Just because you’re retired doesn’t mean you have to stop working. Especially now that you have all the time in the world to do what you really want. Entrepreneurs don’t only come out of Silicon Valley. They come from all walks of life, from all different ages. If you’re retired and want to stay active while you relax, then find out the steps you need to take in order to start, manage, and grow your next small business.
Austrian economics does more than tell you what happens when the government disturbs market forces. In the hands of knowledgeable investors and entrepreneurs, it can tell you exactly what to expect from the market. Market behavior depends on how people behave. And how people behave is central to the Austrian perspective.
The U.S. dollar has been the world's reserve currency for almost a century, and already there are signs it may be in decline. But that doesn't mean it's not still valuable. On the contrary... As Chris Mayer explains, there are many reasons the U.S. dollar will remain relevant on the world stage for years to come. Read on...
The government will do whatever it takes to make sure it has enough of your money to fund itself. On the surface you might think that means enduring a grueling audit. But the IRS and the government is more than willing to ignore your privacy in the cold relentless pursuit of the money they think they deserve. As they get bigger and bigger every year, the smaller and smaller your paycheck becomes as they leach off it.
World War II might have dragged the country out of the Great Depression, but it did so at a great price. Central planning took center stage, and politicans and bureaucrats suddenly knew what was best for America, the economy, and your life. On top of that, they replaced the free market with a new economic system… Creditism.
Argentina is suffering the ravages of government debasement of the currency -- i.e., inflation, the process by which government pays for its ever-increasing debts and bills by simply printing more paper currency. The expanded money supply results in a lower value of everyone’s money, which is reflected in the rising prices of the things that money buys.
Its acceptance is as widespread as its justification is important, for it provides the rationale for the Federal Reserve’s unprecedented monetary expansion since 2008. While critics may dispute the wealth effect’s magnitude, few have challenged its conceptual soundness. Such is the purpose of this article. The wealth effect is but a mantra without merit.
Baron Rothschild, the famous French financier, was once heard to say that he knew of only two men who really understood money -- an obscure clerk in the Bank of France and one of the directors of the Bank of England. “Unfortunately,” he added, “they disagree.”
The saga of All Saints could soon be coming to a community near you. Thanks partly to the scandal surrounding the IRS’ targeting of conservative groups, the agency has proposed a new set of rules for a huge number of social-welfare groups that claim tax exemption under Section 501(c)4 of the tax code.
Nihilo ex nihilo fit. Out of nothing, nothing comes. First put forward by ancient Greek philosopher Parmenides in the fifth century B.C., Thomas Aquinas and St. Augustine later used this axiom to prove that the universe needed a “first mover” to get things going. Even if the whole thing began with some kind of “Big Bang” moment, it still needed a banger to bang it. Who? God, of course.
It’s easy to be negative about the U.S. economy these days. Find a glint of silver, and folks come running to point out all of the dark clouds looming about. This, of course, is what we got last week when the monthly jobs report was released from the U.S. Department of Labor (DOL). Folks pooh-poohed the number of jobs and whining that they’re not enough or that it’s less than a bunch of economists thought that it might be. But you know what? Stuff ’em.
Given how poorly states like California and Illinois have funded the pension funds for their own employees, one would think that this would stop dead in its tracks any plan to have the government assist in managing private sector funds too. The spate of recent activity, however, suggests otherwise.
The financial world is plodding along like a drunken sailor avoiding debt collectors by keeping no cash in his wallet. It’s not the kind of calm that’s going to last or end well. But the storm will have to wait until after the Olympics.What a game! We’ve never watched ice hockey closely before. But watching […]
“When they come for my gun, they will have to pry it out of my cold, dead hands,” is a common refrain I often hear from the Neo-Cons when there is a threat, credible or otherwise, that the U.S. government is going to take their firearms.And, when I hear this crazy talk, I agree with […]
Last year was quite the year for Bitcoin. We’ve seen exponential growth in Bitcoin’s exchange rate and extensive coverage in the media. Another phenomenon we have witnessed is the proliferation of alternative cryptocurrencies, five of which we’ve provided below.What all of these cryptocurrencies have in common is that they rely on a decentralized network to […]
The nonpartisan Congressional Budget Office is acting in a bipartisan way to cover up the biggest single threat to the bipartisan political alliance that is stripping America of its wealth: the United States Congress.There is no question that the following policy is bipartisan. Democrats and Republicans in Congress are completely agreed that the following information […]
Amidst all the revelations about how the American people, many of whom are absolutely convinced they live in a free society, have their telephone calls, emails, website visits, and who knows what else under surveillance by their own government, let’s not forget the massive infringements on financial privacy that have gone on for decades.Consider, for […]
Image: ShutterstockBitInstant CEO Charlie Shrem, along with alleged co-conspirator Robert Faiella, was arrested by federal authorities last week for allegedly laundering more than $1 million worth of Bitcoins. This is a tiny amount compared to the largest drug-and-terrorism money laundering case ever. Yet when British bank HSBC was found guilty in 2012 of laundering billions, […]
The exercise had an awesome name, inspired by the movies: “Quantum Dawn 2.”On July 18, scads of U.S. banks, stock exchanges and government agencies took part in a digital fire drill — a practice run in the event all of Wall Street came under massive cyberattack.This isn’t the first time banks have come under an […]
The faces of the Detroit bankruptcy are the thousands of pensioners whose promised benefits are suddenly part of the restructure negotiation. When Motown filed for Chapter 9 last July, the city had $11.5 billion in unsecured liabilities. The vast majority of this was pension and health care benefits owed to retired city employees.The images of […]
So you’ve maneuvered the Obamacare website, plugged in your top-secret information and found out how much you are forced to pay to avoid a fine.And for some of you, it turns out you qualify for a government subsidy — making the premium sound like a bargain. But signing on that line to accept the government’s […]
The Largest Company in History:“The United States Corporation of Government (USCOG)”I follow global social and commercial networks, looking for entrepreneurial opportunities.Innovation surges when industry and government models change. Buggy whips. Landline phones. Railroads. The Soviet Union. Apartheid South Africa. All marked social and commercial innovation, both bad and good.We are witnessing a new form of […]
We’d like to give the banks in Australia some credit. They’ve finally gone and done it. They have caught up with 1960s technology. They’ve figured out how to use PIN numbers.How to only use PIN numbers, that is. They’re considering scrapping signatures on credit cards to cut down on fraud. Apparently, having to verify your […]
We put in a good-citizen call to the SEC the other day.“There’s a massive scheme to manipulate stock prices,” we told the friendly agent.“I have to tell you that your call is being monitored so that we can better serve the public,” he replied.“Oh, don’t worry about that. The NSA is tapping our call anyway.”“Are […]
Bitcoins are largely considered digital currency (or “crypto currency”) so you’d expect it to be treated like currency on a retail web site. But the Internal Revenue Service might not think so.
Politicians — elected officials — are street smart rather than book smart.If you care about influencing government policy it helps to know how they think.Forbes contributor Nathan Lewis argues that:“Too much is done today on the oral tradition. That is, literally, what it is. In this post-Gutenberg age, we have some better alternatives.“Thus, we need […]
Bitcoin has been making headlines for months now. Extreme price fluctuations have sparked a vigorous debate: Is it a currency or a scam? Is Bitcoin viable in the long-term, or are we witnessing a bubble waiting to burst?The answers to these questions are simple: Yes, Bitcoin is a currency, but we cannot know if it […]
“Thanks to Bitcoin, I am now living debt-free, just today managed to pay off all of my credit card debt!” — so reports a poster on Reddit, and the statement was echoed by many others. A currency that not only discourages debt, but earns enough money to pay off previous debt, plus encourages saving?
It seems unthinkable to people today. That’s because none of us in living memory has had experience with a currency that rises in value. The emergence of Bitcoin — a digital currency that has grown in purchasing power over time — has changed that experience dramatically. As a free-market currency, it does what currency should do, which is increase in value over time.
Conversely, government currencies usually fall in value. That’s the only kind of currency we’ve known throughout our lives. This reality affects our personal financial decisions in ways that we aren’t always aware of. We’ve come to assume that there is no inherent prize to be won by merely holding money.
With paper money, governments and central banks are in a position to punish holding money. Because it can be created without limit, discipline vanishes. Individuals, families, businesses, and government can ramp up spending without limit and avoid the consequences of their behavior. There’s no reason for them not to be profligate.
The dollar didn’t always behave this way. During the Second Industrial Revolution, after the Civil War in the so-called Gilded Age, we had a gold standard. Prices were generally declining for everything. Another way to look at it: The dollar was growing more valuable. It’s almost impossible for us to even conceive of a world that worked this way.
The dollar bought three times as much grain in 1894 as it did in 1867. It bought nearly twice as much cotton in 1877 as it did in 1872. Farmland became more affordable. In general, the dollar gained 2% in value through the whole period. Wages were falling nominally, but rising in real terms, simply because the dollar could buy more. You were getting raises even without begging the boss.
During the same period, population soared and output expanded at levels we’ve not seen anywhere in living memory. Today, we celebrate 2% and get on our knees in gratitude that production isn’t generally falling. But back between 1870-1890, we saw growth rates of 6% and more, and that became the new normal. Sound money was the basis of unprecedented prosperity.
The 20th-century experience flipped our expectations for what money should do. Especially in the postwar period, the falling value of the dollar punished savings and rewarded spending. This is exactly what the Keynesian economists hoped for. They wanted money always circulating and never “hoarded.” “Deflation” was to be avoided no matter what.
To be rewarded for savings, we needed interest that outstripped inflation. That worked for a while, but starting about 20 years ago, the central bank conspired to deny us even that. Today, there is no reward whatsoever. There’s no point to keeping paper around. We hold money only to prepare for future uncertainties, not as a way of investing.
How does this affect the culture? It has a profound effect. It means that people need to be constantly nudged to save. We anticipate losses in holding money, but expect gains by buying and holding stuff like homes. We spend what we can and live at the height of our earning power, which is to say slightly beyond our means. This is the pattern by which many generations have lived.
This tendency has dramatically depleted the capital stock. Again, Keynesians have celebrated this as a wonderful thing. Actually, it is a terrible thing, because it puts the entire economic structure on life support. We end up depending more and more on the central bank and less and less on our own personal wealth. Debt becomes the basis for life itself. If anything threatens to cut off the flow of relentless credit, everyone freaks out.
How does Bitcoin change this? It rewards holding money. It impresses upon the human mind that the cost of spending money is not just the money spent, but also the foregone gains that you would have otherwise realized by saving.
You can try this experiment at home. Let’s say you have a problem teenager who lives like everyone else, throwing around cash and seeing no point whatsoever in saving money. Send that kid a Bitcoin and see what happens, even without hectoring instructions.
To be sure, he could spend it right away on BitcoinStore.com or somewhere else. But there would be hesitation before that happened. After all, on Jan. 1 of this year, Bitcoin was worth $15. As we write, Bitcoin is trading for $218 on the most popular exchange, Mt. Gox.
The thing has been increasing in value daily. Far from wanting to spend it, there would be every reason to hold it.
The kid would even become reluctant to spend on fripperies. Even the act of spending means a current and future loss.
To be sure, this value-increasing pattern of Bitcoin is taking place ridiculously fast, but the point remains: With sound money, there is merit to saving. It is not even something you have to teach. It is something that is built into the program. It changes all our incentives.
Bitcoin is based on the idea that the money supply can and should be fixed. There is an upward limit of 21 million Bitcoins that can be created, and none of us will be alive when that limit is reached. In the meantime, only one Bitcoin “block” is added to the existing stock every 10 minutes. You can’t create more by pyramiding loans on top of existing Bitcoins. A credit market can emerge, and they surely will be these markets, but they won’t actually cause new units of the currency to magically come into existence.
That’s why Bitcoin is often described as a “deflationary” currency. This is exactly why Paul Krugman hates it so much. He very astutely observed in 2011 that this currency means the end of the pattern of a full century, and this is why he hates it:
“In effect, Bitcoin has created its own private gold standard world, in which the money supply is fixed, rather than subject to increase via the printing press…
“What we want from a monetary system isn’t to make people holding money rich; we want it to facilitate transactions and make the economy as a whole rich. And that’s not at all what is happening in Bitcoin…
“And because of that, there has been an incentive to hoard the virtual currency, rather than spending it. The actual value of transactions in Bitcoins has fallen, rather than rising. In effect, real gross Bitcoin product has fallen sharply.”
Here’s what beautiful about this experience: It doesn’t matter in the slightest what Paul Krugman thinks. It doesn’t matter how many economic experts Paul Krugman lines up to oppose Bitcoin. It doesn’t matter how many Nobel Prize winners denounce it and oppose it. That’s because Bitcoin is not a “policy” invented by elite and privileged intellectuals. It is a market-based currency, one created by an entrepreneur and chosen by market players.
And this brings us to another lesson that Bitcoin has taught us. Money is like any other good in society in that it can be produced and managed entirely by the free market. This is the reverse of what scholarly opinion has said for more than 100 years.
Every expert will tell you that the state has to create and manage that money. If we do not do that, we’ll have chaos on our hands. Bitcoin proves the opposite, that a money can emerge from within the market itself, based purely on voluntary behavior, and needs no privileged elites to manage it.
That is an essential postulate of the free society. When government gets hold of the money, freedom is in peril. When the market makes and manages money, freedom has a built-in reinforcement in half of every transaction. In short, just based on our experience with Bitcoin so far, we see the conventional wisdom of a century completely turned on its head. Fantastic!
Should more and more of the world’s money supply be gradually converted to crypto-currency, we will see changes in the way people and businesses manage money. We could see our pattern of capital depletion reversed so that capital accumulation again becomes the norm. People have every reason to get out of debt and start saving again.
Even our teenagers will learn a thing or two about putting off currency consumption and sacrificing now for greater gain in the long term. It’s all so beautiful: the reassertion of the old verities within the most postmodern technology one can only imagine!
Most exciting of all, with money back in the hands of the market — made sound by the brilliance of well-written software — the prospects for freedom will become bright again.