tag:blogger.com,1999:blog-51758853714459963182024-03-15T18:10:12.879-07:00The Monetary ResetThere have been major monetary overhauls in 1913, 1933, 1945, and in 1971. For those who take the time to look at the signs it has become clear another reset in inevitable. The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.comBlogger61125tag:blogger.com,1999:blog-5175885371445996318.post-46244141258692177082020-07-20T12:50:00.001-07:002021-01-19T19:51:36.609-08:00Hedera Hashgraph HBAR Bull Case Series<div class="separator" style="clear: both; text-align: center;">Hedera Hashgraph HBAR Bull Case 4 : January 2021</div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><iframe allowfullscreen="" class="BLOG_video_class" height="266" src="https://www.youtube.com/embed/pSOFW9vgRdU" width="320" youtube-src-id="pSOFW9vgRdU"></iframe></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;">
Hedera Hashgraph HBAR Bull Case 3 : February 2020</div>
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Hedera Hashgraph HBAR Update : January 2020</div>
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Hedera Hashgraph HBAR Bull Case 2 : September 2019</div>
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Hedera Hashgraph HBAR Bull Case : November 2018</div>
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<br />The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com0tag:blogger.com,1999:blog-5175885371445996318.post-50588001961549365042020-07-19T10:29:00.000-07:002020-07-20T10:31:51.423-07:00Compare the Decentralization of Hedera, Bitcoin, EOS, Ethereum and Bitcoin Cash<div class="separator" style="clear: both; text-align: center;">
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<span style="font-family: roboto, arial, sans-serif; font-size: 10px; white-space: pre-wrap;">This video takes a deep dive into the relative decentralization of Hedera, Bitcoin, EOS, Ethereum, and Bitcoin Cash. </span></div>
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<span class="style-scope yt-formatted-string" dir="auto" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; border: 0px; font-family: roboto, arial, sans-serif; font-size: 10px; margin: 0px; padding: 0px; white-space: pre-wrap;">Epicenter Podcast. (2015, August 31). EB94 – Gavin Andresen: On The Blocksize And Bitcoin's Governance. Retrieved from </span><a class="yt-simple-endpoint style-scope yt-formatted-string" dir="auto" href="https://www.youtube.com/watch?v=B8l11q9hsJM" spellcheck="false" style="cursor: pointer; display: inline-block; font-family: roboto, arial, sans-serif; font-size: 10px; white-space: pre-wrap;">https://www.youtube.com/watch?v=B8l11...</a></div>
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The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com0tag:blogger.com,1999:blog-5175885371445996318.post-42775599599184305592020-05-17T14:44:00.004-07:002021-01-24T21:48:28.685-08:00Hedera Forum<div class="separator" style="clear: both; text-align: center;">Episode 16</div><div class="separator" style="clear: both; text-align: center;"><iframe allowfullscreen="" class="BLOG_video_class" height="266" src="https://www.youtube.com/embed/fWrkXMDMmkE" width="320" youtube-src-id="fWrkXMDMmkE"></iframe></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;">Episode 15</div><div class="separator" style="clear: both; text-align: center;"><iframe allowfullscreen="" class="BLOG_video_class" height="266" src="https://www.youtube.com/embed/SXsruQ36Xmo" width="320" youtube-src-id="SXsruQ36Xmo"></iframe></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;">Episode 14</div><div class="separator" style="clear: both; text-align: center;"><iframe allowfullscreen="" class="BLOG_video_class" height="266" src="https://www.youtube.com/embed/SkOseI9l6dI" width="320" youtube-src-id="SkOseI9l6dI"></iframe></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;">Episode 12</div><div class="separator" style="clear: both; text-align: center;"><iframe allowfullscreen="" class="BLOG_video_class" height="266" src="https://www.youtube.com/embed/eHEPUaAYWQ0" width="320" youtube-src-id="eHEPUaAYWQ0"></iframe></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;">Episode 11</div><div class="separator" style="clear: both; text-align: center;"><iframe allowfullscreen="" class="BLOG_video_class" height="266" src="https://www.youtube.com/embed/ZACOBfpYVVo" width="320" youtube-src-id="ZACOBfpYVVo"></iframe></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;">
Episode 10</div>
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Episode 9 </div>
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Episode 8</div>
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Episode 7</div>
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Episode 6</div>
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Episode 5</div>
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AdsDax Q&A</div>
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Episode 4</div>
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Episode 3</div>
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Episode 2</div>
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Episode 1</div>
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The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com1tag:blogger.com,1999:blog-5175885371445996318.post-84278885683378606092019-09-29T06:33:00.000-07:002019-09-29T06:33:08.834-07:00Hedera HBAR Bull Case 2<div class="separator" style="clear: both; text-align: center;">
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<br />The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com0tag:blogger.com,1999:blog-5175885371445996318.post-85131834091795838932019-08-14T05:58:00.000-07:002019-08-14T05:58:20.735-07:00Hedera Vs Algorand<div class="separator" style="clear: both; text-align: center;">
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A discussion on the implications of Algorand's market performance after it hit the markets on the upcoming Hedera market launch. This is not a technical comparison, and only focuses on price and market performance.</div>
The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com0tag:blogger.com,1999:blog-5175885371445996318.post-48517022923585796122019-07-27T11:31:00.000-07:002019-07-27T11:31:35.813-07:00Answers to Viewers Questions About Hedera<div class="separator" style="clear: both; text-align: center;">
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<br />The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com0tag:blogger.com,1999:blog-5175885371445996318.post-89462081670000390932019-05-12T06:15:00.001-07:002019-07-07T15:04:25.526-07:00The 2019 Crypto Bull Case (Part 1 and 2)<div class="separator" style="clear: both; text-align: center;">
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Thanks again to HBARprice.com for the great graphics!<br />
This outlines the bull case for the total crypto market in 2019. While putting this video together the Crypto Market has increased by over 25%, and while there will be significant pull backs along the way, I believe this is only the beginning.</div>
The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com3tag:blogger.com,1999:blog-5175885371445996318.post-75713402392151379262019-04-09T06:37:00.001-07:002019-04-09T16:17:23.673-07:00 The Opportunity of Return on Crypto and Proof of Stake in the Upcoming Bull Run<div class="separator" style="clear: both; text-align: center;">
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Special thanks to <a href="http://hbarprice.com/">HBARPrice.com</a> for the use of their great graphics!</div>
<br />The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com1tag:blogger.com,1999:blog-5175885371445996318.post-57688429711197662072019-03-21T10:23:00.003-07:002019-03-27T06:41:28.165-07:00Dynamic Investment Program (Method to Invest in Volatile Assets)<div class="separator" style="clear: both; text-align: center;">
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<b><span style="font-size: large;"><a href="https://drive.google.com/file/d/1UyhzbxoFyyZiYSGszd1G28vsi3RZPici/view?usp=sharing">CLICK HERE TO DOWNLOAD THE DYNAMIC INVESTMENT PROGRAM</a></span></b><br />
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<b>Cost for the program is 60 cents in HBAR, of course this is on the honor system, there's nothing preventing you from downloading it for free. I'm just trying out some micropayments and looking for motivation to put out more content. Thank's for contributing.</b><br />
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<b>Hedera Wallet QR</b><br />
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The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com4tag:blogger.com,1999:blog-5175885371445996318.post-61039087182266391042018-11-29T05:09:00.001-08:002018-11-29T07:13:29.595-08:00The Hedera Hashgraph HBAR Bull Case<div class="separator" style="clear: both; text-align: center;">
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<a href="https://www.hedera.com/">Hedera Website</a></div>
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<a href="https://www.hedera.com/hh-whitepaper-v1.4-181017.pdf">Hedera Whitepaper</a></div>
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<a href="https://hashgraph.org/">Hedera Community Site</a></div>
The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com1tag:blogger.com,1999:blog-5175885371445996318.post-11153762153032335162018-11-27T06:44:00.000-08:002019-03-27T06:44:47.031-07:00A New Solution<div class="separator" style="clear: both; text-align: center;">
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<br />The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com0tag:blogger.com,1999:blog-5175885371445996318.post-8155481694106960002017-08-10T17:17:00.001-07:002017-09-07T16:41:20.161-07:00Duane Challenge Accepted, and a Wager<div class="separator" style="clear: both; text-align: center;">
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<br />The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com18tag:blogger.com,1999:blog-5175885371445996318.post-81446940418675594832017-03-26T05:07:00.000-07:002017-03-26T05:07:48.941-07:00Bitcoin Prehistory<div class="separator" style="clear: both; text-align: center;">
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<br />The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com235tag:blogger.com,1999:blog-5175885371445996318.post-52713276948200622382017-02-01T16:53:00.000-08:002017-08-05T04:19:29.265-07:00Complimentary Precious Metals and Bitcoin Crisis Portfolio (Update 2/10/17)<div style="text-align: center;">
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The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com32tag:blogger.com,1999:blog-5175885371445996318.post-26501367881262687602017-01-27T03:54:00.000-08:002017-01-27T12:44:58.923-08:00US Strength in the Upcoming Monetary Shift<div>
Kyle Bass, in my opinion will be one of the best money managers of the next 40 years. His ideas often mirror my own, and when he speaks I always make it a point to listen. A Bloomberg interview recently done with Kyle, shown below, prompted me to republish a piece I did a couple years ago.<br />
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Below was initially published in March 27th 2015<br />
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There is one thing that the current Austrian economic minded Libertarian community seems to pride themselves on and that is challenging the mainstream narrative. I count myself among them. I would like to turn some of that skepticism back on some of the standard trains of thought that are often touted as self evident by many among us in a series of posts.<br />
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The first accepted ‘fact’ I would like to question is that during the next world monetary overhaul the United States will be doing so from a position of weakness. Here is a quote from Mike Maloney when answering a question about which countries will be hurt most and which ones will do well in the upcoming turmoil when the current system comes crashing down: “The countries where most of the currency supply is base money circulating as paper bills in the public are going to suffer a whole lot less than countries like the United States that is rigged up on credit that’s leveraged by credit that’s leveraged by credit.” This quote exemplifies how many Americans with an Austrian economic view feel the US will fare when the crisis happens and a new system is required. I certainly agree with much of what Mike has to say but this belief that the US will fare the worst in the monetary shift at very least should have its merit evaluated. <br />
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Let’s be honest the nations that are leveraged on credit over and over, China included, are the most powerful in the world and I wonder if those that have the majority of their money supply in paper bills will even have a seat at the table in determining what the next world monetary system will be. But before we get too deep into other nations pro’s and con’s let’s look at the United States objectively to see if they will have a seat at that table.<br />
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Think of the technological changes that make our world different and arguably better than the world of 30 years ago. Certainly computers come to mind, the internet and all of the advantages it has brought. Online commerce has revolutionized nearly everything, from how we make purchases, banking/investing, news, to communication. I would also put GPS near the top of the list of new inventions of the past few decades. Apple has been the main developer in bring all of this to our fingertips with iPads and iPhones. One of the most impressive aspects of these devices is how some of their features are what I pictured 25 years ago as futuristic but feel like an afterthought and taken for granted. Facetime is one of these features, as a kid I always imagined the step after telephones would be to see the person you were talking to. Of course teleconference has been around a while but Apple’s face time certainly took it to the next level, and I don’t even remember Apple advertising about it.<br />
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What do all of these innovations have in common, well that’s pretty easy, they are all American. For whatever reason the US is still, by far, the most innovative nation on earth, and don’t kid yourself, this is no small advantage.<br />
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The US is also a resource rich nation, the US may not have the most natural resources but have much more to work with than countries like Japan, or the UK.<br />
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I know there are the rumors that the 8133 tons of US gold reserves are gone and though that may be possible I think it is much more likely that the gold is still in the vaults, though it may be leased out. Even if it is leased out, as we have all heard, possession is 9/10ths of the law, and if there are multiple claims on that gold, the US being one of them, I have no doubt who would end up controlling it. With China’s holdings in question I don’t know if those 8133 tons will put the US at the top of the gold holding list but it is still significant. <br />
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As we all know the US was the head of the coalition that hammered out the Bretton Woods monetary system after World War 2 as well as unilaterally ushered in the following monetary system when Nixon suspended the convertibility of the dollar into gold in ‘71. There is no question that these monetary systems have gotten us into this mess but who would know better the flaws of our monetary system, when it might come crashing down, and be able to deal with the fallout of its failure than the architect? I have my doubts about the powers in banking and the government being as clueless as many in our community seems to think.<br />
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There are certainly other advantages such as a powerful military, and strong corporate and governmental institutions, and we know there is a long list of disadvantages but let’s take a look at the rest of the world for a moment to see what the US is up against.<br />
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While on most points I agree with Peter Schiff, as with Mike Maloney, his focus on the flaws of the US economy appears to make him blind to the deficiencies of other nations. If my father were the political prisoner in a nation I would have some pretty strong biases as well. Unfortunately his bias allowed him to favor Japan in recent years when the issues of Japan are similar to the United States only on steroids. <br />
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Europe as a whole is a basket case, and there will be no real leadership coming from there until they realize the monetary union is a failure. Depending on the time line the fallout from that failure will probably follow through into the next monetary system. In addition, after the financial crisis, the US essentially recapitalized its banking system, even if immoral to do so. Europe never recapitalized, and this is why they are so much more levered than the US banks, yet another issue that will have to be dealt with that will hamper the European powers.<br />
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For some reason alternative media seems to embrace Russia, but they’re economy is overly dependent on the resource sector not to mention thoroughly corrupt. <br />
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Another one of Schiff’s darlings is China, and there is no doubt China is an economic force to be reckoned with in the 21st century, yet she is far from perfect. The leaders of China over the past few decades have taken note of what works, namely capitalism, and it has done what it does best and brought prosperity to many. That said those same leaders have not been able to let go of one of, if not the biggest enemy of capitalistic prosperity, central planning.<br />
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China’s monetary system is still debt based and as such it has developed far too much debt, granted it is in the private instead of public sector, although the line between private and public sector is much more blurred than in other advanced economies. That debt being in the ‘private’ sector hasn't prevented misallocation of resources with not just empty buildings but empty cities built. Like Russia, corruption is rampant in China, and the one thing the leaders fear is a massive population that is not easy to placate without constant economic growth.<br />
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There is no question that China is gaining market share on the world stage and may even be more than an equal to the US during the upcoming monetary changes. Though they may be a balance to the US, I doubt they will be a replacement.<br />
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I listed the US being at the center of the past monetary systems as a possible advantage, where as critics may see this as the reason the US should bear the brunt of the repercussions for its failure. While I certainly understand wanting to see punishment for those that are responsible, it is no way to rationally analyze what nation will be hurt most in the next monetary shift. Our world is often not fair. <br />
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There is no question that watching the US get burned in a economic collapse would feel like justice, but those who take it as a given may be satisfying what they want for the future and not performing their due diligence as analysts. We must not only question the mainstream’s commonly held beliefs but also some alternative beliefs that we may take for granted. The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com6tag:blogger.com,1999:blog-5175885371445996318.post-58979630270028725132016-12-21T11:11:00.001-08:002016-12-21T11:11:53.433-08:00The Un-American Welfare Cliff<div class="separator" style="clear: both; text-align: center;">
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<br />The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com6tag:blogger.com,1999:blog-5175885371445996318.post-89053017100859719972016-09-02T05:14:00.000-07:002016-09-02T05:14:03.776-07:00State Issued Crypto Currency Propaganda Continues<br /><div>
Bloomberg published a new article, <a href="https://www.bloomberg.com/view/articles/2016-09-01/on-digital-currencies-central-banks-should-lead">On Digital Currencies Central Banks Should Lead,</a> discussing central bank issued crypto currency. <br /><br />A few key points were noticed. First, they refer to it more as digital currency rather than crypto currency, even though it is clear they are referring to the latter. This is likely to ease readers into the concept. Readers will think "what's the big deal, we already have digital currency". Second, they frame China as leading the charge, a situation which will compel American’s to wonder why the Fed isn’t showing more progress with this innovation. Finally, the article makes state issue crypto currency seem more like an inevitability rather than a possibility. <br /><br />These points smack of propaganda rather than informative news. <br /><br />For a warning from this path rather than propaganda watch The Reset’s original video on the subject below. </div>
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<br /><a name='more'></a><br />I’ll leave you with a quote from the Bloomberg piece, and after watching the video it should give you a chill. <br /><br />“Using the existing system would make it easier for a legal digital currency to gradually replace paper money.”The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com26tag:blogger.com,1999:blog-5175885371445996318.post-47359748919785942082016-05-25T09:33:00.002-07:002016-05-25T09:35:18.313-07:00Is r > g Really the Reason for Recent Income Inequality<div class="separator" style="clear: both; text-align: center;">
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Meet Thomas Piketty the new poster child of socialists that supposedly proves the unfairness of capitalism with his book Capitalism in the 21st Century.<br />
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The premise of the book revolves around a simple formula; r > g. R is the return on capital where g is the growth of the economy. His research shows that throughout history the return on capital has been greater than the rate of growth of the economy. Considering the average person’s increase in income is going to be roughly based on the rate of growth in the economy and that the rich own most of the capital, Piketty contends that this will cause the funneling of wealth to the rich. Said another way capitalism inherently causes income inequality thus flawed.<br />
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Liberals have latched on to this doctrine to justify their socialist agendas. This is exemplified by the opening sentences of <a href="https://www.theguardian.com/books/2014/apr/28/thomas-piketty-capital-surprise-bestseller">The Guardian Story</a> by Paul Mason where he says:<br />
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<i>"That capitalism is unfair has been said before. But it is the way Thomas Piketty says it, subtly but with relentless logic, that has sent rightwing economics into a frenzy both here (UK) and in the United States.'</i><br />
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Unfortunately for their point, it is exactly the lack of logic that is the problem. First, even though there may be a general trend that shows that r > g, his followers if not Piketty, ignore that there is tremendous turnover in pure capitalism as to who is rich. The rich often become poor through bad investment decisions, they are not always well diversified nor logical. Even if those that create the wealth are good stewards of their wealth their children often are not. The poor and middle class also often become rich through innovation and hard work. <br />
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Not to mention that though r may be greater than g on average, there have been great spans where that has not been the case, including much of the last century.<br />
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More to the point of this post, this concept has gained traction lately because of the obvious increase in income inequality of the past few decades, and especially the last few year. Liberals now hang their hat on Piketty’s work as proof that it is capitalism itself that has caused this inequality but ignores two much more likely causes of this most recent jump in income inequality.<br />
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The first is socialism itself. Socialism literally pays the poor to remain poor, and</div>
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incentivizes people who are just above the poverty line to become poor. It is a human condition to take the easiest path to survival, and throughout our development as a species this trait, as is shared with most animals, has served us well. It’s that voice in our mind that tells us it is a better idea to hunt a deer rather than a lion. Let’s not kid ourselves and think that we have evolved past this trait. If a free lunch is offered we will take it. <br />
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Second is a more recent development, but works in concert with the first to exacerbated income inequality to a crisis level that has everyone from Bernie Sanders and Thomas Piketty to the Pope up in arms. That is Quantitative Easing. As a debt based monetary system reaches its final phases this has been the preferred method used to prevent debt from destroying the money supply. Quantitative easing (QE) is when central banks simply buys financial assets, mostly debt instruments to add money to the economy and remove debt.<br />
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Obviously QE adds demand for financial assets that the central bank decides to purchase and pushes the prices of those assets up. And who owns most of these asset? The rich. So we can’t be surprised when the rich get richer as the central banks create new money and essentially hand it to the top 1%. If the central banks decided to buy commemorative plates, hand me down clothes, and couch lint (assets owned by the poor) QE might help decrease income inequality but that’s not what the central banks did to the tune of trillions of dollars over the past decade. <br />
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Socialists will never question a debt based monetary system, nor what is necessary to sustain it, because it is the only monetary system that can (temporarily) allow for their social system. Under a sound money regime the taxation necessary to allow the social systems we now have in place would not be tolerated. Those bills will be paid but those dependent on the handouts and those in power hope the due date will be far in the future.<br />
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Before even entertaining the idea that income inequality is being caused by very gradual flaw in capitalism, r>g, we may want to stop giving money directly to the rich and paying people to limit their income.<br />
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The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com6tag:blogger.com,1999:blog-5175885371445996318.post-78234494372459042912016-05-02T09:32:00.003-07:002016-05-12T17:13:24.664-07:00The Financial Industry Just Held A Secret Meeting to Test a Crypto Dollar<div>
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This site has been discussing the possibility of the E Dollar to get us out of the monetary and economic mess we find ourselves in for a while now.<br />
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The E Dollar would also a carry the added optional benefit of a gradual debt jubilee if the powers that be decided to allow old debt to remain denominated in old dollars.<br />
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When I saw the E Dollar as a possibility, Miles Kimball, an Economist from the University of Michigan, was the only other person around who was discussing it, and he had started presenting the concept as an option to central banks. In reality he was breathing life into an old concept with the digital age. <br />
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Economist <a href="http://blog.supplysideliberal.com/post/77041501112/robert-eisler-stable-money-the-remedy-for-the">Robert Eisler floated a similar idea</a> during the Great Depression, only it was to be maintained with a ledger system by banks and retailers. The computer age makes the concept that much easier. I tacked on to his idea that the new E Dollar could be a cryptocurrency, eliminating the need for keeping the digital currency in a bank account, instead being maintained in digital wallets. <br />
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It is always easier to sell something new rather than something old and blockchain technology is certainly a relatively new innovation. The concept of electronic cash has actually been investigated by the government for some time, and I think the circumstantial evidence<a href="http://www.themonetaryreset.com/2015/03/bitcoin-e-dollar-beta-test.html"> that bitcoin is being used as a beta test for such a system</a> is compelling.<br />
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I’m no fan of this plan since it maintains the unbreakable covenant of shifting monetary systems of the last century, the banks and government gain power, but this is is precisely why such a concept has a following sea. Still when initially writing about the E Dollar I saw the possibility of it coming to fruition as pretty slim. After a string of recent events that possibility has increased exponentially.<br />
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In January we reported <a href="http://www.themonetaryreset.com/2016/04/e-dollar-concept-is-being-pursued-by.html">that central banks including the Bank of England, The Peoples Bank of China, and the Federal Reserve were actively pursuing E dollar concepts</a>, and just last week a favorite to be named as the next Federal Reserve President, Larry Summers, joined a cryptocurrency research and media firm, Digital Currency Group. <br />
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The evidence that we may be looking at the E Dollar keeps mounting with a new Bloomberg story, <a href="http://www.bloomberg.com/news/articles/2016-05-02/inside-the-secret-meeting-where-wall-street-tested-digital-cash">Inside the Secret Meeting Where Wall Street Tested Digital Cash.</a><br />
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Bloomberg says:<br />
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“On a recent Monday in April, more than 100 executives from some of the world’s largest financial institutions gathered for a private meeting at the Times Square office of Nasdaq Inc. They weren’t there to just talk about blockchain, the new technology some predict will transform finance, but to build and experiment with the software.<br />
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By the end of the day, they had seen something revolutionary: U.S. dollars transformed into pure digital assets, able to execute and settle a trade instantly. That’s the promise of a blockchain, where the cumbersome and error-prone system that takes days to move money across town or around the world is replaced with almost instant certainty. The event was created by <a href="https://chain.com/">Chain</a>, one of many startups trying to rewire the financial industry, with representatives from Nasdaq, Citigroup Inc., Visa Inc., Fidelity, Fiserv Inc., Pfizer Inc. and others in the room.”<br />
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“We created a digital dollar”<br />
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It's about time we start paying attention to the clear trend toward a possible E-Dollar, it's consequences, and how to position ourselves accordingly.The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com28tag:blogger.com,1999:blog-5175885371445996318.post-76852966871516217772016-04-28T12:10:00.000-07:002016-04-28T12:23:20.106-07:00Ultimate Insider Larry Summers Joins Bitcoin Firm <div class="separator" style="clear: both; text-align: center;">
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Larry Summers, former US Treasury Secretary and Fed president contender, has just joined the Digital Currency Group along with bitcoin developer Gavin Andresen as senior advisors. Digital Currency Group studies blockchain technology and finance and has recently acquired Coindesk, the largest bitcoin news site as well as Consensus, the largest bitcoin conference in the world. <br />
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Larry Summers is the ultimate insider and one of the most respected personalities in the Keynesian economic world. In 2013 he was the far and away favorite to become the next Federal Reserve president as Ben Bernanke’s successor. For some reason he declined the coveted and most powerful position in economics opening the door for Janet Yellen. This is his statement for declining the nomination: "I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation's ongoing economic recovery." <br />
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It is doubtful that one would turn his back on the pinnacle of ones craft because there may be some opposition. What's more likely is he removed himself from what he saw as a train wreck waiting to happen. He could easily let Yellen deal with the unsustainable bubbles and position himself as a savior after the crash occurs. <br />
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His new role as an advisor to this crypto currency outfit dovetails nicely into my theory on a possible US government issued <a href="http://www.themonetaryreset.com/2016/04/e-dollar-concept-is-being-pursued-by.html">E Dollar</a>. The E Dollar could phase out cash, opening the door to negative rates, and a host of other benefits for the government and banks. A Federal Reserve president who introduced the E Dollar, the savior of the currently doomed monetary system, would be touted as a hero <br />
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We have laid out why we think bitcoin could be an <a href="http://www.themonetaryreset.com/2015/03/bitcoin-e-dollar-beta-test.html">E Dollar beta test</a> as well as the <a href="http://www.themonetaryreset.com/2016/04/e-dollar-concept-is-being-pursued-by.html">interest by central banks in the concept. </a> The fact that we have a likely candidate for the next Fed president, who suspiciously backed out contention in 2013, that is now taking on such a prominent role in a blockchain research and media company only strengthens our conviction that the E Dollar is a real possibility.The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com6tag:blogger.com,1999:blog-5175885371445996318.post-4823335296937471762016-03-21T09:56:00.000-07:002016-04-16T10:06:31.871-07:00Socialism is a Kneejerk Reaction to Rising Income Inequality but Does Nothing to Address the Root CauseRecently I stumbled across an LA Times story entitled: <a href="http://www.latimes.com/business/hiltzik/la-fi-hiltzik-ft-graphic-20160320-snap-htmlstory.html">America's Explosion of Income Inequality, in One Amazing Animated Chart</a>. The chart shows what many of us know, there is rising income inequality, but beyond a huge picture of Bernie Sanders to start off the story, does little to identify a solution. I actually appreciate very little meaningful commentary; the data point is quite enough as long as you're willing to do your own research. And while the Sanders pic was a thinly veiled hat tip to the author's solution, Socialism, he did nothing to address the root cause. Luckily I had done my own research, and feel confident that I know the cause and thus I should be much more equipped than the author to determine the best solution. Instead of making a snarky comment I took the opportunity to reach out to the author with the email and questions below.<br />
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Michael,<br />
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I wanted to address your story on rising income inequality in the United States. It is implied, if not stated, that the solution to rising income inequality is to implement reforms to the entitlement system to redistribute this wealth, as is touted by presidential candidate Bernie Sanders. To address your three points, of course income inequality exists, it is as bad or worse than many realize, and at these extremes it is not good for our society, but redistributing this wealth through taxes and social programs (socialism), while understandably tempting, is merely a Band-Aid seeking to correct the problem before understanding it. We must first ask the question why are the rich getting richer more quickly than the common man? Below I will outline that the problem lies with our monetary system, not with capitalism itself.<br />
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Under our debt based monetary system total debt must grow at a certain rate based on the interest accrued the year before. The money supply and economy (national income) normally also grow but at a slower rate. This sets up a condition where eventually the total national credit market debt cannot be serviced by the national income. This growing divergence is outlined by the below chart.<br />
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During the years between 1981-2008, whenever the total debt would reach the limits of the economy the criteria would be changed. More specifically the interest rates would be manipulated lower by the Federal Reserve to spur economic participants to take on more debt. More than anything else this debt was used to buy assets, causing asset price inflation, and in turn, asset bubbles. Who owns these assets that saw tremendous increases in value? The rich.<br />
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In 2008 this game of decreasing interest rates to keep debt growing, as required by our monetary system, ran into a snag. An asset (housing) bubble burst, and the Fed dropping rates to zero was not enough to reflate the bubble. Debt stopped growing and actually shrank. This is a big no no for a debt based monetary system, shrinking debt will cause a debt based monetary system to destroy itself. I'm sure you heard that the financial crisis nearly destroyed the world financial system. This destruction was nearly caused by the very small drop of total credit market debt that had been rising on a nearly perfect exponential curve for decades as shown in the above chart.<br />
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To get things headed in the right direction the central banks of the world had to introduce a new tool, quantitative easing or QE. With this program the Federal Reserve created 3.5 trillion new dollars and traded them for mortgage backed securities (MBS) and government bonds forcing their price up. Who owns a disproportionate amount of MBS and government bonds? The rich.<br />
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Once the rich got ahold of this new money what did they buy? Other things the rich like to own; stocks, high end real estate, and art, all of which also skyrocketed in price adding to income inequality. If the Fed had used the newly created trillions to buy commemorative plates, boxes of old clothes, and couch lint, the high levels and increasing income inequality of the past several years would have been non existent, and likely would have reversed, not that that would have been the correct solution.<br />
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QE has ended in the Untied States which now only has ultra-low interest rates supporting asset bubbles in stocks, bonds, and real estate, although, QE is still at record levels in the EU and Japan.<br />
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My contention that those who own assets have benefited from the efforts of the central banks is also supported by a quote you referenced. "Older Americans were the biggest gainers by far in terms of their progression up the income tiers during the current century, and also when compared with the start of the 1970s....The group aged 18-29 has seen the biggest slide." Even if in the same employment income bracket as a younger worker, older workers, who are naturally wealthier from a career in the workforce, are going to see much more income from assets in the form of interest and dividends.<br />
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To address QE adding to the income inequality there has been talk about "QE for the people" also termed <a href="http://blogs.wsj.com/economics/2016/03/21/the-time-and-place-for-helicopter-money/">helicopter money.</a> But while it may help ease some of the direct QE injection into wealth inequality, it does not address the flawed and failing monetary system. Core inflation (very damaging to the poor and middle class) would also be effected by helicopter money more than traditional QE.<br />
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When I have inquired to those who are Sanders supporters, what has caused the income inequality, they often simply say capitalism. And while capitalism naturally causes inequality as a feature of the system that allows it to function, it currently is not acting alone. Our current monetary system was created by a certain segment of the affluent, namely the banks, for their own gain, we cannot be surprised when they benefit. Actually perpetuating this system is now a question of survival for the banks, not just profit.<br />
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Why do you think income inequality has increased so much in recent years? What are the mechanisms that have caused it? How would you address those specific causes?<br />
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While I believe Bernie is an honest man, his tire patch of a solution without addressing the root cause is childish and ignorant. We must address the root cause of the problem not its symptoms.<br />
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Thank you for shining more light on this important problem. Feel free to reply or address my points in a future story. Please let me know if you pursue the latter.<br />
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Thanks<br />
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The Reset<br />
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The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com5tag:blogger.com,1999:blog-5175885371445996318.post-76950627052171801162016-02-24T10:13:00.000-08:002016-05-09T17:38:28.343-07:00Gold Bashing Now Pure Counterfactual Propaganda<div style="box-sizing: border-box; margin-bottom: 8.5px;">
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The Reset Original Video </div>
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"Gold is widely seen as a safe-haven investment, but that's not always the case. This is why gold presents such immense danger for investors over the next few years. The reason for this is that we're currently in a <a href="http://www.investopedia.com/terms/d/deflation.asp">deflationary</a> environment. Gold is only safe in <a href="http://www.investopedia.com/terms/i/inflation.asp">inflationary</a> environments." <a href="http://www.investopedia.com/contributors/53695/">Dan Moskowitz</a> via Investopedia Story <a href="http://www.investopedia.com/articles/investing/022216/gold-still-safe-haven.asp?partner=YahooSA">Is Gold Still A Safe Haven?</a><br />
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<a href="http://www.investopedia.com/articles/investing/022216/gold-still-safe-haven.asp?partner=YahooSA"></a>I have written in past on <a href="http://www.themonetaryreset.com/2016/04/0-really-zero.html">gold bashing stories</a> and in that post I said of the gold bashing writers "Their goal is not to objectively offer the facts to let the reader, who may or may not hold precious metals, determine what a logical portfolio may be. It is to convince those who don't own precious metals, themselves included, that their choice not to own any is the right one." Many of the past stories denouncing gold bend facts to make their readers and themselves feel better about not owning gold, but there is another kind of gold bashing story.<br />
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This second kind of gold story not only bends the facts, but breaks them in an attempt to manipulate the investing public into not buying, holding precious metals, and even attempts to convince them to short PM's. The opening quote is taken from one such piece just published by Investopedia.<br />
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As the title implies the story starts off questioning golds ability to act as a safe haven. This while gold is currently acting as an effective safe haven, go figure. Since the Fed raised rates in mid-December the S&P 500 has fallen over 8%, while gold is up 16%, nearly all on a safe haven bid. Considering this, its pretty ballsy to title a story "Is Gold a Safe Haven."<br />
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I'll address additional quotes from the story that will be in italics as we continue.<br />
<i><br /></i> <i>"On a larger scale, we're slowly but surely moving toward a cashless society. If we're not going to use paper money because it's seen as an outdated form of trade, then moving to gold would be archaic. Everything will eventually move digital."</i><br />
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When Nixon removed the dollars convertibility into gold, many economists forecasted that the price of gold would drop. To anyone who didn't understand gold it would make sense; if there was less demand for gold as a monetary base, the price could possibly go down. We now clearly know that this was not the case, and though gold was no longer an official monetary metal, it did not change the fact that it was a monetary metal, and a premier store of value. If the role of gold was not diminished from the government declaring that it wasn't money, do you think it will be changed when they declare that paper isn't money either?<br />
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Also let's not forget that the <a href="http://www.themonetaryreset.com/2016/02/beware-economists-bearing-multiple.html">only reason economists want to ban cash</a> is to implement negative rates to save the current monetary system. Physical gold may not pay a dividend, but at least it doesn't charge one, thus negative rates should be excellent for gold. And again negative rates are ONLY to save a FAILING system!<br />
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He goes on to back his opinion by the opinion of others, namely Goldman Sachs:<br />
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<i>"Jeffrey Currie, global head of commodities at Goldman Sachs Group, Inc...has a <a href="http://www.marketwatch.com/story/sell-gold-now-as-recent-rally-isnt-justified-says-goldman-sachs-2016-02-16">three-month target</a> of $1,100 an ounce and a 12-month target of $1,000 an ounce."</i><br />
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<a href="http://www.zerohedge.com/news/2016-02-09/goldman-capitulates-closes-out-five-its-six-top-trades-2016-loss">5 of the 6 top Goldman Sachs</a> trades of 2016 have already failed. Anyone paying attention to Goldman's calls should by now understand they are made to "fleece the muppets" aka, the investment bank is making the call only to take the opposite side of the trade against clients or anyone else willing to take their advice. Not only would I take their suggestions with a grain of salt, I would take them as a contrarian indicator.<br />
<i><br /></i> <i>"Today, that's not the case. If and when deflation hits, the Fed might come to the rescue by moving interest rates lower or even by implementing negative interest rates, but there's still not many places to go compared to 2008. Any inflationary spikes will be short lived, which means any gold rallies will not be sustainable."</i><br />
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I'm not sure what makes Mr. Moskowitz think that the Fed will not be able to stoke inflation. The Fed has never allowed a significant period of deflation since the Great Depression, and it is laughable to say that the Fed is out of bullets, as <a href="http://www.themonetaryreset.com/2015/10/the-fed-is-not-out-of-ammo-but-it.html">explained here.</a> The Fed has many avenues to continue to create money from nothing including restarting QE, so called helicopter money, and yes, negative rates.<br />
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And speaking of the Great Depression here is Mr. Moskowitz's Bottom Line:<br />
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<i>"The only real catalysts for gold are panic/confusion in the stock market and the Federal Reserve turning dovish. While both catalysts have the potential to lead to large short-term gains, neither will lead to sustainable gains. It's a lose/lose for gold. If the global economy is entering a deflationary cycle, then gold will take a significant hit. If the global economy is improving, the Fed will tighten and gold will take a significant hit."</i><br />
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First, to address his assertion that gold does not perform well in a deflation. Where is he getting his evidence of what he almost states as common knowledge 'fact'? There is only one instance of sustained deflation during the Federal Reserves reign, the Great Depression. What happened to gold prices during this time you ask (and Mr. Moskowitz should have asked)? It increased from $20.67 an ounce to $35 an ounce. A 70% return during a time when stocks and real estate were looking at even greater losses. </div>
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His second assertion is if the economy improves, the Fed will raise rates and rising rates will be bad for gold prices. Again, I would have loved if he would have provided some data points, but since he didn't, I will. </div>
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Here is a chart showing the bull run in gold during the 1970's. While interest rates were rising from 1972 to 1974, so to were gold prices, and actually when the Fed Funds Rate fell the gold price did as well. The upward trend in Gold prices continued when interest rates again started to rise.<br />
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During the interest rate increase cycle of the early 2000's we again saw gold price rise.<br />
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And what did the Fed do a couple months ago? Raise rates. What has happened to gold prices?<br />
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Frankly, when looking at the below chart of interest rates and gold prices, when Mr. Moskowitz's says "If the global economy is improving, the Fed will tighten and gold will take a significant hit" I don't know what the heck he is talking about.<br />
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<span style="font-size: x-small;">Source: Ice Benchmark Administration, Gold Fixing Price 10:30 A.M. (London time) in London Bullion Market, based in U.S. Dollars [GOLDAMGBD228NLBM], retrieved from FRED, Federal Reserve Bank of St. Louis</span><br />
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Falling interest rate can appear to be good for gold as was the case in 2007-2011, but my point is there isn't a concrete correlation.<br />
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After taking just a few moments to look into Mr. Moskowitz persuasion points it is clear that he is not presenting even remotely factual information. This story is not providing facts that support a view point, it is providing counterfactual propaganda that the author wants to believe or wants the reader to believe. I hope his DUST gold short position wasn't opened on margin.The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com4tag:blogger.com,1999:blog-5175885371445996318.post-91330410846917617572016-02-14T08:57:00.000-08:002016-04-30T16:27:09.443-07:00Beware Economists Bearing Multiple Reasons<i>"If you have more than one reason to do something (choose a doctor or veterinarian, hire a gardener or an employee, marry a person, go on a trip), just don't do it. It does not mean that one reason is better than two, just that by invoking more than one reason you are trying to convince yourself to do something. Obvious decisions (robust to error) require no more than a single reason."</i><br />
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― <a href="http://www.goodreads.com/author/show/21559.Nassim_Nicholas_Taleb">Nassim Nicholas Taleb</a>, <a href="http://www.goodreads.com/work/quotes/19092611">Antifragile: Things That Gain from Disorder</a></div>
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<a href="https://3.bp.blogspot.com/-72rIv4ZSFw8/VxZVvB4hLRI/AAAAAAAAAUQ/gl2DFN-oAuswZsPR287kGPL0wPsR3_U3ACLcB/s1600/Depositphotos_26229743_s-2015.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="256" src="https://3.bp.blogspot.com/-72rIv4ZSFw8/VxZVvB4hLRI/AAAAAAAAAUQ/gl2DFN-oAuswZsPR287kGPL0wPsR3_U3ACLcB/s400/Depositphotos_26229743_s-2015.jpg" width="400" /></a>Not only do people use multiple reasons for doing something to convince themselves, but also to convince others. Recently Bloomberg borrowed <a href="http://www.debtcrash.report/all-posts-list/all-post-list/entry/e-dollar-update-2">my work</a> (without citing) to discuss the <a href="http://www.debtcrash.report/all-posts-list/all-post-list/entry/e-dollar-update-2">Crypto-E-dollar. </a> My piece was a warning, but Bloomberg portrayed the E Dollar as a viable solution strictly for economic reasons. Today they ran a <a href="http://www.bloomberg.com/news/articles/2016-02-08/high-value-banknotes-should-be-binned-to-fight-crime-sands-says">new story on banning high denomination cash</a> to aid law enforcement. They cited<a href="http://www.hks.harvard.edu/centers/mrcbg/publications/awp/awp52"> a paper</a> done by a Harvard economist, Peter Sands, entitled Making it Harder for the Bad Guys: The Case for Eliminating High Denomination Notes. Here is an abstract of the paper.<br />
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<i>Illegal money flows pose a massive challenge to all societies, rich and poor. Tax evasion undercuts the financing of public services and distorts the economy. Financial crime fuels and facilitates criminal activities from drug trafficking and human smuggling to theft and fraud. Corruption corrodes public institutions and warps decision-making. Terrorist finance sustains organisations that spread death and fear. The scale of such illicit money flows is staggering. Depending on the country, tax evasion robs the public sector of anywhere between 6% and 70% of what tax authorities estimate they should be collecting. Global financial crime flows are estimated to amount to over US$2tr per year. Corruption amounts to another US$1tr. Most of the effort to combat such illicit financial flows focuses on the perpetrators, the underlying criminal activities or on detecting illicit transactions through the banking system. Yet despite huge investments in transaction surveillance systems, intelligence and interdiction, less than 1% of illicit financial flows are seized. In this paper we suggest a different approach, one that would complement existing policies and make them more effective. Our proposal is to eliminate high denomination, high value currency notes, such as the €500 note, the $100 bill, the CHF1,000 note and the £50 note. Such notes are the preferred payment mechanism of those pursuing illicit activities, given the anonymity and lack of transaction record they offer, and the relative ease with which they can be transported and moved. By eliminating high denomination, high value notes we would make life harder for those pursuing tax evasion, financial crime, terrorist finance and corruption. Without being able to use high denomination notes, those engaged in illicit activities – the "bad guys" of our title – would face higher costs and greater risks of detection. Eliminating high denomination notes would disrupt their "business models".</i></div>
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One should be immediately suspicious, why would an economist write a paper about law enforcement? Wouldn't this plea have been better suited to a criminal justice professor? My mind went back to Nassim's quote. This paper is not to present facts but to convince the reader of something. The range of bills he uses as an example have a current value ranging from $74 to $1010. Quite a range isn't it? The supposed goal of this paper is to make cash so cumbersome that it is not viable as a criminal medium of exchange. A stack of fifties, of the same value, would take up only twice the room as a stack of hundreds, hardly a deterrent. Google "tens and twenties unmarked bills" and you will find countless references to criminals using these denominations as well. For reference, a $10,000 stack of ten dollar bills would be 4.3 inches high. Now consider that criminals have little choice but to use cash, at what point would they decide to use a different medium of exchange? I'm guessing if the ten dollar bill were to be eliminated criminals would opt to use something else such as gold.<br />
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Maybe not so ironically, when economist <a href="http://www.themonetaryreset.com/2016/04/why-do-economists-currently-feel-as-if.html">Willem Buiter discusses banning cash</a> he allows the caveat of leaving denominations five dollars and below for older people who don't feel comfortable with electronic payments.<br />
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Interestingly, Buiter is not discussing cash bans for law enforcement reasons, he is suggesting it to allow significantly negative interest rates. Now THIS is a reason an economist would want to ban cash. Just like a criminal being deterred from using small bills, an individual will be less likely to take ones and fives out of the bank due to negative rates, and actually more so. There are steps added if a criminal wanted use gold to do business rather than cash, each of these steps is a place where they leave a trail, a trail that can be followed, leading to their capture. Is an individual going to pull out his savings in ones and fives to save 2% a year, on money that, if the likes of Buiter get their way, is going to be spent within two months. This being the case, banning larger bills is much more useful for implementing negative rates than for law enforcement.<br />
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When I hear Peter Sands say he wants to ban large denomination bills to 'stop the bad guys', it sounds very similar to: "Dad can I stay out all night to go to a party? I just thought it would be good to give you and mom a quiet night at home." If you wouldn't accept your kid's 'quiet night at home' line, why would you accept an economist trying to convince you that banning cash is a good idea for law enforcement reasons. Both have ulterior motives, one is slightly more veiled than the other.The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com2tag:blogger.com,1999:blog-5175885371445996318.post-20741194888217678652016-02-05T17:25:00.000-08:002016-07-08T13:21:07.986-07:00Gold for a Finite World<div style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin: 0in 0in 5.3pt;">
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"Now, the gold bugs will no doubt reply that under a gold standard big bubbles couldn't happen, and therefore, there wouldn't be major financial crisis. And it's true under the gold standard America had no major financial panics other than in 1873, 1884, 1890, 1893, 1907, 1930, 1931 and 1933. Oh wait. The Truth is that returning to gold is an almost comically (and cosmically) bad idea." Paul Krugman<br />
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This quote is the typical opinion of economists with a Keynesian bent. The only problem is it has no bearing in real economic history.<br />
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It is true that the United States used gold as money during the 19th century, but it was not the only form of money. Private fractional reserve banking was extensively used, and when fractional reserve banking is utilized it produces debt based money similar to the money we use today. The instability the Keynesians often refer to were the many panics that occurred during the first half of American history as Krugman points out above. The term panic is actually very apt and descriptive for these economic downturns.<br />
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The private banks would print money when they made a loan. Instead of the money stating that it was backed by the loan, it would be printed with an implication that the currency could be redeemed for gold and silver from the originating institution. As the banks expanded money and debt, a credit created boom would occur as entrepreneurs and businesses would use this borrowed money to produce real goods and services. Unfortunately, as banks always do, they would create too many loans and too much of this debt based money. The first cracks in this scheme could start if some of these loans defaulted or if depositors started withdrawing too much from accounts. For those paying attention, it would become clear that the bank would not be able to make good on the promises printed on their currency. This would result in a 'panic' as people came to the realization that they would not be able to withdraw their money from their accounts, also known as a bank run.<br />
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If gold and silver were used alone with no expansion of the money supply through fractional reserve banking, these panics would not have occurred. The economic turmoil of the 19th century was actually the result of debt based money, which the likes of Paul Krugman advocate, not gold. The revisionist history Krugman's ilk practice, blaming gold, would be comical if not for the fact that they are the ones driving world economic policy.<br />
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Economic participants suffered significant psychological damage as a result of the panics associated with fractional reserve banking in the 19th century. The question is, was the damage done to the economy in the aftermath of the panic/crash enough to wipe out any or all of the real growth that occurred during the boom (compared to if only gold and silver were used as money). Frankly we don't know for sure. I would like to think that the certainty of sound money, as well as not having huge gyrations in money supply, would have allowed for the industrial revolution, and the growth of this period just the same, but this can't be proven.<br />
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The growth of the 20th and 21st centuries on the other hand has nearly all been the result of debt based money. Any time the loose ties to gold attempted to restrict the exponential growth of debt, and debt based money, those ties were severed. All of the kudos for the growth of this time should admittedly be placed at the foot of this debt-based monetary system. You will not get an argument from me that the real economic growth as a result of a debt based monetary system is anything but impressive; only that it is unsustainable and unhealthy. By unsustainable I mean that all debt based monetary systems will result in unsustainable debt, bubbles, and ultimately an overhaul of the system. By unhealthy, I mean it misuses resources, and I think we can all agree unsustainable systems are inherently unhealthy.<br />
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As Ludwig von Mises said in my favorite quote:<br />
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"There is no means to avoiding the final collapse of a boom brought on by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."<br />
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The world has experienced two major credit created booms since 1900. The first lasted for about three decades, the first of the 19th century. Pinpointing the beginning of credit booms can be difficult depending on the criteria used, but this credit expansion ended with the Great Depression. During the 1930's debts were wiped out, and there was an obvious crash. The system was overhauled by removing gold from circulation and major banking reform, including deposit insurance, and the <a href="https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Legislation">Glass-Steagall act.</a> There was a second overhaul that took place at the end of World War Two with the adoption of the Bretton Woods world monetary system.<br />
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Again pinpointing the beginning of this second credit created boom is difficult, but it was some point during the 1930's. What is less difficult is to know when it ended, and that is...it hasn't. Yes, we have been experiencing an unsustainable credit created boom for over 80 years.<br />
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Some readers, and of course Keynesian economists, would call foul. If a system has lasted longer than a lifetime with nearly everyone alive never having experienced the Von Mises predicted crash, then it must be sustainable. Not to mention the undeniable growth that the world has experienced since WW2.<br />
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I understand this line of thinking, but it is no different than saying the equator is a straight line because it appears to be to anyone looking at it from earth. Yes, for someone born in 1940, and passing last year, I could understand how our monetary system would appear sustainable, but there is one simple set of data points that prove to me that this is a fallacy. Since the beginning of this boom, the expansion of debt has outpaced the income that is necessary to service it. They are both growing on a near exponential curve but debt at a faster rate. The only time the total credit market debt dropped was in late 2008-'09, income was also falling, and I think we can all believe that if the Fed didn't step in with unprecedented policies it would have resulted in the aforementioned crash. As a result of these policies the unsustainable divergence of debt and income has remained at elevated/crisis levels. We don't know when the crash and monetary overhaul will occur. Nor can we know how much of the economic growth of the past eight decades will be wiped out, but it could be significant. Below is a graphical representation of my point, it is a ratio of total debt in the US economy to GDP, a measure of national income to service that debt.<br />
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The next issue with the amazing growth experienced over the past several decades, and there is no question it has been impressive, is the cost of this growth. To facilitate that growth, the economy has had to burn through resources such as oil, lumber, copper, iron, uranium, and water to fuel not only products essential for our population and its increased prosperity but also bubbles. These bubbles/misallocations caused the building of homes, cars, bridges, oil wells, roads and entire cities that really were not necessary. China is a perfect example of this. In addition to the wasted raw materials there is also the untold millions of man hours wasted on products that are simply not necessary; financial sector I'm looking at you.<br />
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I'm certainly want advancement, and at times overall growth, but an economy with a debt based monetary system must grow and is not flexible on this point. It will burn through resources, both natural and human, with no regard as to whether that growth is necessary for our development as a society. Any study of history makes it clear that capitalism is the only system to allow for a peaceful human society, but there must be a better monetary system to allow capitalism to function more efficiently. Certainly better than a system that must grow based on its fundamental nature. Here are some recent examples of how wasteful debt based monetary systems can be.<br />
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<a href="https://1.bp.blogspot.com/-xWtoK-KvaR0/VwPxEjL6_MI/AAAAAAAAAEU/kko8g0fyJnAvJPOin7xmxbBfSDhmwWn_g/s1600/Building.jpg"><img border="0" src="https://1.bp.blogspot.com/-xWtoK-KvaR0/VwPxEjL6_MI/AAAAAAAAAEU/kko8g0fyJnAvJPOin7xmxbBfSDhmwWn_g/s640/Building.jpg" /></a><br />
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This is a picture of a building in China being destroyed because it had never been used. I feel for the guy who did the drywall, looks like digging holes and filling them in again to me. Krugman would be proud. Source:People's Daily Online<br />
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<a href="https://2.bp.blogspot.com/-nXWIkV8PvgY/VwPxo2UMtsI/AAAAAAAAAEg/SvGaYpCON4MIzrkUnPYIencLSRN5C5YBQ/s1600/Erenhot.png"><img border="0" src="https://2.bp.blogspot.com/-nXWIkV8PvgY/VwPxo2UMtsI/AAAAAAAAAEg/SvGaYpCON4MIzrkUnPYIencLSRN5C5YBQ/s640/Erenhot.png" /></a><br />
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Here is one of the famous ghost cities of China, Erenhot, in Inner Mongolia. It was built in the middle of a desert. One part is unfinished, and the other has no one living in it.<br />
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Of course the US is no stranger to waste brought on by bubbles. How many houses still sit unused from the housing boom. I for one live next to one.<br />
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The latest casualty is in the oil industry. I discuss how the root cause of the oil price crash is the debt based monetary system<a href="http://www.themonetaryreset.com/2015/04/oil-price-drop-root-cause-analysis.html"> here,</a> and how a different debt dynamic is exacerbating it <a href="http://www.themonetaryreset.com/2016/01/yet-another-way-excessive-debt-hinders.html">here.</a> <br />
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There are 800 million dollar drill ships, that are only a fraction of of their design life, that may never work again. By the time prices recover and companies are ready to put them back to work, due to neglect and technological development, it may make more sense to cut them up and build a new one rather than the nightmare of trying to re-mobilize what has become obsolete.<br />
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There is also the emotional toll and waste of human resources. Consider someone who started working in the shale oil boom in 2010. He built up some skills and is now laid off. If they don't sell all of the shale oil at ridiculously low prices, and that industry comes back when prices rise, will that worker ever come back? He will have moved on to another career by then, and wouldn't like the thought of getting burned again. Those skills, likely only applicable to the oil field, will go to waste. What if that same person had been employed in home-building before that?<br />
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Using a sound monetary system such as gold on the other hand would not cause nearly as much waste that seems inevitable with debt based money. Krugman actually admitted that wasteful bubbles are the only thing that can keep our system afloat at this point <a href="http://krugman.blogs.nytimes.com/2013/11/16/secular-stagnation-coalmines-bubbles-and-larry-summers/?_r=0">here</a>. The "growth" may be slower using gold as money, but now may be the perfect time to shift to such a system, as we are confronted with the limitations of a finite world, as is often discussed eloquently on Chris Martenson's <a href="http://www.peakprosperity.com/">peakprosperity.com</a>.<br />
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The financial powers that be would have you believe that using sound money would result in no credit being available for anyone. For people who have become so addicted to debt for their homes, education, cars, and businesses this is unthinkable. This is not the case, loans would be available under a sound money regime, though they would certainly be curtailed. Credit would most likely be offered by those producing goods and services, and who better to determine the terms.<br />
<a href="https://1.bp.blogspot.com/-dHiQOnl7i1Q/VwPxvC80xzI/AAAAAAAAAEk/eSmFl8UN_5w6DVYmmM7THeogRghKOMgRQ/s1600/debtcrash4.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://1.bp.blogspot.com/-dHiQOnl7i1Q/VwPxvC80xzI/AAAAAAAAAEk/eSmFl8UN_5w6DVYmmM7THeogRghKOMgRQ/s200/debtcrash4.png" /></a>A homebuilder wouldn't build a house for no money down, and a 30 year repayment schedule at 3.5%, but with 30% down and the remainder paid back over 10 years at 8%, the home would get built. With these more stringent terms the home buyer may build a smaller home or opt to stay in an apartment instead of diving into a 4500 square foot Mcmansion, but think of the lumber, fuel, and electricity that will be saved and used for a more productive purpose. Did the 3 person family really need that much house anyway? No of course not. This is a small example of how resources will be saved, and hopefully better allocated or saved for future generations. I doubt we would see 27 floor buildings built, never used, and destroyed in a short time under a sound money system.<br />
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We don't know what the industrial revolution would have looked like without debt based money, and while the growth of the past century is undeniable, it was also unquestionably wasteful. It has also been a clear credit created boom with no evidence of having avoided Mises's crash. If that crash comes to pass, an overhaul of our monetary system will be required. When deciding what that system should be, those who are concerned about the sustainability of our environment should consider that sound money would promote not only a healthier and sustainable economy, but would also create far less waste.<br />
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<a href="http://www.themonetaryreset.com/2015/06/a-first-step-toward-sound-money.html">Here is a possible first step toward sound money</a> without tipping the fiat apple cart, but <a href="http://www.themonetaryreset.com/2016/04/e-dollar-concept-is-being-pursued-by.html">this</a> is a more likely path the powers that be will follow.</div>
The Monetary Resethttp://www.blogger.com/profile/02123410167784646778noreply@blogger.com1tag:blogger.com,1999:blog-5175885371445996318.post-51827217142569806872016-01-30T17:23:00.000-08:002016-05-12T17:13:59.122-07:00E Dollar Concept is Being Pursued by The BOE, PBOC, and Yes, The Fed.<div class="separator" style="clear: both; text-align: center;">
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The Reset Original Video </div>
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Update: Bloomberg published a story 24 hours after my post that is suspiciously similar to what you will read below. They only differ in that Bloomberg poses the E Dollar as a wonderful monetary innovation whereas I outline the possibility as a warning. They almost certainly took the idea from my post without offering credit, <a href="http://www.bloombergview.com/articles/2016-01-31/bring-on-the-cashless-future">but here is the link to the Bloomberg story,</a> you be the judge...<br />
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<a href="https://3.bp.blogspot.com/-9hdLw-dxlTo/VxgPdidX_PI/AAAAAAAAAWI/1al2ATduJBEtc6QlqqLlfm9LArnIHVvkwCLcB/s1600/Depositphotos_2779654_s.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="240" src="https://3.bp.blogspot.com/-9hdLw-dxlTo/VxgPdidX_PI/AAAAAAAAAWI/1al2ATduJBEtc6QlqqLlfm9LArnIHVvkwCLcB/s320/Depositphotos_2779654_s.jpg" width="320" /></a>Central banks are planning to implement a new form of currency that has the potential of being an even more profound change than 1913, 1933, 1945, or 1971. Back in early 2014 I wrote what is now <a href="http://www.themonetaryreset.com/2014/08/how-they-got-us-into-this-mess-origins.html">How they got us into this mess</a>. In it I discussed an option that the government and banks might use to get us out of the monetary mess we find ourselves in, it was called the E Dollar. The E Dollar is simply a digital currency that has an exchange rate with cash. The central bank would set a rate at which old paper dollars would lose value against E Dollars held in a bank account. Under an E-Dollar system any physical cash removed from the banking system would lose value against the E Dollars retained in an account, this would effectively eliminate the zero lower bound. Central banks would be free to implement significantly negative rates. The E Dollar would also a carry the added optional benefit of a gradual debt jubilee if the powers that be decided to allow old debt to remain denominated<br />
in old dollars.<br />
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When I saw the E Dollar as a possibility, Miles Kimball, an Economist from the University of Michigan, was the only other person around who was discussing it, and he had started presenting the concept as an option to central banks. In reality he was breathing life into an old concept with the digital age. Economist <a href="http://blog.supplysideliberal.com/post/77041501112/robert-eisler-stable-money-the-remedy-for-the">Robert Eisler floated a similar idea</a> during the Great Depression, only it was to be maintained with a ledger system by banks and retailers. The computer age makes the concept that much easier. I tacked on to his idea that the new E Dollar could be a cryptocurrency, eliminating the need for keeping the digital currency in a bank account, instead being maintained in digital wallets. It is always easier to sell something new rather than something old and blockchain technology is certainly a relatively new innovation. The concept of electronic cash has actually been investigated by the government for some time, and I think the circumstantial evidence<a href="http://www.themonetaryreset.com/2015/03/bitcoin-e-dollar-beta-test.html"> that bitcoin is a beta test for such a system</a> is compelling.<br />
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I am no fan of this plan since it maintains the unbreakable covenant of shifting monetary systems of the last century, the banks and government gain power, but this is is precisely why such a concept has a following sea. Still when initially writing about the E Dollar I saw the possibility of it coming to fruition as pretty slim. After a string of recent events that possibility has increased exponentially.<br />
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First, for the old news. At the time of writing <a href="http://www.themonetaryreset.com/2014/08/how-they-got-us-into-this-mess-origins.html">How They Got Us Into This Mess</a> only one central bank had introduced modest negative rates, Switzerland. Since then, as most know, Sweden, Denmark, the ECB, and most recently Japan, have joined the party, but negative rates are only one piece of the E-Dollar concept puzzle. The latest is how major central banks are considering direct issuance of cryptocurrencies.<br />
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Recently there was a meeting held in Beijing with representatives from the Peoples Bank of China, including Governor Zhou Xiaochuan, where the creation of an E Yuan was discussed. The <a href="http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/3008070/index.html">official statement is in Chinese</a> but online translation makes their intent clear enough. China would like to "set up clear strategic objectives for digital currencies issued by the central bank, and develop key technologies and applications aimed at an early launch of a digital currency issued by the central bank."<br />
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One of their stated goals is more control over capital flows; imagine that, a totalitarian government wanting more control over its people. Hao Hong, chief China strategist at the Bank of Communications said "[China is] facing capital outflow pressure, a digital currency would make it easier to check the capital flow." <a href="http://www.themonetaryreset.com/2015/05/never-let-good-crisis-go-to-waste.html">As previously posted,</a> countries would likely need political cover that a crisis would afford to make a move toward an E Dollar Concept, and it would appear <a href="http://www.themonetaryreset.com/2015/05/never-let-good-crisis-go-to-waste.html">China is not letting this latest crisis go to waste.</a> Citigroup has been researching the concept for the PBOC and would help implement it.<br />
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We also recently discussed how one of the most influential economists in the world, Andy Haldane, Chief Economist at the Bank of England, <a href="http://www.themonetaryreset.com/2015/09/as-predicted-boe-head-economist-and.html">suggested an E Pound Concept In September.</a> <br />
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Well it appears the BOE is continuing in its quest. BOE economists Michael Kumhof and John Barrdear wrote a paper in which they "Explore the macroeconomic consequences of central banks themselves issuing digital currency in sizable amounts, in direct competition with privately-issued bank deposits." I found this quote interesting in that it almost appears as if they are setting up the E Pound as an adversary to traditional bank created money, but I digress. Preliminary findings of the paper for a central bank digital currency include "A sizable increase in steady state level GDP" and "stabilize the business cycle by granting policy makers additional policy instruments that controls either the price or quantity of government provided liquidity." Additional policy instruments huh? You wouldn't mean significantly negative rates and banning cash would you?<br />
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Finally, and here's the big one, In January of 2015 David Andolfatto the vice president of the Federal Reserve Bank of St Louis said the following during a presentation:<br />
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"This opens up the door for some innovation; potentially the government or some government agency can step in and be more efficient than the private sector, and I'll defend that statement as well, the notion is Fedcoin, which is a term not original with me, its something I came across in the blogosphere. JP Koning was the first to coin the term, but basically what this is is the idea of combining the bitcoin payment system, or the protocol with the US dollar." Minute 1:30-2:30<br />
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He discusses why bitcoin is a bad form of money in minutes 23:00-30:00, and later says:<br />
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"We believe that the fed can maintain the fixed exchange rate system [between the currencies] because the fed [would] 'print' both types of currency, and no other private sector [entity] can print dollars, giving the Fed a comparative advantage"<br />
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If the Fed can maintain a fixed exchange rate, they can vary the exchange rate as well.<br />
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He also wrote a <a href="http://andolfatto.blogspot.co.uk/2015/02/fedcoin-on-desirability-of-government.html">blog post</a> on the subject in which he wrote the following interesting excerpts:<br />
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"And so, here is where the idea of Fedcoin comes in. Imagine that the Fed, as the core developer, makes available an open-source Bitcoin-like protocol (suitably modified) called Fedcoin. The key point is this: the Fed is in the unique position to credibly fix the exchange rate between Fedcoin and the USD (the exchange rate could be anything, but let's assume par)."<br />
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The Exchange rate could be anything huh?<br />
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"What justifies my claim that the Fed has a comparative advantage over some private enterprise that issues (say) BTC backed by USD at a fixed exchange rate? The problem with such an enterprise is precisely the problem faced by countries that try to peg their currency unilaterally to some other currency. Unilateral fixed exchange rate systems are <a href="http://andolfatto.blogspot.com/2015/01/on-instability-of-unilateral-fixed.html">inherently unstable</a> because the agency fixing the BTC/USD exchange rate cannot credibly commit not to run out of USD reserves to meet redemption waves of all possible sizes. In fact, the structure invites a speculative attack." He seems to be vilifying bitcoin as inviting attacks from the ever evil speculators.<br />
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This statement goes back to my comments in <a href="http://www.themonetaryreset.com/2014/08/how-they-got-us-into-this-mess-origins.html">How They Got Us Into This Mess</a>, that when the time comes they will point out all of the flaws in bitcoin, which they have fixed with the E Dollar/Fedcoin. My original text from '14: "At the same time they could say, as in the congressional testimony, that bitcoin had many benefits but was too dangerous without oversight. But with the introduction of a US crypto currency, the E Dollar, all of those benefits would be realized without the risk, because of additional regulation and safeguards."<br />
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He goes on:<br />
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"First, the Fedcoin protocol could be made open source, primarily for the purpose of transparency. The Fed should only honor the fixed exchange rate for the version of the software it prefers. People can download free wallet applications, just as they do now for Bitcoin. Banks or ATMs can serve as exchanges where people can load up their Fedcoin wallets in exchange for USD cash or bank deposits."<br />
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"From the perspective of the Fed, because Fedcoin can be viewed as just another denomination of currency, its existence in no way inhibits the conduct of monetary policy (which is concerned with managing the total supply of money and not its composition). In fact, Fedcoin gives the Fed an added tool: the ability to conveniently pay interest on currency."<br />
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Or conveniently charge interest, through negative rates, <a href="http://www.washingtonsblog.com/2016/01/negative-interest-rates-sign-desperation.html">as is going on throughout the world, </a>and the Fed considers as a <a href="http://www.reuters.com/article/usa-fed-yellen-rates-idUSN9N0X501620151104">possibility</a> ( I would call it an probability) in the future. Let's not forget this is a St Louis Fed official, the same St. Louis Fed that <a href="https://research.stlouisfed.org/wp/2015/2015-015.pdf">wrote a paper</a> indicating that <a href="http://www.cnbc.com/2015/08/18/st-louis-fed-official-no-evidence-qe-boosted-economy.html">QE doesn't work,</a> and when at the zero lower bound the only option to ease monetary policy besides QE is negative rates.<br />
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Mr. Andolfatto hits on a couple of my points made as to why the government would love the E-Dollar Here:<br />
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"In short, Fedcoin is essentially just like digital cash. Except in one important respect. Physical cash is still a superior technology for those who demand anonymity (see <a href="http://fic.wharton.upenn.edu/fic/papers/01/0112.pdf">A Theory of Transactions Privacy</a>). Cash does not leave a paper trail, but Fedcoin (and Bitcoin) do leave digital trails. In fact, this is an excellent reason for why Fedcoin should be spared any KYC restrictions. First, the government seems able to live with not imposing KYC on physical cash transactions--why should it insist on KYC for digital cash transactions? And second, digital cash leaves an digital trail making it easier for law enforcement to track illicit trades. Understanding this, it is unlikely that Fedcoin will be the preferred vehicle to finance illegal activities."<br />
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He ends with this:<br />
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"Finally, the proposal for Fedcoin should in no way be construed as a backdoor attempt to legislate competing cryptocurrencies out of existence. The purpose of Fedcoin is to compete with other cryptocurrencies--to provide a property that no other cryptocurrency can offer (guaranteed exchange rate stability with the USD). Adopting Fedcoin means accepting the monetary policy that supports it. To the extent that people are uncomfortable with Fed monetary policy, they may want to trust their money (if not their wealth) with alternative protocols."<br />
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Because why would you want to stop<a href="http://www.themonetaryreset.com/2015/03/bitcoin-e-dollar-beta-test.html"> the E Dollar/Fedcoin Beta test</a> too early when you are still gathering good information and research from it?<br />
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Below is Mr. Andolfatto's presentation on Fedcoin.<br />
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There have been plenty of stories in the alternative financial media on cash bans, negative rates and debt jubilees, but none about doing it in one fell swoop with an E Dollar concept. Just doing a cash ban and negative rates would not be as effective as an E Dollar as covered <a href="http://www.debtcrash.report/all-posts-list/all-post-list/entry/e-dollar-vs-negative-rates-1">here</a> but additionally terms like cash ban, negative rates and debt jubilee could have some very negative connotations with the public. The E Dollar/Fedcoin on the other hand could be sold as innovation, and who wants to stand in the way of progress. The millennial generation, of which I am a member, could easily accept the new cryptocurrency and blow off naysayers as just "not getting it".<br />
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<a href="http://www.themonetaryreset.com/2015/06/the-case-for-owning-bitcoin-from-crypto.html">I have not changed my mind on holding a small allocation to bitcoin,</a> but as the loathsome <a href="http://www.themonetaryreset.com/2015/11/bitcoin-reality-check.html">Jamie Dimon points out it is vulnerable</a> and he has a valid point. Even Gavin Andresen, a bitcoin core developer, <a href="http://www.peakprosperity.com/podcast/82569/bitcoin-architect-everything-need-know-about-bitcoin">in an interview with Chris Martenson,</a> indicated that if a government created a cryptocurrency similar bitcoin, supported by tax collection and legal tender laws it would have clear advantages over bitcoin, and would take back market share. That said, Bitcoin has proven that it reacts well to monetary turmoil and there may be wonderful trading opportunities in what I believe is going to be a very tumultuous decade to come. This opportunity may be fleeting, a time between when people rush to the cryptocurrency for safety while fiat currencies are faltering, but before it is outlawed.<br />
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It's about time we start paying attention to the clear trend toward a possible E-Dollar/Fedcoin, it's consequences, and how to position ourselves accordingly.<br />
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Update: On January 29th 2016 Business Insider put forth another <a href="http://www.businessinsider.com/how-negative-interest-rates-would-work-japan-switzerland-2015-11?r=UK&IR=T">story campaigning for the E Dollar as a solution</a>. Kimball is again highlighted, but the authors don't seem realize that if there is going to be a new electronic currency that would phase out cash, it will likely be on a cryptocurrency platform discussed above.</div>
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