Saturday, February 29, 2020

What Has the Age of Quantitative Easing Gotten Us? Ron Paul Explains (Video)

by Peter Schiff, SchiffGold:

When the housing bubble popped in 2007, the Federal Reserve went to work to reinflate the bubble. It quickly pushed interest rates to zero, and in December 2008, the Fed launched the first of three rounds of quantitative easing. The virtual money printing lasted for five years.

So, what did we ultimately get for the billions of dollars created by these Federal Reserve programs? As Ron Paul explains in a special episode of the Liberty Report, more numerous and bigger bubbles, and another crisis waiting to happen. 

The housing bubble is back along with subprime loans. There’s an auto financing bubble encouraged by subprime loans for many customers. The stock market is in a bubble waiting to be pricked. The bond market is in a huge bubble as a result low or negative interest rates.”

The Fed wasn’t alone in its interventionist monetary policy. Central banks around the world followed the same prescription. All in all, the central banks of the world increased their balance sheets by $8.3 trillion, with only $2.1 trillion worth of GDP growth to show for it.

This left $6.2 trillion of excess liquidity in the banking system that did not go where the economic planners had hoped. Central banks now own $9.7 trillion of negative interest-yielding bonds. The financial system has been left with a bubble mania, financed by artificial credit and unsustainable debt. The national debt in 2007 was $8.9 trillion; today it’s $20.5 trillion. Rising interest rates will come and that will be deadly for the economy and the federal budget.”

This is exactly what Peter Schiff predicted would happen. He talked about it in a recent podcast.

It’s not a mortgage crisis, it is a dollar crisis. That is the only place we are headed. In fact, this is the exact crisis that I have been forecasting since the very beginning, because it is a byproduct of the monetary mistakes that I knew the Federal Reserve was going to make in the aftermath of the ’08 financial crisis – to reflate, or attempt to reflate, the stock market bubbles and the housing bubbles that they had created but that had popped.”

Peter said the central bankers succeeded in reinflating the bubbles even beyond his wildest imagination. But that’s not good news.

So, they have inflated the mother of all bubbles, and when the air comes out, or in order to prevent the air from coming out, they have to crash the dollar.”

Peter has been saying that the central bankers have reached the end of their rope. There isn’t enough stimulus or interest rate tinkering left in the tank to reinflate the bubbles the next time they burst. That’s why he’s predicting a currency crisis in the future. Ron Paul is equally pessimistic about the Fed’s ability to save the economy again. He said we ultimately need radical monetary reform.

We’re at the point where another QE inflationary binge will not tide us over in the next economic downturn. We’re fast approaching the time when true monetary reform will be required to deal with the ‘sin’ of living beyond our means. If that is not done, expect a long period of economic chaos, inner city violence, and political warfare.”

Paul said gold will likely play an important role in monetary reform.

Though currently, there is a lackadaisical interest in gold compared to crypto-currencies, I believe gold is in the early stage of the third major bull market since 1971, which started two years ago when gold was $1050/oz. If history is of any benefit, gold will be used in the coming monetary reform, whether it’s accomplished by the government or the market. But if the choice of a monetary unit turns out not related to something tangible, it will prove to be a first in history. Just because our current money is now a total fiat dollar, it can’t be used to justify a market developed fiat currency. We must remember that the dollar was originally defined as a weight of silver or gold. The destructive nature of the monetary event of Aug. 15, 1971, was a consequence of our government refusing to maintain the dollar’s relationship to something tangible, thus making it a fiat currency. This explains why we’re in such a mess. A fiat currency developed in the market, won’t solve the current financial crisis the world faces … All paper or fiat money self-destructs and has limited lifespans. Gold currencies last until governments debase them into a fiat currency. The fiat dollar today, for many nefarious reasons, is constantly being destroyed by counterfeiters posing as politicians and central bankers. The day is fast approaching when the fiat dollar standard will need a major overhaul. The age of quantitative easing is ending.”

Read More @ SchiffGold.com

INTERVIEW WITH PASTOR DAN – Jim Willie

by Pastor Dan, Golden Jackass:

January 7th:  a first show with the good pastor, which included a long introduction of the Jackass with background, then a free rein to hit on a great many diverse topics related to the unsound monetary system and its inevitable decay decline and demise, which will yield in favor of the Gold Standard, first to be seen in trade payment and finally seen in the banking system

Click HERE to listen

Read More @ GoldenJackass.com

World Debt Is Rising Nearly Three Times As Fast As Total Global Wealth

by Steve St. Angelo, SRSrocco:

Some nasty dark clouds are forming on the financial horizon as total world debt is increasing nearly three times as fast as total global wealth.   But, that’s okay because no one cares about the debt, only the assets matter nowadays.  You see, as long as debts are someone else’s problem, we can add as much debt as we like… or so the market believes.

Now, you don’t have to take my word for it that the market only focuses on the assets, this comes straight from the top echelons of the financial world.  According to Credit Suisse Global Wealth Report 2017, total global wealth increased to a new record of $280 trillion in 2017.  Here is Credit Suisse’s summary of the Global Wealth 2017: The Year In Review:

According to the eighth edition of the Global Wealth Report, in the year to mid-2017, total global wealth rose at a rate of 6.4%, the fastest pace since 2012 and reached USD 280 trillion, a gain of USD 16.7 trillion. This reflected widespread gains in equity markets matched by similar rises in non-financial assets, which moved above the pre-crisis year 2007’s level for the first time this year. Wealth growth also outpaced population growth, so that global mean wealth per adult grew by 4.9% and reached a new record high of USD 56,540 per adult.

 

This year’s report focuses in on Millennials and their wealth accumulation prospects. Overall the data point to a “Millennial disadvantage”, comprising among others tighter mortgage rules, growing house prices, increased income inequality and lower income mobility, which holds back wealth accumulation by young workers and savers in many countries. However, bright spots remain, with a recent upsurge in the number of Forbes billionaires below the age of 30 and a more positive picture in China and other emerging markets.

There are a few items in the Credit Suisse’s summary above that I would like to discuss.  First, how did the world increase its global wealth at a rate of 6.4% in 2017 when world oil demand only increased 1.6%??

 

As we can see from the IEA – International Energy Agency’s Global Oil Demand table above, total world oil demand only increased 1.6% over last year.  Thus, the rate of increase of global wealth of 6.4% in 2017 was four times higher than the 1.6% increase in world oil demand.  I would imagine some readers would stand on their soapbox and emphatically claim that energy has nothing to do with wealth creation.  Unfortunately, these individuals somehow lost the ability to reason along the way.  And we really can’t blame them for making such an absurd remark because they probably believe their food magically appears on the Supermarket shelves.

Second, the financial wizards at Credit Suisse reported that global wealth also outpaced the population growth.  What they are suggesting here is that the “Millenials” who (many) are becoming wealthier by sitting in front of a screen and clicking on a mouse than their grandparents (the poor slobs) who were mainly working in the manufacturing industry by producing real things.

Third, while the Credit Suisse analysts stated that the Millenials were facing some disadvantages, there was a bright spot with a recent surge in the number of Forbes billionaires below the age of 30.  Well, ain’t that a lovely statistic.  What once took an individual at the ripe old age of 55-70 years to achieve a billionaire status, now can be done right out of college.  It’s probably not a good sign for the economy going forward that we are seeing more billionaires below the age of 30.

Global Debt Is Destroying Real Wealth

Okay, now that we know the global wealth reached a new record high in 2017, what about the other side of the story?  You know… the debt.  As I mentioned in my previous article, ECONOMICS 101 states:

NET WEALTH = ASSETS – DEBTS

Now, that equation above is a simple one… kind of like 2 + 2 = 4.  However, the financial industry likes to focus on the assets and not the debts.  But, according to a recent article on Zerohedge, Global Debt Hits Record $233 Trillion, Up $16Tn In 9 Months, the world added more debt in 2017 than total U.S. GDP:

As we can see, total global debt increased from $217 trillion at the beginning of 2017 to $233 trillion in the third quarter of 2017.  That is a $16 trillion increase in global debt in just nine months.  While U.S. GDP hit $19 trillion in Q3 2017, if we add another quarter for the increase in global debt, it could surpass $20 trillion for the entire year.

So, even if global wealth surged in 2017, so did world debt.  According to the data, global wealth increased by $16.7 trillion in 2017 while global debt expanded $16 trillion… nearly one to one. However, this is only part of the story.

Read More @ SRSrocco.com

Russia-China combined gold reserves could shake US dominance in global economy – expert tells RT

from RT:

The gold accumulated by China and Russia could be seen as part of a strategy to move away from international trade denominated in US dollars, according to Singapore’s BullionStar precious metals expert Ronan Manly.

Manly exclusively told RT that there is a shift occurring regarding the two countries building up their gold reserves, to perhaps returning to gold-backed currencies in the future and a move away from the global dominance of the US dollar, which is no longer supported by gold.

“China and Russia have both been aggressively accumulating their official gold reserves over the last 10 – 15 years,” he said, adding that only a decade ago each of them held around or less than 400 tons. “But now both these nations hold a combined 3670 tons of gold.”

“Interestingly, both Russia and China publicize and promote their accumulations of gold and publicly refer to gold as a strategic monetary asset. They make no secret of this. But on the flipside, the US does the opposite, and constantly downplays the strategic role of gold.”

According to Manly, for Russia and China gold is the only strategic monetary asset that could provide independence from the US dollar.

Manly said the sides could conceivably be holding a lot more gold than they declare in their official reserves due to many channels through which they could buy the precious metal.

Read More @ RT.com

GOLD CONTINUES TO REBOUND DESPITE CONSTANT CARTEL WHACKING: GOLD DOWN $1.40

by Harvey Organ, Harvey Organ Blog:

SILVER IS DOWN 11 CENTS. GOLD WITNESSES ANOTHER BIG 6,000 PLUS GOLD EFP/SILVER HAS 1723 EFP NOTICES/GOOD NUMBER OF SWAMP STORIES TONIGHT

Glad to be back as I was in Israel over the holidays.

I will resume my normal detailed commentary

 

GOLD: $1319.50 DOWN $1.40

Silver: $17.12 DOWN 11 cents

Closing access prices:

Gold $1320.50

silver: $17.11

SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)

SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)

SHANGHAI FIRST GOLD FIX: $1323.92 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME: $1320.00

PREMIUM FIRST FIX: $3.92

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SECOND SHANGHAI GOLD FIX: $1323.92

NY GOLD PRICE AT THE EXACT SAME TIME: $1318.25

Premium of Shanghai 2nd fix/NY:$5.67

SHANGHAI REJECTS NY /LONDON PRICING OF GOLD

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LONDON FIRST GOLD FIX: 5:30 am est $1380.80

NY PRICING AT THE EXACT SAME TIME: $1318.75

LONDON SECOND GOLD FIX 10 AM: $1268.85

NY PRICING AT THE EXACT SAME TIME. 1268.50??

For comex gold:

JANUARY/

NUMBER OF NOTICES FILED TODAY FOR JANUARY CONTRACT: 0 NOTICE(S) FOR nil OZ.

TOTAL NOTICES SO FAR: 242 FOR 24200 OZ (0.7527 TONNES),

For silver:

jANUARY

0 NOTICE(S) FILED TODAY FOR

nil OZ/

Total number of notices filed so far this month: 507 for 2,535,000 oz

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Bitcoin: BID $15,392/OFFER $15,512 DOWN $1155 (morning)

 Bitcoin: BID   14,763/OFFER  $14,871 DOWN  $1800(CLOSING)

 

end

Let us have a look at the data for today

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In silver, the total open interest  ROSE BY TINY  165 contracts from 194,264 RISING TO 194,429 WITH FRIDAY’S TINY 4 CENT RISE IN SILVER PRICING.  WE HAD ZERO COMEX LIQUIDATION BUT WITHOUT A DOUBT WE WITNESSED ANOTHER MAJOR BANK SHORT- COVERING OPERATION. NOT ONLY THAT , WE WERE AGAIN NOTIFIED THAT WE HAD ANOTHER HUGE SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP ROUTE: A CONSIDERABLE 1721 EFP’S FOR MARCH (AND ZERO FOR OTHER MONTHS) AND THUS TOTAL ISSUANCE OF 1721 CONTRACTS. HOWEVER THE MOVEMENT ACROSS TO LONDON IS NOT AS SEVERE AS IN GOLD AS THERE SEEMS TO BE A MAJOR PLAYER TAKING ON THE BANKS AT THE COMEX. STILL, WITH THE TRANSFER OF 1721 CONTRACTS, WHAT THE CME IS STATING IS THAT THERE IS NO SILVER (OR GOLD) TO BE DELIVERED UPON AT THE COMEX AS THEY MUST EXPORT THEIR OBLIGATION TO LONDON. YESTERDAY WITNESSED  EFP’S FOR SILVER ISSUED. ALSO KEEP IN MIND THAT THERE CAN BE A DELAY OF 24 HRS IN THE ISSUING OF EFP’S. I BELIEVE THAT WE MUST HAVE HAD SOME MAJOR BANKER SHORT COVERING AGAIN TODAY.

ACCUMULATION FOR EFP’S/SILVER/ STARTING FROM FIRST DAY NOTICE/FOR MONTH OF JANUARY:

17,931 CONTRACTS (FOR 6 TRADING DAYS TOTAL 17,931 CONTRACTS OR 89.66 MILLION OZ: AVERAGE PER DAY: 2988 CONTRACTS OR 14.94 MILLION OZ/DAY)

RESULT: A SMALL SIZED GAIN IN OI COMEX DESPITE THE TINY 4 CENT RISE IN SILVER PRICE WHICH USUALLY INDICATES HUGE BANKER SHORT-COVERING. WE ALSO HAD A FAIR SIZED  EFP ISSUANCE OF 1721 CONTRACTS WHICH EXITED OUT OF THE SILVER COMEX AND TRANSFERRED THEIR OI TO LONDON AS FORWARDS.  FROM THE CME DATA 1721 EFP’S WERE ISSUED FOR TODAY (FOR MARCH EFP’S AND NONE FOR ALL OTHER MONTHS) FOR A DELIVERABLE FORWARD CONTRACT OVER IN LONDON WITH A FIAT BONUS. WE REALLY GAINED 1886 OI CONTRACTS i.e. 1721 open interest contracts headed for London (EFP’s) TOGETHER WITH A INCREASE OF 165 OI COMEX CONTRACTS. AND ALL OF THIS HAPPENED WITH THE TINY RISE IN PRICE OF SILVER BY 4 CENTS AND A CLOSING PRICE OF $17.23 WITH RESPECT TO FRIDAY’S TRADING. YET WE STILL HAVE A GOOD AMOUNT OF SILVER STANDING AT THE COMEX.

In ounces AT THE COMEX, the OI is still represented by just UNDER 1 BILLION oz i.e. 0.9720 BILLION TO BE EXACT or 139% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT JANUARY MONTH/ THEY FILED: 0 NOTICE(S) FOR NIL OZ OF SILVER

In gold, the open interest ROSE BY AN HUGE SIZED 9,128 CONTRACTS UP TO 551,441 WITH THE SMALL RISE IN PRICE OF GOLD WITH FRIDAY’S TRADING ($1.40). IN ANOTHER HUGE DEVELOPMENT, WE RECEIVED THE TOTAL NUMBER OF GOLD EFP’S ISSUED YESTERDAY FOR TODAY AND IT TOTALED A GOOD SIZED  6115 CONTRACTS OF WHICH THE MONTH OF FEBRUARY SAW 6115 CONTRACTS AND APRIL SAW THE ISSUANCE OF 0 CONTRACTS.  The new OI for the gold complex rests at 551,441.DEMAND FOR GOLD INTENSIFIES GREATLY AS WE CONTINUE TO WITNESS A HUGE NUMBER OF EFP TRANSFERS TOGETHER WITH THE MASSIVE INCREASE IN GOLD COMEX OI  TOGETHER WITH  THE TOTAL AMOUNT OF GOLD OUNCES STANDING FOR JANUARY. EVEN THOUGH THE BANKERS ISSUED THESE MONSTROUS EFPS, THE OBLIGATION STILL RESTS WITH THE BANKERS TO SUPPLY METAL BUT IT TRANSFERS THE RISK TO A LONDON BANKER OBLIGATION AND NOT A NEW YORK COMEX OBLIGATION. LONGS RECEIVE A FIAT BONUS TOGETHER WITH A LONG LONDON FORWARD. THUS, BY THESE ACTIONS, THE BANKERS AT THE COMEX HAVE JUST STATED THAT THEY HAVE NO APPRECIABLE METAL!! THIS IS A MASSIVE FRAUD: THEY CANNOT SUPPLY ANY METAL TO OUR COMEX LONGS BUT THEY ARE QUITE WILLING TO SUPPLY MASSIVE NON BACKED GOLD (AND SILVER) PAPER KNOWING THAT THEY HAVE NO METAL TO SATISFY OUR LONGS. LONDON IS NOW SEVERELY BACKWARD IN BOTH GOLD AND SILVER (BIG RISE IN BOTH GOFO AND SIFO) AND WE ARE WITNESSING DELAYS IN ACTUAL DELIVERIES. IN ESSENCE WE HAVE ANOTHER HUMONGOUS GAIN OF 15,243 OI CONTRACTS: 9.128 OI CONTRACTS INCREASED AT THE COMEX AND A GOOD SIZED 6115 OI CONTRACTS WHICH NAVIGATED OVER TO LONDON.

FRIDAY, WE HAD 17,213 EFP’S ISSUED.

ACCUMULATION OF EFP’S/ GOLD(EXCHANGE FOR PHYSICAL) FOR THE MONTH OF JANUARY STARTING WITH FIRST DAY NOTICE: 57,605 CONTRACTS OR 5.760 MILLION OZ OR 179.16 TONNES (6 TRADING DAYS AND THUS AVERAGING: 9,600.8 EFP CONTRACTS PER TRADING DAY OR 960,000 OZ/DAY)

Result: A STRONG SIZED INCREASE IN OI WITH THE SMALL SIZED RISE IN PRICE IN GOLD TRADING ON YESTERDAY ($1.40). WE HAD ANOTHER FAIR SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 6115. THERE OBVIOUSLY DOES NOT SEEM TO BE MUCH PHYSICAL GOLD AT THE COMEX AND YET WE ALSO OBSERVED A HUGE DELIVERY MONTH FOR THE MONTH OF DECEMBER. I GUESS IT EXPLAINS THE HUGE ISSUANCE OF EFP’S…THERE IS HARDLY ANY GOLD PRESENT AT THE GOLD COMEX FOR DELIVERY PURPOSES. IF YOU TAKE INTO ACCOUNT THE 6115 EFP CONTRACTS ISSUED, WE HAD A NET GAIN IN OPEN INTEREST OF 15,243 contracts:

6115 CONTRACTS MOVE TO LONDON AND  9128 CONTRACTS INCREASED AT THE COMEX. (in tonnes, the gain in total oi equates to 47.40 TONNES)

we had: 0 notice(s) filed upon for NIL oz of gold.

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With respect to our two criminal funds, the GLD and the SLV:

GLD: with gold up for 11 consecutive days, we still have no changes in gold inventory

Today, with gold down a tiny $1.40 after rising for 12 straight days, gold inventory declines by a huge 1.44 tonnes today/

Inventory rests tonight: 834.86 tonnes.

SLV/ 

NO CHANGES IN SILVER INVENTORY AT THE SLV/

INVENTORY RESTS AT 318.423 MILLION OZ/

end

First, here is an outline of what will be discusse
d tonight:

1. Today, we had the open interest in silver ROSE BY A SMALL 165 contracts from 194,264 UP TO 194,429 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE THE TINY RISE IN PRICE OF SILVER TO THE TUNE OF 4 CENTS  ON FRIDAY.  WE HAD WITHOUT A DOUBT ANOTHER MAJOR SHORT COVERING FROM OUR BANKERS AS THEY HAVE CAPITULATED. NOT ONLY THAT BUT OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE ANOTHER 1721 PRIVATE EFP’S FOR MARCH (WE DO NOT GET A LOOK AT THESE CONTRACTS AS IT IS PRIVATE BUT THE CFTC DOES AUDIT THEM).  EFP’S GIVE OUR COMEX LONGS A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON. WE HAD NO COMEX SILVER COMEX LIQUIDATION. BUT, IF WE TAKE THE SMALL OI GAIN AT THE COMEX OF 165 CONTRACTS TO THE 1721 OI TRANSFERRED TO LONDON THROUGH EFP’S WE OBTAIN A GAIN OF 1886 OPEN INTEREST CONTRACTS DESPITE THE MAJOR BANKER SHORT COVERING. WE STILL HAVE A GOOD AMOUNT OF SILVER OUNCES THAT ARE STANDING FOR METAL IN JANUARY (SEE BELOW). THE NET GAIN TODAY IN OZ: 9.43 MILLION OZ!!!

RESULT: A SMALL SIZED INCREASE IN SILVER OI AT THE COMEX WITH THE TINY SIZED RISE OF 4 CENTS IN PRICE (WITH RESPECT TO YESTERDAY’S TRADING). BUT WE ALSO HAD ANOTHER 1721 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE GOOD  SIZED AMOUNT OF SILVER OUNCES STANDING FOR JANUARY, DEMAND FOR PHYSICAL SILVER INTENSIFIES AS WE WITNESS MAJOR BANK SHORT COVERING ACCOMPANIED BY INCREASES IN GOFO AND SIFO RATES INDICATING SCARCITY.

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY: Bloomberg

3. ASIAN AFFAIRS

i)Late SUNDAY night/MONDAY morning: Shanghai closed UP 17.73 points or 0.53% /Hang Sang CLOSED UP 84.89 pts or 0.28% / The Nikkei closed UP 208.20 POINTS OR 0.89%/Australia’s all ordinaires CLOSED UP 0.11%/Chinese yuan (ONSHORE) closed UP at 6.4974/Oil UP to 61.90 dollars per barrel for WTI and 67.85 for Brent. Stocks in Europe OPENED MOSTLY GREEN.   ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.4974. OFFSHORE YUAN CLOSED UP AGAINST  THE ONSHORE YUAN AT 6.4943 //ONSHORE YUAN  STRONGER AGAINST THE DOLLAR/OFF SHORE STRONGER TO THE DOLLAR/. THE DOLLAR (INDEX) IS  STRONGER AGAINST ALL MAJOR CURRENCIES. CHINA IS  HAPPY TODAY.(GOOD MARKETS)

Read More @ HarveyOrganBlog.com

Study Finds That 22 Percent Of Bitcoin Investors Are Using Debt To Fund Their Investments

by Michael Snyder, The Economic Collapse Blog:

Investing in cryptocurrencies such as Bitcoin, Ripple, Ethereum and Litecoin is extremely risky, and experts all over the country are warning that people should only invest what they are willing to lose.  Unfortunately, many are getting swept up in the current euphoria surrounding cryptocurrencies and are not listening to that very sound advice.  A disturbing new survey that was just released found that 22 percentof all Bitcoin investors are either directly or indirectly investing in Bitcoin with borrowed money…

According to LendEDU, a personal loan research firm, more than 18 percent of Bitcoin investors have used borrowed money to trade the cryptocurrency. In a global survey of 672 active Bitcoin investors, researchers asked traders the method they used to fund their cryptocurrency trading accounts. The majority of investors used banking systems such as credit cards and ACH transfers to fund their accounts.

But 22 percent of traders revealed that they have not paid off their credit and debit cards after purchasing Bitcoin, effectively investing in the cryptocurrency with borrowed money.

Credit card debt is one of the most toxic forms of debt that you could ever carry, and investing in anything when you still have credit card balances is extremely unwise.

Yes, cryptocurrencies went on an epic run in 2017, but there is absolutely no guarantee that they will continue to rise in 2018.

In fact, there is a very real possibility that we could see a cryptocurrency crash, and there are many investors that are actually eagerly anticipating one

Well, as many traders expected, it appears that institutions are using the futures product to slowly but surely build a short position in bitcoin. According to the CFTC Commitment of Traders report (available CBOE futures), non-commercial traders held a net short position of around $30mn as of Tuesday Dec 26, or around half of the total open interest.

Separately, the Traders in Financial Futures breakdown provided by the CFTC show that the leveraged funds category that consists largely of hedge funds and various money managers had a short of around $14mn, or around a quarter of the total open interest.

In other words, spec investors have used the futures contracts to establish Bitcoin shorts.

On the other hand, there is also the possibility that cryptocurrencies such as Bitcoin could continue to defy gravity and soar even higher over the next 12 months.

In fact, a rumor that Amazon.com will soon start accepting Bitcoin has lots of people buzzing

As a backdrop to all of this, there is a strong rumor that Amazon is about to accept Bitcoin as a method of payment. Patrick Byrne, the CEO of Overstock, has stated that Amazon will soon have no choice but to start accepting it. He is quoted as saying, “… they have to follow suit. I’ll be stunned if they don’t because they can’t just cede that part of the market to us if we are the only main large retail site taking Bitcoin.” Scott Mullins, an Amazon executive has confirmed that Amazon is, “working with financial institutions and crypto-experts to spur innovation, and facilitate frictionless experimentation.”

If the Amazon rumor turns out to be true – Bitcoin will probably go into orbit! Be prepared…

If someone knew exactly what would happen throughout 2018, that individual could make an absolutely obscene amount of money.

Unfortunately I don’t know where cryptocurrencies are heading, but it does appear that things are about to get a whole lot more interesting.  According to Reuters, it looks like you will soon be able to invest in Bitcoin using leveraged ETFs…

The new idea is to build “leveraged” and “inverse” funds that would rise – or fall – twice as fast as the price of bitcoin on a given day.

Direxion Asset Management LLC plans to list such products on Intercontinental Exchange Inc’s NYSE Arca exchange if U.S. securities regulators give the nod, according to a filing by the exchange this week.

In the filing, the exchange said the listing “will enhance competition among market participants, to the benefit of investors and the marketplace.”

So if Bitcoin rises or falls a thousand dollars in a single day, those financial instruments will be designed to move by about twice as much.

That should be fun.

Meanwhile, some are asking what will happen to cryptocurrencies such as Bitcoin, Ripple, Ethereum and Litecoin if the long-awaited collapse of global financial markets finally happens this year.

Well, some believe that it would be doom for cryptocurrencies, but others believe that cryptocurrencies would be like gold and would actually do extremely well during the next great financial crisis…

The question is what will happen to Bitcoin and Cryptocurrencies once the financial collapse takes place. The signs are that when economic circumstances start to deteriorate the price of Bitcoin rises. A prime example of this is during the Cyprus and Greece bailout which saw the price of BTC rise considerably during this period. With banks stopping access to cash in ATM machines, Bitcoin was the perfect solution to be able to store it safely out of the banks and Governments’ hands.

What also happens during a depression is interest rates skyrocket and start to see hyperinflation. This will mean it is extremely hard to get finance from banks and the cost can make it unsustainable. The ICO market is a perfect solution to this problem and as the banking sector suffers, ICOs will boom. More companies will look to these as a cheap way to raise money and will create their own cryptocurrency.

Read More @ TheEconomicCollapseBlog.com

Returning to a Gold Standard – why and how

by Dr Fraser Murrell, GoldSeek:

In the 1600s, Sir Isaac Newton presided over a (bi-metal) Gold and Silver Standard, with the flaw being the fix of silver to gold. In the 1900s, John Maynard Keynes “revolutionized” economics, with the result being certain economic collapse. In both cases there was a logical error in the key definition of “price”, which is critical to the stability of the economy. This note examines the problem and then goes on to present a workable Gold Standard, which it is argued, is the most stable frame of reference for our economy.

FRAMES OF REFERENCE

Life would be chaotic if “time and space” changed regularly or even our definition of it changed regularly. Fortunately, Newton sorted it all out back in the 1600s, developed the Laws of Motion, allowing mankind to proceed with certainty. However, if some Government “expert” later decided that time ran backwards on alternate days and space was shaped like a banana, then chaos would return.

In economics, the central concepts are “time and price” and again Newton considered this problem and deemed that “price” should be defined with reference to weights of gold and silver (more on this later). Once again the real world proved him (almost) correct and as a result there was economic certainty and “Britain Ruled the Waves”. But then along came economic “experts” like Keynes who changed all the critical definitions and as a result we have been plunged back into chaos.

To understand Keynes’ distortion of our economic frame of reference, consider the following example. A man walks into a bank in 1971 with savings of $1,000 (cash) and $1,000 (gold) and today in 2014 he retires and withdraws both. Ignoring for the moment interest and fees, under an (ideal) Newtonian frame of reference there would be price stability, so that the value of each withdrawal will have the same purchasing power as that deposited – in other words “price” is independent of “time”. BUT under Keynes’ new definition of “price and time” the results are that the $1,000 (cash) remains $1,000 (cash) but can now only buy $25 worth of 1971 goods and the $1,000 (gold) is now deemed to be worth $40,000 (cash) even though it can still only buy $1,000 worth of 1971 goods.

The first point is that Keynes has introduced inflation into the concept of “time” and secondly he has introduced volatility into the definition of “price”, because (as it turns out) a man who saved all his money in cash would have been robbed by a factor of 97.5% (in real world terms) and a man who saved all his money in gold would have retained his original purchasing power, but would have been deemed to have invested $1,000 (cash) and received $40,000 (cash) and therefore have made a taxable “capital gain”, thus losing (approximately) half to the Government.

The economic consequences are that anyone who saves in cash is penalized (it is better to go into debt) and anyone who invests in assets that only match inflation loses half in taxation and only a man who actively takes risks and is lucky enough to beat double the rate of inflation can break even. This economy therefore rewards debt funded price speculation over saving and wealth creation, resulting in a negative feedback loop that creates an ever weaker economy.

Whether by design or not, Keynesians and Governments have scrambled together the definitions of time, price, wealth, tax, inflation, volatility and many other things. Furthermore, by constantly changing these definitions, they have created chaos and an unstable system that (I think) must eventually collapse. Someone needs to sit down and unravel all these definitions and restore economic order. As a mathematician rather than an economist, I want to focus on the key definitions of “time and price” and let others do the rest.

HUMAN LOGIC

To find the correct definition of “price”, we cannot just jump to the correct conclusion and nor should we accept any Government’s conclusion of convenience. It turns out that we must first understand human logic itself and what it can and cannot achieve. The philosopher Wittgenstein expressed this in his “Tractatus”. My comments follow in brackets < * >:

[1] The real world is as it is.

< A = A and B = B  >

[2] The real world is independent of human thought.

< Humans can assume that A = B, but this may or may not be correct >.

[3] Human thought is a logical construct which can only prove its own assumptions.

< The assumption A = B can only prove itself A = B or a restatement of itself B = A. It can say nothing of other things C, D, or E without further assumptions >.

[4] If you do not know what you are talking about, it is better to shut up.

< If you assume that A = B and the real world subsequently proves you wrong at any point, then you must abandon your conclusion and revisit your assumptions >.

In my view, these fundamental principles apply to all fields of human endeavour, including physics, economics and (particularly) religion, and humanity would do well to understand them before uttering another word.

Now applying Wittgenstein’s logic correctly – humans can assume a definition of “price” in terms of something measurable in the real world (A = B) but only the real world can confirm or reject that assumption. Any economy we build using a flawed assumption, will itself be fatally flawed. But if we assume a definition of price that the real world confirms, then that economy will be sound. The only thing we know with certainty is that the definition “price = an unbacked fiat currency” is flawed and therefore should be abandoned. But then what is the best assumption on the definition of price?

NEWTON’S BI-METAL STANDARD

Legend has it that Newton developed his Laws of Motion after an apple fell on his head. The man is our greatest ever genius, but I doubt this was the cause. What (I think) he actually did was make (trial and error) assumptions about the nature of “time and space”, then work through his equations and see if nature confirmed or rejected them. Only when nature confirmed them were his assumptions proved correct and he was able to progress ever onwards to his conclusions.

In other words, the falling apple was nature’s confirmation. But had that apple hit him from any other direction or at any other speed, then Newton would have been forced to abandon his conclusions and revisit the assumptions. And in the same way, the real world will (sooner or later) forcemankind to revisit its assumptions on “price” and how to create a stable economy.

As Master of the Royal Mint. Newton’s considerations on the “economic frame of reference” followed the same course and (unfortunately) his conclusion accepted the status quo, which was :

Time – fixed in progression and independent of price

Price – fixed by reference to weight of both gold and silver and independent of time.

Thus “price” had a bi-metal weight definition, with both gold and silver being legal tender. I should add that an integral part of this frame of reference was also the concept of “free coinage”, whereby private gold and silver could be recast as legal tender in unlimited amount.

From the time the Spanish discovered silver in South America in the 1500s until the late 1800s, the value of gold relative to silver was fixed at around 15.5 to 1 (an oddly precise number). Newton continued with the practice butshould have seen Wittgenstein’s objection – that fixing gold to silver was a human thought construct that may not be valid in the r
eal world and so (if wrong) must inevitably cause problems.

Indeed, China’s strong preference for silver over gold (in trade) meant a silver shortage, which problem was partly reversed with the (scandalous) “opium wars”. But the problem was not China or anything else in the real world, it was the unnatural peg of silver to gold. Because had silver been allowed to float, the price would have risen and so ever less silver exported. Nevertheless, a great instability was introduced into the system which gave opportunists the chance to gradually introduce their own fiat currency system (a creation of human thought, backed by nothing except confidence).

 

KEYNESIAN ECONOMICS

Despite needing only a tweak (floating silver), the key definition of “time and price” in Newton’s economic framework were fundamentally changed by economic “experts” like Keynes. Price went from being a “pound” weight of silver, whose value was anchored in the real world – to a flawed thought experiment totally unrelated to the thing that it was trying to measure. With result that from Newton’s time until today (300 years), the “pound” has depreciated by approximately 99.9%, with almost all of that since Keynes. Looked at another way, the “price” of all things in the real world relative to the pound has increased by a factor of 1,000. Thus the “pound” stopped being a useful definition of “price” and instead became a measure of the stupidity of the “expert” economists who changed the definition. Even lima beans would have done a better job (because at least they are of the real world).

What is worse is that the depreciation of the pound has been a volatile process, causing booms and busts and all manner of economic problems. Savers (in fiat currency) have been robbed by the depreciation, causing a change in human behaviour from economic conservatism and wealth and job creation to a culture of debt funded price speculation. These “unwilling speculators” are then robbed again by bankers (with high interest) and then charged by Governments (with income and capital gains taxes) for merely trying to maintain their original purchasing power. In other words, under our current frame of reference, humans have had to run ever faster just to stand still, resulting in an ever increasing risk appetite that results in larger booms and busts. Other things like unemployment, poverty and crime can all be linked back to this flawed definition of “price and time”.

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