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 […]
Politicians who love Big Government love talking about the minimum wage. It’s one of the few policy where they don’t have to ask their constituents to pony up the extra tax dollars to pay the higher costs. Instead, they pass the buck to business owners. They can’t print money, nor can they can force you to pay more. So they cut back hours and fire the very workers politicians tried to help. But that’s how things go when you mess with the economy.
There were no cubicles, no executive suites, and no visible hierarchies of power. It was just a large open room with computers and desks, and at each sat a large monitor in the shape of a medieval triptych: a large screen in the middle, flanked by one on each side.
“Programmers like to have several screens running at once,” explained my tour guide.
My tour didn’t last very long, because the office is surprisingly small.
Despite appearances, this is a room in which history is being pushed forward in ways that no one imagined possible even two years ago.
These are the new offices of BitPay Inc. in Atlanta, Ga. I was there to attend a meetup sponsored by Data Science Atlanta. This meeting just happened to be hosted by BitPay Inc., one of the hottest startups in the crypto-currency world.
Attending the event was an impressive crowd of 150 people, mostly data scientists and code slingers, but also people from the financial industry in Atlanta. They were interested intellectuals and students. Even a Fed economist came. Of course, the entire event was covered in real-time, with digital devices posting images all over the Web as the action was taking place.
The presentations began with an overview of Bitcoin, moved to a history of the company (which was founded only in 2011), went on with some speculation on the future, and ended with questions and answers. The atmosphere was pretty jazzy because the pace of development in recent weeks has sent that signal that there is no stopping this revolution.
BitPay specializes in making it possible for any online merchant to accept Bitcoin without having to become an expert. It has benefited lately from all kinds of new venture capitalist funding, but also from a global broadening of its client base.
Co-founder and CEO Tony Gallippi compared their services to expert installation of home appliances against do-it-yourself projects that take a considerable amount of time and don’t end up working properly.
A peculiar feature of Bitcoin — and a reason why so many people have a hard time wrapping their brains around it — is that it is both a payment system and an emergent money. Those two features are usually separate.
The payment aspects of Bitcoin are the main focus on this company. As Stephen Pair, a co-founder and the CTO, pointed out, Bitcoin is uniquely suited to a digital age. Real property is exchanged, not just a promise to pay, and it is done person to person, without having to go through banks and large institutions. This is crucial for ending the plague of identity theft online. In fact, before I had seen the numbers presented at this event, I had not fully understood what a profound change this really is.
The payment dimension might not seem that important in the United States, but when you broaden the perspective to global commerce, you can easily see it. There are huge swaths of the planet in which you cannot use credit cards at all. Even now, if you try to buy something on Amazon with a home address in one country and a delivery address in another, your transaction is likely to be refused. The anti-fraud measures have been necessary, but they have frustrated the development of the global marketplace.
It was at this point that it finally struck me: This is not a currency only, or even mainly, for the rich tech world; it is a currency for the world’s poor, who are desperately trying to become part of the global division of labor. It allows anyone from anywhere to buy or sell anything securely, privately, and reliably. It suddenly started making sense to me why Bitcoin is so wildly popular in Africa, Latin America, and the outer reaches of the Russian empire.
But even domestically, it is clear that this market is expanding. As of only a few weeks ago, you could pay for anything at hundreds of mainstream merchants with Bitcoin. This is thanks to a deal that BitPay struck with a smartphone application called Gyft. You buy a gift card from Gyft with Bitcoin and the merchant scans the card. The operation takes under a minute.
Personally, it’s fascinating to see this happening. It was only a few months ago that people were saying, “Oh, this stuff can’t really be money because I can’t spend it at Target.” Well, now you can. Where are these doubters now? Are they taking back their previous snark?
The payment system benefits of Bitcoin are clear enough, but there is a much broader vision at work here, one that goes to the heart of the development of money itself. Mr. Pair laid it all out in a presentation on the history of money.
Humankind needs money to facilitate trade, and many goods have served that purpose. At the dawn of modernity in the late Middle Ages, precious metals were universally seen as the best tools for this.
But there was a problem with precious metals. Namely, they are really heavy and not very portable in daily use. Thus did banking institutions come along, and with them paper money. Paper money dominated the world economy until the end of the gold standard in 1971. Since then, argued Pair, money has taken a digital form and is backed solely by debt obligations.
The great innovation of Bitcoin — which Mr. Pair regards not as a digital currency, but rather a crypto-currency — was 20 years in coming. There were many attempts to make a new currency, but they faltered repeatedly because of the problem of double spending. A currency should behave just like the real thing, which is to say like gold and silver.
In a question-and-answer session, there were questions about the deflationary implications of Bitcoin. CEO Tony Gallippi understood immediately what the questioner meant. The usual belief is that a currency rising in value incentivizes hoarding and makes business impossible. He doubted that this was true because his experience so far is that people spend Bitcoin more when the exchange rate value is rising.
For my part, I asked about why Apple’s operating system has been so slow to integrate Bitcoin into its payment apps, and they knew exactly what I meant. In this room full of programmers, there was a widespread groan at the very mention of Apple. Its tendency to roll out only near-perfect software even if it is out-of-date doesn’t sit so well with a crowd that lives on the edge.
I next asked about something I’ve found curious when I use Bitcoin. I begin to think in terms of a new pricing system and sense a real change of psychology. The CFO stood up and made some joking comments about how he looked forward to the day when all companies can keep their books in Bitcoin.
There is something especially dazzling about being around real pioneers of this industry, entrepreneurs who are making it happen. Mr. Gallippi provided some insight into the challenges they face. He said that they worked on the code for their plug-in for a very long time before releasing it. They knew with absolute certainty that the best features of their plug-in would be immediately copied by competitors upon release.
So they prepared to develop and move faster than ever immediately upon release. The first-mover advantage is, indeed, an advantage, but it doesn’t last. You have to “go, go, go, go” — in the Mr. Gallippi’s words — the minute you release.
This insight has some interesting implications for those who say that patents are necessary for enterprise. Actually, patents and other forms of “intellectual property” mostly serve as a license of laziness. Super-competitive businesses know that they can’t rely on them and can’t depend on them at all over the long term, and that the only way to make a market is to work harder, smarter, and more relentlessly than anyone else.
And what are they working toward? The goal is simple: to build a better currency as a means to a better world. There is a beautiful idealism at work here, the kind of thing that people look for from charities and universities. Actually, the world of commerce on this level represents an embodiment of this idealism.
Crazy? Yes. Crazy enough to change the world.