Tag Archive: capital destruction

It’s Only Paper, Market Report 27 Apr

2020-04-28

The response to the virus has added a new mechanism of capital consumption to the many we have documented over the years. Businesses are shut down, yet they continue to incur expenses. There is a popular misconception out there that this is merely a paper loss. One can almost picture a neutron bomb that somehow wipes out only paper, leaving all the physical assets and plant unscathed.

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The Economic Singularity, Report 11 Aug

2019-08-13

by Keith Weiner

2019-08-13

We have recently written several essays about the fallacious concept of Gross Domestic Product. Among GDP’s several fatal flaws, it goes up when capital is converted to consumer goods, when seed corn is served at the feast. So we proposed—and originally dismissed—the idea of a national balance sheet.

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Obvious Capital Consumption, Report 28 Jul

2019-07-30

by Keith Weiner

2019-07-30

We have spilled many electrons on the topic of capital consumption. Still, this is a very abstract topic and we think many people still struggle to picture what it means. Thus, the inspiration for this week’s essay. Suppose a young man, Early Enterprise, inherits a car from his grandfather. Early decides to drive for Uber to earn a living. Being enterprising, he is up at dawn and drives all day.

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The Fake Economy, Report 21 Jul

2019-07-23

by Keith Weiner

2019-07-23

Folks in the liberty movement often say that the economy is fake. But this does not persuade anyone. It’s just preaching to the choir! We hope that this series on GDP provides more effective ammunition to argue with the Left-Right-Wall-Street-Main-Street-Capitalists-Socialists.

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What Gets Measures Gets Improved, Report 23 June

2019-06-25

by Keith Weiner

2019-06-25

Let’s start with Frederic Bastiat’s 170-year old parable of the broken window. A shopkeeper has a broken window. The shopkeeper is, of course, upset at the loss of six francs (0.06oz gold, or about $75). Bastiat discusses a then-popular facile argument: the glass guy is making money (to which all we can say is, “plus ça change, plus c’est la même chose”).

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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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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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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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Illicit Arbitrage Cut by Tax Cuts and Jobs Act, Report 3 Sep 2018

2018-09-04

by Keith Weiner

2018-09-04

This week, we are back to our ongoing series on capital destruction. Let’s consider the simple transaction of issuing a bond. Party X sells a bond to Party Y. We will first offer something entirely uncontroversial. If the interest rate rises after Y buys the bond, then Y takes a loss. Or if the interest rate falls, then Y makes a capital gain. This is simply saying that the bond price moves inverse to the interest rate.

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Monetary Paradigm Reset, Report 5 August 2018

2018-08-07

by Keith Weiner

2018-08-07

Keith Weiner’s weekly look on Gold. Gold and silver prices, Gold-Silver Price Ratio, Gold basis and co-basis and the dollar price, Silver basis and co-basis and the dollar price.

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Getting Their Pound of Flesh – Precious Metals Supply and Demand

2018-07-21

by Keith Weiner

2018-07-21

Keith Weiner’s weekly look on Gold. Gold and silver prices, Gold-Silver Price Ratio, Gold basis and co-basis and the dollar price, Silver basis and co-basis and the dollar price.

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Black Holes for Capital – Precious Metals Supply and Demand

2018-07-07

by Keith Weiner

2018-07-07

Race to the Bottom, Last week the price of gold fell $17, and that of silver $0.30. Why? We can tell you about the fundamentals. We can show charts of the basis. But we can’t get into the heads of the sellers. We can say that in the mainstream view, the dollar is rising. The dollar, in their view, is not measured in gold but in rupees in yuan and rubles. You know, all the superior forms of money…

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An Idea Whose Time Has Come, Report 1 July 2018

2018-07-03

by Keith Weiner

2018-07-03

Keith Weiner’s weekly look on Gold. Gold and silver prices, Gold-Silver Price Ratio, Gold basis and co-basis and the dollar price, Silver basis and co-basis and the dollar price.

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The Wealth Effect, Report 24 Jun 2018

2018-06-27

by Keith Weiner

2018-06-27

Keith Weiner’s weekly look on Gold. Gold and silver prices, Gold-Silver Price Ratio, Gold basis and co-basis and the dollar price, Silver basis and co-basis and the dollar price.

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