Archive for 'money'
Screw Banks!
Bitcoin – The Libertarian Introduction
Managing your money is your responsibility
Here is what one Goldman Sachs insider has to say about his company’s attitude toward their clients:
Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all. It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail.
Central Bank To Limit Forex Withdrawals For Argentines Abroad
Another reason why people are opting out of traditional banking and taking more control of their money. From WSJ:
BUENOS AIRES (Dow Jones)–Argentina’s government will soon make it harder for Argentines traveling abroad to make cash withdrawals in the currency of the country they are visiting.
The move, detailed in a one-sentence statement published Friday by the Central Bank of Argentina, is just the latest in a series of strict government limits on foreign exchange transactions.
“It used to be that if you were overseas, say in the U.S., you could use your debit card to get dollars from a cash machine even if …
Hyperinflation – a German Case Study
The following book gives a great account of the devastating effects of hyperinflation. It shows the social consequences of the German hyperinflation upon the populace. Very grim indeed. It gives the rest of the world a glimpse into their future as the current central planners travel down this same path. At one point, before republication, it was selling on Amazon for over $800 a copy. You can download the book for FREE here:
When Money Dies – The Nightmare of the Weimar Collapse – by Adam Fergusson
Members can protect themselves by buying gold and silver at a discount through our Discount Buyer’s Club. To become a Member for only ten bucks click here.
The Future of Money
Here is a link to an excellent interview with Jon Matonis:
The Federal Reserve’s Explicit Goal: Devalue The Dollar 33%
The following article from Forbes is another reason to consider joining our Gold & Silver Wholesale Club:
2/06/2012
by Charles Kadlec
The Federal Reserve Open Market Committee (FOMC) has made it official: After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years. The debauch of the dollar will be even greater if the Fed exceeds its goal of a 2 percent per year increase in the price level.
An increase in the price level of 2% in any one year is barely noticeable. Under a gold standard, such an increase was uncommon, but not unknown. The difference is that when the dollar was as good as gold, the years of modest inflation would be followed, in time, by declining prices. As a consequence, over longer periods of time, the price level was unchanged. A dollar 20 years hence was still worth a dollar.
But, an increase of 2% a year over a period of 20 years will lead to a 50% increase in the price level. It will take 150 (2032) dollars to purchase the same basket of goods 100 (2012) dollars can buy today. What will be called the “dollar” in 2032 will be worth one-third less (100/150) than what we call a dollar today.
The Fed’s zero interest rate policy accentuates the negative consequences of this steady erosion in the dollar’s buying power by imposing a negative return on short-term bonds and bank deposits. In effect, the Fed has announced a course of action that will steal — there is no better word for it — nearly 10 percent of the value of American’s hard earned savings over the next 4 years.
Why target an annual 2 percent decline in the dollar’s value instead of price stability? Here is the Fed’s answer:
“The Federal Open Market Committee (FOMC) judges that inflation at the rate of 2 percent (as measured by the annual change in the price index for personal consumption expenditures, or PCE) is most consistent over the longer run with the Federal Reserve’s mandate for price stability and maximum employment. Over time, a higher inflation rate would reduce the public’s ability to make accurate longer-term economic and financial decisions. On the other hand, a lower inflation rate would be associated with an elevated probability of falling into deflation, which means prices and perhaps wages, on average, are falling–a phenomenon associated with very weak economic conditions. Having at least a small level of inflation makes it less likely that the economy will experience harmful deflation if economic conditions weaken. The FOMC implements monetary policy to help maintain an inflation rate of 2 percent over the medium term.”
In other words, a gradual destruction of the dollar’s value is the best the FOMC can do.
Here’s why:
First, the Fed believes that manipulation of interest rates and the value of the dollar can reduce unemployment rates.
The results of the past 40 years say the opposite.
The Fed’s finger prints in the form of monetary manipulation are all over the dozen financial crises and spikes in unemployment we have experienced since abandoning the gold standard in 1971. The financial crisis of 2008, caused in no small part by the Fed’s efforts to stimulate the economy by keeping interest rates too low for, as it turned out, way too long is but the latest example of the Fed failing to fulfill its mandate to achieve either price stability or full employment.
The Fed’s most recent experience with Quantitative Easing also belies the entire notion that monetary manipulation can spur the economy. Between November 2010 and June 2011, the Fed tried to spur economic growth by purchasing $600 billion in Treasury securities, flooding the banking system with reserves and keeping interest rates low. In response the economy, which had been growing at a 3.4% annual rate, slowed to a 1% annual rate in the first half of 2011. Once, the Fed stopped supplying all of that liquidity, economic growth in the second half of the year accelerated to a 2.3% annual rate.
Second, the Fed does not use real time indicators of the price level. Instead, it views inflation through the rear view mirror of the trailing increases in the PCE. And, even when it had evidence of rising inflation — as it did in the first quarter of last year — it chose to temporize, betting that the spike in inflation would prove temporary.
This spike in inflation did prove temporary, as Fed Chairman Bernanke predicted at the time, but not for the reasons — a slack economy — that he cited. Instead, the growing debt crisis in Europe led to a massive shift in deposits out of the euro and into the dollar — an event totally out of the Fed’s control. Yet, this increase in the demand for dollars was far more important than any action taken by the Fed because it increased the value of the dollar and produced a slowdown in the inflation rate.
What we are left with is a trial and error monetary system that depends on the best judgment of 19 men and women who meet every six weeks around a big table at the Federal Reserve in Washington. At the end of a day and a half of discussions, 11 of them vote on what to do next. The error the members of the FOMC fear most when they vote is deflation. So, they have built in a 2% margin of error.
Given the crudeness of the tools the FOMC uses to set monetary policy, allowing for such a margin of error is no doubt prudent. For example, when the economy slowed in the first half of last year, inflation picked up, accelerating to a 6.1% annual rate during the second quarter. And, when the economic growth accelerated in the second half, inflation slowed. These results are the precise opposite of what the Fed’s playbook says are supposed to happen.
The best the Fed can do — an average debauch in the dollar’s value of 2% a year while producing recurring financial crises and a more cyclical economy — is demonstrably inferior to the results produced by the classical gold standard. Here’s just one example. The largest gold discovery of modern times set off the 1849 California gold rush and increased the supply of gold in the world faster than the increase in the output of goods and services. The price level in the U.S. did increase by12.4 percent over the next 8 years. That translates into an average of just 1.5% a year. The gold standard at its worst was better than the best the Fed now promises to do with the paper dollar.
The Fed’s best is hardly good enough. The time has arrived for the American people to demand something far better — a dollar as good as gold.
This article is available online at:
http://www.forbes.com/sites/charleskadlec/2012/02/06/the-federal-reserves-explicit-goal-devalue-the-dollar-33/
The Continued Assault On Financial Privacy And The Need For Better Money
The following recent news articles illustrate the ongoing assault on financial privacy. This explains some of the reasons behind the drive for free-market currency alternatives like bitcoin:
Why 308,127,404 Americans Are Going To Get Hosed
Cash-sniffing dog comes through at Philadelphia airport
Curbing money laundering in Ghana: Financial firms to monitor employee’s bank accounts
Tanzania: War On ‘Dirty Money’ Intensified
Activist discusses effects of halting money transfer services
Canada’s New “polymer” Money
Interesting story on Canada’s new “polymer” money:
Funny money: How counterfeiting led to a major overhaul of Canada’s money
Globe and Mail Update
In the fall of 2004, a Brinks truck loaded with cash was rumbling down highway 416 south of Ottawa, picking up bank deposits from stores and restaurants along the way, when the driver noticed something troubling in his rearview mirror. It was a grey Hyundai.
As the Brinks driver glanced behind him, he couldn’t help but notice it was the same car he and his partner had seen at the last two gas stations. And the Tim Horton’s before that. And the McDonald’s before that. Something wasn’t right.
When police stopped the car several minutes later, they expected to find an armed robber. What they discovered instead was just as unsettling – stacks of near-perfect counterfeits of the Canadian $20 bill. Better forgeries than had ever been seen before.
The two men inside the car were on a mission of their own that day, and hadn’t noticed the Brinks truck on their route. At each stop along the highway, they used the counterfeit cash to buy small items – a coffee, a package of gum – and pocketed legitimate money as change, amassing a small fortune as they went. This is how counterfeit money is typically laundered.
US Somali’s shut out by banks…enter Bitcoin?
Another reason to decentralize money. The following situation creates more opportunities for competing currencies that can operate outside of normal banking channels. How do you decentralize money? Stop using centralizing money and start using decentralized money (bitcoin?):
Bank to end wire transfers to hawalas; Somali community scrambles
by Rupa Shenoy, Minnesota Public Radio
St. Paul, Minn. — The last U.S. bank to allow wire transfers to Somalia has given notice it no longer will, sending members of the Minnesota Somali community scrambling to find new ways to send money that country.
For people who want to send money to family in Somalia, there’s just one way, and that is through a hawala. It’s the only wire transfer service that can get money to Somalia. Each year, millions of dollars are sent by Minnesota Somalis through hawalas. For many years they’ve supplied the country’s largest source of income.
Hawalas need accounts with banks to transfer money out of the U.S. An increasing number of U.S. banks have refused to work with hawalas. Now there remains only one — Franklin Bank.
Minneapolis-based American Refugee Committee president Daniel Wordsworth said his organization has spent the last two years trying to set up their own channels to send money securely to Somalia.
“And at all levels it was made very clear to us that Franklin Bank was really our only option. I’ve just confirmed it with folks in Washington that Franklin — really that is the bank.”
That is why many in the Somali community panicked this week when Franklin’s parent-company, St Paul-based Sunrise Community Banks, announced it would close all accounts with Somali hawalas by Dec. 14.
The action will have a profound impact on Somalia, a country struggling to recover from mass famine. Wordsworth said.
“Sunrise Bank, Franklin Bank, have really been the stalwarts in this. They’ve been the bank that have really made all of this possible for the last few years for Somalia,” Wordsworth said. “Turning this tap off will basically switch off all of the money that can be sent from the American Somali community back to their homeland. It’s really a devastating thing.”
Sunrise Bank’s CEO, David Reiling, said that fact weighs heavily on his shoulders. But his bank recently uncovered a vulnerability in its financial dealings with hawalas, he said.
“And that specific risk was really identified out of the recent case involving the two Somali women in Rochester, Minnesota.”
Those women, Amina Farah Ali and Hawo Mohamed Hassan were convicted in October of funneling money to the terrorist group al-Shabab that controls many areas of Somalia.
Reiling says his bank was not involved in that case. But it did raise red flags that lead Sunrise Bank to investigate.
“Upon getting all the court documents and really poring through our own systems, we discovered that there are potential ways that really need to be considered and the risk is really too great not to shut the accounts down and find a new solution.”
Reiling would not be specific about the discovered vulnerability, because there’s still a chance someone could exploit it, he said. But the vulnerability could allow someone to use the bank to send funds that end up supporting terrorism, he said.
Reiling said he met with government officials Thursday to discuss one potential solution — a waiver from the state department would offer the bank some protection. Reiling points out the state department has handed out similar waivers to humanitarian organizations working in Somalia.
“Are there opportunities potentially for the bank to apply for the waiver? If not, how can we work with the state department or others to come up with a solution that quite frankly, takes some of the liability off of the bank, and we’re certainly more than willing and would invite the government to come in and oversee this process and actually would encourage it,” Reiling said.
Adan Hassan works at a Minneapolis hawala and represents the Association of Somali American Moneywiring Companies. He said banks are unfairly judging the Somali community by the actions of the two Rochester women.
“So it’s providing now an excuse for the banks to run away from their responsibilities of accommodating legal, registered and law-abiding businesses like us,” Hassan said. “We think this is the final nail in the coffin of this business. And we think it’s going to precipitate a humanitarian crisis in East Africa.”
Hassan said hawala owners have a meeting set up with Sunrise Bank officials today. He said they’ll ask for at least an extension of Sunrise’s deadline.
Otherwise Hassan says their hawalas will be closed in two weeks.
Bitcoin Accepted Here
BARTERCOIN Accepted Here
