Thursday, 20 March 2014

Image of a crisis

Interest rates this low for this long means we have a long way to go.

Where next?  Nowhere is where next.

Screen Shot 2014-03-18 at 5.04.49 PM

Tuesday, 18 March 2014

Money is an IOU - next step revolution?

Good article looking at the role of money creation in the modern society.  The truth is out there.

The truth is out: money is just an IOU, and the banks are rolling in it [Guardian]

"Back in the 1930s, Henry Ford is supposed to have remarked that it was a good thing that most Americans didn't know how banking really works, because if they did, "there'd be a revolution before tomorrow morning".

Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called "Money Creation in the Modern Economy", co-authored by three economists from the Bank's Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window.

To get a sense of how radical the Bank's new position is, consider the conventional view, which continues to be the basis of all respectable debate on public policy. People put their money in banks. Banks then lend that money out at interest – either to consumers, or to entrepreneurs willing to invest it in some profitable enterprise. True, the fractional reserve system does allow banks to lend out considerably more than they hold in reserve, and true, if savings don't suffice, private banks can seek to borrow more from the central bank.

The central bank can print as much money as it wishes. But it is also careful not to print too much. In fact, we are often told this is why independent central banks exist in the first place. If governments could print money themselves, they would surely put out too much of it, and the resulting inflation would throw the economy into chaos. Institutions such as the Bank of England or US Federal Reserve were created to carefully regulate the money supply to prevent inflation. This is why they are forbidden to directly fund the government, say, by buying treasury bonds, but instead fund private economic activity that the government merely taxes."

So is the next logical step once the "people" work out how it really works is "revolution" in a Henry Ford sense?  We might find out sooner rather than later.

Worth reading this academic article.

Monday, 10 March 2014

Quote:

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered...I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
 

Thomas Jefferson

Saturday, 8 March 2014

Quote:

"There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt." John Adams.

Friday, 7 March 2014

Bitcoin has theory and history on its side

A bit of Austrian economics for a Friday afternoon. Can anything stop bitcoin? Who is wearing no clothes? The central bankers or the bitcoin miners and buyers of very expensive code that disappears from hotwallets at a ferocious speed.

A good read in full.

 Bitcoin has theory and history on its side [Cobden]

The Bitcoin phenomenon has now reached the mainstream media where it met with a reception that ranged from sceptical to outright hostile. The recent volatility in the price of bitcoins and the issues surrounding Bitcoin-exchange Mt. Gox have led to additional negative publicity. In my view, Bitcoin as a monetary concept is potentially a work of genius, and even if Bitcoin were to fail in its present incarnation – a scenario that I cannot exclude but that I consider exceedingly unlikely – the concept itself is too powerful to be ignored or even suppressed in the long run. While scepticism towards anything so fundamentally new is maybe understandable, most of the tirades against Bitcoin as a form of money are ill-conceived, terribly confused, and frequently factually wrong. Central bankers of the world, be afraid, be very afraid!

Amusing "rubbish bitcoin users say" video

Over at conspiracy economics we have heard them ALL. Bargain prices or just weeks away from collapse?


Thursday, 6 March 2014

The face behind BitCoin

Newsweek article.

The Face Behind Bitcoin [Newsweek]

Satoshi Nakamoto stands at the end of his sunbaked driveway looking timorous. And annoyed.

He's wearing a rumpled T-shirt, old blue jeans and white gym socks, without shoes, like he has left the house in a hurry. His hair is unkempt, and he has the thousand-mile stare of someone who has gone weeks without sleep.

He stands not with defiance, but with the slackness of a person who has waged battle for a long time and now faces a grave loss.

Two police officers from the Temple City, Calif., sheriff's department flank him, looking puzzled. "So, what is it you want to ask this man about?" one of them asks me. "He thinks if he talks to you he's going to get into trouble."

"I don't think he's in any trouble," I say. "I would like to ask him about Bitcoin. This man is Satoshi Nakamoto."

"What?" The police officer balks. "This is the guy who created Bitcoin? It looks like he's living a pretty humble life."