Category Archive: 6a.) Monetary Metals

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Irredeemable Currency Is a Roach Motel, Report 9 June

2019-06-10

In what has become a four-part series, we are looking at the monetary science of China’s potential strategy to nuke the Treasury bond market. In Part I, we gave a list of reasons why selling dollars would hurt China. In Part II we showed that interest rates, being that the dollar is irredeemable, are not subject to bond vigilantes.

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Dollar Supply Creates Dollar Demand, Report 2 June

2019-06-03

by Keith Weiner

2019-06-03

We have been discussing the impossibility of China nuking the Treasury bond market. We covered a list of challenges China would face. Then last week we showed that there cannot be such a thing as a bond vigilante in an irredeemable currency. Now we want to explore a different path to the same conclusion that China cannot nuke the Treasury bond market.

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The Crime of ‘33, Report 27 May

2019-05-28

by Keith Weiner

2019-05-28

Last week, we wrote about the impossibility of China nuking the Treasury bond market. Really, this is not about China but mostly about the nature of the dollar and the structure of the monetary system. We showed that there are a whole host of problems with the idea of selling a trillion dollars of Treasurys: Yuan holders are selling yuan to buy dollars, PBOC can’t squander its dollar reserves If it doesn’t buy another currency, it merely tightens...

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Keith Weiner, PhD, CEO & Founder of Monetary Metals

2019-05-22

by Keith Weiner

Keith Weiner, PhD, CEO & Founder of Monetary Metals, believes interest rates must go lower to keep interest expense under control and result in a deflationary credit implosion.

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China’s Nuclear Option to Sell US Treasurys, Report 19 May

2019-05-21

by Keith Weiner

2019-05-21

There is a drumbeat pounding on a monetary issue, which is now rising into a crescendo. The issue is: China might sell its holdings of Treasury bonds—well over $1 trillion—and crash the Treasury bond market. Since the interest rate is inverse to the bond price, a crash of the price would be a skyrocket of the rate. The US government would face spiraling costs of servicing its debt, and quickly collapse into bankruptcy.

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The Monetary Cause of Lower Prices, Report 12 May

2019-05-14

by Keith Weiner

2019-05-14

We have deviated, these past several weeks, from matters monetary. We have written a lot about a nonmonetary driver of higher prices—mandatory useless ingredients. The government forces businesses to put ingredients into their products that consumers don’t know about, and don’t want. These useless ingredients, such as ADA-compliant bathrooms and supply chain tracking, add a lot to the price of every good.

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Nonmonetary Cause of Lower Prices, Report 5 May

2019-05-07

by Keith Weiner

2019-05-07

Over the past several weeks, we have debunked the idea that purchasing power—i.e. what a dollar can buy—is intrinsic to the currency itself. We have discussed a large non-monetary force that drives up prices. Governments at every level force producers to add useless ingredients, via regulation, taxation, labor law, environmentalism, etc.

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Is Keith Weiner an Iconoclast? Report 28 Apr

2019-04-30

by Keith Weiner

2019-04-30

We have a postscript to our ongoing discussion of inflation. A reader pointed out that Levis 501 jeans are $39.19 on Amazon (in Keith’s size—Amazon advertises prices as low as $16.31, which we assume is for either a very small size that uses less fabric, or an odd size that isn’t selling). Think of the enormity of this. The jeans were $50 in 1983. After 36 years of relentless inflation (or hot air about inflation), the price is down to $39.31. Down...

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The Two Faces of Inflation, Report 22 Apr

2019-04-23

by Keith Weiner

2019-04-23

We have a postscript to last week’s article. We said that rising prices today are not due to the dollar going down. It’s not that the dollar buys less. It’s that producers are forced to include more and more ingredients, which are not only useless to the consumer. But even invisible to the consumer. For example, dairy producers must provide ADA-compliant bathrooms to their employees.

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New Inflation Indicator, Report 14 Apr

2019-04-16

by Keith Weiner

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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