Tag Archive: Basic Reports

Dollar Supply Creates Dollar Demand, Report 2 June

2019-06-03

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2019-06-03

Gold and Silver Price
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

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2019-05-28

Gold and Silver Price
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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China’s Nuclear Option to Sell US Treasurys, Report 19 May

2019-05-21

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2019-05-21

Gold and Silver Price
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

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2019-05-14

Gold and Silver Price
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

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2019-05-07

Gold and Silver Price
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

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2019-04-30

Gold and Silver Price
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

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2019-04-23

Gold and Silver Price
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

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2019-04-16

Gold and Silver Price
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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What Causes Loss of Purchasing Power, Report 7 Apr

2019-04-09

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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

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2019-04-02

Gold and Silver Price
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

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2019-03-26

Gold and Silver Price
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

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2019-03-18

Gold and Silver Price
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

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2019-03-11

Marginal Productivity of Debt 1952-2018
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

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2019-03-04

Gross Output vs GDP 2005-2018
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

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2019-02-25

Gold and Silver Price
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

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2019-02-19

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

2019-02-11

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2019-02-11

Gold and Silver Price
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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Who Knows the Right Interest Rate, Report 3 Feb 2019

2019-02-04

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2019-02-04

Gold and Silver Price
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

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2019-01-28

Gold and Silver Price
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

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2019-01-23

Gold and S&P: Correlation -0.82
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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