It is nearly impossible to detach politics from bitcoin although many try. The reason being that everything bitcoin touches has social and political ramifications that are too startling to ignore. Argentina is no exception.
Filmed in Buenos Aires, three bitcoin proponents set out to produce a short film on the impact of bitcoin in Argentina. The result is a beautiful 8-minute documentary examining the promise of economic growth in the ‘free’ or ‘shadow’ economy beyond the ‘official’ crippled economy.
All financial eyes should be focused on the BOJ (Bank of Japan) right now. Money managers are calling this week’s BOJ meeting, the most important one in many years. Key market players expect Governor Kuroda to imitate Ben Bernanke’s actions, and begin buying longer maturity bonds, and more of them, with electronically printed yen.
Kuroda has said he will do “whatever it takes” to get the Japanese inflation rate up to 2%. Cost push inflation (CPI) will likely be the horrific consequence of doing “whatever it takes”. Japan is the 3rd largest economy in the world, far larger than Germany, which is number 4. CPI could devastate Japanese savers. Worse, because Japan is such a large economy, CPI could spread around the world, and I think it will. The only good news about CPI is that it could push the gold price well above $2000, and push your gold stocks to new highs.
In light of the recent events in Cyprus, where the banks will reportedly remain closed at least through March 26th and the likelihood that Cyprus will exit the Eurozone, re-institute the Cypriot pound and devalue the currency is growing by the minute, we thought it apropos to present LRS’ first hand account and experiences recognizing, surviving, and even profiting from the devaluation of the Mexican Peso in the late 1970′s.
For those unfamiliar with the account of the 1976 Mexican Peso devaluation (and anyone who has not experienced a currency devaluation first-hand), this is an ABSOLUTE MUST READ as while the Cypriots may be the first, they will undoubtedly not be the last to devalue their currency before the global financial debt crisis is over.
LRS, who successfully saw the Peso devaluation coming and side-stepped loss of wealth by converting his funds into US dollars, states that Americans must: Read the writing on the wall, and extricate yourselves from your US dollar positions. Physical gold and silver bullion and coins will be the ultimate protection and wealth preservation assets during the coming devaluation of the US dollar.
My experience with the peso devaluation makes it necessary for me to move my investments away from paper into physical gold and silver.It is going to be a very tough time for the US and I anticipate the Mexican devaluation will pale in comparison to our dollar devaluation.
Here’s a piece of recent news that you almost certainly missed: A large consumer products company, Johnson & Johnson, announced a one-off loss owing to a 32 percent currency devaluation in Venezuela. The reason I expect you missed that less-than-seismic piece of news is that, unless you happen to be particularly fascinated in Johnson & Johnson, or utterly enthralled by the development of currency policy in Venezuela, you probably didn’t care.
But here’s the thing. Do you care to guess how much J&J lost thanks to that currency movement? Answer: a cool hundred million dollars. Johnson is a pretty large company, but even so. To lose a hundred million bucks? In Venezuela? That sounds a little disturbing, no? A bit like the start of one of those killer-virus horror flick, where the pretty teenager who comes down with a benign little illness ends up dying horribly as some unknown disease takes hold.
Central Planners Bernanke, Draghi & Merkel Hard at Work
In what has now become a series of posts on how people in the western world are being shortchanged by stealth inflation, we now find out that: “four out of seven Footlongs — purchased at Subway locations in Manhattan, Brooklyn and Queens — measured only 11 or 11.5 inches.”
From the New York Post:
And that’s not the only corner Subway is cutting — the shops have sliced their cold-cut sizes by 25 percent in the past few months, a Manhattan franchise owner told The Post.
These types of stories are popping up with increased frequency throughout the western world. Products are simply declining in quality, and in many cases these declines are being accompanied by price increases. Remember my article from a week ago Inflation Hits Coffee as Brewers Secretly Swap Robusta for Arabica. This is more or less the same story, except this time in the UK and centered around beer. From CNBC:
Britain’s favorite pint of bitter is being watered down as austerity continues to bite and taxes rise.
John Smith’s Extra Smooth, billed as “no nonsense beer”, is being reduced from 3.8 percent alcohol to 3.6 percent in response to rising costs and reduced beer consumption.
Heineken, which is also raising the cost of the famous bitter by about 2.5 pence a pint…
Currency controls are now in place and there is a ban on traveling with more than $10,000 in cash. Egyptian officials are becoming worried as savings account withdrawals increase in the face of a depreciating pound and public rumors of central bank confiscation of deposits.
Over the coming weeks, we’re going to be hearing a lot about the ‘fiscal cliff’: the threat that some 5% of GDP is going to be ripped out of the economy in a combination of tax hikes and spending cuts. A fiscal slow-down on that scale will almost certainly trigger recession. The CBO thinks so, though their numbers look optimistic to me. (If you cut demand by 5%, more or less overnight, then you shouldn’t expect the economy to grow by more than 1% in the year following.)
The Feds solution to debt: more debt
Because the process of fiscal compromise acts itself out on the political stage – all big personalities and high drama – the media loves to report it. Loves to imply that vast questions are at stake, that political careers will stand or fall by the outcome.
But they’re not. Not really. This so-called ‘cliff’ is really just the first in a series of steps. The US budget is arguably the most distorted in the Western world. Greece and Japan may have higher debts, Italy and Portugal may have worse growth prospects – but for sheer budgetary insanity, the US is probably the world leader, combining huge current deficits with vast unfunded promises to retirees, and welfare entitlement program recipients. You don’t need to take my word for this. The IMF states, ‘under our baseline scenario, a full elimination of the fiscal and generational imbalances would require all taxes to go up and all transfers to be cut immediately and permanently by 35 percent. A delay in the adjustment makes it more costly.’ Continue reading →
A hundred years ago, a generation of men – many of them volunteers – fought an unprecedently bloody war for almost invisible gains. The men were heroes, but the generals commanding them were too often blunderers, too little conscious of the ever-mounting casualties. David Cameron is right to demand that our schoolchildren are reminded of the Great War and the vast sacrifices involved.
He’s right, but he’s also showing some chutzpah. History remembers those men as ‘lions led by donkeys’. Heroes betrayed by blundering and unimaginative leaders. We are not – thank God – at war on that scale now, but in economic terms we are deep in our own version of trench warfare and David Cameron has too little idea how to lead us out. Continue reading →
QE has created the worlds biggest housing and equities bubbles in the UK markets
Last week, the Bank of England declared its intention to print another £50 billion. Hardly anyone noticed. That £50 billion will bring the Bank’s total money printing to around £425 billion, or about one quarter of British GDP. No one cares. Yesterday, the U.S. Federal Reserve announced its own plans for another round of “quantitative easing” — a euphemistic term for “destroying the currency.” Not to be left out, the ECB has announced plans for unlimited bond buying (though Germany has, thank goodness, set some limits.) Given that the bonds the ECB wants to buy are issued by increasingly bankrupt Mediterranean governments, the ECB too is doing what it can to wreck the currency it’s charged to protect.