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...
When’s the best time to invest in something? When everyone else is trying to get their money out of it. It might go against conventional thinking, but following the crowd usually makes you miss the real opportunities. At one monetary metal conference recently, the smartest guys in the industry sat down to discuss where these real hidden gems lay.
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 […]
Greetings from Maine! Right now, I’m writing from within foghorn distance of the sea. And this gives me an opportunity to tell you a down east tale that should serve as a warning to every investor: Maine’s Great Gold Swindle.I’m not talking about central banks, or manipulation of today’s markets. I’m talking about something from […]
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 […]
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 […]
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 […]
Remember that correction we’ve been quietly talking about over the past couple of months?Well, it might be right around the corner. Stocks waited until the last day of the month to nose-dive. The S&P 500 posted its first 2% down day since April — and the Dow wasn’t far behind. Early this morning, futures continue […]
A great technology solves a problem that we didn’t know we had. It makes us aware of deprivations we didn’t know existed until we discover the new thing. Once discovered, we can’t go back.People in the 1950s, for example, never missed the smart phone. They were pleased to have a phone at all. But today, […]
In early July 1944, delegates from 44 countries gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire. A three-week summit took place, at which a new system was agreed to regulate the international monetary and financial order after the Second World War.The U.S. was already the world’s commercial powerhouse, having eclipsed the British […]
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 […]
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 […]
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, […]
According to the Bureau of Labor Statistics, consumer prices are rising at a 2.1% annual rate. This suggests to us that the current stock market boom will die with a bang, rather than a whimper.Fed economists say they don’t think inflation rates are rising. They think the most recent reading is a fluke. But why […]
Real progress happens through real people, ideas, and innovations. Not by legislation argued and debated in Congress. Right now, one of the most influential technologies is changing the way people do business. And reinventing the future in the process.
As the world gets more digital, people forget about the benefits of transacting in cash. And government officials know that.
The experts will tell you the recession is over, but they’re only torturing the data to hide the truth. The economy never recovered from the downturn it experienced. But the downturn happened in 2000, not 2008. The country’s been in the middle of a 14 year recession and hardly anyone knows the truth.
Every time Bitcoin crashes, it winds up at a price greater than it’s previous high. Yet the experts still call it a currency fad that will fade away. But a little over a year since it really took up, the digital currency is still going strong, and is once again seeing its price rise. But is there another reason why people are buying Bitcoins.
All paper currency has a shelf life. It could be 5 years or 500 years, but at some point, the value of any paper currency eventually reaches zero. That's why, for centuries, people have turned to one shiny metal to safeguard their personal store of wealth. And, as Jim Rickards explains, you still have that option. Read on...
Edward Snowden’s one year visa in Russia expires at the end of next month. With only a few weeks left before he finds himself without a safe country to live in, he sat down to give an exclusive interview. Here are the most important things he wants you to remember from his recent sacrifice.
It’s a destructive cycle that comes around everytime your politicians ask you to take to the polls. The government’s meddling creates unexpected problems that eventually overshadow the planners’ original intentions. But that only leads the way for even more interventions.
Politicians love inflation. It’s a way to pay for the government’s debts without upsetting the public by raising taxes, or their special interests by cutting government. So they’ll flood the economy with easy money and eat away at your savings. But that’s only part of the story...
Obama recently claimed this was the “Decade of the Brain”. But it not the first time the government made that promise. The last time they did it, they wasted millions of your tax dollars. Now they’re back for round two. But this time, their failure could mean more than squandered money. It could mean making Alzheimer’s even worse for those who suffer from it.
“So we have, indeed, had a disappointingly slow recovery, and our consistent expectations for a pickup in growth have been dashed over a number of years… And the labor market is behaving in some perplexing ways and showing patterns that are novel.”–Federal Reserve Chairperson Janet Yellen in a speech to the Economic Club of New […]
Bitcoin may reach $100 today. That brings the total value of the existing Bitcoin stock (10,960,500) to more than $1 billion.
It was only a few weeks ago when a local Bitcoin trader in my town wanted a 40% premium for a local cash-to-BTC exchange at the rate of $70 per coin. I balked on grounds that it was too high, since the prevailing market rate was $48. Today, that same trader is asking $132. Seems like I passed up a good deal.
Many people fear that Bitcoin is overpriced right now. This view is held even by people in the Bitcoin community who worry that a move from $15 to $93 in three months is not good for long-term viability. A crash could bring down the currency unit in devastating ways, leading to another round of debunking and clucking from the advocates of government money.
But here’s the truth: No one knows for sure. Maybe the price will keep climbing. Next month at this time, people might be kicking themselves for not getting in right now. My instincts right now tend in this direction. I’m seeing BTC at $250, then $500, and then $1,000 by year-end.
Why bullish? Government paper is failing at a faster pace than anyone imagined would have happened in the past year. The Cyprus disaster took nearly everyone by surprise. No close observer believes that the latest bandage amounts to anything permanent. Moreover, the Cyprus save sets in place an incredible precedent: Bank deposits will hereafter be treated as government property first and belong to the depositors only at the discretion of the masters of the money.
It’s no wonder that Bitcoins are being brought from locales all over Europe, including Spain, Greece, Italy, and beyond. This also accounts for why mainstream news outlets are starting to write about Bitcoin as if it were the real thing, something serious, something that really matters on the world stage.
Meanwhile, Bitcoin applications are flourishing all over the Web. Among them:
- Bitspend.net, which allows you to use BTC on any website
- Bitpay.com, which enables payments on any website
- Coinbase.com is a popular place to buy and sell BTC, plus it gives you a local wallet
- Bitcoinstore.com is the emerging Amazon of BTC
- Blockchain.info is the application that many smartphone users choose.
I can completely understand why this emerging currency causes alarm, not just for central bankers, but also for regular people. People have a hard time wrapping their brain around the whole idea of a digital currency. It seems too abstract, kind of sketchy; maybe it is a pyramid scheme of some sort.
Now, you might think that these same people would have just as much trouble figuring out how such a thing as a dollar or a euro exists. After all, this stuff is just cotton fiber paper backed by nothing real at all, and its value has nothing whatever to do with its physical properties. That has been the case for fully 40 years now, since Richard Nixon destroyed the last remnants of the gold standard.
So there is actually nothing entirely unusual about a money being an abstraction. What’s ironic here is that Bitcoins are in fact more “real” than dollars or euros. They are built from 1s and 0s arranged in a particular way to serve a particular monetary function.
Someone might say, “But that’s not real. That’s just code.” Well, actually, code is real, as real as email, YouTube, Microsoft Office, the weather application on your smartphone, or any other piece of software on the planet.
When Bill Gates first started experimenting with the idea of making an economic good out of software and turning it into a commercial enterprise, he was practically alone. The whole idea of “commodifying” stuff made out of code struck many people as outlandish and probably impossible. We know what happened: Code has become the basis of practically every significant economic advance over the last 30 years.
Yet we still have doubts! I’ve thought about this a long time, investigated my own doubts, and here’s what I find to be an additional major point of resistance.
In the world of software and digits, stuff is reproducible. You send an image to Mom and you still keep the image on your computer. When you download a song, you don’t “take” it from anyone; it’s still there for someone else to download. When you invent software, you don’t have to keep inventing it; instead, you sell the same thing thousands or millions of times.
In other words, copyability is the key advantage that the digital world offers over the physical world. The Internet is one big copy machine.
But copying money? That’s not a feature; it’s a bug. Any digital currency has to and must solve the problem of reproducibility. It must be strictly controlled, as with the gold standard. If you want more gold, you have to mine gold.
It turns out that this is exactly how Bitcoin works. The servers run by miners have to work very hard solving complex math problems that grow more difficult over time. You have to use real resources to make more Bitcoins.
But what about those that exist? How can property rights be enforced? This is the real brilliance of Bitcoin. The structure includes a ledger that keeps track of all existing coins and their owners (not by name, but by digits). There is absolutely no way for one coin to be possessed by two separate people. The ledger is open and changes second by second, depending on the trades.
This is why Bitcoin succeeds where every other attempt to make a digital currency (and there were plenty before) had previously failed. Bitcoin assigned property rights to each unit of exchange and made that ownership a major feature of the software itself. In other words, Bitcoin used computer code to reject what is seemingly the key advantage of computer code: its status as a nonscarce good. Instead, it built scarcity into the code.
Incredible, isn’t it? What’s more, the integrity of the system itself doesn’t depend on a single institution like a central bank or one big corporation, but instead operates in a completely decentralized way, peer to peer. There are no money masters and no money slaves.
Dollars can be produced infinitely, and this power has been used too liberally since 2008. Bitcoins, in contrast, are mined about one every 20 seconds, and each new Bitcoin has a particular owner and cannot be spent simultaneously by two owners. In other words, it is sound, like the gold standard, and structured to be this way. This is why so many people are drawn to it.
There are other advantages that this currency unit has over even gold itself. Gold in large quantities usually has to be stored. Historically, this gave rise to deposit banks that tempt bankers to blur the lines of ownership. When accounts are overleveraged and banks find themselves unable to pay out, they traditionally turn to government for help. That’s how we ended up with egregious institutions like central banks.
Bitcoins completely bypass this problem of storage, since they are literally weightless. They cannot be owned by more than one person at a time, so all loan markets will have to emerge within the strict confines of property rights. That means that emerging markets will exist on a sound basis, with no sneaky attempts to blur ownership titles.
Of course, the promise held out by an anonymous, market-created global unit of exchange with near-zero transactions costs can only be described as mind-blowing. Will it continue to advance? No one knows for sure, but my doubts are melting by the day, especially given the incredible failure of government money and the global clamor for a modern currency that serves human needs.