Free Republic

<p>World asleep as China tightens deflationary vice We keep our fingers crossed as we glimpse the first foam of a deflationary Ch'ient'ang'kian coming our way from China. The world's central banks have no margin for error Societe Generale has defined its hard landing as a fall in Chinese growth to a trough of 2pc, with two quarters of contraction. .snip. The balance of evidence is that most powerful Chinese leader since Mao Zedong aims to prick China's $24 trillion credit bubble early in his 10-year term, rather than putting off the day of reckoning for yet another cycle.</p>

Concerns about high debt and an overvalued currency are sucking gold imports into China, according to a new report from Lombard Street Research. It adds that the authorities may possibly be moving in the direction of using gold in a plan to make the yuan an international currency. China's official reserves of gold stand at 1,054 metric tons, that's worth about $45 billion. This figure has not been updated since 2009 and Lombard says the number may not be accurate because since that last update imports of gold and domestic production amount to over 4,500 metric tons.

Chronic problems have been flaring up in financial markets lately, and some of them may emanate from the United States. Yet none of these issues have seriously damaged the exalted status of what Washington Irving once called “the almighty dollar.” In fact, a familiar pattern has been emerging: When the world’s financial system runs into trouble, the position of the dollar as the world’s crucial currency becomes more formidable. Eswar S. Prasad, a Cornell economics professor and senior fellow at the Brookings Institution, has written a thoughtful new book that clarifies this counterintuitive phenomenon. Its title is “The Dollar Trap:...

I ran into this new $100 bill in Las Vegas.

The temperate winter climate of Miami, Florida is serving as a pleasing backdrop for the numerous attendees of the North American Bitcoin Conference. The symposium, being held at the Miami Beach Convention Center this weekend, brought a huge crowd. Many of the talks were held with all seats full. In the afternoon, the second hall, used in the morning for merchant vendor workshops, was used as an additional seating area with the speakers being broadcasted on a large video screen.

CARACAS, Venezuela (AP) -- President Nicolas Maduro's government is slashing the amount of U.S. dollars Venezuelans traveling to Florida and other popular destinations take with them under decade-old currency controls. Travelers just to Florida will be allowed to charge a maximum of $700 annually on their Venezuelan credit cards and will be allowed to buy no more than $300 in cash. That compares with limits of $2,500 in credit and $500 in cash they were previously allowed for trips to Florida, an amount that will be maintained for the remaining 49 US states. The restrictions published Friday in the Official...

The deregulation of the financial system during the Clinton and George W. Bush regimes had the predictable result: financial concentration and reckless behavior. A handful of banks grew so large that financial authorities declared them “too big to fail.” Removed from market discipline, the banks became wards of the government requiring massive creation of new money by the Federal Reserve in order to support through the policy of Quantitative Easing the prices of financial instruments on the banks’ balance sheets and in order to finance at low interest rates trillion dollar federal budget deficits associated with the long recession caused...

A Congressional report quietly released last month suggests that bitcoin could be a threat to US monetary policy, and makes the case for continued central banking control. The report, Bitcoin: Questions, Answers, and Analysis of Legal Issues, was published by the Congressional Research Service, which produces research reports for US policy makers. It argues for the benefits of a single, incumbent currency (the US dollar), for stability. “If greater use of bitcoin (and other cryptocurrencies) leads to multiple monetary units, these benefits could be threatened, particularly if these new currencies continue to exhibit a high degree of price volatility,” the...

The Day the Dollar Dies America’s financial Pearl Harbor is coming December 6, 2015, 3 p.m. HKT, Hong Kong Twenty-one men representing China’s most powerful institutions file into a conference room atop the ICC Tower looming over Victoria Harbor. The Politburo Standing Committee has mustered the CEOs of China’s four largest banks, Sinopec, and several other state-owned multinationals, plus officers from the Central Military Commission and a pair of academics from China’s top technology universities. The general secretary formally opens the meeting.“As you know, the United States of America continues to manipulate its currency,” he begins. “It is devaluing...

Bitcoin is rapidly becoming part of the everyday lexicon. Following David Woo's investigation, National Australia Bank's Emma Lawson looks at its creation, use, and quality as "currency," and find that Bitcoin meets most, but not all the conditions required to be a currency. Lawson concludes Bitcoin may not be the most efficient monetary system, given the costs to create, and that the supply set-up can be seen as both an advantage (hyperinflation is not possible) but also a disadvantage (there are conditions which may create deflation). But, if enough people believe in it, and use it, it may be here...

On the flat lava plain of Reykjanesbaer, Iceland, near the Arctic Circle, you can find the mines of Bitcoin. To get there, you pass through a fortified gate and enter a featureless yellow building. After checking in with a guard behind bulletproof glass, you face four more security checkpoints, including a so-called man trap that allows passage only after the door behind you has shut. This brings you to the center of the operation, a fluorescent-lit room with more than 100 whirring silver computers, each in a locked cabinet and each cooled by blasts of Arctic air shot up from...

A paper currency system contains the seeds of its own destruction. The temptation for the monopolist money producer to increase the money supply is almost irresistible. In such a system with a constantly increasing money supply and, as a consequence, constantly increasing prices, it does not make much sense to save in cash to purchase assets later. A better strategy, given this scenario, is to go into debt to purchase assets and pay back the debts later with a devalued currency. Moreover, it makes sense to purchase assets that can later be pledged as collateral to obtain further bank loans....

America, if there was ever a time in our nation’s history that it was imperative that we as Americans separated ourselves from the constant dribble of the false paradigm of American politics, the time is definitely now. I find myself in total disbelief as I watch the obvious consequences of the corruption, massive wasteful spending, the outsourcing of the American labor force and many other ills that have plagued this nation for decades come boiling to a head like a massive pimple on a teenager’s forehead. When this pimple pops, it is going to hurt. We have to stop pretending...

There are conflicting stories among Bitcoins’ supporters about why a Japanese programmer or team of Japanese programmers, who are known by a pseudonym Satoshi Nakamoto, developed the original idea for the Bitcoins software. The primary justification for Bitcoins among libertarians is the prediction that Bitcoins will become an alternative currency to all existing central bank currencies. Bitcoins are seen as a first-stage revolt against central bank money. In this essay, I’m going to make a series of arguments. I’m going to tell you in advance what my arguments are. You can then judge whether or not I have been successful...

Mark Twain once said, “The reports of my death are greatly exaggerated.” And speaking of an overstated demise, the same can be said these days regarding the U.S. dollar. Indeed, there isn’t a day that goes by that I don’t hear or read various pundits continuing to shout the praises of gold as the next currency. In fact, according to these so-called experts, it seems as though we’ll be utilizing gold in order to do our Christmas shopping sooner rather than later. Nevertheless, I must declare strong support for the highly coveted precious metal. Lord knows I bought enough...

He is spearheading a bill in Congress called The Inform Act. It is an attempt to wake up the nation to our dire financial situation so something can be done to fix this enormous problem. Dr. Kotlikoff explains, “The bill has been endorsed by over 1,000 economists, including 15 Nobel Prize winners in economics . . .Never in the history of this country have this many top economists from all political persuasions endorsed a piece of legislation like this.” Dr. Kotlikoff and his fellow economists all contend, “The country needs to do honest accounting.”

In the wake of all the misguided pleas for negative interest rates in Europe (hoping to get banks to lend), comes news US banks warn Fed interest cut could force them to charge depositors. Leading US banks have warned that they could start charging companies and consumers for deposits if the US Federal Reserve cuts the interest it pays on bank reserves. Depositors already have to cope with near-zero interest rates, but paying just to leave money in the bank would be highly unusual and unwelcome for companies and households. The warning by bank executives highlights the dangers of one...

The Dow rallied more than 100 points to close above the 16000 mark for the first in history amid optimism the Fed will keep its foot firmly on the economic accelerator. The Dow Jones Industrial Average (DJI) rose 109 points, or 0.69%, to 16010, the S&P 500 (GSPC) advanced 14.5 points, or 0.81%, to 1796 and the Nasdaq Composite (IXIC) gained 47.9 points, or 1.2%, to 3969. Wall Street has rallied in a big way this year. The Dow is up more than 22%, and has rallied 145% since its bear-market low in March 2009.

One day before the Senate's digital currency hearing titled "Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies", Bitcoin is largely oblivious to any potential regulatory threats, either at the legislative or the city level, where as reported previously the New York superintendent is in a rush to enforce BitLicenses on businesses that accept BitCoin, and moments ago crossed $500 for the first time ever. Instead, it appears that as we also reported previously, the Chinese Bitcoin craze has reached the parabolic threshold, going so far as making Bitcoin an acceptable payment for real estate, which means...

Moments ago BitCoin hit $395, and will likely cross $400 in the immediate future (the chart looks a little less scary in log scale). So as more and more pile into the electronic currency, some due to ideological reasons, some simply to chase momentum, some out of disappointment with the manipulated gold price looking to park their savings in an alternative, non-fiat based currency, which a year ago traded 40 times lower, the attention of the government is finally starting to shift to what has been the best performing asset class in the past year, outperforming even the infamous Caracas...