Category Archive: 6a.) Monetary Metals

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New Inflation Indicator, Report 14 Apr

2019-04-16

Last week, we wrote that regulations, taxes, environmental compliance, and fear of lawsuits forces companies to put useless ingredients into their products. We said: “For example, milk comes from the ingredients of: land, cows, ranch labor, dairy labor, dairy capital equipment, distribution labor, distribution capital, and consumable containers.”

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Debt and Profit in Russell 2000 Firms

2019-04-12

by Keith Weiner

2019-04-12

This week, the Supply and Demand Report featured a graph of debt vs profitability in the Russell 2000. Here’s the graph again: This graph shows a theme that we, and practically no one else(!) have been discussing for years. It is the diminishing marginal utility of debt. In this case, more and more debt is required to add what looks like less and less profit (we don’t have the raw data, only the graphic).

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What Causes Loss of Purchasing Power, Report 7 Apr

2019-04-09

by Keith Weiner

2019-04-09

U.S. small-cap debt builds up, 2002-2019

We have written much about the notion of inflation. We don’t want to rehash our many previous points, but to look at the idea of purchasing power from a new angle. Purchasing power is assumed to be intrinsic to the currency. We have said that the problem with the word inflation is that it treats two different phenomena as if they are the same.

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Will Basel III Send Gold to the Moon, Report 2 Apr

2019-04-02

by Keith Weiner

2019-04-02

A number of commentators have predicted that the rules of the Basel III bank regulations will cause gold to skyrocket (no, this article is not about our view that gold does not go up, that it’s the dollar going down, that the lighthouse does not go up, it’s the sinking ship going down in the storm).

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On Board Keynes Express to Ruin, Report 24 Mar

2019-03-26

by Keith Weiner

2019-03-26

Last week, I ranted about the problem with our monetary system and trajectory: falling interest rates is Keynes’ evil genius plan to destroy civilization. This week, I continue the theme—if in a more measured tone—addressing the ideas predominant among the groups who are most likely to fight against Keynes’ destructionism.

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Keynes Was a Vicious Bastard, Report 17 Mar

2019-03-18

by Keith Weiner

2019-03-18

My goal is to make you mad. Not at me (though I expect to ruffle a few feathers with this one). At the evil being wrought in the name of fighting inflation and maximizing employment. And at the aggressive indifference to this evil, exhibited by the capitalists, the gold bugs, and the otherwise-free-marketers.

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The Duality of Money, Report 10 Mar

2019-03-11

by Keith Weiner

2019-03-11

This is a pair of photographs taken by Keith Weiner, for a high school project. It seemed a fitting picture for the dual nature of money, the dual nature of wood both as logs to be consumed and dimensional lumber to be used to construct buildings.

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Is Capital Creation Beating Capital Consumption? Report 3 Mar

2019-03-04

by Keith Weiner

2019-03-04

We have written numerous articles about capital consumption. Our monetary system has a falling interest rate, which causes both capital churn and conversion of one party’s wealth into another’s income. It also has too-low interest, which encourages borrowing to consume (which, as everyone knows, adds to Gross Domestic Product—GDP).

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Is Lending the Root of All Evil? Report 24 Feb

2019-02-25

by Keith Weiner

2019-02-25

Ayn Rand famously defended money. In Atlas Shrugged, Francisco D’Anconia says: “So you think that money is the root of all evil? . . . Have you ever asked what is the root of money? Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them.

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Central Planning Is More than Just Friction, Report 17 February

2019-02-19

by Keith Weiner

2019-02-19

It is easy to think of government interference into the economy like a kind of friction. If producers and traders were fully free, then they could improve our quality of life—with new technologies, better products, and lower prices—at a rate of X. But the more that the government does, the more it burdens them. So instead of X rate of progress, we get the same end result but 10% slower or 20% slower.

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Quantum Metal Lease #1 (gold)

2019-02-13

by Keith Weiner

2019-02-13

Monetary Metals leased gold to Quantum Metal, to support the growth of its gold distribution business through retail bank branches. The metal is held in the form of retail Perth Mint bars.

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What They Don’t Want You to Know about Prices, Report 10 Feb

2019-02-11

by Keith Weiner

2019-02-11

Last week, in part I of this essay, we discussed why a central planner cannot know the right interest rate. Central planner’s macroeconomic aggregate measures like GDP are blind to the problem of capital consumption, including especially capital consumption caused by the central plan itself.

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Monetary Metals Leases Gold to Quantum Metal

2019-02-08

by Keith Weiner

2019-02-08

Scottsdale, Ariz, February 8, 2019—Monetary Metals® announces that it has leased gold to Quantum Metal, to support the growth of its business of selling gold through retail banks. Investors earn 4.5% on their gold, which is held as Perth Mint minted gold bars in inventory. Monetary Metals has a disruptive model, leasing gold from investors who own it and subleasing it to businesses who need it, typically for inventory or work-in-progress.

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Who Knows the Right Interest Rate, Report 3 Feb 2019

2019-02-04

by Keith Weiner

2019-02-04

On January 6, we wrote the Surest Way to Overthrow Capitalism. We said: “In a future article, we will expand on why these two statements are true principles: (1) there is no way a central planner could set the right rate, even if he knew and (2) only a free market can know the right rate.” Today’s article is part I that promised article.

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Modern Monetary Theory: A Cargo Cult, Report 20 Jan 2019

2019-01-28

by Keith Weiner

2019-01-28

Newly elected Representative Alexandria Ocasio-Cortez recently said that Modern Monetary Theory (MMT) absolutely needed to be “a larger part of our conversation.” Her comment shines a spotlight on MMT. So what is it? According to Wikipedia, it is: “a macroeconomic theory that describes the currency as a public monopoly and unemployment as the evidence that a currency monopolist is restricting the supply of the financial assets needed to pay taxes...

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The Dollar Works Just Fine, Report 20 Jan 2019

2019-01-23

by Keith Weiner

2019-01-23

Last week, we joked that we don’t challenge beliefs. Here’s one that we want to challenge today: the dollar doesn’t work as a currency, because it’s losing value. Even the dollar’s proponents, admit it loses value. The Fed itself states that its mandate is price stability—which it admits means relentless two percent annual debasement (Orwell would be proud).

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Rising Interest and Prices, Report 13 Jan 2019

2019-01-14

by Keith Weiner

2019-01-14

For years, people blamed the global financial crisis on greed. Doesn’t this make you want to scream out, “what, were people not greedy in 2007 or 1997??” Greed utterly fails to explain the phenomenon. It merely serves to reinforce a previously-held belief.

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Surest Way to Overthrow Capitalism, Report 6 Jan 2019

2019-01-07

by Keith Weiner

2019-01-07

One of the most important problems in economics is: How do we know if an enterprise is creating or destroying wealth? The line between the two is objective, black and white. It should be clear that if business managers can’t tell the difference between a wealth-creating or wealth-destroying activity, then our whole society will be miserably poor.

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Are Stocks Overvalued, Report 24 Dec 2018

2018-12-27

by Keith Weiner

2018-12-27

We could also have entitled this essay How to Measure Your Own Capital Destruction. But this headline would not have set expectations correctly. As always, when looking at the phenomenon of a credit-fueled boom, the destruction does not occur when prices crash. It occurs while they’re rising.

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Why Do Investors Tolerate It, Report 17 Dec 2018

2018-12-18

by Keith Weiner

2018-12-18

For the first time since we began publishing this Report, it is a day late. We apologize. Keith has just returned Saturday from two months on the road. Unlike the rest of the world, we define inflation as monetary counterfeiting. We do not put the emphasis on quantity (and the dollar is not money, it’s a currency). We focus on the quality. An awful lot of our monetary counterfeiting occurs to fuel consumption spending.

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