Periphery Watch
Fiat Money Woes
Monday was Labor Day holiday in the US. The facts are that the euro lost another 1.4%, the pound another 1.1%, and the yuan another 0.9% last week.
Assorted foreign fiat confetti against the US dollar – we have added the Argentine peso as well, as it demonstrates what can happen when things really get out of hand. [PT]
Exciting Visions of a Bright Future
Fund Managers, economists and politicians agree on the exciting future they see in the Third World. According to them, the engine of the world’s economic growth has moved from the West to what were once the poverty-stricken societies of the Third World. They feel mushy about the rapid increase in the size of the Middle Class in the Third World, and how poverty is becoming history.
GDP of India vs. UK in 2016 – crossing over.
The Final Stage of a Crack-Up Boom
For economists the dire downward spiral of Venezuela’s economy holds the same fascination black holes hold for physicists. Both illustrate what happens amid the most extreme conditions imaginable. It is thought that this may potentially provide clues of a more general nature. The remnants of massive imploded stars are inanimate and many light years distant; regardless of how violent conditions in their vicinity are, they cannot touch us. Unfortunately, extreme economic conditions definitely involve a great deal of human suffering.
“We are the humanist socialism that will save the world”, from Venezuelan cartoonist Weil (he always draws the dear leaders with big wads of dollars sticking out of their pockets, making them look like otherworldly birds – look for his work on the intertubes).
Extracting Meaning from PPP
“An alternative exchange rate – the purchasing power parity (PPP) conversion factor – is preferred because it reflects differences in price levels for both tradable and non-tradable goods and services and therefore provides a more meaningful comparison of real output.” – the World Bank
Headquarters of the World Bank in Washington. We have it on good authority that the business of ending poverty is quite lucrative for its practitioners (not least because employees of multilateral organizations such as the IMF and the World bank have to pay no taxes whatsoever on their income – and the perks certainly don’t end there). A number of long-serving employees of the institution we have met over time have struck us as quite cynical and not particularly convinced that their efforts in developing countries were achieving much (and it was not for lack of trying). That is of course not the official line and merely represents anecdotal evidence based on a limited sample size. Experience tells us though that we should not dismiss such evidence out of hand – especially not if it rings true. The agency’s views on PPP are a sign that its economists probably don’t get out much. [PT]
Photo credit: Simone D. McCourte
Decolonization
The British Empire was the largest in history. At the end of World War II Britain had to start pulling out from its colonies. A major part of the reason was, ironically, the economic prosperity that had come through industrialization, massive improvements in transportation, and the advent of telecommunications, ethnic and religious respect, freedom of speech, and other liberties offered by the empire.
The colors represent the colonies of various nations in 1945, and the colonial borders of that time – click to enlarge.
Étatiste Crackpottery
Shortly after we posted Jayant Bhandari’s recent article that inter alia discussed the new complex GST (general sales tax) regime introduced in India by the Modi government (see “The Lunatics Have Taken Over the Asylum” for details), we were contacted by Lakshminarayanan Kumaraapuram, a small businessman in Mumbai. He asked us whether we would be prepared to publish a comment he originally mailed to the prime minister’s “grievance portal”, so as to transform it into an open letter.
Let’s keep it simple… but not too simple. The chief surgeon gets ready to wield his scalpels and cleavers.
Jayant on Emerging Markets, Precious Metals and Mining Companies
Maurice Jackson of Proven & Probable has once again interviewed one of our friends, namely Jayant Bhandari, a frequent and highly valued contributor to Acting Man. Jayant is probably best known to our readers for his strong criticism of the economic and nationalist policies implemented by prime minister Narendra Modi in India since he decreed the demonetization of the bulk of the cash currency circulating in the country (see his most recent article here).
Jayant Bhandari speaking at the 2016 Capitalism and Morality seminar.
Everything Gets Worse (Part XII) – Pakistan vs. India
After 70 years of so-called independence, one has to be a professional victim not to look within oneself for the reasons for starvation, unnatural deaths, utter backwardness, drudgery, disease, and misery in India.
Intellectual capital accumulated in the West over the last 2,500 years — available for free in real-time via the internet — can be downloaded by a passionate learner. In the age of modern technology, another mostly free gift from the West which has significantly leveled the playing field, societies that wanted economic convergence with the West, such as Japan, Korea, Singapore, HK, China, etc., have either achieved it rapidly, or have strongly trended toward it.
More than 28,000 children less than six years of age have died in just one province, Madhya Pradesh, over the past year. Because these deaths were due to diseases resulting from malnourishment, the government attributed every single death to disease rather than malnourishment.
Photo credit: Hemender Sharma, India Today
India’s Currency Ban – Part VIII
India’s Prime Minister, Narendra Modi, announced on 8th November 2016 that Rs 500 (~$7.50) and Rs 1,000 (~$15) banknotes would no longer be legal tender. Linked are Part-I, Part-II, Part-III, Part-IV, Part-V, Part-VI and Part-VII, which provide updates on the demonetization saga and how Modi is acting as a catalyst to hasten the rapid degradation of India and what remains of its institutions.
India’s Pride and Joy
Indians are celebrating that their economy has surpassed that of India’s former colonial master, the UK.
The Industrious Greeks Mystery
In the course of the Greek crisis, animosities between creditor countries like Germany and Greece didn’t take long to surface. They were fired up in the tabloid press, which was quick to revive various stereotypes. In Greece, Germans soon found themselves compared to their Nazi predecessors, while German tabloids inter alia complained sotto voce about those allegedly “lazy Southerners”.
The stereotype of “lazy Greeks”
Venezuela: Real Wages Collapse amid Continuing Crack-Up Boom
While the crack-up boom in Venezuela continues, real wages in the country have have utterly collapsed. The bolivar is still trading close to 700 to the US dollar on the black market, and the Caracas stock index keeps making new all time highs in nominal terms almost every day. Ironically, Venezuela’s currency is called the “bolivar fuerte” (VEF), i.e. “the strong bolivar” ever since it has been “reverse split” 1 for 1,000 in January 2008.
Image via designlimbo.com
Greek Stocks Reopen with a Thud
The Greek stock market very likely represents an emerging opportunity, as many stocks are sporting extremely low valuations these days. However, when we last discussed the Greek market, we pointed out that there was probably no hurry and more importantly, that using ETFs to play the Greek market would pose a difficulty at the current juncture.
Greek ruins – emblematic for the country’s situation.
Photo credit: fondos7.net
Most read in the last 20 days:
Repo Quake – A Primer
Chaos in Overnight Funding Markets Most of our readers are probably aware that there were recently quite large spikes in repo rates. The events were inter alia chronicled at Zerohedge here and here. The issue is fairly complex, as there are many different drivers at play, but we will try to provide a brief explanation. There have been two spikes in the overnight general collateral rate – one at the end of 2018, which was a first warning shot, and the one of last week,...
Curious Events in Risk-Free Collateral-Land - Precious Metals Supply and Demand
Liquidity Shortage Last week the price of gold rose $28, and silver $0.53. But the prices of the metals was not the big news last week. The price of repo — a repurchase agreement, to sell and repurchase a treasuries — skyrocketed. Banks were thirsty for liquidity, and only cash can quench it. Last week's “oops” moment in repo land as the overnight general collateral rate briefly soared to 10% (we will soon publish a detailed summary of the sequence of events that...
The Inexorable Final Collapse
Groping in the Dark This week central planners pursued their primary mission with steadfast conviction. They planned. They prodded. They prearranged tomorrow to save us from ourselves. Some also grubbed a little graft for their trouble. Other central planners took to debasing the dollar to price fix the federal funds rate within a narrow band of tolerance. What in the world do they think they are doing? Central planning committee in the analysis and forecasting phase......
Elizabeth Warren’s Plans to MAGA
21st Century Hooverville There are places in Los Angeles where, although the sun always shines, they haven’t seen a ray of light in over 100-years. There’s a half square mile of urban decay centered on the Union Rescue Mission at 545 South San Pedro Street, where depravity, chaos, addiction, insanity and archaic diseases multiply and ricochet about like metastatic cancer. One of LA's modern-day Hoovervilles in San Pedro Street... In 2015 it was reported that Union...
The System Scrapes By - Precious Metals Supply and Demand
An Accident in Waiting The price of gold dropped $20, and silver 43 cents. For reference, $20 was once worth just about an ounce of gold. Dollar was a unit of measure, a weight of gold equal to 1/20.67 ounce of fine gold. A gold certificate from the time when the dollar still represented a fixed weight of gold [PT] Today, it is an irredeemable currency, defined not as a unit of weight but as a unit of central bank liability which is backed by government debt,...
Zugzwang - Precious Metals Supply and Demand
Respectable and Not so Respectable Assets The price of gold went up 8 bucks, and the price of silver went up a penny last week. These were not among the capital assets that could be liquidated for greater quantities of consumer goods last week. Nor were equities. A respectable, mother-in-law-proof speculation: the 10-year US treasury note. [PT] However, the consumer goods stockpile stored in treasury bonds (to extend our half sarcastic, half tongue-in-cheek...
Fed Chair Powell’s Inescapable Contradiction
Under the Influence “This feels very sustainable.” – Federal Reserve Chairman Jerome Powell, October 8, 2019 Understandable confusion... [PT] Conflict and contradiction. These were two of the main themes reverberating around the world of centralized monetary planning this week. On Tuesday, for instance, a novel and contradictory central banker parlance – “reserve management purposes” – was birthed into existence by Fed Chair Jay...
Austrian Theory and Investment
Realtime Charts
Gold in USD:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
Gold in EUR:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_euoz_2.gif)
Silver in USD:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
Platinum in USD:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/platinum/t24_pt_en_usoz_2.gif)
USD - Index:
![[Most Recent USD from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_usd_en_2.gif)
