Economics

Why Bitcoins Are Just Like Gold

"Bitcoin is gold on steroids, designed for a society that lives through the internet. Bitcoin is designed with the ideals of the contemporary cyber movement in mind: decentralization, peer to peer, cryptography. Easily transferable in ones and zeros, it’s a storage of value for a virtual society. As a payment system, it's a temporal store of money that can be easily sent across the globe securely and speedily without counterparty risk. No matter the price of bitcoin, these benefits will always give it purpose. Given its self-contained nature, it eliminates the need for inherent human interference. There’s no need for a central bank because bitcoin self-regulates." Continue reading →

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Don’t Hold Bitcoins; Krugman Won’t Like It

"Paul Krugman has written about Bitcoins, and he has come to the conclusion that they represent a grim development. Fortunately, no one is asking for Krugman’s permission to mine, hold, or use Bitcoin. He is not in charge of designing this emerging alternative money. As for making society rich, a main reason why Bitcoin is taking off is because people want to flee government paper money or at least have some hedge against government money and all that it brings with it. Bitcoin might someday save the economy from being destroyed by government and its economic advisers." Continue reading →

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Housing: Addicted to Fiat Money

"We are told that the housing recovery is strong. Then why is the best-performing new home building stock losing money? The Federal Reserve is buying about $40 billion worth of Fannie Mae and Freddie Mac bonds every month in order to sustain the present housing recovery. How is this market going to be sustained when the Federal Reserve finally stops creating half a trillion dollars a year worth of fiat money in order to goose the housing market? This is clearly the most manipulated market in the history of the United States. Bernanke and his associates have decided that it is the Federal Reserve’s job is to subsidize housing in the United States." Continue reading →

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Bernanke Saying He’s Dispensable Suggests Tenure Ending

"Rates have been low for so long that they have continued to facilitate rash borrowing. Now rates literally cannot be lifted without causing extreme pressure on US disbursements. Second, to keep rates down, Bernanke has virtually doomed the Fed to perpetual monetary debasement. No matter what happens, boom or bust, the Fed will need to promote huge inflationary programs. Perhaps it is unfair to Ben Bernanke, but anyone examining the totality of his actions and their likely result would be tempted to come to the conclusion that he wants to leave before the proverbial house of cards comes tumbling down." Continue reading →

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Jim Rickards: Forget Cyprus, Nobody Is Stealing from Depositors More than Bernanke

"'At this stage of a recovery normalized interest rates should be around 2-3%,' says Rickards. 'Apply that 2-3%…to the entire multi-trillion-dollar deposit base of the United States of America and that’s a $400-billion per year wealth transfer from savers to bankers so they can pay themselves bigger bonuses or make crazy bets.' Over time, Rickards says, that wealth transfer could reach $1 trillion. Rickards says zero interest rates are just one way the Fed is fleecing depositors. Others include increasing inflation, which Bernanke is trying to do, and taxing deposits like Cyprus is pushing for." Continue reading →

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Peter Schiff Global Investor Newsletter – March 2013

"The Keynesians have overlooked a much more dangerous and demonstrable pitfall of their own creation: something that I call 'The Stimulus Trap.' This condition occurs when an economy becomes addicted to the monetary stimulus provided by a central bank, and as a result fails to restructure itself in a manner that will allow for robust, and sustainable, growth. The trap redirects capital into non-productive sectors and starves those areas of the economy that could lead an economic rebirth. The condition is characterized by anemic growth (masked by the delivery of perpetual stimulus) and deteriorating underlying economic fundamentals." Continue reading →

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Peter Schiff: Cyprus Lifts the Curtain

"The decision to inflict pain on both large and small depositors was almost universally described as a historic blunder. But the mistake was to do so in a manner that was not camouflaged by financial smoke and mirrors. In truth, rank and file depositors have been paying, and will continue to pay, for all manner of bailouts and stimulus. Whether it's through lower interest payments on deposits, inflation, higher taxes, higher borrowing costs, or the accumulation of unsustainable sovereign debt, Cypriots will bear the burden of past profligacy. But the new plan for Cyprus was far too transparent, simple, and direct to survive in a world dependent on deceit and obfuscation." Continue reading →

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Underground Economy Helps Account for Discrepencies in Economic Data

"Kalmes is among the 4.8 million unemployed Americans -- 40 percent of all those jobless -- who have been out of work for more than 27 weeks, even as the economy has been growing since June 2009 and the job market shows recent signs of healing. As her unemployment benefits have run out, she has entered the informal economy to make ends meet. America's shadow economy includes activities that are actually illicit -- prostitution and drug dealing -- and more benign jobs like working construction for a day for cash, or even the $2 per child that Kalmes gets for walking neighborhood students to the bus. Economists estimate $2 trillion could be involved." Continue reading →

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Gold and Silver Coins in Arizona May Become Legal Tender

"Arizona is likely to become the second state after Utah to pass a law specifying that gold and silver coins will be regarded as legal tender inside the borders of the state. The important thing about this legislation, as well as the law in Utah, is that it is now becoming clear to more voters that there is something fundamentally wrong with a monetary system that is run by a committee of tenured bureaucrats in Washington. This kind of legislation would have been inconceivable 10 years ago. The legislation is important mainly as an economic indicator of a change in public opinion, at least in Western states, regarding the future of fiat money." Continue reading →

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Cyprus and the reality of banking: Deposit haircuts are both inevitable and the right thing to do

"My sympathies for Cypriot depositors is somewhat limited. If you are a depositor in a Cypriot bank, whether of deposits of more or less than €100,000, who did you think was guaranteeing your deposit? The Blue Fairy? Did you really think that in such a small place with such a bizarrely bloated banking system – one that for years and, by now, very publicly had been investing in Greek government bonds! – your government had the resources to protect all depositors? The bailout of Cyprus’ two largest banks will cost the equivalent of 60% of GDP! And after what happened in Greece, did you really think that the Germans were willing to cover the whole bill?" Continue reading →

Continue ReadingCyprus and the reality of banking: Deposit haircuts are both inevitable and the right thing to do