US better than Germany London FT Declares
The view of the USA from outside is always enlightening for those stuck in a domestic world. All we ever hear about is the US debt, the Fed monetization, and Obama’s latest attack upon the constitution. That notwithstanding, the view in Japan with North Korea itching to draw first Japanese blood and Europe demonstrating it is about as honest as any local politician. The debt picture of Germany is not much better than the USA. It is actually far worse. The whole idea of the Euro was to increase trade. So let’s see, if we impose huge austerity upon the rest of Europe with unemployment above 50% among the youth, this will increase trade and profits for Germany exactly how? I fail to understand the logic here. The German economy will decline sharply, unemployment will rise further, and the whole Euro experiment will prove to be a failure. It is like pretending you are married, without the certificate, in a state that does not recognize “common law” marriages and you expect the IRS to honor an unwritten agreement? Good one! That is what Gay Marriage is about. Two people can live together, share the expenses and contribute equally to the mortgage, and when one dies the other has to pay inheritance taxes. You cannot create a European marriage among nations using a single currency, but then drawing the line and say what we each owe is our own and not joint. Sorry – it is not a marriage in the eyes of the law or the financial markets. The German debt picture is no better than the USA if not worse given its much smaller economy.
Forget debt fears, US is better than Germany
Bitcoin
The rise in Bitcoin to $147 is clearly a phase transition. Nothing moves in that manner that is sustainable. The cyber attacks are interesting. They could be major players seeking to disrupt the business to benefit short positions. Or it could be government attacks as well.
The problem Bitcoin faces is the same we all face. The core assumption that they can create an electronic currency out of the banking system and actually survive as an alternative to government, is a bit naive. The assumption is that governments will play by the rule of law. What stops them from simply storming the offices and criminalizing it as money laundering? At least Hitler respected the sovereignty of Switzerland. Today, it is all about money and they could care even less about international law. Switzerland had been forced to yield. They can shut down entire countries unless they comply.
In the 1970′s, when futures were starting, we had tax-straddles. Lets say gold was rising into January 1980 so you sold short Dec 1979 and bought Feb 2000 gold. You closed the trade taking the loss in 1979 and thus the money was moved from one year to the next. The IRS learned about the play, imposed mark-to-market on all positions, ending the straddles, and then went after all the records of firms and clients who participated charging fines, interest and penalties.
I seriously doubt that with the kill-switch, the ability of government cut off power and track every transmission, that any type of electronic money will ever be safe. The only solution is to leave for Asia, or push for major reform to end taxation and restore our liberty and privacy. Otherwise, there is no rule of law. They will do whatever they want. They can easily declare it to be money-laundering, and don’t forget, that is how they discovered Eliot Spitzer’s payment to a hooker that forced him to resign as governor of New York state.
Every country now has a cooperating money laundering department. They are tracking absolutely everything with no exceptions.
It’s Global Stupid!
One reader wrote: “Congratulations. Your forecast that the Dow would make new highs from the depths of 2009 has been astonishing. You have done the same each and every time since 1987. You consistently hit the ball out of the park every time. I was at your Berlin Conference. You dedicated that conference to Milton Friedman. He must be smiling by now. You have proven the world is truly global. Erstaunlich! The rest are fumbling in the dark in case you have not seen this”
Another reader, citing the same article wrote:
“Why didn’t the govt. just call you?!?!. . . . it sounds like another agency looking only at domestic events:”
We remain captured by our prejudices far beyond what most people even realize. The talking heads are never right because they constantly look domestic. The academics are wrong for they are still following Marx and their horizon is limited to also the domestic landscape. You simply cannot forecast ANYTHING in isolation. It is global and always has been. Yes, I dedicated my global tour to Milton Friedman – my friend who convinced me I had a front row seat that no one else had running around the world with offices on every continent. But it has been the clients that have forged me into what I have become. They forced me to look at the world through everyone’s eyes. Advising one to buy gold but ignoring the global trend leads only to losses. To understand the economy, requires an understanding of capital flows. Grasp the true nature of the world and you will see the light.
Understand one thing. If the economy moves because of global trends, then academics are useless for their goal is to create models for government to manipulate us. Obama thinks he can alter the global economy by raising taxes, and spending that money on infrastructure? If you have $20 in your left pocket and move it to your right, are you really any richer?
If the next bust comes from external sources, then academics can recommend nothing and politicians cannot lock up someone for causing it when they were not here. Preferring that the economy is purely domestic, has its political purposes: “Vote for me and I will change this”. But if the economy is global, politicians have to “manage” rather than “manipulate”. Can you image actually having to show skills to run for office rather than bribing people – “Vote for me and I will steal the cost from anyone who has more than you”.
If we understand that the economy is really global, then we can go with the flow rather than trying to grow lettuce in the desert at the cost of $100 a head. If people expanded their skills to advance rather than enlist unions to try to demand more money with no additional skills ignoring international competition, then just perhaps the future could be different. But everything is extremely myopic and very Marxist insofar as saying: “Ya. That is how it works. But I will change that.” Perhaps the understanding of cycles is just an ancient knowledge we have forgotten along with the knowledge that the Earth was round and not flat. There truly is a time for everything. Even light moves in electromagnetic waves where magnetism bounds the electricity between two extremes. The business cycle functions the same, but it is volatility that bounds the boom and bust cycle between two extremes.
There is an appointed time for everything. And there is a time for every event under heaven—
2 A time to give birth and a time to die;
A time to plant and a time to uproot what is planted.
3 A time to kill and a time to heal;
A time to tear down and a time to build up.
4 A time to weep and a time to laugh;
A time to mourn and a time to dance.
5 A time to throw stones and a time to gather stones;
A time to embrace and a time to shun embracing.
6 A time to search and a time to give up as lost;
A time to keep and a time to throw away.
7 A time to tear apart and a time to sew together;
A time to be silent and a time to speak.
8 A time to love and a time to hate;
A time for war and a time for peace.
A time to plant and a time to uproot what is planted.
3 A time to kill and a time to heal;
A time to tear down and a time to build up.
4 A time to weep and a time to laugh;
A time to mourn and a time to dance.
5 A time to throw stones and a time to gather stones;
A time to embrace and a time to shun embracing.
6 A time to search and a time to give up as lost;
A time to keep and a time to throw away.
7 A time to tear apart and a time to sew together;
A time to be silent and a time to speak.
8 A time to love and a time to hate;
A time for war and a time for peace.
ECCLESIASTES 3:1-15
The Economic Evolution
This massive leak on people who have accounts outside their country put together by 160 journalists who are most likely closet Marxists, now threatens even Russians in the Government. Putin also vowed to go after Russians who had offshore accounts in his December State of the Union Address.
This hunting down of the rich and thirst for taxation because politicians have spent your future earnings for the rest of your life already while consistently reducing the payments that they promised citizens in the welfare state. is threatening to destroy the world economy all because these people cannot manage anything no less an economy. When you make the laws, you exempt yourself and your friends from them, and thus the very essence of what made civilization a benefit is transformed into economic slavery.
At the risk that the Goldbugs will assassinate me before the Politicians, MONEY is no longer tangible and in fact it has rarely been so throughout history. Consequently, money is simply whatever people accept and that means it is no different than a share in a corporation. This being the case, money is now electronic, with a tiny portion even paper. This means TAXES are no longer even necessary and the expense of government need only be covered by the limited expansion of the money supply. Eliminating taxation restores FREEDOM as the Founding Fathers saw (NO DIRECT TAXATION) so we need not care about offshore accounts and if we realize this one point, then those accounts will return as will the jobs. Eliminate borrowing money PERIOD!. Eliminating taxation also eliminates the bulk of LOBBYING and that will go a long way to cleaning up government and stop the conspiracies. It will eliminate borrowing and NEUTER the banks. We then need term limits, all election finance is ONLY paid for by government – NO DONATIONS. Maximum term 4 years if not 1 year and one time only. We need to END professional politicians who are lawyers without a clue other than how to write laws. We also need to restore the Roman office of TRIBUNE, which was a independent officer who could indict anyone in government. That is the Office of Inspector General, but today they have no power and report to the head of the Department of Justice – NO WAY!!!! Must be separate elected office not appointed by politicians.
Judges may NEVER have worked for government at any point in their career. They cannot be appointed for life but should also have short terms of 2 years – ONE TIME ONLY. No one may be indicted in any place other than where they live if it be a person or corporation. We must stop corruption as is going on in NYC where they indict anyone who competes with that city in NY but never their own (banks). Prosecutors must have experience and must sign career contracts – none of this revolving door crap hired by the firms they investigate or their lawyers. There should be only ONE regulator, not ten. Any overlapping regulation must be eliminated by closing that agency.
This theory that MONEY must be tangible destroys all freedom. It is nonsense. You hedge government with your assets. MONEY is not a store of value for it rises and falls in purchasing power with the booms and busts. Just because precious metals were used as coins at various times, does not support this idea that money must be tangible. That ranks up there with the world is also flat. Everyone who has ever eaten broccoli has eventually died. Therefore, we must also assume that broccoli will kill you. There have been hundreds of yearly intervals where money was NEVER precious metals and what about Asia where China never issued precious metal coins. They proved money is simply what everyone agrees to have value. St. Patrick wrote how the Irish used slave girls – not precious metals.
It is time we open our eyes and start to comprehend that the world economy has grown like a child. MONEY cannot be tangible nor a store of wealth without making everything a flat line and that was the idea of Karl Marx to also create “fairness”. When there is no cycle – you are dead. We need not hunt down everyone, tear the productive forces asunder, for we can graduate to the next level of social development if we stop the insane witch-hunts that will only lead to a Great Depression if not a new Dark Age. When Maximinus I (235-238AD) hunted the wealth and declared the state owned everything, that was the beginning of the end for Rome. It was Julian II (360-363AD) who said that the Emperor should not be above the law. He was a wise man – they assassinated him as well. So we have a internal bet within the company who will assassinate me first – the Goldbugs or Politicians.