Friday, January 17, 2020

Bitcoin: A Tower of Monetary Babel

by Antonius Aquinas, Market Oracle:

The promoters of crypto currencies have gushingly touted them as the mechanism by which the present central banking cabal and the system of nation states which derive much of their power from will be brought down and replaced by digital money. Despite their meteoric rise as speculative “assets,” there are fundamental economic reasons why they will never act as a general medium of exchange despite the wild enthusiasm for them by the crypto-currency cultists.

Money – a general medium of exchange – is the most marketable (exchangeable) commodity in an economy. As a good, money is not sought after for its direct use – to satisfy individual wants – but to satisfy wants indirectly through exchange for other goods. Over time, one good becomes money since it possesses qualities superior to all other goods as a money. When gold became demanded not for its “use value,” but for its “exchange value,” it became a general medium of exchange – money.

As a consumer good, gold possessed a value or a “price” prior to it becoming a money, as the eminent monetary theorist Murray Rothbard explains:

. . . embedded in the demand for money is knowledge

of the money-prices of the immediate past; in contrast

to directly-used consumers’ or producers’ goods, money

must have pre-existing prices on which to ground a demand.

But the only way this can happen is by beginning with a useful

commodity under barter, and then adding demand for a

medium to the previous demand for direct use (e.g., for

ornaments in the case of gold.)*

Thus, Bitcoin’s “price” is not in terms of its original commodity price, but its price is in terms of dollars, Euros, yuan, etc. In the dollar’s case, it was at one time linked to gold, but has since been severed from it while Bitcoin has had no such relationship.

Once money is established, then prices are expressed in terms of it and thus economic calculation can rationally take place and the division of labor and specialization can be expanded. Rothbard continues:

The establishment of money conveys another great

benefit. Since all exchanges are made in money, all the

exchange-ratios are expressed in money, and so people

can now compare the market worth of each good to that

of every other good.**

Once gold became money, the price of goods became expressed in gold not in other elements – nickel, zinc, lead, etc. With the proliferation of crypto currencies, there will be a myriad of different price ratios for each good. There will be a Bitcoin price for a car, an Ethereum price for a car, a Dogecoin price of a car, and so on. This is the antithesis of the purpose of money – one unit of account that reflect prices for all commodities as Rothbard shows:

 

Because gold is a general medium it is most marketable,

it can be stored to serve as a medium in the future as well

as the present, and all prices are expressed in its terms.

Because gold is a commodity medium for all exchanges,

it can serve as a unit of account for present, and expected

future, prices. It is important to realize that money cannot

be an abstract unit of account or claim, except insofar as it

serves as a medium of exchange.*** [my emphasis]

Crypto currencies, therefore, directly violate one of the main principles of monetary theory. The vast array of digital money, all with unique price ratios (to say the least of their volatility), would make economic calculation and rational planning next to impossible. In this sense, the current world of fiat dollars would be preferable to a Tower of Monetary Babel that digital currencies would create.

Read More @ MarkeyOracle.com

 

Own this currency [no, it’s not a cryptocurrency]

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by Simon Black, Sovereign Man:

With the nearly daily moves to record highs among the hundreds of cryptocurrencies that currently exist, talking about ‘regular’ currencies seems about as out-of-fashion as that hideous shoulder pad trend from the 1980s.

[Millennial readers: see here if you’re confused.]

But there are actually a few currencies out there worth talking about right now.

And top among them, especially for anyone holding US dollars, is the Hong Kong dollar.

The Hong Kong dollar is different because it is ‘pegged’ to the US dollar at a pre-determined rate.

Unlike the euro, pound, yen, etc. whose exchange rates fluctuate on a daily basis (and occasionally have major, violent price swings) the Hong Kong dollar is set at 7.80 HKD per US dollar, plus or minus a very narrow band.

The Hong Kong dollar has effectively traded between 7.75 and 7.85 for the past three decades– a variation of about 0.64{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}. This barely registers as a rounding error.

Now, there are a handful of other currencies which are also pegged to the US dollar.

Venezuela’s government fixes its bolivar currency to the US dollar at an official rate of roughly 10:1. (Though when I was in the country a few weeks ago the Black Market rate was 30,000:1.)

In Africa, the government of Eritrea pegs its currency (the Nakfa) to the US dollar at a rate of 13.5:1.

Even Cuba’s government pegs its “convertible peso” to the US dollar at 1:1 (less some absurd exchange fee).

But none of these currencies is a viable alternative to the US dollar. The US government’s finances may be in shambles, but Eritrea’s, Cuba’s, and Venezuela’s are in much worse condition.

Hong Kong is a rare exception in the world.

The Hong Kong Monetary Authority, the country’s central bank, is among the best capitalized on the planet.

Plus the government is awash with cash and routinely runs substantial budget surpluses.

Hong Kong has virtually zero debt, and nearly $1 trillion Hong Kong dollars ($126 billion) in net foreign reserves.

That’s a public savings account worth roughly 40{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the country’s GDP.

Hong Kong’s Net International Investment Position, which is essentially a reflection of the government’s ‘net worth’ is about $1.25 TRILLION, or 380{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of GDP.

This is nearly unparalleled. By comparison, the US government’s net worth is NEGATIVE $65 trillion– roughly NEGATIVE 350{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of GDP, versus Hong Kong’s POSITIVE 380{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of GDP.

One country is broke. The other is a financial fortress.

And while the US government’s liabilities keep mounting, Hong Kong’s foreign reserves keep increasing.

Between the two, it’s pretty obvious that Hong Kong is in vastly superior financial condition. And that’s what makes the Hong Kong dollar so compelling.

By holding Hong Kong dollars, you essentially get all the US dollar benefit without having to take the US dollar risk.

If the US dollar remains strong, the Hong Kong dollar remains strong. The two are virtually interchangeable.

But unlike holding US dollars (where your savings is linked to a bankrupt country), Hong Kong dollars are backed by one of the most solvent, fiscally responsible governments in the world.

So if there were ever a US-dollar crisis, Hong Kong could simply de-peg its currency… meaning anyone holding Hong Kong dollars would be insulated from the consequences of the US government’s pitiful finances.

Read More @ SovereignMan.com

Gold: Higher Highs and Lower Lows

by Jim Rickards, Daily Reckoning:

Gold could be in a long-term trend right now that spells dramatically higher prices in the years ahead.

To understand why, let’s first look at the long decline in gold prices from 2011 to 2015.

The best explanation I’ve heard came from legendary commodities investor Jim Rogers. He personally believes that gold will end up in the $10,000 per ounce range, which I have also predicted.

But Rogers makes the point that no commodity ever goes from a secular bottom to top without a 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} retracement along the way.

Gold bottomed at $255 per ounce in August 1999. From there, it turned decisively higher and rose 650{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} until it peaked near $1,900 in September 2011.

So gold rose $1,643 per ounce from August 1999 to September 2011.

A 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} retracement of that rally would take $821 per ounce off the price, putting gold at $1,077 when the retracement finished. That’s almost exactly where gold ended up on Nov. 27, 2015 ($1,058 per ounce).

This means the 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} retracement is behind us and gold is set for new all-time highs in the years ahead.

Why should investors believe gold won’t just get slammed again?

The answer is that there’s an important distinction between the 2011–15 price action and what’s going on now.

The four-year decline exhibited a pattern called “lower highs and lower lows.” While gold rallied and fell back, each peak was lower than the one before and each valley was lower than the one before also.

Since December 2016, it appears that this bear market pattern has reversed. We now see “higher highs and higher lows” as part of an overall uptrend.

The Feb. 24, 2017, high of $1,256 per ounce was higher than the prior Jan. 23, 2017, high of $1,217 per ounce.

The May 10 low of $1,218 per ounce was higher than the prior March 14 low of $1,198 per ounce.

The Sept. 7 high of $1,353 was higher than the June 6 high of $1,296. And the Oct. 5 low of $1,271 was higher than the July 7 low of $1,212.

Read More @ DailyReckoning.com

Washington Is Destroying American Power

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by Paul Craig Roberts, Paul Craig Roberts:

Readers at home and around the world want to know what to make of the announcement that China henceforth will conduct oil purchases and sales in gold-backed Chinese currency.

Is this an attack by Russia and China on the US dollar? Will the dollar weaken and collapse from being discarded as the currency in which oil is transacted? These and other questions are on readers’ minds.

Below is my opinion:

The US dollar’s value depends on whether central banks, corporations, and individuals are content to hold their assets or wealth in dollars. If they are, it does not matter what currency is used to transact oil. If they are not, it does not matter if all oil is transacted in dollars. Why?
Because if they don’t want to hold dollars, they will dump the dollars as soon as the transaction is completed and move into other currencies or gold. What China is doing is creating a currency that might be a more attractive currency to hold.

It is possible that the gold-backed Chinese currency is a move against US power, but I see it differently. I see it as a protection against US power. China and Russia are disassociating from the dollar system, because Washington, in its abuse of the world currency role, uses the dollar payments mechanism to impose sanctions on other countries and to threaten them with exclusion from the payments clearing system.

In other words, Washington, instead of operating a fair system, uses its world currency role to dominate other countries. Russia and China are too strong to be dominated, and, thus, are throwing off the dollar system. If other countries follow, the dollar will cease to be an instrument of US control over the rest of the world.

To put it in different words, Bretton Woods gave Washington the responsibility for the world financial system. Washington abused the power entrusted to it by using the dollar system to destabilize other countries, such as Venezuela currently. Washington’s abuse of the world currency role in order to advance American financial and business interests and Washington’s power over the foreign and domestic policies of other countries has set in motion forces that will eliminate the dollar’s role as world reserve currency.

The hubris and arrogance of Washington are destroying American power.

Read More @ PaulCraigRoberts.org

The Added Liquidity Caused By 2 Votes

by J. Johnson, Miles Franklin:

We have been involved in one heck of a transition these past 5 quarters. Not only has the politically gamed background been forced up front and center for both party’s embarrassment, the intelligence agencies and foreign agreements (entanglements such as those of NATO, NAFTA, CAFTA et al.) are now totally open to full exposure speculation.  And boy the protestations coming from those that are finally being looked at are loud and obnoxious aren’t they? So much commotion is going on that it is really hard to stay on a singular subject without asking if we are not being told all we need to know.

If we stick to the subjects within the sectors of precious metals and currency, we’ll find that there seems to be very little meaningful data at hand with the only exceptions coming from the financial priests on high (G7) who claim all is well and to fear not what they do, for their data is invincible. So what if it’s all in secret?  It’s all they say but it doesn’t jive with what we are living thru at present.

Without getting into all the other things that used to make the movements within the markets, we’ll look at what has happened based on a time period from June 2016 to the present in chart form. The US Dollar is our first post; with a brand new low

The European Currency is next; with a brand new high

Now Gold;

And of course Silver; both seem to be coiling

Each one of these charts are set up in the continual format in order to keep balance in the prices during what is called the roll over periods in the commodities market. The charts all seem to be pointing to a clarification of contention and imo, we’re about to see some volatile movements in fiat and a continued climb in precious metals.  I set these charts up to show the changes that have occurred from June 2016 to the present because a major currency event occurred and since that time another happened that required the term “liquidity” to be used beyond what has ever happened in the past.

The Brexit Vote was taken in June 2016 with the outcome going towards England not becoming a player in the failed system of conjoin nations. I call it failed because ironically no one thought about the “what if” scenarios, like having a way out of the failed marriage after the money was gone or other uncalculated events not brought up before the blind acceptance.  It failed for the simple reason that it was built that way, because those that decided upon the terms knew what they were doing by not allowing exit terms.  Now the populations of each enslaved nation are starting to react negatively and their anger is aimed upwards and towards these deciders.  It’s obvious to all under the conditions created that the whole idea of central planning anything failed, to the point that no other country wants to join. In fact, more and more countries want to leave and now the actors on stage are playing it out like “Sorry, we have no exit clause …. Too bad it wasn’t planned out in case we failed!”

The US Dollar and the European Currency (EC) go against one another almost exactly, but the precious metals follow their own course and are in line positively with the Brexit reaction. First the Dollar explodes from around 91 to just under 97 and the EC goes from around 1.1450 down to about 1.0950, all in a three day period. That type of swing used to be very disruptive in all things currency and debt but apparently it means nothing anymore. Now we see a new low for the past year in the Dollar and a new high in the EC, I think it is possible these trends will continue.

Silver and Gold traders seemed to have had a longer lasting view about the Brexit vote in that they knew this would be very disruptive to the entire G7 currency system no matter what the outcome.  Most likely because of the many failed attempts to leave the union after a nation was absorbed into the uncontrollable clutches of EU debt and its new rules.  Gold went from around $1,200 to about $1,380 (13{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}) in a short period of time and Silver went from just below $16 to just over $21 (23{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}). Indeed a decent move for both metals but the one piece of data that cannot be seen in these charts is the jump up in Open Interest within Silver that made a life of contract high during the Brexit vote period and the Trump win in November.

Open Interest is the total amount of buyers and sellers holding their contracts overnight. The highest Open Interest ever recorded before these two events was around 198,000. When Silver tried to surpass the 1980 all time high most recently 2011, the OI was only in the 135,000 area, but now our new mark to beat is 235,000 OI which happened during these 2 votes. What does this tell us? Imo, some hedgers or flat out new shorts have come in to supply liquidity for the buyers. At least that was the micro-phoned statement used by main stream to blow over the fact that these prices do not represent mined products, just a diluted way of reducing the price under dollar terms and additional shorted contracts.

There seems to be an issue with these 2 separate events (Brexit/Trump) but both create the impression that they are in play inside the Comex Silver market and it’s Open Interest. Many sources from withinGATA and other experts over the past 2 decades, have stated they believe that Silver IS the lynchpen to all things monetary. If that is close to being true it would explain why Comex Silver contracts have such a huge point of leverage with 5,000 troy ounces per trade compared to Golds 100 ozs.  In truth I don’t know how they came up with these contract sizes. They certainly do not represent any sort of 15 to 1 ratio in what used to be our nations currency spread between the 2 metals.

Read More @ MilesFranklin.com

How The Elite Dominate The World – Part 3: 90{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} Of What You Watch On Television Is Controlled By Just 6 Giant Corporations

by Michael Snyder, The Economic Collapse Blog:

How much is your view of the world shaped by what you see on television?  On average, Americans spend more than 150 hours watching television every month, and it is called “programming” for a reason.  If you allow anyone to pour ideas and information into your mind for five hours a day, it is going to change how you look at reality.  Everyone has an agenda, and every single news program, television show and movie is trying to alter your views.  Sadly, our society has become absolutely addicted to media, and the mainstream media is completely dominated by the elite.  In fact, about 90 percent of the programming that comes through your television is controlled by just 6 gigantic media corporations.  Most of us are willingly plugging ourselves into this “propaganda matrix” that is completely dominated by the elite for several hours each day, and that gives them an enormous amount of power over the rest of us.

In Part I and Part II of this series, I discussed how the elite use money as a tool to dominate the planet.  Today, we are going to talk about how they use information.  If you control what people think, then you control a society.  And through their vast media empires, the elite are able to shape how we all think to a frightening degree.

Just think about it.  What do we talk about with our family, our friends and our co-workers?  To a large extent, those conversations are about movies, television shows, something that we just saw on the news or a sporting event that just took place.  The reason why we talk about certain things is because the mainstream media gives those things attention, and other things we ignore because the mainstream media does not make them seem to be important.

The mainstream media literally sets the agenda for our society, and it would be difficult to overstate the power that is in their hands.  And as I mentioned above, the mainstream media is almost entirely controlled by just 6 colossal corporations.  The following list of these 6 corporate giants comes from one of my previous articles, and this is just a sampling of the media properties that they each own…

Comcast

NBC
Telemundo
Universal Pictures
Focus Features
USA Network
Bravo
CNBC
The Weather Channel
MSNBC
Syfy
NBCSN
Golf Channel
Esquire Network
E!
Cloo
Chiller
Universal HD
Comcast SportsNet
Universal Parks & Resorts
Universal Studio Home Video

The Walt Disney Company

ABC Television Network
ESPN
The Disney Channel
A&E
Lifetime
Marvel Entertainment
Lucasfilm
Walt Disney Pictures
Pixar Animation Studios
Disney Mobile
Disney Consumer Products
Interactive Media
Disney Theme Parks
Disney Records
Hollywood Records
Miramax Films
Touchstone Pictures

News Corporation

Fox Broadcasting Company
Fox News Channel
Fox Business Network
Fox Sports 1
Fox Sports 2
National Geographic
Nat Geo Wild
FX
FXX
FX Movie Channel
Fox Sports Networks
The Wall Street Journal
The New York Post
Barron’s
SmartMoney
HarperCollins
20th Century Fox
Fox Searchlight Pictures
Blue Sky Studios
Beliefnet
Zondervan

Time Warner

CNN
The CW
HBO
Cinemax
Cartoon Network
HLN
NBA TV
TBS
TNT
TruTV
Turner Classic Movies
Warner Bros.
Castle Rock
DC Comics
Warner Bros. Interactive Entertainment
New Line Cinema
Sports Illustrated
Fortune
Marie Claire
People Magazine

Viacom

MTV
Nickelodeon
VH1
BET
Comedy Central
Paramount Pictures
Paramount Home Entertainment
Country Music Television (CMT)
Spike TV
The Movie Channel
TV Land

CBS Corporation

CBS Television Network
The CW (along with Time Warner)
CBS Sports Network
Showtime
TVGN
CBS Radio, Inc.
CBS Television Studios
Simon & Schuster
Infinity Broadcasting
Westwood One Radio Network

If nobody tuned in to their “programming”, they would not have any power over us.

But according to a report put out by Nielsen, Americans are plugging into “the matrix” more than ever before.  The following is how our daily use of media breaks down by device

Live TV: 4 hours, 31 minutes
Time-Shifted TV: 33 minutes
Radio: 1 hour, 52 minutes
DVDs: 8 minutes
Video Game Consoles: 14 minutes
Multimedia Devices (Apple TV, Roku, etc.): 13 minutes
Internet on PC: 58 minutes
Smartphone: 1 hour, 39 minutes
Tablet: 31 minutes

When you total those numbers up, it comes to 10 hours and 39 minutes.

In essence, Americans are spending most of their waking hours plugged in to something.

And if you only add together “live television” and “time-shifted television”, Americans are spending an average of more than five hours each day just watching television.

Of course many of us spend countless hours on the Internet as well.  It has been estimated that 54,907 Google searches are conducted, 7,252 tweets are posted, 125,406 YouTube videos are viewed, and 2,501,018 emails are sent out every single second.

You may have guessed this already, but most of the news and information that we consume on the Internet is also controlled by the elite

Overall, the top 10 publishers — together owning around 60 news sites — account for 47{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of total online traffic to news content last year, with the next-biggest 140 publishers accounting for most of the other half, SimilarWeb found.

The biggest online news publisher for the U.S. audience was MSN, owner of MSN.com, with just over 27 billion combined page views across mobile and desktop, followed by Disney Media Networks, owner of ESPN and ABC News, with 25.9 billion.

Read More @ TheEconomicCollapseBlog.com

Goldman Sachs Says Gold Is Better Than Bitcoin

by Dave Kranzler, Investment Research Dynamics:

“Precious metals remain a relevant asset class in modern portfolios, despite their lack of yield,” analysts including Jeffrey Currie and Michael Hinds wrote. “They are neither a historic accident or a relic.” Looking at properties such as durability and intrinsic value, they are still relevant even with new materials discovered and new assets emerging, such as cryptocurrencies, they said (LINK)

Here’s what blows my mind:  When gold ran from $250 to $1900, the entire western mainstream financial media called it a bubble. Bitcoin has run from $250 to $5500 and price momentum-chasers and the usual hypster con artists exclaim that it’s going to $100,000. Qu’est-ce que c’est, Rudolph Havenstein?

This is typically what a bubble looks like:

NVDA is without a doubt in a parabolic bubble. In a recent Short Seller’s Journal I explained in detail why NVDA’s fundamentals might justify a price closer $30 and provided ideas for shorting NVDA. Short-selling is the market’s method of introducing accountability and price discovery into the valuing assets. The problem with Bitcoin is that it can’t be borrowed and shorted. There’s no mechanism to impose express a bearish view of Bitcoin’s fundamental value.

The Goldman report goes on to say:   Intrinsic value:   There’s a limited supply of gold and other precious metals in the Earth’s crust, whereas in the case of cryptocurrencies, it’s easy to create alternatives, meaning there’s effectively no control over supply at a macroeconomic level and no intrinsic value due to rarity.  Unit of account: Gold is better at holding its purchasing power, and has much lower daily volatility. Bitcoin/dollar volatility has averaged almost seven times that of gold in 2017, the bank said.

Read More @ InvestmentResearchDynamics.com

Wells Fargo Gets Clocked in California

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by Wolf Richter, Wolf Street:

Why is Tim Sloan still CEO, asks California Treasurer.

In a letter so brutally scathing it’s practically funny, California Treasurer John Chiang skewers Wells Fargo, its Board of Directors, and its new CEO Tim Sloan. And he extended the sanctions on Wells Fargo, first imposed in September last year, by “at least” another year.

The Treasurer’s office oversees “nearly $2 trillion in annual banking transactions, manages a $75 billion investment pool, and is the nation’s largest issuer of municipal debt,” Chiang pointed out last year when he imposed the sanctions on Wells Fargo’s “most highly profitable business relationships with the State of California.” Those sanctions include:

  • Suspension of investments by the Treasurer’s Office in all Wells Fargo securities.
  • Suspension of the use of Wells Fargo as a broker-dealer for purchasing of investments by his office.
  • Suspension of Wells Fargo as a managing underwriter on negotiated sales of California state bonds where the Treasurer appoints the underwriter.

With these sanctions, Chiang sought “real accountability and lasting reforms.” But it’s a long and complex relationship that dates back to the Gold Rush era:

Wells Fargo has evolved to become the nation’s second largest bank by total assets. California is set to become the world’s fifth largest economy. What we each do, therefore, matters and effects the public interest.

The sanctions were first triggered by revelations last year that Wells Fargo “had fleeced its own customers by opening millions of bogus accounts” which “raised concerns about the bank’s culture, leadership, and loyalties.” The sanctions were aimed “to spur” the leadership to answer this question:

“Could Wells Fargo identify and eradicate the root causes of this widespread and recalcitrant culture of customer abuse and restore public trust?”

Wells Fargo did accomplish a few things Chiang had demanded, including:

  • Separating the CEO and the chairman into two positions
  • Three of the board members “at the helm” at the time of the “bogus accounts scam and other abuses” have departed or will soon.
  • Key executives were fired and “there have been claw-backs of executive compensation across the company.”
  • Incentives for cross-selling having been eliminated.

 

But now there has been “a string of new disclosures about bad practices at the bank,” a veritable “infestation of problems” that “have come scurrying out of dark corners within Wells Fargo,” among them:

  • The number of phony accounts has ballooned from an initial 2 million to now 3.5 million.
  • This past July, news broke that as many as 800,000 consumers were forced by the bank to buy “lender -based” car insurance they did not need, tipping a quarter of a million Wells Fargo customers into delinquency and triggering 25,000 vehicle repossessions.
  • In August, a new and different auto insurance fraud scandal broke in which the bank is being accused of failing to make refunds to consumers who paid off their loans early.
  • Also in August, Wells Fargo agreed to pay $108 million to settle a lawsuit claiming it overcharged military veterans under a federal mortgage refinancing program.

As revelations like these are recurring “with such regularity,” Americans could “become de-sensitized to the bank’s pervasive exploitation of the public’s trust.” He added, “It concerns me when systemic fraud and abusive banking practices are broadly viewed as the new normal.”

The bank’s “reluctance to hang a lantern over past and present mistakes undercuts claims of repentance and meaningful reform.” He listed three examples of what Wells Fargo failed to do:

Read More @ WolfStreet.com

The Coming One-World Currency

by Martin Armstrong, Armstrong Economics:

QUESTION:

Bitcoin + Cryptocurrencies

Firstly, thank you – I’ve learned more from your blog and models that high-school would ever have hoped to teach me. And even after a year, I am a still at the start-line of knowledge.

I am also been a follower and investor/gambler on crypto for over a year.

I concur with your findings that Govt’ will ultimately try to ban or regulate to tax cryptocurrencies. It really is all about tax. nothing else. I really don’t see how it can have anything to do with terrorist funding and the need to track all transactions, considering that as far back as 1996 the Federal Reserve that “ about $200 billion to $250 billion of U.S. currency was abroad at the end of 1995, or more than half the roughly $375 billion then in circulation outside of banks.” So how do the track this cash? or do they really care?

But what happens if the people just ignore the gov’t(s) attempt to ban crypto? What then?

Is it likely, or even remotely possible that most gov’ts would work jointly and simultaneously to ban cryptocurrencies?

Will there always be several countries that will ignore / not join this movement to benefit from the flow of currency – even if this inflow is cryptocurrency or not hard currency?

What will happy if the people just revolt and ignore the gov’s efforts to tax crypto or ban it?

Some insight on how and what happened with previous alternative currencies who help shed some light on this. Could you also recommend some reading in this area?

Thanks again for your patience and skill in translating your work into digestible English so people like myself can benefit from your knowledge

 

D

ANSWER: This is a battle to the death.  A cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. However, this idea has also falsely embraced the notion that a cryptocurrency will be a store of value and hence defeat inflation. That has proven to be absolute nonsense. The rise of cryptocurrency is a reflection that people do not trust the government. Those in power know that and see this as unacceptable. Edward Snowden has pointed out that BitCoin is not as safe as everyone believes. He said:

“Obviously, Bitcoin by itself is flawed. The protocol has a lot of weaknesses and transaction sides and a lot of weaknesses that structurally make it vulnerable to people who are trying to own 50 percent of the network and so on and so forth.” … “Focusing too much on bitcoin, I think is a mistake. The real solution is again, how do we get to a point where you don’t have to have a direct link between your identity all of the time? You have personas. You have tokens that authenticate each person and when you want to be able to interact with people as your persona in your true name, you can do so.”

Zcash is far better than BitCoin for to remain equally interchangeable, units of Zcash are unlinked from their history so that one unit is as good as any other unit and this makes them really fungible in the cryptocurrency world. They have unlinked shielded coins from their history on the blockchain. This means they can be used for tax avoidance and the government can use its Terrorist Card. They will not allow cryptocurrency to defeat taxes and BitCoin is not secure enough in that manner.

The rise in cryptocurrency has another side to it that is not being mentioned. Many of the people cheering BitCoin are the dollar-haters who also tend to be the goldbugs. The interesting question that arises from this is very blunt. Has the introduction of cryptocurrency been displacing gold as the alternative currency?

This is a subject that requires a lot more space for analysis than a blog post. We also have central banks looking at creating their own cryptocurrency and that raises the possibility that private cryptocurrency will be banned.

Read More @ ArmstrongEconomics.com

Is Silver Set to Soar?

by Peter Schiff, SchiffGold:

Could silver be set to soar?

Analysts Barron’s spoke with recently think so.

An article published on the business journal’s website last week predicted the white metal will emerge as a winner for the second straight year.

With a per-ounce price of $17.41 for silver futures as of Friday, analysts say the white metal is poised for a big climb, particularly as the gold-to-silver ratio stands well above historical averages.”

Peter Schiff talked about the silver-gold ratio over the summer, noting it is historically very high. This means silver is extremely undervalued. The current silver to gold ratio stands at nearly 76:1. This means you can buy almost 76 ounces of silver with one ounce of gold. Consider the historic average ratio hovers around 16:1, and the modern average over the last century is around 40:1. As Peter said, “This is silver on sale.”

It’s one of the greatest silver sales of all time, relative to the price of gold.”

Precious Metals Investing For Dummies author Paul Mladjenovic agrees with Peter’s assessment.

Silver is definitely undervalued compared to gold and as a stand-alone investment. I consider it likely to be the most undervalued asset in the general investment markets.”

Gold and silver have both shown nice gains in 2017, but the yellow metal has outpaced silver. Gold is up nearly 12{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} while silver gains currently stand around 6{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}. Last year, silver’s climb of about 16{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} outpaced gold’s rise of almost 9{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}. Mladjenovic told Barron’s he expects silver to close the gap again this year.

Silver isn’t keeping pace with gold because the market perception is that gold is a safer play, while the market perceives silver’s role as exposed to economic weakness. But as inflation heats up, more of the public will realize silver’s second role as a store of value and inflation hedge.”

Mladjenovic also said the world’s increasing appetite for silver as an industrial metal will ultimately push overall demand higher. Silver is an important element in the manufacture of solar panels. China, in particular, continues to rapidly increase solar energy production. In its 13th Five-Year Plan, Beijing aims to triple its solar capacity by 2020. Last year ranked as the strongest on record for solar-related silver demand.

This comes at a time of tightening supply. Total silver mined in 2016 fell by 0.6{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to 885.8 million ounces. Silver scrap supply fell to 139.7 million ounces in 2016, despite higher silver prices. It was the first decline in overall silver production since 2002.

But many analysts say a weakening dollar will be the primary factor driving silver’s gains. Gold Newsletter editor Brien Lundin told Barron’s he thinks the dollar is the main reason gold has outperformed silver so far this year.

Gold and the greenback have been trading in a very close inverse correlation for about the last two years, and the relationship has only grown closer this year.”

Lundin noted that the dollar index has fallen 8.8{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} this year because of “underlying skepticism” about the Federal Reserve’s ability to keep raising rates.

Even the Fed admits a new-normal rate environment would mean a federal-funds rate of around 2.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}. Balance that against its goal of 2{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} inflation, and you see they [the Fed] want an ultralow real-rate environment that would be bullish for gold and bearish for the dollar.”

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