Hello,
Here's that breathlessly awaited post on what? You said it trade!!!
The definition of TRADE in relation to the US: If it crosses customs and is intended to be sold in the US, it's an IMPORT. If it passes through customs from the US to be sold overseas, it's an EXPORT. Pay a TARIFF (bridge toll) either way.
Couldn't be simpler--Right????????? Uh huh. Uh Huh. Uh Huh. Well remember there's nothing so simple that we humans can't make complicated!!!!!!!
Tariff is a system of government decreed duties placed on imported or exported goods.
A TRADE DEFICIT is when the value of IMPORTS is GREATER than the value of EXPORTS. We owe money that way!!! Like our 1-2 TRILLION dollar debt to China.
GLOBAL TRADE is a political phenomenon NOT technological because it is so easy to undermine politically. It traces its roots to the 19th century in Europe.
Okay, we're off and running on trade.
Our old familiar corporation, "UP YOURS" has expanded again and a new CEO is looking covertly at foreign trade so that it can increase the sale of its suppositories in China where they have studied the market and find a great need for suppositories.
The CFO immediately begins negotiations and find the Chinese very interested. A trade agreement is reached. "Up Yours" will ship to "One Hun Lo" Corporation in Beijing, who will be the DISTRIBUTOR (seller) in China. The trade will mean that the suppositories must clear customs in the United States.
A financial agreement is reached so that "One Hun Lo" agrees to an opening shipment from "Up Yours" for 500,000 suppositories. Simple trade between foreign companies. Of course, now "Up Yours" must take into consideration a tariff (tax) on those goods by China. The same COST OF DOING BUSINESS will include shipping. A large order is usually freight prepaid so "UP Yours" must be sure their prices include the many extra costs of international trade. They are now also subject to the political pressures of international trading.
This kind of trade was not always possible in the good old USA. The early days of our new country had a lot of trade barriers to foreign imports plus high tariffs until the early 1900's when those barriers all but disappeared. When times got rough in the late 1920's The SMOOT-HAWLEY Tariff Act of 1930 (a name like that should have sounded alarms) and signed by Herbie (Herbert Hoover, generally blamed for the 1929 great depression but not alone in the deed) cooled trade drastically by raising the import duty (or tariff) 59%.
The SMOOT-HAWLEY ACT had the effect of causing tariff increases by about sixty retaliating countries. The result was a collapse of world trade and US imports fell to 31% of the l929 level and exports fell even more. This was a major contributing factor in the GREAT DEPRESSION. Thanks Herbie. ARE YOU GETTING THE IMPRESSION OUR WORST ENEMIES ARE SOME US PRESIDENTS??????????!!!!!!
Frankie (FDR) and his Congress saw the error of Herbie's ways and decided to change the rules. Loosen the ties that bind and create a little more government controlled socialism.
The Congress passed the TRADE AGREEMENTS ACT OF 1934. A good enough trade act that its principles are largely the basis of all US trade legislation since that time. It was renewed eleven times until 1962 when we enacted the Trade Expansion Act.
Formulation of trade policy in 1934 shifted from Congress to the President to negotiate mutual tariff reductions by almost 50% of the SMOOT-HAWLEY levels.
In 1947 the General Agreement on Tariffs and Trade called GATT was created as an international organization and devoted to free trade through multilateral negotiations and had headquarters in Geneva, Switzerland. GATT called for three basics: unconditional acceptance with a few exceptions; elimination of non tariff trade barriers with a few exceptions; dispute consultation among member nations. There were appeals allowed. By 1993 GATT had 123 nations and more since that time with overall tariffs reduced.
In 1962 Jack Kennedy called for the Trade Expansion Act a socialist plan that provided welfare subsidies for company workers supposedly displaced by foreign competition. It was used heavily from the l970-80's. Kennedy also used GATT to reduce tariffs by 35% over 5 years from their l962 levels.
Our Prexy Jack (when not doing Hollywood) created more bureaucracy called the office of the Special Trade Representative (STR) to participate in the multilateral trade negotiations in the 60's under GATT. Of course by the 1970's STR was expanded and made it directly accountable to the President and Congress and became a Representative on Cabinet level.
UP, UP, and AWAY. A 1979 Executive order elevated STR TO USTR (office of the United States Trade Representative) to centralize Government policy-making and negotiate international trade and EXPAND the office. Surprise--surprise!! How these centralized government offices do grow. It was further expanded in 1988, 1994 and 2000. We'll deal with the agency and its power in the next post.
There were a number of trade reform acts after that called: Tokyo Round of 1974; trade and tariff act of 1984; Omnibus Trade and Competitiveness Act of 1988; The Uruguay Round, 1993. Each of these acts were related to specific problems of that time frame.
International trade and its policy are still controversial. NAFTA (North American Free Trade Agreement) was designed to open trade between the US, Canada and Mexico. Open markets (free trade) is supposed to benefit consumers not producers and that creates a lot of restrictions.
More next time.
Cheers, Connie
3/26/10
THE PIRATES OF FINANCE!!! POST 16
Hi,
This post deals with Pirates who no longer operate on the high seas but have moved inland to financial markets where they are a TRILLION times more dangerous! The pirates still seek the same precious metals as heretofore but have found an easier way to plunder. The name OF THE GAME is GOLD DERIVATIVES.
A post on the Gold wars may give a more complete insight into how important Gold really is. The latest directive of Red China is a loosening of restrictions on gold buying by its citizens both in coins and jewelry. The reason seems to be that it will put more pressure on the American economy. Clever these Chinese!
Ludwig von Mises said "Government is the only agency that can take a valuable commodity like paper, slap some ink on it, and make it totally worthless." and he said that in the 1920s before gold had been removed as the standard of value.
Gold's history in this country goes back to the Constitution's section 8 "The Congress shall have power...to coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures." Giving Congress that responsibility was probably not their wisest move if we judge the collective wisdom of that August body by their latest actions ignoring the voters on health care. And we have to assume their ignorance of Gold depravities.
However, in those days the CONGRESS believed it REPRESENTED THE PEOPLE so in 1792 they did exactly that. They fixed a rate of 0.5156 troy ounces of Gold to the dollar but in 1837 they reworked it and the dollar was redefined at one ounce of Gold for $20.67 dollars and it remained the fixed value for 96 years until 1933. The dollar at that time was devalued to $35. for a troy ounce of gold.
Now, here's where China's knowledge of our history with gold comes in handy. By the 1960's $35. an ounce for gold became difficult to sustain. Gold demand rose and US gold reserves fell because of trade deficits. John F. Kennedy's treasury undersecretary combated this situation by pooling the US and Europe's gold reserves to keep gold at $35. an ounce and formed the "London Gold Pool" with eight European countries.
However France's President Charles De Gaulle reneged and demanded the dollars that had been paid him for exports be replaced with gold under legal entitlement. So much for helping them out of a jam in World War 2. He caused an acute drain on gold and the pool folded but the demand for US gold did not abate. So a series of other measures were taken until 1981 when gold was abandoned by investors to have dollars.
China does not at present have much in-ground gold for mining. China's desire for Tibet and a railroad route to the high Himalayas presages a future of mining gold and other metals and minerals in that rich mountain territory. That's why the Dalai Lama can't get his land and his home back in Tibet!!
China's gold reserves are not presently as great as ours. We are at present in great debt to China. What happens when their citizens get GOLD FEVER as the government is gambling they will and China's reserves run low so she needs more gold for balance??????
You don't suppose Red China will demand we pay her in gold, do ya???? A cash demand no longer under legal entitlement but possible with a US President who bows to the Communist Chairman. Or is China hoping to burst the GOLD BUBBLE caused by DERIVATIVES that I explain later in this post? Would that big, really ancient country that feels it deserves to be the major world power do that to the good old USA?
IN A HEARTBEAT!!!!
Of course, the USA has not been above similar maneuvering. Richard Nixon, in the 1970's, faced with either eliminating trade deficits or valuing the dollar downwards against gold, did neither. He reneged on the international obligation of the US to redeem its dollar in gold just as FDR had repudiated the domestic obligation in the 1930's.
The last link between the dollar and gold was gone with Nixon's action and the world's currencies "floated" into 1974. Gold went from $35. to $195. an ounce. Recall that I told you in the last posts that Gold is now over $1100. an ounce.
In 1975 US citizens were allowed to buy gold again with no bargains at $195. an ounce. Large sales by the treasury and other central banks drove the price down to $103. with loss to the citizenry.
The imbalances were not resolved although gold auctions were tried to attempt to hold down the price. They were a failure because the demand for gold became overwhelming. Gold returned to $195. and by 1979 was $300. an ounce.
By this time Jimmy Carter, the Georgia Peanut King, was President and appointed Paul Volcker late in 1979 as Federal Finance Chairman. Gold went up to $400. by October. Volker went to a conference in Belgrade thereafter where the participating countries decided the global financial system was about to collapse. Volker returned and announced that instead of controlling interest rates, it would control money supply. Gold had soared to $850. by early 1980 after a great rush of gold buying.
Also early in 1980 US interest rates soared, the dollar stopped falling and began to rise. The gold buyers were coaxed back into dollars by the interest rates and the rising dollar and a major financial melt down was averted.
Unfortunately the prime rate reached 20% and stayed high until 1982 when gold after dropping to $296., took off and rose to $510 by 1993 then began falling to $410.
THE GOLDEN HORDE RIDES AGAIN (an allusion to the khanate (overlords) in Russia in the 13Th-15Th Century) from this point forward into the clever pirating of GOLD by the use of derivatives.
A DERIVATIVE is a contract between two parties based on and linked to an agreed and recognized asset's future price movements as security with the range of said contract limited only by the ingenuity of the traders. As long as derivative buying and selling is like the old HANDSHAKE agreements used to be, that is based on honor and honesty; it works.
Read that very carefully because this next part describes LEGAL??? pirating.
The birth of the DERIVATIVE MARKET IN GOLD followed and it makes HEDGE FUNDS look like milk and cookies. This a real WHISKY GAMBLE.
All this maneuvering openly over gold was becoming a problem so it was decided to go underground to fight for gold. And thus GOLD DERIVATIVES were born (ie: a security whose value derives from the value of something else) and developed in the currency, and spread into the equity as well as gold markets.
They provided leverage for more aggressive trading (WHERE THE PIRATES HANG OUT) and a method to expand the amount of money in circulation without expanding the "money supply". Inflation slowed. More lovely ORIGAMI PAPER traded ON PAPER.
As a consequence another the more frightening DERIVATIVE GOLD STRATEGY was named FORWARD SELLING by Gold Mining Companies. By 1990 gold companies world-wide but mainly in Australia were selling many years worth of PROJECTED GOLD PRODUCTION. Paper promises for gold to be mined.
This Gold Mine paper allowed the Bullion dealer to sell gold immediately by borrowing from the world's central bank, who had a GOLD hoard. He paid a SPOT GOLD LEASE RATE (an extremely low rate of interest based on the SPOT PRICE OF GOLD) and provided the GOLD or (paper again)a CLAIM to Gold to the buyer and invested that money. The difference of the SPOT and FORWARD determined the FORWARD PRICE for gold. The forward price is the interest rate minus the lease rate paid for the gold. So far, so good BUT..........
The figure for the sale of GOLD OPTIONS (DERIVATIVES) reached in 2009 was 30,000 tonnes (according to Market Skeptics on the net "More about the OTC Gold Derivative Market")--that is more than the WORLD'S TOTAL OFFICIAL GOLD RESERVES. . . in retail that's called understocked and oversold and often considered FRAUD.....Ouch!!!!!!!!! If a run on the metal stuff begins -POP -POP - POP and we all go DOWN - DOWN -DOWN.
Start digging GOLD in the mines boys!!!!!! Time's a wasting!! This bubble is set to burst all over the gold mining grounds. The PIRATES OF FINANCE found in the hedge (funds) recently have also been hauling gold. Get a move on before we have a real catastrophe because China is waiting patiently for our bubble to burst.
Cheers, Connie
This post deals with Pirates who no longer operate on the high seas but have moved inland to financial markets where they are a TRILLION times more dangerous! The pirates still seek the same precious metals as heretofore but have found an easier way to plunder. The name OF THE GAME is GOLD DERIVATIVES.
A post on the Gold wars may give a more complete insight into how important Gold really is. The latest directive of Red China is a loosening of restrictions on gold buying by its citizens both in coins and jewelry. The reason seems to be that it will put more pressure on the American economy. Clever these Chinese!
Ludwig von Mises said "Government is the only agency that can take a valuable commodity like paper, slap some ink on it, and make it totally worthless." and he said that in the 1920s before gold had been removed as the standard of value.
Gold's history in this country goes back to the Constitution's section 8 "The Congress shall have power...to coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures." Giving Congress that responsibility was probably not their wisest move if we judge the collective wisdom of that August body by their latest actions ignoring the voters on health care. And we have to assume their ignorance of Gold depravities.
However, in those days the CONGRESS believed it REPRESENTED THE PEOPLE so in 1792 they did exactly that. They fixed a rate of 0.5156 troy ounces of Gold to the dollar but in 1837 they reworked it and the dollar was redefined at one ounce of Gold for $20.67 dollars and it remained the fixed value for 96 years until 1933. The dollar at that time was devalued to $35. for a troy ounce of gold.
Now, here's where China's knowledge of our history with gold comes in handy. By the 1960's $35. an ounce for gold became difficult to sustain. Gold demand rose and US gold reserves fell because of trade deficits. John F. Kennedy's treasury undersecretary combated this situation by pooling the US and Europe's gold reserves to keep gold at $35. an ounce and formed the "London Gold Pool" with eight European countries.
However France's President Charles De Gaulle reneged and demanded the dollars that had been paid him for exports be replaced with gold under legal entitlement. So much for helping them out of a jam in World War 2. He caused an acute drain on gold and the pool folded but the demand for US gold did not abate. So a series of other measures were taken until 1981 when gold was abandoned by investors to have dollars.
China does not at present have much in-ground gold for mining. China's desire for Tibet and a railroad route to the high Himalayas presages a future of mining gold and other metals and minerals in that rich mountain territory. That's why the Dalai Lama can't get his land and his home back in Tibet!!
China's gold reserves are not presently as great as ours. We are at present in great debt to China. What happens when their citizens get GOLD FEVER as the government is gambling they will and China's reserves run low so she needs more gold for balance??????
You don't suppose Red China will demand we pay her in gold, do ya???? A cash demand no longer under legal entitlement but possible with a US President who bows to the Communist Chairman. Or is China hoping to burst the GOLD BUBBLE caused by DERIVATIVES that I explain later in this post? Would that big, really ancient country that feels it deserves to be the major world power do that to the good old USA?
IN A HEARTBEAT!!!!
Of course, the USA has not been above similar maneuvering. Richard Nixon, in the 1970's, faced with either eliminating trade deficits or valuing the dollar downwards against gold, did neither. He reneged on the international obligation of the US to redeem its dollar in gold just as FDR had repudiated the domestic obligation in the 1930's.
The last link between the dollar and gold was gone with Nixon's action and the world's currencies "floated" into 1974. Gold went from $35. to $195. an ounce. Recall that I told you in the last posts that Gold is now over $1100. an ounce.
In 1975 US citizens were allowed to buy gold again with no bargains at $195. an ounce. Large sales by the treasury and other central banks drove the price down to $103. with loss to the citizenry.
The imbalances were not resolved although gold auctions were tried to attempt to hold down the price. They were a failure because the demand for gold became overwhelming. Gold returned to $195. and by 1979 was $300. an ounce.
By this time Jimmy Carter, the Georgia Peanut King, was President and appointed Paul Volcker late in 1979 as Federal Finance Chairman. Gold went up to $400. by October. Volker went to a conference in Belgrade thereafter where the participating countries decided the global financial system was about to collapse. Volker returned and announced that instead of controlling interest rates, it would control money supply. Gold had soared to $850. by early 1980 after a great rush of gold buying.
Also early in 1980 US interest rates soared, the dollar stopped falling and began to rise. The gold buyers were coaxed back into dollars by the interest rates and the rising dollar and a major financial melt down was averted.
Unfortunately the prime rate reached 20% and stayed high until 1982 when gold after dropping to $296., took off and rose to $510 by 1993 then began falling to $410.
THE GOLDEN HORDE RIDES AGAIN (an allusion to the khanate (overlords) in Russia in the 13Th-15Th Century) from this point forward into the clever pirating of GOLD by the use of derivatives.
A DERIVATIVE is a contract between two parties based on and linked to an agreed and recognized asset's future price movements as security with the range of said contract limited only by the ingenuity of the traders. As long as derivative buying and selling is like the old HANDSHAKE agreements used to be, that is based on honor and honesty; it works.
Read that very carefully because this next part describes LEGAL??? pirating.
The birth of the DERIVATIVE MARKET IN GOLD followed and it makes HEDGE FUNDS look like milk and cookies. This a real WHISKY GAMBLE.
All this maneuvering openly over gold was becoming a problem so it was decided to go underground to fight for gold. And thus GOLD DERIVATIVES were born (ie: a security whose value derives from the value of something else) and developed in the currency, and spread into the equity as well as gold markets.
They provided leverage for more aggressive trading (WHERE THE PIRATES HANG OUT) and a method to expand the amount of money in circulation without expanding the "money supply". Inflation slowed. More lovely ORIGAMI PAPER traded ON PAPER.
As a consequence another the more frightening DERIVATIVE GOLD STRATEGY was named FORWARD SELLING by Gold Mining Companies. By 1990 gold companies world-wide but mainly in Australia were selling many years worth of PROJECTED GOLD PRODUCTION. Paper promises for gold to be mined.
This Gold Mine paper allowed the Bullion dealer to sell gold immediately by borrowing from the world's central bank, who had a GOLD hoard. He paid a SPOT GOLD LEASE RATE (an extremely low rate of interest based on the SPOT PRICE OF GOLD) and provided the GOLD or (paper again)a CLAIM to Gold to the buyer and invested that money. The difference of the SPOT and FORWARD determined the FORWARD PRICE for gold. The forward price is the interest rate minus the lease rate paid for the gold. So far, so good BUT..........
The figure for the sale of GOLD OPTIONS (DERIVATIVES) reached in 2009 was 30,000 tonnes (according to Market Skeptics on the net "More about the OTC Gold Derivative Market")--that is more than the WORLD'S TOTAL OFFICIAL GOLD RESERVES. . . in retail that's called understocked and oversold and often considered FRAUD.....Ouch!!!!!!!!! If a run on the metal stuff begins -POP -POP - POP and we all go DOWN - DOWN -DOWN.
Start digging GOLD in the mines boys!!!!!! Time's a wasting!! This bubble is set to burst all over the gold mining grounds. The PIRATES OF FINANCE found in the hedge (funds) recently have also been hauling gold. Get a move on before we have a real catastrophe because China is waiting patiently for our bubble to burst.
Cheers, Connie
3/23/10
IS THAT A RED TIE?- POST 15
Hi,
In the eighteen century POLITIES was the study of the economies of governments that led to political economists who proposed the theory that labor and not land was the real source of value. It was first identified as political economy then became Economics with an attempt to replace the study with a mathematical basis. It has not really worked so graphs, statistics, comparisons and charts have added an illusion of mathematics.
I really wanted to give clear definitions of the two Economic systems at war today. The problem is that there is so much BS included that it becomes less than clear. The only defining answers seem to lie in the fact that one system of trade is based on elective freedom and corporate management and the other system is based on Socialist Government control and management. Both are about POWER and MONEY AND WHO CONTROLS THEM.
Make no mistake it is a real war!!!!!!!!! Russia was defeated economically. No guns, no bombs but a war of economic ideas that began in the eighteenth century and fostered the basic theories used today. Wars have grown out of the Economic theories (World War 2 is a good example) but Economists today prefer not to waste money on shooting wars when they can defeat the opposition other ways. The ECONOMISTS have become more important than most country's leaders and harder to control because they act behind the scenes. Their theories are based on many and varied assumptions as I have pointed out in other posts.
Our economic system just received a big defeat in the Economists' war when the health care bill was passed because it turns economic control completely over to the system of Socialism which the Marxist Lenin said was the road to Communism. It puts the essential decisions about health care in the government's hands only and places the burden on the electorate.
If our country becomes a debtor nation permanently from the major expenses of this bill, we lose much of our power in the world. Only power and money insures our system of government and the freedom of the individual.
The current moves for global trade and conservation are moves to unite the world in efforts that can lead to World communism and eventually a one world congress with leaders that supersede individual-nation governments. The nation-governments will answer to the one central world government.
Seems like the fictions of the 1960-80s but it is not. The Marxist system is based on solidarity. The "rule of the Proletariat" which judges actions that are inconsistent with their determination of the people's needs as punishable. No individuality in other words and no freedom of choice. One-Worldism will be open to the same repressions for the individual that our forefathers came to America to escape.
From what I have explored in ECONOMICS, its philosophers and philosophies, and their potential for ERROR, that scares the Hell out of me! One gigantic error and we are back in the dark ages of poverty and starvation and ignorance. Not a very cheering thought!
And you thought Economics was dull and unimportant!!!??????
Cheers, Connie
In the eighteen century POLITIES was the study of the economies of governments that led to political economists who proposed the theory that labor and not land was the real source of value. It was first identified as political economy then became Economics with an attempt to replace the study with a mathematical basis. It has not really worked so graphs, statistics, comparisons and charts have added an illusion of mathematics.
I really wanted to give clear definitions of the two Economic systems at war today. The problem is that there is so much BS included that it becomes less than clear. The only defining answers seem to lie in the fact that one system of trade is based on elective freedom and corporate management and the other system is based on Socialist Government control and management. Both are about POWER and MONEY AND WHO CONTROLS THEM.
Make no mistake it is a real war!!!!!!!!! Russia was defeated economically. No guns, no bombs but a war of economic ideas that began in the eighteenth century and fostered the basic theories used today. Wars have grown out of the Economic theories (World War 2 is a good example) but Economists today prefer not to waste money on shooting wars when they can defeat the opposition other ways. The ECONOMISTS have become more important than most country's leaders and harder to control because they act behind the scenes. Their theories are based on many and varied assumptions as I have pointed out in other posts.
Our economic system just received a big defeat in the Economists' war when the health care bill was passed because it turns economic control completely over to the system of Socialism which the Marxist Lenin said was the road to Communism. It puts the essential decisions about health care in the government's hands only and places the burden on the electorate.
If our country becomes a debtor nation permanently from the major expenses of this bill, we lose much of our power in the world. Only power and money insures our system of government and the freedom of the individual.
The current moves for global trade and conservation are moves to unite the world in efforts that can lead to World communism and eventually a one world congress with leaders that supersede individual-nation governments. The nation-governments will answer to the one central world government.
Seems like the fictions of the 1960-80s but it is not. The Marxist system is based on solidarity. The "rule of the Proletariat" which judges actions that are inconsistent with their determination of the people's needs as punishable. No individuality in other words and no freedom of choice. One-Worldism will be open to the same repressions for the individual that our forefathers came to America to escape.
From what I have explored in ECONOMICS, its philosophers and philosophies, and their potential for ERROR, that scares the Hell out of me! One gigantic error and we are back in the dark ages of poverty and starvation and ignorance. Not a very cheering thought!
And you thought Economics was dull and unimportant!!!??????
Cheers, Connie
3/20/10
GOLD EAGLES, MAPLE LEAFS AND DINARS POST 14
Hi,
Gold was not available to Americans for many years. We were not allowed to hold gold in this country from 1934 to 1974. Confiscation of gold was practiced in the United States in the Great Depression. Confiscation is a strong word since houses were not searched and looted. Folks had to turn in what they had and were paid paper dollars for the current worth. A $10. gold piece received $10.
The Congress passed a bill, "An Act to Provide Relief in the Existing National Emergency in Banking and For Other Purposes". It allowed FDR (Franklin D. Roosevelt) to made gold illegal in 1933. It became a federal crime with a $10,000. fine and/or ten years imprisonment for a US citizen to have gold coins or bullion. Being an illegal alien was a more prosperous state in 1933 since gold coin and bullion were at that time abundantly and freely in circulation. Thanks Frankie! In 1934 gold was revalued from $20.67 to $35. an ounce, therefore, the average citizen could not profit from that change in value. I say the average citizen because those with influence and large holdings shipped what they had in gold in bags to Switzerland and Great Britain where it lay at the bottom of vaults until gold was again allowed in 1974.
If bad times like these are ahead this is what you need: a leather bag; a secret Swiss, Bermuda or Bahamian bank account and/or safety deposit box; and an airline ticket to one of the above. Of course, you must be prepared to leave your stash there until the law is in your favor which could be some time.
Exceptions to the confiscation rule were numismatic gold coins (coin collection objects); gold used in the normal course of business (jewelry, dental, artisans)but not in large quantity; and each citizen could have $100. face value of gold coins or Gold Certificates; gold mining, refining and exporting were allowed.
The executive order was written to be limited to the period of emergency only but it evidently was not considered to be over until 1974. PULEEEZE!!!??? It seems to me that we are long overdue in reducing Executive powers not just about war. Congress is slow moving but in every sense of the word that is more often a plus than a minus for the freedom of U.S. citizens.
GUESS WHO freed the American Public???????? The President, whom you believed his only act was pardoning Richard M. Nixon. GERALD R. FORD gave us back our rights on the last day of 1974. Evidently to that date, he was the only AMERICAN PRESIDENT since the founding fathers who believed in the rights of a FREE people and that the 1933 crisis was over.
J. KENT WILLIS in an editorial on the Web, "The Gold Confiscation Issue", says it well: "The gold confiscation edicts were born from the illicit union of Mother Fear and Father Hubris in the midst of the depression."
When good old Jerry legalized gold for solid citizens, coins from the 1930's appeared in U.S. market that hadn't been seen for years, many of which were thought to be numistically rare (a bad hit for collectors). None-the-less U.S. citizens could again purchase gold coins and bullion.
Meanwhile, gold is now prevalent in many countries. We have the Gold Eagle, Canada has the Maple leaf, South Africa has the Rand etc. They all now have some competition from Islamic countries who in 1992 began exploring reissuance of the Islamic Gold Dinar and the silver Dirham both high grade metals.
In 2006 Kelantan, a part of Malaysia, became the first state to launch gold dinar coins. The DEK (DINAR EMAS KELANTAN) is similar to the original dinar. As early as 1992 founders of e-dinar Ltd. and FZ-LLC (Dr. Zeno Dahinden, Switzerland; Prof Fernando Vadill, Spain; Dato Abdul Rahman Shariff, Malaysia) minted the first gold dinar and silver dirhams in Spain.
How much of this gold and silver is currently in circulation is unknown. The original company is now owned by an unnamed middle-eastern corporation who call it the e-dinar company and mints gold and silver coins in the United Arab Emirates and Indonesia. Certainly the Arab states don't intend to be caught with their FIATS down!
One can certainly see Islamic gold could be used as a weapon against our weakened dollar and what that can mean if we continue to use paper without gold backing. Politicos are always about two things: Power and money no matter what good causes or religious fervor they may espouse. Lose either position and a new team goes to bat.
Gold was not available to Americans for many years. We were not allowed to hold gold in this country from 1934 to 1974. Confiscation of gold was practiced in the United States in the Great Depression. Confiscation is a strong word since houses were not searched and looted. Folks had to turn in what they had and were paid paper dollars for the current worth. A $10. gold piece received $10.
The Congress passed a bill, "An Act to Provide Relief in the Existing National Emergency in Banking and For Other Purposes". It allowed FDR (Franklin D. Roosevelt) to made gold illegal in 1933. It became a federal crime with a $10,000. fine and/or ten years imprisonment for a US citizen to have gold coins or bullion. Being an illegal alien was a more prosperous state in 1933 since gold coin and bullion were at that time abundantly and freely in circulation. Thanks Frankie! In 1934 gold was revalued from $20.67 to $35. an ounce, therefore, the average citizen could not profit from that change in value. I say the average citizen because those with influence and large holdings shipped what they had in gold in bags to Switzerland and Great Britain where it lay at the bottom of vaults until gold was again allowed in 1974.
If bad times like these are ahead this is what you need: a leather bag; a secret Swiss, Bermuda or Bahamian bank account and/or safety deposit box; and an airline ticket to one of the above. Of course, you must be prepared to leave your stash there until the law is in your favor which could be some time.
Exceptions to the confiscation rule were numismatic gold coins (coin collection objects); gold used in the normal course of business (jewelry, dental, artisans)but not in large quantity; and each citizen could have $100. face value of gold coins or Gold Certificates; gold mining, refining and exporting were allowed.
The executive order was written to be limited to the period of emergency only but it evidently was not considered to be over until 1974. PULEEEZE!!!??? It seems to me that we are long overdue in reducing Executive powers not just about war. Congress is slow moving but in every sense of the word that is more often a plus than a minus for the freedom of U.S. citizens.
GUESS WHO freed the American Public???????? The President, whom you believed his only act was pardoning Richard M. Nixon. GERALD R. FORD gave us back our rights on the last day of 1974. Evidently to that date, he was the only AMERICAN PRESIDENT since the founding fathers who believed in the rights of a FREE people and that the 1933 crisis was over.
J. KENT WILLIS in an editorial on the Web, "The Gold Confiscation Issue", says it well: "The gold confiscation edicts were born from the illicit union of Mother Fear and Father Hubris in the midst of the depression."
When good old Jerry legalized gold for solid citizens, coins from the 1930's appeared in U.S. market that hadn't been seen for years, many of which were thought to be numistically rare (a bad hit for collectors). None-the-less U.S. citizens could again purchase gold coins and bullion.
Meanwhile, gold is now prevalent in many countries. We have the Gold Eagle, Canada has the Maple leaf, South Africa has the Rand etc. They all now have some competition from Islamic countries who in 1992 began exploring reissuance of the Islamic Gold Dinar and the silver Dirham both high grade metals.
In 2006 Kelantan, a part of Malaysia, became the first state to launch gold dinar coins. The DEK (DINAR EMAS KELANTAN) is similar to the original dinar. As early as 1992 founders of e-dinar Ltd. and FZ-LLC (Dr. Zeno Dahinden, Switzerland; Prof Fernando Vadill, Spain; Dato Abdul Rahman Shariff, Malaysia) minted the first gold dinar and silver dirhams in Spain.
How much of this gold and silver is currently in circulation is unknown. The original company is now owned by an unnamed middle-eastern corporation who call it the e-dinar company and mints gold and silver coins in the United Arab Emirates and Indonesia. Certainly the Arab states don't intend to be caught with their FIATS down!
One can certainly see Islamic gold could be used as a weapon against our weakened dollar and what that can mean if we continue to use paper without gold backing. Politicos are always about two things: Power and money no matter what good causes or religious fervor they may espouse. Lose either position and a new team goes to bat.
Cheers, Connie
3/15/10
FIAT AND ORIGAMI POST 13
Hi,
FIAT (Latin for "let it be") but naturally Politicians can't let anything BE. Somehow it must be changed, improved?, reconstructed, or generally UPENDED. So it's obviously a misnomer but that is what any paper money not backed by any physical commodity (gold, silver etc.) is called. And its value is based on relative scarcity and faith by those who use it. The basis right now is a mite shaky. FIAT is the currently used currency in many countries.
Unfortunately, there is no restraint on the amount of money that can be printed which allows unlimited credit creation. That creates inflation but looks like the economy is great and expanding. When the debt caused by the extra amount of money cannot be repaid (and that's too often the case) that causes deflation (or recession or depression). Clinton and Bush kept saying there was LOW inflation as prices went up and monstrous debt was incurred in the mortgage markets. Hello......??????????
Excessive debt brings FIAT money into existence. We lost our gold standard again in 1971 when President Richard Nixon removed GOLD as the guarantee for our dollar because we were so deeply in debt that printing more was irresistible to Nixon rather than default. Thanks again Ricky!! Truth will out.
You can only print the amount of money that you can back under a gold standard. In other words if one ounce of gold was valued at $10. (don't we wish) then the government could only spend $10. for every ounce in Fort Knox if the dollar was backed by gold. Without the backing the sky's the Idiot's limit.
Hyper-inflation is what destroyed German currency when the money suddenly lost most of its value almost overnight. Since the value of FIAT money is based on confidence when Germany lost that confidence the money became worthless. Shifting to gold can avoid hyper-inflation. Hyper-inflation is the point at which ORIGAMI folding becomes necessary with paper money because that is the only value the paper could offer. Paper sculpture is highly valued in other lands.
One thing all of the founding fathers and framers of the Constitution agreed upon was limitations on the issuance of money. Many of them had experienced financial difficulties because of FIAT currencies. President George Washington thought gold or silver backing was so important that he contributed silver for the initial coin making.
A gold standard resulted in domestic price stability without inflation from 1880-1914until Germany lost its cool. After the first world war was over, a need had been created for a gold EXCHANGE standard which in 1926 was pegged to the pound and the dollar. The Great depression caused a run on gold. And so FLOATING FIAT was agreed upon in 1931 worldwide causing economic imbalances and was a major factor in World War 2. Thanks FDR (President Franklin Delano Roosevelt).
So far GOLD seems to KEEP peace and FIAT ATTENDS war! In 1945 (after the war) a Bretton Woods Accord (similar to the gold exchange standard was tied to the dollar and the pound). When there was another run this time to convert pounds to gold, the pound collapsed. Economists now think the rate for gold was set too low. What do ya know, Prexy Harry Truman, your economist missed the bus! Tremendous consternation was felt in all the country's financial markets including ours.
By 1963 FIAT was back and silver disappeared from coins because of the coinage act of 1965 signed by Lyndon Johnson. This act terminated the legislation signed by George Washington 173 years before. That legislation carried the death penalty for removal of silver but good ole George was not alive to have Johnson shot or hanged. Too bad that the damage Presidents do our country's financial stability is no longer punishable by death.
Nixon ending the gold standard left us with various forms of FIAT. It floated then was fixed (to the dollar) and finally in the mid-seventies the BASEL ACCORD established the current floating exchange of currency.
There is a lot of dialogue today about returning to a gold standard for our dollar particularly with the vast amounts of spending that recent Presidents have done. The debts incurred in the Trillions of dollars are beyond belief.
One of the suggestions that I've read recently is that gold be used as a backing at its current over thousand dollar rate to allow more flexibility. In the past it was brought back at early low rates (as low as $20.67 and $35.) which does not really reflect what has happened to the nation's financial climate.
There is only so much gold in the world and the price has to be realistic if it is pegged to the dollar and/or the pound. We are seeing that we need some financial stability and it would seem the only realistic way that goal can be reached is for the money to have metal backing. If there's no stability in sight, I highly recommend a course in FIAT-ORIGAMI SCULPTURE. I can recommend a good teacher and family member! The green paper is a great color!
Cheers, Connie
FIAT (Latin for "let it be") but naturally Politicians can't let anything BE. Somehow it must be changed, improved?, reconstructed, or generally UPENDED. So it's obviously a misnomer but that is what any paper money not backed by any physical commodity (gold, silver etc.) is called. And its value is based on relative scarcity and faith by those who use it. The basis right now is a mite shaky. FIAT is the currently used currency in many countries.
Unfortunately, there is no restraint on the amount of money that can be printed which allows unlimited credit creation. That creates inflation but looks like the economy is great and expanding. When the debt caused by the extra amount of money cannot be repaid (and that's too often the case) that causes deflation (or recession or depression). Clinton and Bush kept saying there was LOW inflation as prices went up and monstrous debt was incurred in the mortgage markets. Hello......??????????
Excessive debt brings FIAT money into existence. We lost our gold standard again in 1971 when President Richard Nixon removed GOLD as the guarantee for our dollar because we were so deeply in debt that printing more was irresistible to Nixon rather than default. Thanks again Ricky!! Truth will out.
You can only print the amount of money that you can back under a gold standard. In other words if one ounce of gold was valued at $10. (don't we wish) then the government could only spend $10. for every ounce in Fort Knox if the dollar was backed by gold. Without the backing the sky's the Idiot's limit.
Hyper-inflation is what destroyed German currency when the money suddenly lost most of its value almost overnight. Since the value of FIAT money is based on confidence when Germany lost that confidence the money became worthless. Shifting to gold can avoid hyper-inflation. Hyper-inflation is the point at which ORIGAMI folding becomes necessary with paper money because that is the only value the paper could offer. Paper sculpture is highly valued in other lands.
One thing all of the founding fathers and framers of the Constitution agreed upon was limitations on the issuance of money. Many of them had experienced financial difficulties because of FIAT currencies. President George Washington thought gold or silver backing was so important that he contributed silver for the initial coin making.
A gold standard resulted in domestic price stability without inflation from 1880-1914until Germany lost its cool. After the first world war was over, a need had been created for a gold EXCHANGE standard which in 1926 was pegged to the pound and the dollar. The Great depression caused a run on gold. And so FLOATING FIAT was agreed upon in 1931 worldwide causing economic imbalances and was a major factor in World War 2. Thanks FDR (President Franklin Delano Roosevelt).
So far GOLD seems to KEEP peace and FIAT ATTENDS war! In 1945 (after the war) a Bretton Woods Accord (similar to the gold exchange standard was tied to the dollar and the pound). When there was another run this time to convert pounds to gold, the pound collapsed. Economists now think the rate for gold was set too low. What do ya know, Prexy Harry Truman, your economist missed the bus! Tremendous consternation was felt in all the country's financial markets including ours.
By 1963 FIAT was back and silver disappeared from coins because of the coinage act of 1965 signed by Lyndon Johnson. This act terminated the legislation signed by George Washington 173 years before. That legislation carried the death penalty for removal of silver but good ole George was not alive to have Johnson shot or hanged. Too bad that the damage Presidents do our country's financial stability is no longer punishable by death.
Nixon ending the gold standard left us with various forms of FIAT. It floated then was fixed (to the dollar) and finally in the mid-seventies the BASEL ACCORD established the current floating exchange of currency.
There is a lot of dialogue today about returning to a gold standard for our dollar particularly with the vast amounts of spending that recent Presidents have done. The debts incurred in the Trillions of dollars are beyond belief.
One of the suggestions that I've read recently is that gold be used as a backing at its current over thousand dollar rate to allow more flexibility. In the past it was brought back at early low rates (as low as $20.67 and $35.) which does not really reflect what has happened to the nation's financial climate.
There is only so much gold in the world and the price has to be realistic if it is pegged to the dollar and/or the pound. We are seeing that we need some financial stability and it would seem the only realistic way that goal can be reached is for the money to have metal backing. If there's no stability in sight, I highly recommend a course in FIAT-ORIGAMI SCULPTURE. I can recommend a good teacher and family member! The green paper is a great color!
Cheers, Connie
3/10/10
SPRING FEVER , GOLD, AND FIAT!! Post 12
HI,
I had a lovely and boring study of trade and tariff for this post BUT I decided to delay it. I thought we should look at Gold for awhile.
Gold is shiny, yellow, and beloved by most societies, both historic and modern. It also has a wonderful history including being the underpinning of our dollar. It was removed, replaced,and stayed until Richard Nixon got a wild hair up his nose and removed it again in August of 1971. Thanks Ricky.
Nixon reasoned gold as the standard for the dollar didn't allow us to print more money(duh...that was the idea!).The theorists (assuming again) said removing the gold backing (it doesn't really peel off!!??) and printing FIAT money would reverse the 1970's recession. Well, we lost the gold standard which had stabilized the dollar, printed more paper money with only our word as backing; then went into a slump called "Stagflation". Theorists had advised Nixon that the prior return to the gold standard had depressed our economy so it could not grow naturally. Hmmmmmm. Maybe Presidents should keep their mitts off financial matters.
GOLD was rated at $35. an ounce at the time. That meant that each ounce of gold in Fort Knox (I guess the gold is still there unless one of our honest politicians has figured out a way to remove it.) backed $35. of paper called U.S. currency. That was solid and sound. If you had $35. in paper money and you wanted to have it converted to gold, you could buy one ounce of gold and put it in the vault and thumb your nose at the politicians who could make the U.S. economy weak.
GOLD is a valuable metal and can always be sold, usually for more than you paid for it. When the economy goes into decline, folks purchase gold to make sure they have something to fall back on when a current currency goes belly up. If the economy stays good, you can have it melted down into jewelry. TRY THAT WITH PAPER MONEY! Gold has now reached almost $1100. dollars an ounce--think about that?
Our economy now runs on what is called a FIAT monetary system. There is no restraint on the amount the politicians can print since it's not backed by any hard metal. The only thing that makes it valuable is RELATIVE SCARCITY and FAITH. If we now remove "In God We Trust" we not only don't have scarcity, we've lost faith. Uh Oh!!!:::???
By the way, Lyndon Johnson removed the silver backing from coins. The Constitution wouldn't discuss paper money as a replacement for gold or silver. Those wise men were hesitant. Seems like we need not only to remove a few laws but a few powers from Presidents, who are arrogant enough to think they know better than the framers of the Constitution.
A FIAT Money system allows unlimited credit creation. A rapid growth in credit availability is often misunderstood as economic growth and therein lies the rub! That misinterpretation causes expansion bubbles as we have seen in the mortgage market.
In my next blog, we'll look deeper into gold underpinnings for the currency and the current FIAT system AND why hyper-inflation can follow the loss of confidence in a currency and how it can be avoided.
One of my readers suggested I keep these post a little shorter for better understanding and I am doing so!
Cheers, Connie
I had a lovely and boring study of trade and tariff for this post BUT I decided to delay it. I thought we should look at Gold for awhile.
Gold is shiny, yellow, and beloved by most societies, both historic and modern. It also has a wonderful history including being the underpinning of our dollar. It was removed, replaced,and stayed until Richard Nixon got a wild hair up his nose and removed it again in August of 1971. Thanks Ricky.
Nixon reasoned gold as the standard for the dollar didn't allow us to print more money(duh...that was the idea!).The theorists (assuming again) said removing the gold backing (it doesn't really peel off!!??) and printing FIAT money would reverse the 1970's recession. Well, we lost the gold standard which had stabilized the dollar, printed more paper money with only our word as backing; then went into a slump called "Stagflation". Theorists had advised Nixon that the prior return to the gold standard had depressed our economy so it could not grow naturally. Hmmmmmm. Maybe Presidents should keep their mitts off financial matters.
GOLD was rated at $35. an ounce at the time. That meant that each ounce of gold in Fort Knox (I guess the gold is still there unless one of our honest politicians has figured out a way to remove it.) backed $35. of paper called U.S. currency. That was solid and sound. If you had $35. in paper money and you wanted to have it converted to gold, you could buy one ounce of gold and put it in the vault and thumb your nose at the politicians who could make the U.S. economy weak.
GOLD is a valuable metal and can always be sold, usually for more than you paid for it. When the economy goes into decline, folks purchase gold to make sure they have something to fall back on when a current currency goes belly up. If the economy stays good, you can have it melted down into jewelry. TRY THAT WITH PAPER MONEY! Gold has now reached almost $1100. dollars an ounce--think about that?
Our economy now runs on what is called a FIAT monetary system. There is no restraint on the amount the politicians can print since it's not backed by any hard metal. The only thing that makes it valuable is RELATIVE SCARCITY and FAITH. If we now remove "In God We Trust" we not only don't have scarcity, we've lost faith. Uh Oh!!!:::???
By the way, Lyndon Johnson removed the silver backing from coins. The Constitution wouldn't discuss paper money as a replacement for gold or silver. Those wise men were hesitant. Seems like we need not only to remove a few laws but a few powers from Presidents, who are arrogant enough to think they know better than the framers of the Constitution.
A FIAT Money system allows unlimited credit creation. A rapid growth in credit availability is often misunderstood as economic growth and therein lies the rub! That misinterpretation causes expansion bubbles as we have seen in the mortgage market.
In my next blog, we'll look deeper into gold underpinnings for the currency and the current FIAT system AND why hyper-inflation can follow the loss of confidence in a currency and how it can be avoided.
One of my readers suggested I keep these post a little shorter for better understanding and I am doing so!
Cheers, Connie
3/3/10
SUPPLY AND DEMAND (economic bedfellows) post 11
Hey,
SUPPLY AND DEMAND is another part of Economics.
Economics definition: soft science based on supposition (assuming), rhetoric (lots of debate), speculation (wishing), some HARD FACTS and mathematical or financial theories. Economics studies the production, distribution and consumption of goods and services.
First and foremost, all mathematical theories have one thing in common. The perpetrators (forever now known as the "Perps"!!!!) have a strong mathematical foundation and know what few of us do-- that there's a lot of mathematical persuasion that cannot be proved but there's enough that can be proved to make it look like a REALLY HARD (not difficult but real) science. .
Three more definitions we need here: What is meant by SUPPLY and DEMAND (S&D) being a fundamental concept of economics. Simply put it's the relationship between (S&D )that determines the price of a commodity (gas is a commodity).
SUPPLY is the quantity available. DEMAND is the quantity demanded or desired. When the two amounts are skewed (not in good relationship)- disaster hovers. The S&D relationship is reflected in price as the result of the interaction. Price in turn can affect supply and skew demand. A teeter-totter on which all financial ventures play.
Sounds like many human relationships where demand often exceeds supply or vice-versa. However, in Economics there should be a good balance--no permanent break-ups here. When one or the other side is over emphasized, financial imbalance occurs.
INFLATION is an over-SUPPLY of money often creating euphoria and DEFLATION means money supply diminishes, prices go down, demand lessens, jobs disappear and finances Suck.
Let's visit our Corporation "Up-yours" again and talk to the CFO (CHIEF FINANCIAL OFFICER) about how suppository sales are progressing.
Skipping the usual "yahtata,", we ask if DEMAND for his product has increased. He tells us that DEMAND (particularly in Washington, D.C.) so exceeded expectations (SUPPLY) that PRICES rose (REFLECTION OF INTERACTION) for "Up-yours" suppositories that the Corporation increased the SUPPLY to meet the DEMAND. Fortunately or unfortunately, as often happens this also increased competition and a new company "Stick it" is currently driving the price down by flooding the suppository market. Although the market share is holding steady, we asked him what "Up-yours" plans to do.
"Well," the CFO smiled and whispered conspiratorially, "We know that government regulations will assist us and we are currently talking to "friends" about making "Stick-it" face penalties for unfair trade practices because they do not follow all government guidelines. We'll borrow big time and with the current low interest rates, we can hold our own at lower prices. We'll also use some modern techniques in marketing and advertising. You know people are more open to our product these days." I guess you could say he's "bullish" (Stock market term for up market) on his market future.
An over abundance of articles on Economic theories exist. Economics proliferates with schedules,graphs, function/equations, demand curves, shifts vs. movements, individual vs. market and so on. Modern Economics is an economics "hay day" (or "hey-hey" day). There are so many theories that Economists have to explain them to each other. We can't take them all aboard but we'll take a look at four reasonably familiar efforts by Perpetrators (henceforth known as "perps".
Remember that the word THEORY means SUPPOSITION or ASSUMPTION. You remember the definition of Assume.
KEYNESIAN ECONOMICS IS A THEORY declaring that intervention is necessary to ensure an active and vibrant economy by stimulating DEMAND to encourage economic growth. (DEMAND drives Economic growth.) An intervention is recommended (by any source) to keep the overall demand high. By a "perp" named (You guessed it) Maynard Keynes, who argued for Government intervention.
Neoclassical Economics has various versions or schools of thought such as the Chicago School and Austrian School of Economics. It is an amalgamation (combination) of several THEORIES and currently provides the foundation for the global economy. It is a more quantitative (mathematical-statistical) approach to research that now appeals to modern economists. It is criticized as a Utopian philosophy focusing on a RATIONAL INDIVIDUAL in ECONOMICS who is mathematically predictable for a general methodological principle for economics.
That means in essence--it's about a "Joe" who can be relied on to make the same clear cut judgements over and over again so that he can be reliably graphed to form a program for all of us to follow to create Economic perfection.(Oh, Yeah, pul..leeselet's have more of this current purr..fection in the country's and the world's financial picture!!!????)
Often referred to these days as "mainstream economics", it is far removed from SUPPLY AND DEMAND realities and more into the philosophy of global trade. The followers have developed a range of theories: game theory; linear programming, and econometrics. As a movement it gets further and further away from the REAL world of 2+2 make 4 and into PHILOSOPHY. The "Perps" who came up with the theory are multiple.
SUPPLY-SIDE ECONOMICS is a THEORY (a name coined by "Perp" Herbert Stein in 1976) that says reducing tax rates for business and wealthy individuals stimulates (SUPPLY) by savings and investments that benefits everyone. Not as highly valued as in Ronald Reagan's time as President when it was used to create a high flying American economy that now is not fashionable in the global economy.
MONETARISM is an economic theory which focuses on the supply of money and central banking's role and was formulated by "perp" Milton Friedman, who believed in a Target of "quantity of money" rather than "value of money" which included Supply Side Economics as well as some Austrian theory-another amalgamation.
Friedman's argument stated that excessive expansion of money (SUPPLY) IS INFLATIONARY. AN EQUILIBRIUM should be maintained between the S&D OF MONEY (Wellll..yeah!!??). He attributed deflation to a central bank's failure to support the money supply.(provide more or less)
Alan Greenspan, our former GOVERNMENT FINANCIAL GURU was a leading monetarist. Ben Bernanke (our present GURU) appears to be following in his footsteps. Critics have said that a devaluation effect follows printing more money while the economy is not stimulated and the dollar is weakened.
The Austrian School blames Greenspan's actions in 2004-6 for creating false signals for investors with excessive liquidity (which refers to how quickly and cheaply an asset can be converted into cash. Cash money is the most liquid asset. And that Greenspan caused lending standards to deteriorate thereby creating the HOUSING BUBBLE of 2004-6 that ended in the bubble bursting in 2007-8 and the depression.
All these theories deal with the PHILOSOPHY of SUPPLY and DEMAND but they seem to exist far outside the real world balancing act of SUPPLY and DEMAND by focusing primarily on theories. I am not assured that this is good financial planning for a country let alone a world.
No theory has a perfect record so an immense amount of paper work ensues and I don't intend to add to it here.
Suffice it to say, we are being ruled by supposition (or assumption) And the new theories based on Global disasters being speculated on by world congresses rest on the same kind of supposition.
And you thought ECONOMICS was just a harmless hobby for MATHEMATICIANS and not of interest or concern to you!
MUCH has been written lately about deficits and impending INFLATION (what the USA owes everyone but mostly China). MUCH was written during the Reagan years about deficits to overcome "STAGFLATION" caused by years of Keynesian policies. MUCH continues to be written about who and what caused the current depression. Wall Street blames the Government. The Government blames Wall Street. In the depression overseas blame is placed on our Wall St. however the European Union ( many countries in Europe joined together under one Economic policy)must share blame. That Union was put together on suppositional theory as a Socialist Global Economy.
I add to the hyperbole (yata taa yata ta) that maybe all our problems stem from SUPPOSITION!!!!???? (ya think?). And worse, an unwillingness to admit that PHILOSOPHICAL ASSUMPTION is okay for the debating team but not okay for building a firm foundation for fiscal (financial) reality and security. But what do I know? beyond 2+2=4 and that's way too simple to stand the test of time. Or is it??????!!!
Economists can spout theories forever but let's leave the theories for study and debate as a true social science, not put those theories into practice without a firm not esoteric basis of fact. Supply and demand equal profit. LET BUSINESS BE BUSINESS and THEORY BE THEORY!
CHEERS, CONNIE
SUPPLY AND DEMAND is another part of Economics.
Economics definition: soft science based on supposition (assuming), rhetoric (lots of debate), speculation (wishing), some HARD FACTS and mathematical or financial theories. Economics studies the production, distribution and consumption of goods and services.
First and foremost, all mathematical theories have one thing in common. The perpetrators (forever now known as the "Perps"!!!!) have a strong mathematical foundation and know what few of us do-- that there's a lot of mathematical persuasion that cannot be proved but there's enough that can be proved to make it look like a REALLY HARD (not difficult but real) science. .
Three more definitions we need here: What is meant by SUPPLY and DEMAND (S&D) being a fundamental concept of economics. Simply put it's the relationship between (S&D )that determines the price of a commodity (gas is a commodity).
SUPPLY is the quantity available. DEMAND is the quantity demanded or desired. When the two amounts are skewed (not in good relationship)- disaster hovers. The S&D relationship is reflected in price as the result of the interaction. Price in turn can affect supply and skew demand. A teeter-totter on which all financial ventures play.
Sounds like many human relationships where demand often exceeds supply or vice-versa. However, in Economics there should be a good balance--no permanent break-ups here. When one or the other side is over emphasized, financial imbalance occurs.
INFLATION is an over-SUPPLY of money often creating euphoria and DEFLATION means money supply diminishes, prices go down, demand lessens, jobs disappear and finances Suck.
Let's visit our Corporation "Up-yours" again and talk to the CFO (CHIEF FINANCIAL OFFICER) about how suppository sales are progressing.
Skipping the usual "yahtata,", we ask if DEMAND for his product has increased. He tells us that DEMAND (particularly in Washington, D.C.) so exceeded expectations (SUPPLY) that PRICES rose (REFLECTION OF INTERACTION) for "Up-yours" suppositories that the Corporation increased the SUPPLY to meet the DEMAND. Fortunately or unfortunately, as often happens this also increased competition and a new company "Stick it" is currently driving the price down by flooding the suppository market. Although the market share is holding steady, we asked him what "Up-yours" plans to do.
"Well," the CFO smiled and whispered conspiratorially, "We know that government regulations will assist us and we are currently talking to "friends" about making "Stick-it" face penalties for unfair trade practices because they do not follow all government guidelines. We'll borrow big time and with the current low interest rates, we can hold our own at lower prices. We'll also use some modern techniques in marketing and advertising. You know people are more open to our product these days." I guess you could say he's "bullish" (Stock market term for up market) on his market future.
An over abundance of articles on Economic theories exist. Economics proliferates with schedules,graphs, function/equations, demand curves, shifts vs. movements, individual vs. market and so on. Modern Economics is an economics "hay day" (or "hey-hey" day). There are so many theories that Economists have to explain them to each other. We can't take them all aboard but we'll take a look at four reasonably familiar efforts by Perpetrators (henceforth known as "perps".
Remember that the word THEORY means SUPPOSITION or ASSUMPTION. You remember the definition of Assume.
KEYNESIAN ECONOMICS IS A THEORY declaring that intervention is necessary to ensure an active and vibrant economy by stimulating DEMAND to encourage economic growth. (DEMAND drives Economic growth.) An intervention is recommended (by any source) to keep the overall demand high. By a "perp" named (You guessed it) Maynard Keynes, who argued for Government intervention.
Neoclassical Economics has various versions or schools of thought such as the Chicago School and Austrian School of Economics. It is an amalgamation (combination) of several THEORIES and currently provides the foundation for the global economy. It is a more quantitative (mathematical-statistical) approach to research that now appeals to modern economists. It is criticized as a Utopian philosophy focusing on a RATIONAL INDIVIDUAL in ECONOMICS who is mathematically predictable for a general methodological principle for economics.
That means in essence--it's about a "Joe" who can be relied on to make the same clear cut judgements over and over again so that he can be reliably graphed to form a program for all of us to follow to create Economic perfection.(Oh, Yeah, pul..leeselet's have more of this current purr..fection in the country's and the world's financial picture!!!????)
Often referred to these days as "mainstream economics", it is far removed from SUPPLY AND DEMAND realities and more into the philosophy of global trade. The followers have developed a range of theories: game theory; linear programming, and econometrics. As a movement it gets further and further away from the REAL world of 2+2 make 4 and into PHILOSOPHY. The "Perps" who came up with the theory are multiple.
SUPPLY-SIDE ECONOMICS is a THEORY (a name coined by "Perp" Herbert Stein in 1976) that says reducing tax rates for business and wealthy individuals stimulates (SUPPLY) by savings and investments that benefits everyone. Not as highly valued as in Ronald Reagan's time as President when it was used to create a high flying American economy that now is not fashionable in the global economy.
MONETARISM is an economic theory which focuses on the supply of money and central banking's role and was formulated by "perp" Milton Friedman, who believed in a Target of "quantity of money" rather than "value of money" which included Supply Side Economics as well as some Austrian theory-another amalgamation.
Friedman's argument stated that excessive expansion of money (SUPPLY) IS INFLATIONARY. AN EQUILIBRIUM should be maintained between the S&D OF MONEY (Wellll..yeah!!??). He attributed deflation to a central bank's failure to support the money supply.(provide more or less)
Alan Greenspan, our former GOVERNMENT FINANCIAL GURU was a leading monetarist. Ben Bernanke (our present GURU) appears to be following in his footsteps. Critics have said that a devaluation effect follows printing more money while the economy is not stimulated and the dollar is weakened.
The Austrian School blames Greenspan's actions in 2004-6 for creating false signals for investors with excessive liquidity (which refers to how quickly and cheaply an asset can be converted into cash. Cash money is the most liquid asset. And that Greenspan caused lending standards to deteriorate thereby creating the HOUSING BUBBLE of 2004-6 that ended in the bubble bursting in 2007-8 and the depression.
All these theories deal with the PHILOSOPHY of SUPPLY and DEMAND but they seem to exist far outside the real world balancing act of SUPPLY and DEMAND by focusing primarily on theories. I am not assured that this is good financial planning for a country let alone a world.
No theory has a perfect record so an immense amount of paper work ensues and I don't intend to add to it here.
Suffice it to say, we are being ruled by supposition (or assumption) And the new theories based on Global disasters being speculated on by world congresses rest on the same kind of supposition.
And you thought ECONOMICS was just a harmless hobby for MATHEMATICIANS and not of interest or concern to you!
MUCH has been written lately about deficits and impending INFLATION (what the USA owes everyone but mostly China). MUCH was written during the Reagan years about deficits to overcome "STAGFLATION" caused by years of Keynesian policies. MUCH continues to be written about who and what caused the current depression. Wall Street blames the Government. The Government blames Wall Street. In the depression overseas blame is placed on our Wall St. however the European Union ( many countries in Europe joined together under one Economic policy)must share blame. That Union was put together on suppositional theory as a Socialist Global Economy.
I add to the hyperbole (yata taa yata ta) that maybe all our problems stem from SUPPOSITION!!!!???? (ya think?). And worse, an unwillingness to admit that PHILOSOPHICAL ASSUMPTION is okay for the debating team but not okay for building a firm foundation for fiscal (financial) reality and security. But what do I know? beyond 2+2=4 and that's way too simple to stand the test of time. Or is it??????!!!
Economists can spout theories forever but let's leave the theories for study and debate as a true social science, not put those theories into practice without a firm not esoteric basis of fact. Supply and demand equal profit. LET BUSINESS BE BUSINESS and THEORY BE THEORY!
CHEERS, CONNIE
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