Ⓥ EconomicsJunkie

True Money Supply May 2012

Nima — Wed, 23 May 2012 09:28:15 +0000

It’s been a while since I posted the last update on the US Money supply (true money supply), so here it goes:

The true money supply has grown to $2,731 billion:

The annual growth rate is currently at 13.62 percent:

Discussion on Gold, Money, South Africa, and Mining

Nima — Wed, 23 May 2012 08:28:02 +0000

It’s these kinds of conversations that I love. Knowledgeable individuals who calmly discuss world events without any mainstream media bias or bullshit …

The main things to take away from this conversation:

Gold has remained money for 5000 years while fiat currencies have failed over and over again
The Euro will fail (if it hasn’t already)
40% (!!) of the world’s gold has been produced in South Africa (it is thus to gold like Saudi Arabia to oil)
Fleming proposes that a sizable portion of Chinese gold demand comes from personal savers, and thus represents genuine and un-manipulated personal savings demand
Fleming believes that the dollar price gold will sooner or later get back to Dow Jones parity (in case you’re wondering: gold is currently at $1500 while the Dow is at 12500)
Fleming also suggests that individuals Greece, once left alone by EU imperialists, will have incentives to focus on one of their biggest strengths, namely the shipping industry

Capital Flight From France to London

Nima — Sat, 19 May 2012 19:26:42 +0000

As always, when socialists make it into office, people take their money elsewhere:

London real estate agents are like the canary in the coalmine for the debt crisis. They can sense early on the next country to get sucked into the vortex. So who’s up next? Apparently it’s the French.

Wave of Interest

Real estate agents have been aware of a new wave of interest for months, but it’s been especially noticeable since Feb. 28. The night before, the then Socialist candidate for French president, François Hollande, who famously said “I don’t like the rich,” announced that, if elected, he would raise the top rate of tax on incomes over €1 million to 75 percent. At home, he got much applause for the announcement. But in London, the news produced a reaction that was noticeable on the computers of the London-based property company Knight Frank.

“Since February, when Hollande announced his wealth tax, there has been a large rise in web searches from French customers,” Liam Bailey, head of residential research at Knight Frank, recently told the Daily Telegraph.

Those who do the best they can to attract money will probably fare best during this debt crisis.

You reap what you sow …

Real Estate Crash Well Underway In China; GDP Crash Will Follow

Nima — Fri, 18 May 2012 08:09:49 +0000

Mish recently posted a synopsis of an article about things happening in China:

Year-on-year sales in Q1, for all real estate, was down 14.6%.

Residential property sales were down 17.5%

Office sales were down -10.2%

Sales in January-February were a disaster, falling 20.9% overall, compared to the first two months of 2011, -24.7% for residential.

Total amount of floor space “for sale” was up 35.5%, compared to the same date last year

Floor space of residential units “for sale” grew 47.4%.

At the end of 2011, total floor space “under construction” was roughly 4.6 times the floor space sold

A year and a half worth of excess inventory is hidden somewhere in the pipeline

New starts in April fell 14.6% year-on-year and 27.0% month-on-month, for property as a whole

Housing starts fell -14.4% year-on-year and -23.4% month-on-month

Office starts fell -21.0% year-on-year in April, and -45.1% compared to March

Retail property starts fell -18.7% year-on-year, and -36.8% compared to March

Land sale revenues in April (RMB 27 billion) were down -54.7% compared to April last year

Foreign funding for property development was down -91.4% in March and -80.8% in April, compared to the same months last year.

Clearly a crash is underway. The above stats also show the soft-landing thesis is written on toilet paper.

Clearly a big reset is happening in China.

Michael Pettis is betting on an average GDP growth of 3 percent over the next 10 years. I’m with him on that.

Do As Iceland Did

Nima — Wed, 09 May 2012 05:54:52 +0000

As I have said many times before, there will come a time when Europe’s bankrupt governments will be forced to default on their debts and exit the Euro and do precisely that which they have been avoiding and I have been repeating year after year now:

An absolute and unconditional abandonment of any more bailout talks is highly necessary. Member states need to consolidate their finances, cut spending, trim down their obtrusive bureaucracies and cut their unsustainable tax burdens.

For many of them, after they’ve now unfortunately been digging themselves a deeper hole, default remains inevitable, and in Greece’s case it has already occurred.

Now the most popular tweet in Spain is #hagamoscomoislandia or “Do As Iceland Did”, and as Mish points out:

A Twitter search for “#hagamoscomoislandia” turns up a hit with titles in English but comments in Spanish.

Google Translation says the page is already in English. However, I cut some of the comments and translated them. Here are the results.

Not one euro for banks, prosecute the perpetrators of the crisis and a constitution written by the citizens!

Education + health budget in 2012: 5,397 million euros. Rescue Bankia: 7,000 million euros

Greece, under the control of the Troika, in bankruptcy. Iceland, after a revolution, Out of Crisis.

7,000 million euros for Bankia? To begin, No. # # HagamosComoIslandia RescatemosPersonas

Trial of bankers and politicians, reappropriation of wealth plundered, new constitution and social justice

Default is the free market’s solution to extreme insolvency. Do as Iceland did.

Mish on Capital Account: Austerity, Debt, Krugman’s Delusions & More …

Nima — Sat, 05 May 2012 20:20:52 +0000

Who would have thought in 1982 that 30 years later a Russian TV channel would educate Americans about free market economics?

Paul vs. Krugman

Nima — Tue, 01 May 2012 07:53:18 +0000

Ron Paul debates Paul Krugman on monetary policy and economic history:

The most instructive point in this discussion, in my opinion, is where Krugman flat out exposes his ignorance about the essence of the concept of fiat money:

At 8:55:

Ron Paul: “People today, if they use gold and silver, you can go to jail.”
Paul Krugman (chuckles): “That’s not what I’ve … that’s not MY understanding of the law.”

Well, then it might behoove him to be a bit more open and curious about cases like that of Bernard von NotHaus:

Bernard von NotHaus, 67, was convicted today by a federal jury of making, possessing, and selling his own coins, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Following an eight-day trial and less than two hours of deliberation, von NotHaus, the founder and monetary architect of a currency known as the Liberty Dollar, was found guilty by a jury in Statesville, North Carolina, of making coins resembling and similar to United States coins; of issuing, passing, selling, and possessing Liberty Dollar coins; of issuing and passing Liberty Dollar coins intended for use as current money; and of conspiracy against the United States.

I can can already guess what Krugman is going to proclaim in his defense: That of course he’s well aware of the case and that said individual was only sent to jail because he was ripping of the “Dollar” brand or that he was committing acts of conspiracy or something along those lines.

At 6:23 Ron Paul talks about the policies that laid the foundation for an end to the Depression and the post WW2 era boom which Krugman himself admits he wants to go back to:

“… we cut spending by some 60 percent, we slashed taxes, finally the Depression ended. It was the liquidation of debt that made it available that we could go back to work again.”

Here are some charts for the period in question:

Government spending 1945 – 1950 in pct of GDP:

Government debt 1945 – 1950 in pct of GDP:

Taxes from 1945 – 1950 in pct of GDP:

It is, then, a pretty arrogant, self centered, narcissistic, and most importantly false way of debating when all you can respond to someone confronting you with such historical facts is “That’s not my version of history”.

It’s actually quite irrelevant what “my” or “your” version of history is, as much as it is indeed relevant what the correct version of history is. But it takes a certain level of humility to subjugate your own opinion to this annoying thing called reality.

Tenured economics professors are unfortunately a so tied up with internal he-said-she-said gossip and with debating the inconsequentialities of whether the target inflation should be 2 or 3 percent and whether rich should be taxed more or less, that they really seem to have no time to delve into a comprehensive, detailed, and honest analysis of historical and economic facts.

It is thus up to you, dear reader, to tune out when you hear such clowns spout out irresponsible, boring, and oft-repeated and refuted nonsense, and to seek out those who take the pursuit of truth more serious than childish ad-hominem attacks, gossip, and prestige amongst the influential and well connected.

Spanish Government Bans Transactions over EUR 2500

Nima — Tue, 17 Apr 2012 04:46:52 +0000

The creeping progression towards all-round state control under one soviet style European Union has hit a new low as Spain Bans Cash Transactions Over 2,500 Euros:

The Prime Minister, Mariano Rajoy, has announced on Wednesday that the plan to combat tax evasion on Friday approved the Cabinet prohibit the payment in cash transactions of over € 2,500 and which at least involved a businessman professional.

During the control session the Government in the House of the Congress of Deputies and in response to a question about the tax amnesty made by the general coordinator of IU, Cayo Lara, the Prime Minister has revealed that those who violate the ban will face fines of 25% of the payment made in cash.

The Government had already advanced the plan to combat fraud limitations include the use of cash for certain operations, although he had not yet specified which would place the threshold (yes at the time there was talk that it could be 1,000 euros for self-employed).

I highly doubt that this is in line with one of the supposedly fundamental pillars of the European Union, namely the unrestricted mobility of capital. Spain might as well exit right now and get it over with.

As everyone with half a brain knows and as we have been arguing here for a long time now: Government intervention leads to problems that will be combated with more government intervention until a complete breakdown of trade, credit, and the monetary system becomes inevitable.

We are witnessing the inevitable and accelerating downhill ride that is being aggravated and prolonged by one failed government intervention after another.

What’s next? All round capital controls, baby!

Should guns be banned from school campuses? And what the heck is Libertarianism anyway??

Nima — Sat, 18 Feb 2012 08:01:35 +0000

Does Iran’s President Want to Wipe Israel off the Map or Deny the Holocaust?

Nima — Mon, 06 Feb 2012 01:00:14 +0000