CLibertyC

Public Sector Pensions Are a National Issue

"Paul Krugman and Dean Baker took the Washington Post editorial page to task yesterday for stating that unfunded state and local pension liabilities amounted to $3.8 trillion. They accuse the page of misquoting a study in which the total was cited as only $1 trillion. Currently, standard practice measures the funding status of public pensions in the US under the laughable assumption that every dollar in the pension funds will earn compound returns of 7.75% or 8% per year. That’s the basis for the $1 trillion in unfunded liabilities. If unfunded liabilities are $1.0 trillion under an 8% rate, then they are $3.4 trillion unfunded under a 4% rate." Continue reading →

Continue ReadingPublic Sector Pensions Are a National Issue

Europe Continues to Circle the Drain

"Where is the austerity? The cuts Keynesians are complaining about are mere reductions in increase. 'Despite austerity rhetoric,' wrote Frank Karsten, 'government debts keep rising in most democratic countries. ‘Austerity’ is a code word for ‘spending less than we had wanted, but more than in the past.’ In the end, they wind up raising taxes, rather than lowering expenditures to cut deficits.' As we reported last week, central banks around the world continue to cut their euro holdings for the third straight year. The Old World’s scrip now accounts for only 23.3% of foreign reserve holdings. If central banks are wary of euros… you should be as well." Continue reading →

Continue ReadingEurope Continues to Circle the Drain

Europe Continues to Circle the Drain

"Where is the austerity? The cuts Keynesians are complaining about are mere reductions in increase. 'Despite austerity rhetoric,' wrote Frank Karsten, 'government debts keep rising in most democratic countries. ‘Austerity’ is a code word for ‘spending less than we had wanted, but more than in the past.’ In the end, they wind up raising taxes, rather than lowering expenditures to cut deficits.' As we reported last week, central banks around the world continue to cut their euro holdings for the third straight year. The Old World’s scrip now accounts for only 23.3% of foreign reserve holdings. If central banks are wary of euros… you should be as well." Continue reading →

Continue ReadingEurope Continues to Circle the Drain

The Democrats Finally Embrace Money Printing

"Even though Quantitative Easing started in 2008, it seems as if Democrats didn’t really 'get it'. They viewed it as a way to save the banksters’ collective bacon—they didn’t see it as the way by which the Federal government could go into limitless debt. But with Thursday’s testimony, it’s clear like a bomb blast that the Democrats finally understand what QE really means: The Federal government can go into as much deficit spending as it wishes, because the Federal Reserve will be buying the bonds that finance this deficit spending by way of QE. And now that they understand this, they are all in favor of more of it." Continue reading →

Continue ReadingThe Democrats Finally Embrace Money Printing

UK Telegraph: ‘We No Longer Have Free Markets’

"If Bernanke really shakes the tree, half the world may fall out ... We no longer have a free market. The world's financial asset prices have become a plaything of central banks and the sovereign wealth funds of a few emerging powers. Julian Callow from Barclays says they are buying $1.8 trillion worth of AAA or safe-haven bonds each year from an available pool of $2 trillion. Nothing like this has been seen before in modern times, if ever." Continue reading →

Continue ReadingUK Telegraph: ‘We No Longer Have Free Markets’

Bill Bonner: Can a credit system last in the modern world?

"When you have a system based on credit rather than bullion deals are never completely done. Instead, everything depends on the good faith and good judgment of counterparties - including everybody's Number One counterparty: the US government. Its bills, notes, and bonds are the foundation of the money system. But they are nothing more than promises. A credit system cannot last in the modern world. Because as the volume of credits rise the creditworthiness of the issuers declines. The more they owe the less able they are to pay. As time goes by, the web of credit spins out in all directions, entangling not just the present, but the future too." Continue reading →

Continue ReadingBill Bonner: Can a credit system last in the modern world?

Inflation: Robbing You Since the 10th Century

"Humans have been screwing up money for centuries, beginning with China's printing of jiaozi in the 10th century. History is littered with episodes of hyperinflation, but my favorite is that of revolutionary France. France's hyperinflation began as all hyperinflations do: the state printed too many assignats (pictured below), and they rapidly lost their purchasing power. French citizens sought alternative stores of value and mediums of exchange, as any intelligent person would. The French government, correctly perceiving this as a threat to its financial hegemony, reacted violently." Continue reading →

Continue ReadingInflation: Robbing You Since the 10th Century

Gold Sector: A Small Fish in a Big Pond

"The conclusion we can draw from these two charts is rather obvious: gold stocks are a tiny constellation in a big universe. That's important, because it shows just how very crowded this little area could get when the larger universe of investors turns to the gold sector. If they invest in the bigger companies, there won't be that many to choose from, which could swell stock prices. In the meantime, gold stocks remain deeply undervalued. Let me build on Jeff's argument that gold stocks are cheap on an historical basis and compare them to other industries' price-to-book values as of July 17. How long will gold stocks continue to be so undervalued?" Continue reading →

Continue ReadingGold Sector: A Small Fish in a Big Pond

CoinAva allows Iranians to buy and sell bitcoins

"Citizens of Iran now have their own bitcoin market website, CoinAva. The site aims to educate people about bitcoin and allow them to buy and sell the digital currency. A spokesperson for CoinAva said bitcoin isn’t yet very popular in Iran, but said that once a few people start talking about it, its popularity will increase rapidly. The Iranian government believes anything based on the internet is suspicious, according to the spokesperson, but he thinks bitcoin has more potential to do positive than negative things for Iran and its government." Continue reading →

Continue ReadingCoinAva allows Iranians to buy and sell bitcoins

Afghanistan’s first recorded bitcoin transaction?

"The sun beat down at a blistering 120 degrees in the Helmand desert. The air was dry and tense as the two bitcoin entrepreneurs, Adam Locklin and yours truly, shook hands and made a deal in bitcoin. A Partagas robusto cigar traded hands, I sent Adam 0.1 BTC, and so concluded what we believe to be Afghanistan’s first recorded bitcoin transaction. This simple trade comes with a few lessons if bitcoin is really going to work in Afghanistan and other remote parts of the developing world." Continue reading →

Continue ReadingAfghanistan’s first recorded bitcoin transaction?