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Tag Archives: Silver co-basis

Wealth Consumption vs. Growth – Precious Metals Supply and Demand

GDP – A Poor Measure of “Growth” Last week the prices of the metals rose $35 and $0.82. But, then, the price of a basket of the 500 biggest stocks rose 62. The price of a barrel of oil rose $1.63. Even the euro went up a smidgen. One thing that did not go up was bitcoin. Another was the much-hated asset in the longest bull market. We refer to the US Treasury. The spread between Treasury bonds and junk bonds narrowed this week. It is now close to its post-crisis low....

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The End of an Epoch, Report 8 Dec

“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” What the heck did John Maynard Keynes mean by saying this? Overturning the existing basis of society?! Let’s begin by stating something that is both obvious and unpopular. We are living in days...

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What’s the Price of Gold in the Gold Standard, Report 10 Nov

Let’s revisit a point that came up in passing, in the Silver Doctors’ interview of Keith. At around 35:45, he begins a question about weights and measures, and references the Coinage Act of 1792. This raises an interesting set of issues, and we have encountered much confusion (including from one PhD economist whose dissertation committee was headed by Milton Friedman himself). Gold, Paper, and Redeemability Back in the 18th century, three facts were obvious and not...

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Wealth Accumulation Is Becoming Impossible, Report 20 Oct

We talk a lot about the falling interest rate, the too-low interest rate, the near-zero interest rate, the zero interest rate, and the negative interest rate. Hat Tip to Switzerland, where Credit Suisse is now going to pay depositors -0.85%. That is, if you lend your francs to this bank, they take some of them every year. Almost 1% of them. A bank deposit comes with a risk. But instead of compensating you for the risk, the bank pays you nothing. So it’s a return-free...

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Motte and Bailey Fallacy, Report 13 Oct

This week, we will delve into something really abstract. Not like monetary economics, which is so simple even a caveman can do it. A Clever Ruse We refer to a clever rhetorical trick. It’s when someone makes a broad and important assertion, in very general terms. But when challenged, the assertion is switched for one that is entirely uncontroversial but also narrow and unimportant. The trick is intended to foreclose debate of the broad assertion, not really to...

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A Wealth Tax Consumes Capital, Report 6 Oct

It seems one cannot make a name for one’s self on the Left, unless one has a proposal to tax wealth. Academics like Tomas Piketty have proposed it. And now the Democratic candidates for president in the US propose it too, while Jeremy Corbyn proposes it in the UK. Venezuela finally added a wealth tax in July. A Wealth Tax So how does a wealth tax work? The politicians quibble among themselves, as if the little implementation details that differ between them are...

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The Purchasing Power of Capital, Report 29 Sep

We discuss capital consumption all the time, because it is the megatrend of our era. However, capital consumption is an abstract idea. So let’s consider some concrete examples, to help make it clearer. Flipping Homes, Consuming Capital First, let’s look at the case of Timothy Housetrader. Tim has a small two-bedroom house. Next door, his neighbor Ian Idjit, owns a four-bedroom house which is twice the size. For some reason, Ian offers to trade houses with Tim. Both...

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How Is Negative Interest Possible? Report 8 Sep

Germany has recently joined Switzerland in the dubious All Negative Club. The interest rate on every government bond, from short to 30 years, is now negative. Many would say “congratulations”, in the belief that this proves their credit risk is … well … umm … negative(?) And anyways, it will let them borrow more to spend on consumption which will stimulate … umm… well… all of the wasteful consumption for which governments are rightly infamous. While those who are...

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Asset Inflation vs. Consumer Goods Inflation, Report 1 Sep

A paradigm is a mental framework. It has a both a positive pressure and a negative filter. It structures one’s thoughts, orients them in a certain direction, and rules out certain ideas. Paradigms can be very useful, for example the scientific method directs one to begin with facts, explain them in a consistent way, and to ignore peyote dreams from the smoke lodge and claims of mental spoon-bending. However, a paradigm can also prevent one from discovering an...

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Directive 10-289, Report 25 Aug

Everyone must ask himself the question. Do you want the world to move to an honest money system, or do you just want gold to go up (we italicize discussion of apparent moves in gold, because it’s the dollar that’s moving down—not gold going up—but we sometimes frame it in mainstream terms). Gold’s Going Up We have written about the tension between these two goals before. Many people start with the former. They come to gold, as they begin to realize that the dollar...

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