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 […]
It was a wild ride last week in the world of the Deep Web, that section of the Internet that requires special tools to access. The feds took down the site called Silk Road and claim to have arrested its founder and administrator. The news streams were filled with lurid tales of derring-do in this world that seem to be drawn from a TV mini-series.
My first step was to see if I knew this fellow named Ross Ulbricht whom the feds unmasked as the Dread Pirate Roberts, the hero to cyberpunks everywhere. Sure enough, I found a correspondence from 2009 in which he spoke about a real-time experiment in market action. Thinking that he was talking about business cycles — this must have been on my mind — I said it sounds great.
In the meantime, it never occurred to me that I might actually have exchanged emails with the founder of the Silk Road. It has long been an eBay-style marketplace for illicit goods and services. Yes, narcotics are among them. It sounds scary, doesn’t it? Yes, it does, until you actually visit the place, as I did only a few months ago.
Here you have many sellers of marijuana, cocaine, methamphetamine, and many psychedelics. There are customer reviews, solid product descriptions, lots of back and forths between users, a high level of quality control, and all the apparatus we’ve come to expect from regular Internet shopping.
None of these products appeal to me in the slightest. The drugs I like — caffeine and alcohol — you can buy at the grocery store. But you come to realize something important after browsing the Silk Road. Maybe it is obvious. Maybe you already know this. But it needs to be said: The desire on the part of a large swath of humanity to dope itself up with something cannot be suppressed, no matter how hard governments try.
Yes, many of these drugs are personally harmful. Some are not, and it is absurd that they are illegal at all. Regardless, none of them embody some kind of evil that can be or must be vanquished from the planet. At these markets, you find willing buyers and willing sellers, no different from any other sector of life. What makes this market different is that it is illegal, so, therefore, it is dangerous.
At one level, it is incredible and amazing that the Silk Road survived as long as it did — out there in plain view for anyone who downloaded the right browsing software. It was the most conspicuous sign on the planet of the impotence of government. Despite all the power, all the guns, all the courts and legal status, government couldn’t get rid of the thing.
The tools of the Deep Web take some of the danger away, and that is all to the good.
So how did the feds finally catch up with the guy who ran the Silk Road? It wasn’t through technological failure or compromise. Ulbricht, who allegedly ran the site, was just a bit too reckless in throwing around his name and clues to his identity. The investigator on the case traced him through various public postings, connected the dots, and even ran a little sting operation designed to ramp up the charges (an agent pretended to be a hit man for hire, and got himself hired!).
Who cheered the shutdown? Governments, sure. But there’s another group out there who would be thrilled by the end of Silk Road. That would be the drug cartels. Just as Amazon meant competitive pressure on the big sellers and publishers, just as PayPal became a rival to the big money transfer companies, and just as online brokers have eaten into the market for large brokerage houses, so too did Silk Road begin to loosen the grip of the violent drug cartels.
In other words, this site was a threat to the powers that be both in government and in the drug business. Imagine bypassing the middleman and letting producers and consumers connect directly? No more dangerous alleyways. No more risky cash transfers. No more turf wars. The “turf” becomes digital, which is perhaps the best way to optimize search. Guns and bullets are replaced by user rankings and reviews.
So let’s just grant that there will be no end to the demand for, and, therefore, the supply of, drugs. The government’s war on drugs has actually intensified use and driven people to ever harder forms of drugs. Everyone has an interest in seeing peace and normalcy come to these markets. Silk Road was achieving exactly this, which is why many people think that the Dread Pirate Roberts (the nomenclature of Silk Road’s owner) ought to get the Nobel Peace Prize.
And please, don’t think for even one instant that this shutdown does anything to curb the progress of these Deep Web markets. At least three replacements for Silk Road popped up overnight. Users and suppliers are all busy making other plans. The next iteration won’t make the same mistakes. Just as the Napster shutdown began the great era of file sharing, so too will the Silk Road shutdown mean a boom-time business in online drug hookups.
In the course of the seizure of the domain, the government also took all money that was in escrow within the system. The money, however, was denominated in the currency that the Silk Road accepted, which was Bitcoin. Suddenly, the government has found itself as a major holder of Bitcoin: all 27,000, which are easily visible on the blockchain. Now the government has a public address, to which many thousands have been sending Bitcoin along with choice words in the comment section of the transaction. You can enjoy a fun evening reading them all.
Interestingly, however, there are still another 600,000 Bitcoin (valued at around $80 million) that the feds can’t seem to get. Most likely, that’s because the key to Ulbricht’s personal stash is in cold storage on the blockchain and can be accessed only through what’s called a “brain wallet.” That means that only Ross himself has the key to access it. What will they do to pry it out of him? To what lengths will they go? Waterboarding? Solitary confinement? Worse?
Fascinating, isn’t it? One year ago, governments were laughing at this digital currency. Most everyone was. People said it was a fake currency, an Internet scam, a money-crankish Ponzi scheme. How times change! Now the world largest government is crying out, desperately trying to grab these coins. They consider them valuable assets, which, at $140 a pop, they certainly are.
Until last week, there were plenty of people who claimed that the value of Bitcoin was entirely wrapped up with its use on the Silk Road. That’s a testable proposition. The Road went down, and Bitcoin swooned for a few hours. But by the next day, the dollar exchange rate was actually higher than it was before the seizure. Now it is stabilized.
Therefore, there is another irony. Bitcoin is benefiting from this shutdown. What was marginal and odd only last week is now seen as robust and growing and probably the future of monetary economics. Where are the critics? As always, they have snuck away and have not admitted that, as always, technology has proven itself a superior guide to the future than intellectuals and governments.
Even so, the tragedy remains. Many users of Silk Road have been looted for no reason. A peaceful marketplace has been shuttered. A promising path to a future world without drug cartels has been blocked. But so long as government gets its Bitcoin, I gather the power elite don’t really care.