This post was published at SilverDoctors
We live in an age of statistics. They are everywhere, including a whole lot of junk numbers (endless studies) that don’t pass minimum scrutiny. Somehow, statistics have become the gold standard for at least the mainstream media in framing our view of everything from new discoveries to further exploration into how things work.
That’s fine for a discipline like quantum physics where the utterly complex probability models have been repeatedly tested and validated. It’s a far different proposition in the softer sciences where the rules of science aren’t as easily determined.
In 1972, Karl Popper in further defining the scientific process in this modernizing age said that,
Whenever a theory appears to you as the only possible one, take this as a sign that you have neither understood the theory nor the problem which it was intended to solve.
It’s a warning that I try to take to heart, seeing as I do eurodollars lurking ominously behind every global problem. But Popper also said at the same time, ‘no rational argument will have a rational effect on a man who does not want to adopt a rational attitude.’ In other words, as long as I stick to a broad enough survey of evidence then proceeding as I do on the monetary explanation for at least economic deficiencies is a legitimate, rational inquiry.
This post was published at Wall Street Examiner on November 7, 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.
This week President Trump revealed his final five candidates for Federal Reserve chair. Disappointingly, but not surprisingly, all five have strong ties to the financial and political establishment. The leading candidates are former Federal Reserve governor and Morgan Stanley banker Kevin Warsh and current Fed governor, former investment banker, Carlyle Group partner, and George H. W. Bush administration official Jerome Powell. Gary Cohn, current director of the president’s National Economic Council and former president of Goldman Sachs, is also on Trump’s list.
Trump is also considering reappointing Janet Yellen, even though when he was running for president he repeatedly criticized her for pursuing policies harmful to the middle class. Of course candidate Trump also promised to support Audit the Fed and even voiced support for returning to the gold standard. But, he has not even uttered the words ‘Audit the Fed,’ or talked about any changes to monetary policy, since the election.
Instead, President Trump, in complete contradiction to candidate Trump, has praised Yellen for being a ‘low-interest-rate-person.’ One reason Trump may have changed his position is that, like most first-term presidents, he thinks low interest rates will help him win reelection. Trump may also realize that his welfare and warfare spending plans require an accommodative Fed to monetize the federal debt. The truth is President Trump’s embrace of status quo monetary policy could prove fatal to both his presidency and the American economy.
This post was published at Ludwig von Mises Institute on Oct 23, 2017.
Europe is now replicating the 1930s and the mistakes it made with austerity back then as well outside of Germany. Of course, Merkel has imposed the German view of austerity based on their experience but has ignored the opposite experience of the rest of Europe that led to the 1931 Sovereign Debt Crisis and mass defaults.
It was the year of 1925 when then chancellor of the Exchequer, Winston Churchill, returned Britain to the gold standard. Britain was trying desperately to reestablish itself as the financial capital of the world as if nothing had taken place. Returning to the gold standard resulted in wages being forced down to compete with America. John Maynard Keynes at the time pleaded that this was madness. The pound was overvalued against the dollar by 10% trying to reestablish confidence in Britain but the net result crippled exports and unemployment began to rise and workers engaged in strikes for having wages reduced even though the pound was worth more officially.
This post was published at Armstrong Economics on Oct 24, 2017.
Despite credit card giant American Express reporting another round of solid quarterly earnings, with revenue of $8.40bn beating expectations of $8.19bn, and generating EPS of $1.50, also above the $1.48 expected, and boosting its profit guidance for good measure, now projecting full year EPS of $5.80 to $5.90, up from $5.60 to $5.80 (above the consensus estimate of $5.75), AXP stock initially spiked, then immediately slumped back to unchanged, following news that the company’s CEO since 2001, Ken Chenault, is retiring effective February 1, 2018.
The unexpected departure prompted Warren Buffett, the company’s largest shareholder, to share the following parting words ‘Ken’s been the gold standard for corporate leadership and the benchmark that I measure others against. He led the company through 9/11, the financial crisis and the challenges of the last couple of years. American Express always came out stronger. Ken never went for easy, short-term answers, never let day-to-day challenges distract him from what was right for the moderate to long term. No one does a better job when it really counts and he’s always done it with the highest degree of integrity.’
Chenault will be replaced by Stephen Squeri, who has been Vice Chairman since 2015 and prior to that was Group President of the Company’s Global Corporate Services Group.
Full press release below:
American Express Announces Stephen J. Squeri to Succeed Kenneth I. Chenault as Chairman and Chief Executive Officer
American Express Company (AXP) said today that its Board of Directors has appointed Stephen J. Squeri Chief Executive Officer and elected him Chairman of the Board, each effective February 1, 2018. Mr. Squeri, 58, will succeed Kenneth I. Chenault, 66, who will retire after a distinguished 37-year career with the Company.
This post was published at Zero Hedge on Oct 18, 2017.
Editor Mark O’Byrne
– ‘Going off gold did the opposite of what many people think’ – FT Alphaville
– ‘Surprising’ findings show benefits of Gold Standard
– Study by former Obama advisor in 1999 and speech by Bank of England economist in 2017 make case for gold
– UK economy was ‘much less prone to extremes’ under than the gold standard – research shows
– ‘Gold standard seems to have produced fewer catastrophes for Britain’ – data shows
– FT still wary of gold standard arguing ‘stability can be overrated and growth is worth having’
– Finding is not surprising and joins a wealth of evidence and research that shows gold’s importance as money, a store of value and safe haven asset
300 years ago last week on the 21st September, 1717 Sir Isaac Newton, Master of the Royal Mint of Great Britain, accidentally invented the gold standard.
Last month it was the 46th anniversary of President Nixon ending the gold standard. Since then the world has existed on a system of fiat paper and digital currency. It works so badly that it has lead to the global financial crisis, unending debt issues and a dramatic devaluation in sovereign currencies.
Despite this, much of the media and central banking system remain supporters of the current financial and monetary status quo.
This post was published at Gold Core on September 28, 2017.
I recently had the pleasure of being on Tim Preuss’ podcast to talk about several topics including how, interestingly, it’s the countries without central banks that are always under attack by the US government and it’s globalist buddies, and by the media as well.
Likewise I talk about the US going off the gold standard as a turning point in the history of the modern financial system and how it was a major wakeup call for many people that allowed them to see the ridiculousness of fiat paper currency backed by nothing.
This is a good interview as it has quite a few historical anecdotes that explain the situation we’re in today.
You can watch it in full here:
This post was published at Dollar Vigilante on September 23, 2017.
Total US debt has now exceeded $20 trillion for the first time ever. Meanwhile, interest rates (i.e. the cost of debt) in the US and around the globe reached the lowest levels in recorded history.
Financial Sense recently spoke with Richard Sylla, professor emeritus of economics at New York University and the co-author of A History of Interest Rates, about the unique times we are living in and why, historically speaking, we may be looking at a momentous turning point in human civilization.
History of Interest Rates
‘As long as you have some commerce…people are going to demand credit,’ Sylla said.
Silver and gold have always been prized, but coin-based currency didn’t come in until the fifth or sixth century. This ushered in a new era, Sylla noted.
This was one of the most impactful economic innovations in history, basically beginning in Asia Minor or what is today Turkey.
This state of affairs changed over the years, but we basically had a monetary system based on precious metals until the classical gold standard in the late 19th and early 20th centuries, Sylla noted.
This post was published at FinancialSense on 09/12/2017.
Fed vice-chair Stanley Fischer’s surprise announcement of early retirement triggers the obvious question as to whether this could be the fore-runner to a serious market and economic deterioration ahead. Monetary bureaucrats, even if signally bad at counter-cyclical fine tuning, sometimes have a reputation for intuition about how to time their own career moves ahead of crisis. In this case, such suspicion may be wide of the mark given the personal circumstances. Even so, the exit of a Fed Vice-Chair, who in many respects has been the pioneer and the dean of the prevailing doctrine in the global central bankers club, is pause for thought.
The Early Years When Professor Fischer published his famous paper ‘On Activist Monetary Policy with Rational Expectations’ (NBER working paper no. 341, April 1979), the fiat money world was well into the third stage of disorder following the collapse of the international gold standard in 1914. But things were at a temporary resting point where the skies seemed to be getting clearer. After the violent terminal storms of the gold exchange standard (early 20s to early 30s), and then of the Bretton Woods System, it seemed to many that the ‘monetarist revolutionaries’ had found a better practical monetary navigation route. The Bundesbank, the Federal Reserve, the Swiss National Bank, and even the Bank of Japan were pursuing an ersatz gold rule of low percentage increases in the monetary base or a related aggregate.
This post was published at Ludwig von Mises Institute on Sept 10, 2017.
– Trump could be planning a radical ‘reboot’ of the U. S. dollar
– Currency reboot will see leading nations devalue their currencies against gold
– New gold price would be nearly 8 times higher at $10,000/oz
– Price based on mass exit of foreign governments and investors from the US Dollar
– US total debt now over $80 Trillion – $20T national debt and $60T consumer debt
– Monetary reboot or currency devaluation seen frequently – even modern history
– Buy gold eagles, silver eagles including monster boxes and gold bars
– Have a 10% allocation to gold, smaller allocation to silver
Editor: Mark O’Byrne
A new monetary standard which will see the dollar ‘reboot’ and gold be revalued to $10,000/oz according to best-selling author and Pentagon insider Jim Rickards.
A monetary ‘reboot’ is not unprecedented Articles about an imminent return to the gold standard are not exactly infrequent in the gold world and it can be easy to become immune to them and dismiss them without considering the facts and case being made.
This post was published at Gold Core on August 30, 2017.
Echoing his predecessor Greenspan’s shift to the ‘dark side’ (fully supportive of a gold standard after leaving office), former Fed Chair Bernanke now appears to be full-heartedly supportive of cryptocurrencies having warned in 2015 of “serious problems” with bitcoin due to its “instability” and “anonymity.”
As CoinTelegraph reports, in an interesting turn of events, former chairman of the Federal Reserve Ben Bernanke, will be the keynote speaker at a Blockchain and banking conference in October hosted by Ripple.
Bernanke is an interesting call for the keynote speaker as he has criticized cryptocurrencies in the past… (via Qz.com)
[Bitcoin]’s interesting from a technological point of view. We’re in a world where the payments system is evolving quickly and new approaches to managing payments are proliferating, and some of the ideas around bitcoin will no doubt be useful in doing that.
This post was published at Zero Hedge on Aug 27, 2017.
Ten years ago, I was invited by the brilliant monetary theorist, Professor Antal E. Fekete, to give a talk at his Gold Standard University held August 15-31, 2007 in Szombathly, Hungary; and while there, I and others watched intently as a global credit crunch swept through world markets.
The effects of the “credit crunch”, when banking companies stopped lending to each other resulting in bankrupt or acquired banks, were so serious that the Bank of England, the European Central Bank and the United States Federal Reserve had to provide ‘bail out’ packages in order to make substantial injections of capital into financial markets.
In August 2007, those of us gathered in Hungary were watching history, a history that has not yet run its course. The August 2007 global credit contraction was a signal that something was wrong. Fatally wounded by the removal of gold from the international monetary system in 1971, the wheels of the bankers’ powerful juggernaut of credit and debt were beginning to come off.
This post was published at GoldSeek on Tuesday, 22 August 2017.
Most false or irrational ideas about money are not new. For example, take the idea that government can just fix the price of one monetary asset against another. Some people think that we can have a gold standard by such a decree today. This idea goes back at least as far as the Coinage Act of 1792, when the government fixed 371.25 grains of silver to the same value as 24.75 grains of gold, or a ratio of 15 to 1. This caused problems because the market valued silver a bit lower than that.
So people were happy to bring their silver to the U. S. Mint to be coined. Silver had a higher value as a coin than it did in the market, and it was the opposite for gold. Gresham’s Law teaches us that if two monies must be treated by law as the same value, then the one of lower value will circulate and the one of higher value will be hoarded. This put the fledging America on a de facto silver standard.
Or, bad ideas have their roots in historical precedent but something is lost (or sabotaged) along the way. Back in 1792, there was no question that money meant gold and silver. There was no question that, when you deposited money at a bank, you had a right to get the same amount of money back. However, if each bank had a different unit of deposit, it would be hard to understand if someone said ‘I will pay you ten dollars’. Is that ten Road Runner Bank Dollars or ten Bank of Wile Coyote dollars?
The Coinage Act standardized the unit, but it did not change the rights of depositors or the obligations of banks. However, today, many people think that the government can, post hoc, change the definition of a unit and thereby change the value of everyone’s debt obligations and bank balances (and presumably cause a repricing of every extant asset).
This post was published at GoldSeek on Monday, 21 August 2017.
The gold miners’ stocks have spent months adrift, cast off in the long shadow of the Trumphoria stock-market rally. This vexing consolidation has left a wasteland of popular bearishness. But once a quarter earnings season arrives, bright fundamental sunlight dispelling the obscuring sentiment fogs. The major gold miners’ just-reported Q2’17 results prove this sector remains strong fundamentally, and super-undervalued.
Four times a year publicly-traded companies release treasure troves of valuable information in the form of quarterly reports. Companies trading in the States are required to file 10-Qs with the US Securities and Exchange Commission by 45 calendar days after quarter-ends. Canadian companies have similar requirements. In other countries with half-year reporting, some companies still partially report quarterly.
The world’s major gold miners just wrapped up their second-quarter earnings season. After spending decades intensely studying and actively trading this contrarian sector, there’s no gold-stock data I look forward to more than the miners’ quarterly financial and operational reports. They offer a true and clear snapshot of what’s really going on, shattering the misconceptions bred by ever-shifting winds of sentiment.
The definitive list of major gold-mining stocks to analyze comes from the world’s most-popular gold-stock investment vehicle, the GDX VanEck Vectors Gold Miners ETF. Its composition and performance are similar to the benchmark HUI gold-stock index. GDX utterly dominates this sector, with no meaningful competition. This week GDX’s net assets are 19.9x larger than the next-biggest 1x-long major-gold-miners ETF!
Being included in GDX is the gold standard for gold miners, requiring deep analysis and vetting by elite analysts. And due to ETF investing eclipsing individual-stock investing, major-ETF inclusion is one of the most-important considerations for picking great gold stocks. As the vast pools of fund capital flow into leading ETFs, these ETFs in turn buy shares in their underlying companies bidding their stock prices higher.
This post was published at ZEAL LLC on August 18, 2017.
I started observing the slow-motion train-wreck in process in 2001 – a year removed from my perch as a junk bond trader on Wall Street and living several thousand miles away from NYC and DC in the Mile High City, where the view is a lot more clear than from either coast.
The United States has been in a state of collapse for several decades. To paraphrase Hemingway’s flippant description of the manner in which one goes bankrupt: two ways: slowly than suddenly (‘The Sun Also Rises’).
The economic decay was precipitated by the advent of the Federal Reserve; then reinforced by FDR’s executive order removing gold from the citizenry’s ownership, the acceptance of Bretton Woods, and the implementation of what is capriciously termed ‘Bretton Woods Two’ – Nixon’s completely disconnecting the dollar from the gold standard. If you study the monetary and debt charts available on the St. Louis Fed’s website, you’ll see that post-1971 both the money supply and the amount of debt issued at all levels of the system (public, corporate, household) began gradually to go parabolic.
I would argue the political collapse kicked into high-gear during and after the Nixon administration, although I know many would argue that it began shortly after the Constitution was ratified in 1788. At the Constitutional Convention, someone asked Ben Franklin if we now had Republic or a Monarchy, to which Franklin famously replied, ‘a Republic, if you can keep it.’
This post was published at Investment Research Dynamics on August 18, 2017.
– Gold hedges massive ongoing devaluation of U. S. Dollar
– 46th anniversary of ‘Tricky Dicky’ ending Gold Standard (see video)
– Savings destroyed by currency creation and now negative interest rates
– Long-term inflation figures show gold a hedge against rising cost of fuel, food and cost of living
– $20 food and beverages basket of 1971 cost $120.17 in 2017
– Household items increased by average of 2000% and oil by 5,373% since 1913
– Gold gained 5,669% since 1913; by nearly 3,000% since 1971
– Dollar has been reserve currency of world in the period and most other currencies have seen greater devaluation
– Evidence of gold’s role as inflation and currency devaluation hedge
Editor: Mark O’Byrne
You don’t need ‘Tricky Trump’ to devalue the dollar, it’s been doing that since 1913 and ‘Tricky Dicky’ in 1971
In 2015 President Donald Trump made headlines when he told a town hall event in Atkinson, New Hampshire about how his father had once given him a ‘small loan of a million dollars.’
Outcry swept around the media who asked how much the future President was really in touch with the common voter.
Whilst Trump’s reference to ‘small’ was in relation to the (apparent) size of the empire he subsequently built he may as well have been referring to the value of a million dollars now and how small it is compared to in 1975 when he was lent the money.
This post was published at Gold Core on August 17, 2017.