The so-called recovery is only built on debt and printed cash declares our own Byron King. In the long term, the only option for the government to continue financing it's operations is to print too many dollars. Money printing has it's limits, however. It's Byron's opinion that at some point, perhaps very soon, the government will have to turn to more desperate measures. Namely, capital controls. In the following featured essay, Byron outlines 4 probably ways the government will take your cash and one play you can buy through your broker to prepare today. Read on...
Americans expatriate because they want to get out of the country. Corporations expatriate for similar reasons. Clem Chambers explains...
Say goodbye to your boring morning commute. New technologies are changing the way people drive their cars. It’s making them safer, more fuel efficient, and could reshape the way America builds its roads and cities. The only thing that could stand in the way...
In a 2009 article, the Huffington Post went into considerable detail about the number of people with PhD degrees in economics employed by the Board of Governors of the Federal Reserve System. This is the government’s branch of the Federal Reserve. It is not one of the 12 regional Federal Reserve banks, all of which […]
The U.S. dollar is the dominant global reserve currency. All markets, including stocks, bonds, commodities, and foreign exchange are affected by the value of the dollar.The value of the dollar, in effect, its “price” is determined by interest rates. When the Federal Reserve manipulates interest rates, it is manipulating, and therefore distorting, every market in […]
When the NSA surveillance news broke last year it sent shockwaves through CERN, the particle physics laboratory in Switzerland. Andy Yen, a PhD student, took to the Young at CERN Facebook group with a simple message: “I am very concerned about the privacy issue, and I was wondering what I could do about it.”There was […]
The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance or the get-rich-quick adventurer. They will die poor.– Jesse Livermore, How to Trade in StocksThe trouble with capitalism’s guardians is that they have no […]
Let’s head back in time…In 2004, a mere decade ago, the US national debt rang the register at $7.4 trillion. That represents “debt per citizen” of over $25,000. You, me, your neighbor, your 4-yr old grandson, you name it and they’re portion of the U.S. debt is $25k.But flash forward to today and you’ll see […]
John Foust, a Democrat running for the 10th congressional seat in Northern Virginia, is — like Gov. Terry McAuliffe and other state Democrats — gung-ho to expand Medicaid. His wife’s position is, shall we say, a bit more nuanced.Foust has slammed his opponent, Republican Del. Barbara Comstock, for her opposition to expansion. He has spoken […]
The midterm election season is upon us, and it’s a tossup whether the Republicans will win the Senate, or if President Obama, seemingly oblivious as conflict flares up around the world, will, through his continuous campaigning, keep Harry Reid in his majority leader seat.The only thing we know for sure is that sociopaths will be […]
Alexander Hamilton was America’s first Secretary of Treasury under President George Washington. When he first entered office in 1789, America was an agricultural nation of just 4 million still broke from its financially costly victory over the British Empire in the Revolutionary War.The states had accumulated relatively massive debts to finance that war, which mostly […]
I was talking with one of my colleagues the other day, and he raised a very interesting question, one that deserves consideration by anyone worried about their digital privacy. He read an article that championed the idea that the more steps one took to protect their privacy by using anonymous Web-browsing tools like Tor, the […]
In the minds of many people around the world, including in the United States, the term “capitalism” carries the idea of unfairness, exploitation, undeserved privilege and power, and immoral profit making. What is often difficult to get people to understand is that this misplaced conception of “capitalism” has nothing to do with real free markets […]
When you type a website address into a browser, you might have noticed that the letters “http” appear at the front. “HTTP” stands for Hypertext Transfer Protocol. In typing a Web address, you are actually sending an HTTP command to transmit that website to you. Hypertext Transfer Protocol is the means by which information is […]
Some people are saying it is just what the doctor ordered. Others are saying that the cure is worse than the disease.The Affordable Care Act? Reengagement in Iraq? Tea Party bullying in the GOP?Not this time. Just as protracted in the corridors of Congress and the White House is the debate over the proposed reform […]
In 2012, money mandarins running the European Union chose stagnation over restructuring. Here’s a consequence of that choice: expectations for a self-sustaining economic recovery keep getting crushed.Two years ago, European Central Bank (ECB) chief Mario Draghi promised to do “whatever it takes” to hold the eurozone together. He bluffed nervous investors into believing in a […]
Picture the scene. It’s 2020. You’re at the checkout in a convenience store with a carton of milk. But you’ve got no cash and you’ve left your cards at home. No problem. You scan your right index finger; the green light flashes. Purchase approved and you leave. Easy.Is this a realistic vision of the future, […]
“In the beginning, all the world was America.” — John Locke“The Garden of Eden was a perfect place,” my friend Manuel explained. “Man had free will. He could live in harmony with nature and God — and everything would be fine. But if he defied God, the stain of original sin would be on his […]
After a week of reckoning about the American oil and gas boom… I’ve got to get something off my chest.I can’t stand it when a coworker takes credit for something I did.Whether it’s a special report I wrote or just a little investing trick I found on my own — if someone takes it and […]
It might sound like the latest new product from Apple, but IPAB is actually the newest major legal challenge to Obamacare.Recently, a three-judge panel in the 9th Circuit Court of Appeals in San Francisco heard arguments about the Independent Payment Advisory Board, or IPAB, a 15-member panel created by the Affordable Care Act and empowered […]
Americans have come to believe that the IRS and the income tax are inevitable parts of our lives. After all, most everyone alive today has lived his entire life under federal income taxation.It wasn’t always that way. For some 125 years, the American people lived without having any tax imposed upon their income.The obvious question […]
Here’s a fun fact: Although we all hate the U.S. dollar, as it continues to hemorrhage wealth, its foothold as the world’s reserve currency isn’t going to disappear overnight.A Russian gas deal with China won’t change that — as we’ll highlight below.But before we get to the nitty-gritty, let’s dive into a story that’s right […]
Franklin Delano Roosevelt famously used the term “forgotten man” in a 1932 speech to describe those at the bottom of the economic pyramid who, he felt, government should aid.But the originator of the phrase “forgotten man” had a whole different meaning in mind. He aimed to expose the seeming good intentions of government to reveal […]
“As the nation’s central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding […]
The Keynesian disaster recovery plan has been to lower rates, force people to take more risk in search of yield, and entice others to borrow and spend and, magically, more jobs will be created. If people won’t buy stocks, central banks will.Back in 2011, Ben Bernanke, when asked if QE2 was driving up stock prices, […]
In September 2009, when President Obama made a primetime speech pitching his not-yet-passed health care overhaul, he made the following promise: “I will not sign a plan that adds one dime to our deficits — either now or in the future. Period.” To prove his seriousness, he further promised that “there will be a provision […]
Whatever your views on the role of government, one thing is clear: There will be no way to pay for it if the economy doesn’t grow. And I’m not talking by a measly percentage point or two. If we can’t find our way back to 5% annual economic growth or above soon, America’s accumulated federal […]
Hanging out in Rome, surrounded by ruins of all ages, you can’t help but have big thoughts about the state of the world. Here are a few of mine.
No generation during the long fall of the Roman Empire was really aware of it. Each generation accepted the conditions they inherited and worked to survive as best they could. And so it went for hundreds of years. The “fall of Rome” was obvious only to historians. It never really felt like falling.
Europeans and Americans should know something about that. There have been no appreciable gains in real median household income in the U.S. since the mid-1970s. We work harder and longer for less. Two-income families are a necessity. Young people are full of angst about the future.
As for Italy as a nation, the third millennium has been a disaster of unrelenting decline.
Then and now, the same stuff dragged us down: massive public debt, bureaucracy, unsound money, imperial ambition, official corruption, parasitism, capital depletion, and, above all else, the exaltation of the rulers who loot and destroy over the ruled, who actually build and sustain civilization.
I’ve been in Rome for a week attending an academic seminar, strolling the streets, meeting old friends, touring behind the scenes at the Vatican, and otherwise feeling the buzz amid the ruins and continuing struggle.
Close up, you get a different picture. The official economy is failing, but the unofficial one is busier than ever.
It’s so easy to forget that the economic life of our times is not found in the headlines, the big trends reported by international agencies, or the political trends of who is up and down.
With wingtips on cobblestones, you see a part of economic life that these data do not reveal.
Walk the streets in all directions of the Piazza Navona and what you find is a land of thrilling commercial activity. Money is exchanging hands in the manner of the ancient world, but the products are new. There are loads of so-called “pirate” goods — name-brand fakes that both buyer and seller understand are not the real thing. Forget credit cards. No one takes them. It’s a cash-only world.
Actually, it’s not that different in the hundreds of bars and restaurants around the bustling parts of Rome. People don’t want plastic. Some take it, but dread it. Why? It all comes down to tax collection, regulation, and the massive apparatus of command-and-control that is modern politics. No one wants any part of it. If you can get away, you would be a fool not to.
And there aren’t too many fools in Rome.
The value-added tax is an angry bear, and an enterprise killer. It is enforced in the most wicked way. The tax police ride around in vans and pull up to the restaurants. They demand all records and check out whether the taxes are being enforced. I suppose it’s the Italian context here, but it seems more like a mob shakedown than public policy, and who can really tell the difference?
The whole scene is a reminder of how little we actually know for sure about the structure of the world economy. Some estimates suggest that one-half to two-thirds of the workers of the world owe their jobs and livelihoods to the existence of the “informal sector.” That means, essentially, living and trading outside the officially approved ways.
Anytime I talk to any Roman about politics, I ask the same two questions:
1) What does the government do around here?
The answer is always the same. It takes people’s money in whatever ways it can.
2) What does the government do with the money?
The answer is always the same. The money supports the politicians and bureaucracies.
And that’s how the whole political system works. Money in, money out. Why not just scrap the whole thing? Sure, but no one really knows how to do that.
As with every other democracy, the people slog to the polls at the appointed time and vote for some kind of dramatic change, every single time without exception. It never happens. A few years later, the same thing happens again, except that this time the state is bigger and more corrupt than ever. So on it goes.
As one Roman told me, the only real solution to the parasitic state is unthinkable. What that means in practice can be found variously in Shakespearean tragedies, and speaking about such things is rather dangerous. Besides, people are too busy trying to survive to bother with futile undertakings like revolution.
Rome is surely one of the busiest commercial places on Earth. Marketing is a way of life. Buying and selling are the essence of all activity. People here are the world masters of extracting money from tourists, especially naive Americans who know nothing of the streetwise ways of the old-world merchant class.
Given all this busy-as-bees commerce, where is the burgeoning prosperity? By historical standards, people are doing well. By standards of the U.S., Canada, and Asia, not so much. Why can’t Italy and the whole of Europe put a stop to the decline and re-enter a growth path? Why does all this commercial activity not translate to real economic growth?
Rising prosperity is simply not possible without that much-maligned but still-essential institution called private capital. Private capital allows long-term investment and complex divisions of labor and specialization and creates the infrastructure for long-term economic thriving.
But all over Europe, the capital stock is seriously depleted. It’s been killed by the VAT, by intrusive politicians, but most of all but the desperate desire on the part of the ruling elite to steal anything and everything in sight. People traditionally blame invaders for the fall of Rome. Nonsense.
The invaders are not the problem. The real problem are the nationals who know the system well enough to manage it for their own benefit and at the expense of everyone else.