘control’ the stock market by pushing the buttons that unleash hedge fund black box momentum-chasing and retail ETF buy orders whenever the market is about to head south quickly.
However, the ability to push the stock market higher without a statistically meaningful correction is a statistical ‘tail-event’ in and of itself. The probability that the Fed can continue to control the market like this becomes infinitesimally small. The market becomes like a like a coiled spring. The laws of probability tell us this ‘spring’ is pointing down.
This post was published at Investment Research Dynamics on October 22, 2017.
In a story that seems to have gone largely unnoticed by the western press, the China Daily reported that the PBoC has successfully designed a prototype that can regulate its future supply of digital fiat currency.
In a report, ‘PBoC inches closer to digital currency’, the newspaper stated that China’s central bank ‘has completed trial runs on the algorithms needed for digital currency supply, taking it a step closer to addressing the technological challenges associated with digital currencies, according to a top official associated with the project.’
China’s has been preparing for digital currency since 2016. In June this year, the PBoC ‘finished several digital money trials involving fake transactions between it and some of the country’s commercial banks.’ Given over-invoicing of imports and the shenanigans in the shadow banking/WMP sector, we suspect that the commercial banks took to these trials like proverbial flies to feces.
The China Daily article goes on to suggest that, while there is no timetable, ‘China is likely to become the first country that would deploy a digital fiat currency.’
This post was published at Zero Hedge on Oct 16, 2017.
Gold, and silver, have always been valuable. Through upturns in fiat currency, downturns in commodities, and everything in between, the precious metals have always been a useful indicator and base level for the worth of things internationally.
Learn How to Exploit the Gold Frenzy! Far from being the hallmark of huge institutions, like the Federal Reserve, you can take advantage of the evergreen currency to secure your own ‘reserve’.
Why Use Gold?
There have been few occasions where government has been criticized for keeping hold of gold reserves. Quite apart from it, in fact, with the British government panned for selling back in 2002.
Buy Silver Quarters – In Stock, Ships Fast! There has never been a better time in fact, with measures over the world being taken up that can threaten your ‘liquid’ cash flow. Over in Europe, there has been legislation introduced as the EU attempt to prevent bank runs that threatens your ability to withdraw your own cash in the event of adverse economic conditions.
This post was published at GoldSilverWorlds on October 12, 2017.
The US received a major blow to its global hegemony, and one which is sure to trigger more fighting talk from hawks in Washington.
This week it was announced that China has established a ‘payment versus payment’ (PVP) system to clear Chinese yuan and Russian ruble transactions. The aim, we’re told, is to to ‘reduce risks and improve the efficiency’ of its foreign exchange system.
The new mechanism, which could rival the long-held monopoly of the US SWIFT inter-bank payment system (allowing for simultaneous settlement of transactions in two different currencies) was launched on Monday after receiving approval from China’s central bank, according to a statement by the country’s foreign exchange trading system.
However, financial oligarchs in Wall Street will view this move as an act of aggression in challenging the preeminence of the US dollar as the planet’s global reserve currency – which is inextricably tied and nearly completely dependent on the US ‘Petrodollar’ to prop-up the value of the US fiat currency. Georgetown University scholars note here:
Since petrodollars and petrodollar surpluses are by definition denominated in U. S. dollars, then purchasing power is dependent on the U. S. rate of inflation and the rate at which the U. S. dollar is exchanged (whenever there is need for convertibility) by other currencies in international money markets. It follows that whenever economic or other factors affect the U. S. dollar, petrodollars will be affected to the same magnitude. The link, therefore, between the U. S. dollar and petrodollar surpluses, in particular, has significant economic, political, and other implications.
This post was published at 21st Century Wire on OCTOBER 13, 2017.
I found it amusing that Mohamed El-Erian wrote an opinion piece for Bloomberg which asserted that gold is not much of a ‘safe haven these days.’ His thesis was entirely devoid of material facts. His underlying rationale was that safe haven capital was flowing into cryptocurrencies rather than gold. I guess if one has a western-centric view of the markets, that argument is a modicum of validity. However the scope of the analysis omits that fact that the entire eastern hemisphere is converting fiat currency at a record pace into physical gold that requires bona fide delivery outside of western custodial roach motels.
This post was published at Investment Research Dynamics on September 1, 2017.
The following video was published by FinanceAndLiberty.com on Aug 13, 2017
CrushTheStreet chief editor Kenneth Ameduri joins FinanceAndLiberty to discuss the global economy. He explains the US has experienced the worst productivity in 35 years, and money printing has gone into overdrive.
Where are paper currencies headed? “The world is looking for a free market alternative to be able to put their money in,” he says. This shift is why we’re seeing money flow into cryptocurrencies, gold, and silver. Bitcoin and other cryptocurrencies are “big competition for the Dollar, for the Euro.”
The failure of fiat currency and fractional reserve banking to produce a government-managed utopia is generating very few mea culpas, but lots of rationalizations.
Strangest of all these rationalizations might be the notion that government debt is not really a liability, but an asset of sorts. Where personal and business loans are bad if taken to excess, government borrowing is not just good on any scale, but necessary to a healthy economy. Here’s an excerpt from a particularly assertive version of this argument:
What if every government paid off its national debt?
(Medium.com) – IT might make you feel better but tomorrow if the US Federal Government, or Australia or the UK repaid the entirety of its national debt, it would make not one dollar’s difference to your bank account. In fact the economy would tank.
‘If America repaid all its national debt tomorrow, we very likely would crash into the mother of all great depressions long before the debt is ‘paid off”, says economist, Professor Randall Wray.
This post was published at DollarCollapse on August 9, 2017.
Let’s start with this fact; fiat (paper) currencies die – often spectacularly. That is why precious metals may someday be needed for barter and trade. Anyone who thinks it is silly to worry about such a thing is putting blind faith in Federal Reserve Notes.
The U. S. dollar is having a great run, no question. It will soon be 50 years since Nixon closed the gold window, thereby converting the dollar to a purely fiat currency. Five decades is longer than most purely fiat currencies survive.
Humans carry a normalcy bias. That helps explain why so many assume the unbacked Federal Reserve Note, which has served so long as our currency, will continue to serve in the future.
If you test that assumption, it quickly gets hard to defend.
Point to the exponential growth in U. S. debt, the unrestrained government spending throughout both Republican and Democratic administrations, and the extraordinary monetary policies of the Fed (particularly in the past decade) and reasonable people should acknowledge that the reign of ‘king dollar’ is unlikely to last forever.
Most people don’t know the first thing about the dark history of fiat currencies around the world. Governments use them to borrow and print without limits. Suffer no delusions – fiat currencies were invented for precisely that purpose. The gold in the treasury has never been sufficient for the wars, social programs, and graft which are the hallmarks of a growing government.
This post was published at GoldSeek on 31 July 2017.
Analysts who advocate a monetary policy that targets ‘low inflation’ are the equivalent of chickens in the barnyard rooting for Colonel Sanders to succeed. This idea that a low level of inflation being good for the economy is beyond moronic.
The fiat currency money system era was accompanied by the erroneous notion that a general increase in the price of goods and services is ‘inflation.’ But technically this definition is wrong. ‘Inflation’ is the ‘decline in the purchasing power of currency.’ This decline occurs from actions that devalue a currency. Rising prices are the visible evidence of ongoing currency devaluation.
Currency devaluation occurs when the rate of growth in a country’s money supply exceeds the rate of growth in real wealth output. Simply stated, it’s when the amount of money created exceeds the amount of ‘widgets’ created, where ‘widgets’ is the real wealth output of an economic system.
This post was published at Investment Research Dynamics on July 26, 2017.
From Jim Richards’ Strategic Intelligence:
‘Russia and China are well-positioned to execute the greatest gold short squeeze in history. Of course, they have no interest in doing so right now because both are still buyers who favor low prices. At some point, they will flip to hoarders who favor high prices, but not yet.’
From Hugo Salinas Price:
‘The present monetary system of the world, based on the dollar, is on its death-bed. A fiat currency – such as the dollar – cannot be replaced by another fiat currency, he explains. Therefore the world will necessarily have to take up [precious metals] as the world’s money.’
************* From Steven Warrenfeltz of http://www.free-bullion-investment-guide.com
Gold and Silver Are Moving Back Up
GOLD (Warrenfeltz comments)
Last week, after the dust settled from gold’s price drop, a ‘falling expanding wedge’ formed in gold’s price chart (below).
All falling wedges are positive technical patterns, however for gold to confirm the pattern it will need to break above the upper resistance trend-line of the wedge.
In addition, gold’s MACD (lower indicator) is showing that its direction is about to change from negative to positive, so we should continue to see gold climb this week, but some profit taking is also expected as it moves up.
This post was published at GoldSeek on 19 July 2017.
The following video was published by The Dollar Vigilante on Jul 13, 2017
Jeff is interviewed on The American Intelligence Report, topics include: fiat currency and the Freemasons, the Federal Reserve and the end of the gold standard, the real causes for the US civil war, bypassing the current economic system entirely, gold silver and bitcoin, privacy and crytocurrencies, altcoins, Litecoin, changes to the bitcoin software, Dash and anonymity, Ethereum, the TDV newsletter’s great track record
Instead of selling his soybeans for devalued pesos, Gustavo Tione exchanged 30 tons of soy for about 8,000 liters of diesel from the state-run oil company. This is just one example of a growing barter economy in Argentina as a 24% inflation rate rapidly erodes the value of the country’s currency.
As Bloomberg reports, the rise of barter is simple economics. Commodities hold their value better than than cash.
So, why bother with fiat currency if you don’t have to?
Barter is the most basic economic transaction. You give me something I want or need. In exchange, I give you something you want or need.
YPF, the Argentine energy company, uses barter to bypass the peso. The company barters with farmers, trading fuel for wheat, soy, and corn, and then sells it on the dollar-based export market for grain. Of course, this scheme will fall apart if the dollar crashes. Nevertheless, it illustrates the power of barter.
This post was published at Schiffgold on JULY 12, 2017.
Over half the world’s population, living in the Eurasian land mass, understands that gold is money. The leaders of the Asian nations also know that this is true as well. The leaders of the security and economic alliance of the Shanghai Cooperation Organisation, which now incorporates most of these peoples, also know that to become independent of Western hegemony and to forge their own way, they must abandon Western financial systems and markets, replacing them with a new monetary order, serving their own needs. This is demonstrated in the establishment of parallel multinational financial institutions, duplicating and replacing dollar-centric development banks and settlement organisations.
The direction of travel for the SCO is to eliminate the use of the dollar for cross-border settlements between SCO member states: that much has been made clear. The replacement monetary arrangement must avoid the fundamental weaknesses of the dollar as a fiat currency, partly because these weaknesses will be exposed as the emergence of the SCO undermines the dollar, and partly because the principal drivers of SCO economic policy, China and Russia, have shown through their actions that they have a different vision of their destiny from imperial America.
This article considers the issues involved, the geopolitical sensitivities, and proposes how sound money might emerge to replace the existing fiat-money regimes.
This post was published at GoldMoney on July 06, 2017.