With all the attention placed on Trump, Sanders and the other candidates, it amuses me how clueless the vast majority of Americans are. Most people are focused on the wrong thing. They focus on the inflammatory remarks made by Trump, on they believe in the panacea fantasy described by Clinton and Sanders.
Virtually no one is focussed on the real problem. The country is bankrupt. Does it really make sense for Clinton and Sanders to deliver on their promises if they will make the country’s finances even worse? Trump does not provide details or a plausible plan either, probably because he knows that if he did large numbers of people would not like it.
Chart courtesy of ShadowStats
Nobody talks about QE Infinity or the inflation that has been accelerating over the last decades. Nobody cares that the country is bankrupt or that the party is followed immediately by major financial upheaval. Continue reading →
Bitcoin has started to rise again, and it looks like it might be the start of the next Bitcoin bubble. Although many people have known about Bitcoin for years, most people have not purchased any coins and do not understand it.
Many people think that this is a great time to buy gold. However, the same people who are saying that now were saying it when gold was at $1,800 per oz.
The price of gold has fluctuated over the last 5 years.
Personally, I think it is better to hold gold than dollars. The dollar is collapsing, and I think it will continue to collapse over the next decades. However, that does not mean that everyone should go out and buy gold.
Bitcoin has had an interesting history. Launched in 2009, it was revolutionary in combining cryptography with money. Perhaps the motivation for this idea was to create a system that distributes financial resources to those who have computing power.
Image courtesy of BitcoinCharts.com
We may never know the motivations behing Bitcoin. The mysterious creator, Satoshi Nakamoto, cut off communication in 2011. The name appears to be a pseudonym and he has never been identified. It has been theorized that he is not even a single person, but a group of people who have opted for anonymity. If this is the the case, they have succeeded.
Has Bitcoin revolutionized the way that humans use money?
Consider the following 4 phases of money:
The first phase of human exchange predates the first villages. It was simply the exchange of x amount of one good for y amount of another good. For example, “I’ll give you 3 apples for 2 pears”. Although this worked, it was cumbersome because there was no simple way to value a given good.
It has been quite interesting to watch Bitcoin as it has gone through one bubble, and consistently risen since. Many people thought that Bitcoin was finished after its stratospheric rise in 2011, and it’s subsequent collapse to $3. Can Bitcoin survive such a massive devaluation?
Image courtesy Bitcoin Charts
Recently Bitcoin has achieved quite a bit of attention, because of WordPress.com announcing that they will accept payment in Bitcoin. More recently, Reddit has decided to accept Bitcoin. The more interesting (and perhaps) exciting development is that you can now buy pizza with bitcoins.
President Obama upset some business folks when he basically said… you didn’t build your business.
In fairness, here’s what he said:
“If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business, you didn’t build that. Somebody else made that happen,” he said. “The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.”
So, he could be referring to the roads and businesses. In other words, businesses do not build the infrastructure necessary to allow their companies to bring in raw materials and send out completed products, or however else they conduct their operations.
But he’d still be misguided, for a few reasons–and perhaps it’s semantics.
If what the president is saying is that businesses did not build the roads, then he is only partially correct. Money from businesses in the form of taxes did indeed pay for those roads and bridges. Businesses partnered with government to create infrastructure.
After two record-breaking attempts to jump start the economy through with no signs of success, the Federal Reserve is now debating a third round of quantitative easing.
QE 3, as it will be called, won’t work. But, beyond that, this is a reckless and unethical way to subvert the traditional role of the board. This continual monetization of debt and debasement of the currency could lead to a super bubble–and a resulting pop that will make 2008 look like a slight recession.
Let’s look at why the Fed is considering a third round of easing. It’s simple: the election year is coming up. A sitting president who is facing high unemployment and a weak economy will not get re-elected. Like a giant campaign kitty, the Fed is going to kick in hundreds of billions to make sure the president gets reelected. This isn’t a Democrat or Republican thing either, folks. Both sides do it.