As Greece staggers under the weight of a depression exceeding that of the 1930s in the US, it appears difficult to see a way forward from what is becoming increasingly a Ponzi financed, extend and pretend, “bailout” scheme. In fact, there are much more creative and effective ways to solve some of the macrofinancial dilemmas that Greece is facing, and without Greece having to exit the euro. But these solutions challenge many existing economic paradigms, including the concept of “money” itself.Read more ›
Post Tagged with: "fiat currency"
Last Thursday, we ran a unique half-hour segment on gold, gold investing and the gold standard over at Boom Bust. The panel was made up of four investors: Marshall Auerback, Rick Rule, Cullen Roche and Peter Schiff. I moderated the panel with regular Boom Bust host Erin Ade. I really enjoyed this format and think we could or should have run the segment for a full hour because there was a lot more ground to cover.
Take a look.Read more ›
Reports indicate strong Bitcoin interest in China. BTC, the China-based Bitcoin exchange accounts (trading a third of all Bitcoin transactions, while China may account to close to half of the daily turnover, according to some internet reports) at an estimated 200k Bitcoins a day.Read more ›
Abenomics has been very successful in goosing the Japanese economy thus far. However, the question remains whether this success will be short-lived or durable. I believe it is likely to be short-lived because of the policy constraints that all countries face irrespective of whether they have fiat currency.Read more ›
I was on the Daily Ticker with Lauren Lyster talking about Japan yesterday. My view is that there is no material negative change in Japan’s sovereign debt outlook nor will there be in the medium term because of Abenomics. The video is at the bottom of this post. Before you watch it let me say a little bit about why I take this view on Japan and speak more generally about government debt and deficits. Mike Konczal wrote a post that is getting a lot of buzz on high deficits and Reinhart and Rogoff that will be a good jumping off point for discussion.Read more ›
Spiegel, a widely-read German magazine, has published a trilogy of articles on inflation in German that it has also translated into English. The theme is “How Monetary Policy Threatens Savings” and I see this as a must-read for those interested in a German framing of the present debt crisis. This post is my extended commentary on the view expressed by Spiegel, including my own thoughts on the correct framing of the crisis and present policy solutions.Read more ›
I was on RT’s Capital Account on Friday night talking to Lauren Lyster about QE and the conversation moved more into the realm of fiat currency and government’s coercive taxing power. This is particularly relevant given arguments within Republican circles about returning the US to the gold standard. Last July I wrote a post about fiat money called “Government tax […]Read more ›
Bill Gross is out with his monthly commentary. Because his points are central to the discussion of policy and markets right now, I am going to write this weekly newsletter commentary outside the paywall. The major question is about how to invest in a world that levers much more slowly in total, and can delever sharply in selective sectors and countries. Gross has some answers and I have some comments on the macro backdrop.Read more ›
The chart below from the blog Pragmatic Capitalism shows the U.S. Federal government deficit for each quarter since 1952. As you can see, almost the entire period is marked by deficits.Read more ›
In conclusion, while there are links between the “twin deficits”, they are not the links usually imagined. US trade and budget deficits are linked, but they do not put the US in an unsustainable position vis a vis the Chinese. If the Chinese and other net exporters (such as Japan) decide they prefer fewer dollar assets, this will be linked to a desire to sell fewer products to America. This is a particularly likely scenario for the Chinese, who are rapidly developing their economy and creating a nation of consumers. But the transition will not be abrupt.Read more ›