Blue Dollar Market
The Argentine Government has made it its policy to overvalue the Argentinean Peso (to hide the fact that people are buying dollars and smuggling them out of the country in any way they can as a result of the brain-dead policies they’ve been pursuing for about a decade now). Of course this has led to a “black market” rising where the USD is indeed much higher than the “official rate”. The free market USD is often referred to as Blue Dollar, and is about 60-70% higher than the Government-suppressed “market”.
Never mind the fact that there is a guaranteed trade there if you can actually purchase dollars at the official rate. Good luck with that, there all manner of controls being set up to ensure that is not done (although obviously a handful of well connected individuals must have found ways to get around this).
Never mind the fact that there is a guaranteed trade there if you can actually purchase dollars at the official rate. Good luck with that, there all manner of controls being set up to ensure that is not done (although obviously a handful of well connected individuals must have found ways to get around this).
Now, the story gets interesting because apparently, the neighboring country of Uruguay, obviously for political reasons, has made it its policy to ALSO overvalue the Argentinean peso, effectively creating 3 different exchange rates: Arg official rate; blue dollar rate; and Uruguayan rate, which curiously enough, is about halfway between official and blue. You have to get past all the controls.
Anyhow, this reminds me of when the US decided to overvalue silver, which of course led to the country being flooded with the metal coming from Europe, which eventually led to the US’ default and JP Morgan’s bailout.
Indeed the same thing is happening in Uruguay: The country is being flooded with Argentinean pesos as people are simply buying them in Arg, and selling them in UY (there are a lot of controls but the Arg Gov’t doesn’t mind if people bring dollars INTO the country, it’s getting them out that’s a problem).
So the overvaluation is causing people across the border to shop in Argentina, not to mention the fact that the dollars keep flowing to that country as a result of the arbitrage.
This won’t end well! Now they Gov’t is saying there appears to be a shortage of USD! Well duh?! Stop overvaluing that worthless piece of paper the Argentinians refer to as “currency” for Heaven’s sake!
Indeed the same thing is happening in Uruguay: The country is being flooded with Argentinean pesos as people are simply buying them in Arg, and selling them in UY (there are a lot of controls but the Arg Gov’t doesn’t mind if people bring dollars INTO the country, it’s getting them out that’s a problem).
So the overvaluation is causing people across the border to shop in Argentina, not to mention the fact that the dollars keep flowing to that country as a result of the arbitrage.
This won’t end well! Now they Gov’t is saying there appears to be a shortage of USD! Well duh?! Stop overvaluing that worthless piece of paper the Argentinians refer to as “currency” for Heaven’s sake!
And now to make matters worse, they’re offering a “solution” to the problem they CREATED: Capital controls! Apparently it is no longer “cool”, says the UY Gov’t, to cross over to Argentina to buy cheaper stuff, and pretty soon they’re going to start tracking people who bring Argentinean currency to swap it for dollars and take them away. Just let that currency float!
Margaret Thatcher died at Age 87
Former British Prime Minister Margaret Thatcher, who was the first woman to become British prime minister of Britain, has died at the age of 87. From 1979 to 1990, she was leader of the Conservative Party and was called the “Iron Lady” for her personal and political toughness by the Russians. I doubt that many people appreciate that the mere fact that she came to Princeton, New Jersey to address our conference was a silent demonstration of he belief and comprehension of cycles. I named a piece I wrote, It’s Just Time, after the words she spoke to me saying that the conservatives would lose power in Britain on the next election long before there were any polls. When I asked why, she responded – “It’s Just Time”.
She was a champion of freedom. And while many misunderstood what she was trying to create, she will forever stand in the sands of time as a great leader who even pointed the way for Ronald Reagan. There are no politicians that I am aware of today who are concerned about the country before their party. Times have indeed changed dramatically since 1990. We will miss you dearly.
Regulating Gold Getting Tighter
The story of ABN Amro ceasing delivery of precious metals it had previously offered to its Dutch clients regarding gold, silver, platinum and palladium, had been an agreement with Deutsche Bank Netherlands, who suspended that agreement. The change only impacts those in Holland and has nothing to do with paper contracts that exist in every futures market. For every purported “short” position there is matched “long” position and the spin is those longs would really drive up the price if the shorts were not there. Crazy logic that assumes such longs are long-term investors rather than traders and hedgers. Since even the Bible says there is a swing with a TIME to buy and a TIME to sell since everything has its opposite, this spin seems more like people desperate to suck in buyers so they can sell. All things oscillate. I do not understand people claiming to be analysts who never say sell and when they are wrong, then blame bankers and manipulation. Solomon Brothers use to come out saying bonds would rise, and then they were secretly the sellers. Anyone forget the guilty pleas putting out bogus research during the .COM Bubble of 2000? (http://www.sec.gov/news/digest/12-20.txt). Beware of those who never say sell.
Nevertheless, at the root of the cause of this issue of ABN stopping delivery is governments demanding information on any delivery of precious metals. The US has imposed tracking of all gold in and out of refineries. Governments realize that the precious metals are the door to the underground economy. They are doing their best to slam it shut.
Obviously, purchasing precious metals in a situation other than anonymous cash, leaves a trail for government to follow. Storage facilities in Europe have thrown out all Americans. If a foreign entity FAILS to report anything an American does in Europe, its assets are subject to confiscation in USA. Unless we can attack the tax system, there will be no hope for liberty to survive.
US Population Growth is the Key
Question: So is it money v population that determines the overall trend?
Answer: Yes
The one consistent trend within the correlations that is part of the decline and fall of all empires, nations, and city states, is that as that society becomes more affluent, the birth rate ALWAYS declines. This is why Social Security and Pension funds tend to fail. They rely on increasing population to pay for the last. This is like creating a weather model under the assumption that because today it is bright and sunny, it will remain that way for the rest of time.
The debt burden then rises as government cannot meet its promises, as was the case in Rome, that is reflected back as raising taxes PER CAPITA because the population shrinks and this ultimately leads to civil unrest and the collapse of the system. Even Augustus (27BC-14AD) introduced family laws to compel men to get married and have children. He saw the immigrants were growing faster than Romans. At least Rome bestowed citizenship on everyone so there were taxes. We try to prevent immigrants, build walls, prevent their citizenship, so they become exempt from income taxes. This is one reason to abandon income tax and move to a consumption tax for then everyone pays regardless of their citizen status.
Thus, Social Security has now turned negative because there are fewer new workers to support the previous. The system is doomed in less time than Rome because they granted citizenship to everyone whereas we do not further curtailing tax revenue growth PER CAPITA. NO degree of shifting money to a gold standard will prevent the cycle from unfolding and in fact that would merely accelerate the demise for the gold would quickly vanish and then what? The system is fatally flawed.