Irredeemable Currencies and the Fate of Europe
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Gold:Silver Ratio spikes over 66!
Yesterday in the Gold Basis Report, we wrote: “…we reiterate that we are cautious about the price of silver (measured in grams of gold) and think the ratio is more likely to rise than to fall.” Little did we know. [...]
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Latvian Deflation will Increase their Debt Burden
This article claims that falling prices will increase Latvia’s burden of debt. It is not falling prices, but falling interest rates, that increase the burden of debt (and it is not just Latvia but the whole world, which has falling interest [...]
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Are Japanese Banks on the Verge of Insolvency?
“…holdings in [gold] exchange-traded funds fell to the lowest in over four years…” as this article states. But is this a real relationship? Do holdings at the ETF necessarily fall with a falling gold price and rise with a rising gold price? The [...]
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Lies, Damn Lies, and Statistics
Homebuilder confidence increased in May. Lumber prices in the last two months? Not so much, down over 20%. When I was a kid, I saw many competing stereo receivers offering higher and higher wattage. It was pretty ridiculous to [...]
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“Indisputable Proof”
If there really was gold manipulation, articles like this one would do an injustice. The author uses the word “indisputable”. I do not think that word means what he thinks it means. According to this article, “Indian inflation eased to [...]
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A Picture of Capital Destruction in Germany
Today, the European Central Bank announced that it was cutting interest rates. It also said that it was open to negative deposit rates. We are witnessing nothing less than the metastasis of monetary cancer. A falling interest rate causes the [...]
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BitFlashCrash
A flash crash occurs when the bid is either very thin or disappears altogether. Under any selling pressure, the cleared price can fall to any level at least temporarily. By definition and by nature, money is not subject to flash [...]
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BitTulip
In the 17th century, the price of Dutch tulips ran up to incredible levels before collapsing, ruining many who participated in the first well-documented bubble. We are not knowledgable about horticulture, but we are sure that those Dutch tulips were [...]
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Euro Backwardation
Not too long ago, I wrote dollar backwardation. It’s happening, not in the dollar, but in the euro in Cyprus. Zero Hedge writes the following. Banks have been closed all week, the threat of loss of part of one’s deposits [...]
Keith, what do you expect from japan.
Keith
I just started watching you and love it. Thanks for your service
Keith, do you think we will see rising yields in some countries or we go to a near zero intrest rate which currency collapses by the malinvestment can not expand ?
Well said, and it certainly fits my assessment of our predicament. What I’d like to hear from you is your strategy for balancing the various mega forces at play here. For, as much as I hate Keynesianism, I have to agree with this purported quote that “Markets can remain irrational longer than you can remain solvent.”
Interesting concepts, irredeemable currency on the one hand has no value, garners nothing for it’s time value, and yet we still all need it. The US Gov creates untold gobs of it and somehow makes it citizens responsible for it.
Great lesson on the fact that value is mostly in the brain of the observer. The lesson appears also to be that value is created by the strong.
The sad truth is that as a country the US’s strength is waning. Isn’t it amazing how long our dominance is lasting? We can still help the Euros prop their bonds with gobs O’ dollars, created out of pixie dust.
I am working on a paper to discuss the issues of irredeemable paper money more deeply. For now, let me say that Japan is in the same boat. They, like the US, still have a robust bid in their bond market. They, like Europe, are nearing the end of the line.
Nico: I will have to leave interest rates to another discussion.
Dennis: I agree, there are trillion-ton opposing forces at work here. I plan to address the ever-rising stock market another time.
Keith
I just started watching you and love it. Thanks for your service