I started this blog in June 2007 asking these questions: Are we in a massive asset bubble that will blow up in our faces ??? - ANSWERED YES ! Is western and particularly British society on the verge of social collapse??? What are the best common sense long term investment strategies to keep you rich? When will consumption/debt bubble economics end and a real savings/production economy begin ???

Saturday 26 September 2009

US house prices have fallen to 1988 levels when measured in gold !

The average (median) US house price peaked in 2005 at 490.5 ounces. The average house price is now 160.5 ounces (the 1988 level) and still falling !

The surprising fact revealed by the chart is that the 'real' house price boom happened between 1996 and 2001 when prices went from about 190 to 450 ounces of gold. During the 2000's prices were relatively stable !

The wealth that people thought they were getting via the boom in nominal dollar prices during the 2000s was all an illusion ! People really were getting richer in the 90s but the .com crash ended the boom and ever since massive government spending and ultra low interest rates have been needed to keep up the facade of growth and wealth creation.

Nominal dollar increases in asset prices ARE NOT wealth creating. You haven't made any money until you sell your asset (house, shares etc ...) and converted the 'profit' into gold. Increases in real(priced in gold) asset prices can make you rich. Nominal price increases due to inflation make you poor. Everyone in Zimbabwe is a millionaire !

[click for full image]

[click for full image]

http://www.prisonplanet.com/when-housing-is-priced-in-gold.html

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Friday 25 September 2009

Hyperinflation Nation - THIS IS NOT A FAILURE OF THE FREE MARKET

The free market and small govenment is the only solution. Print and bailout does not work, it just makes things worse:









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Julian Robertson: 15% inflation coming in the US ???

There will be no US Mrs Thatcher !



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The UK Buy-To-Let Slaughter is near !



Fergus Wilson, the former mathematics teacher dubbed Britain’s buy-to-let “King,” says he’s selling 700 rental properties before interest rate rises bring “slaughter” to landlords in the U.K. housing market.

Wilson, who together with his wife Judith rank among the 1,000 wealthiest Britons according to this year’s Sunday Times Rich List, said it was inevitable that interest rates would rise from a historic low, pummeling rental landlords.

“You’ve got a lot of people who have taken out a mortgage and are right up to their throats” in debt, said Wilson as he settled into a black armchair at a hotel in Maidstone, south- eastern England. “As soon as rates go up, they’re going to be slaughtered.”

more ...


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Historian Dr David Starkey on British Democracy



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Thursday 24 September 2009

US on slippery slope to economic collapse



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Gold & Silver & China



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Monday 21 September 2009

The wisdom of the youtube crowd



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Iran replaces Dollar with Euro in FX



http://presstv.com/detail.aspx?id=106669§ionid=351020102


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Deflationist Steve Keen

No growth or inflation without a debt jubilee ??? Wouldn't inflation kill debt ? Unlike Japan the west does not have bankruptcy taboos and can eventually kill its zombies. Japan is a very different production based economy. It can fund its borrowing, unlike the US or UK. Unlike Japan the US and UK will be forced to monetise their debt or massively raise interest rates or both



What if China doesn't believe there will be US deflation? What if there is some inflation shock, e.g. an attack on Iran pushing up the oil price? What if this panics China and Japan and they rush to get rid of their dollar holdings by 'buying up America' and flooding the economy with hot money ?
Panic is a sudden fear which dominates or replaces thinking and often affects groups of people or animals. Panics typically occur in disaster situations, or violent situations (such as robbery, home invasion, a shooting rampage, etc.) which may endanger the overall health of the affected group. The word panic derives from the Greek πανικός, "pertaining to Pan", the god of woods and fields who was the source of mysterious sounds that caused contagious, groundless fear in herds and crowds, or in people in lonely spots. Panic is also known as an acute case of anxiety.

http://en.wikipedia.org/wiki/Panic

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Sunday 20 September 2009

It's Over !



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Saturday 19 September 2009

Peter Schiff - You can have more government but not without killing the private sector and growth

Where do people think all the magic money comes from ???



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Friday 18 September 2009

Ron Paul talks about the American power structure in 1988



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What Is Going on with China and Gold?


As recently as 2002, the private ownership of gold was prohibited in China. You could be jailed if caught with any in your possession. Beginning in 2009, in a stunning about-face, the central government removed all restrictions. In fact, as Mineweb and other sources report now it’s actively pushing folks to buy some personal metal, with China's Central Television, the main state-owned television company, running news programs cum infomercials, letting the public know just how easy it is to purchase gold and silver as an investment.

It truly is as simple as can be, because every bank sells gold and silver bullion bars in four different sizes to individuals. (Try to find the same the next time you make the trek down to Wells Fargo.) Mining companies are reportedly encouraging employees to convert some of their wages to gold on payday. Gold is traded in some form 24 hours a day. And paper proxies for the metal are also soaring in popularity.

There are persistent rumors that the export of silver has already been banned. Gold could be next.

Thus China, which only yesterday was the lowest per-capita consumer of gold in the world, is bidding to become the biggest. Some analysts believe it will pass India – the top dog since forever – as early as 2010. Clearly, the government believes the country is strengthened if everyone who can holds some hard currency.

http://www.kitcocasey.com/articles/2961/what-the-heck-is-going-on-with-china?/

http://www.kitcocasey.com/articles/2970/could-china-push-gold-to-the-moon?/


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Thursday 17 September 2009

It's Peter Schiff VS the WWE



http://www.facebook.co.za/video/video.php?v=1039855847984



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Peter Schiff VS Mish Shedlock by Max Keiser - inflation VS deflation debate

Mish won in 2008 but Schiff will win in the end !



Peter Schiff says DEFLATION will be BIG . . . . . . . . . . . . . . . . when you mesure it in gold !





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The UK debate on closing deficits via tax increases and spending cuts

The only solution is much much smaller government !

Why is the US not having this debate ???



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Wednesday 16 September 2009

What happens when the US can't pay its debt ?



There are 3 options:
1) Honest default by forcing creditors to accept a lower coupon
2) Dishonest default via inflation
3) An Austro-hungary style breakup of the country leaving a rump with all the
debts and imperial bureaucracy.
4) The 4th option isn't really an option at all because it is so ridiculous. Pay back China by slashing spending and increasing taxes and telling the American people they must accept the pain because China must be paid back !

Option one is unlikely, it would mean the end of low interest borrowing for America

Option two must be the most likely but how do you get inflation in an economy that wants to deflate without sparking real inflation rates of 1% a month or more because of a debauched currency ???

Medium term Ben Bernanke has said he will not repeat the 'mistake' of the great depression by tightening monetary policy too soon. This fits nicely with 'inflate away the debt'. So the trend will most likely be an America that gets slowly poorer while China, Asia and South America get richer.

Longer term the US Dollar will loose its reserve currency status. Initially the reserve currency will be shared around with the Euro, Dollar and then maybe an unpegged Yuan all sharing a similar status. Gold, silver, platinum, palladium and oil must also play a big role in this transitional period.

History teaches that an empire can not last long after it enters political and economic decline.

The big problem with the American political system is that it was set up to create a deadlock to stop radical things happening. The problem is that radical things have happened (e.g. setting up of a central bank, removal of the gold standard, the setting up of a large welfare state and military industrial complex, the nation becoming the worlds biggest debtor etc ...). All the system did was to force change to be much slower, more incremental and more stealthy than in other countries. Thus no one is to blame for the terrible mistakes of policy.

But what if radical action is needed ? No party can win a land slide victory and get a mandate to do an option 4 or even an option 1. There will be no American Mrs Thatcher ! The 'end game' must surely be spiralling inflation, poverty and a flight of Americans to Europe, Asia, Canada, Australia and South America - along with their wealth.

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How long before Rick Santelli is thrown off CNBC ???



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The Empirical Evidence Against Big Government



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YES - You can predict a recession ! Paul Francis Cwik PhD Dissertation 2004


[click to enlarge]


Unlike other schools of economic thought Austrian Economists can make useful predictions that can help individuals and businesses:



AN INVESTIGATION OF INVERTED YIELD CURVES
AND ECONOMIC DOWNTURNS:


This dissertation presents an answer to why the yield curve tends to invert one year before a recession.

http://mises.org/etexts/cwik-dissertation.pdf

Even in 1967, the one time there appeared to be a false positive, there was a mini recession (single quarter of contraction).

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Tuesday 15 September 2009

Britain 'may be forced to bail out tax havens'



Why are there no 'stop the economic war' protests about this ???

http://www.guardian.co.uk/business/2009/sep/13/british-tax-havens-need-bailouts

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UK economists baffled by 1.6% inflation rate - still no deflation ???

GEORGE BUCKLEY, CHIEF UK ECONOMIST, DEUTSCHE BANK

"It is obviously another sticky number, inflation has surprised on the upside relative to expectations over the past few months. I think it is a combination of two things. Number one is sterling's impact on inflation and the fact is it has fallen very sharply from its peak in 2007 so that could have been putting upward pressure on import prices and core inflation."

"Secondly is the output gap. If it turns out that we have overestimated the trend rate of growth and the output gap might not actually be as weak as we thought it was ...inflationary pressures might be a little bit closer to the surface than we thought."

STEPHEN LEWIS, MONUMENT SECURITIES

"Obviously it is not as good as expected and there is no tendency for core CPI rate of inflation to moderate which must be worrying to the MPC because it casts doubt on their forecasts. Looking at the components this month, we seem to have more of a bounce back in furniture and household equipment after seasonal July sales than is usual."

http://uk.biz.yahoo.com/15092009/325/instant-view-inflation-slows-expected-august.html

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Monday 14 September 2009

New global taxes to be collected in a new global currency ?



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The False Deflation Panic!



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Public versus Private Salaries

The transfer of wealth from the private sector into the public sector.

If there isn't a revolution the UK and USA are doomed !




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The state is dead !



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After years of selling cheap goods to debt-fuelled Western consumers, China now has $2 trillion dollars of foreign exchange reserves.


In a world of systemic instability, reserves mean power. Reserves mean you can defend your currency, stabilise your banking system and boost your economy without resorting to yet more borrowing – or, worse still, the printing press.

More than half of China's reserves are denominated in dollars. So when the dollar falls, China loses serious money. When you're talking about a dollar-reserve number involving 12 zeros, even a modest weakening of the greenback sees China's wealth takes a mighty hit.

In recent years, America has run massive budget and trade deficits, both of which put downward pressure on the dollar – so devaluing China's reserves. Beijing has remained tight-lipped, worried less about diplomatic niceties than the financial implications of voicing its concerns. If the markets thought China would buy less dollar-denominated debt going forward, the US currency would weaken further, compounding Beijing's wealth-loss.

more ...


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Sunday 13 September 2009

Intro to Austrian Economics



Other Videos from Intro to Austrian Economics:

* The Socialist Calculation Debate - Lawrence White
*
* Money and Inflation - Steve Horwitz
*
* Methodology - Gene Callahan
*
* Menger and the Early Austrians - Paul Cwik
*
* Ludwig von Mises - Ivan Pongracic
*
* Israel Kirzner - Lawrence White
*
* F. A. Hayek - Daniel D’Amico
*
* Entreprenuership - Ivan Pongracic
*
* Creative Destruction - Paul Cwik
*
* Competition and Monopoly - Ivan Pongracic
*
* Business Cycles - Paul Cwik
*
* Austrians and the Other Schools - Paul Cwik
*
* Austrian Economics Today - Steve Horwitz

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Saturday 12 September 2009

Unsustainable Debt



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Inflation and the Fall of the Roman Empire



http://mises.org/story/3663

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1790-1795 France and the destruction of the Asignot

There always needs to be just a little more inflation of the money supply and everything will be fine !

http://www.freedomainradio.com/Traffic_Jams/FDR_1442_Fiat_Money_In_France_Part_1.mp3

http://www.freedomainradio.com/Traffic_Jams/FDR_1443_Fiat_Money_In_France_Part_2.mp3

http://www.freedomainradio.com/Traffic_Jams/FDR_1444_Fiat_Money_In_France_Part_3.mp3





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Peter Schiff - No Deflation without a return to gold

Deflationists like Robert Prechter and Mish Shedlock are not factoring in runaway money printing (gold money history doesn't apply to a fiat money world)! When the UK and US can't borrow any more the only way to keep spending is money printing:



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In 1976 the UK put Keynesian economics in the dustbin of history - why did they pull it out ???

Back in 1976, then Labour Prime Minister Jim Callaghan told his own party conference: "We used to think you could spend your way out of recession … I tell you now in all candour that option no longer exists … In so far as it ever existed, it worked only to inject larger doses of inflation into the economy, followed by higher unemployment as the next step".

http://www.telegraph.co.uk/finance/comment/liamhalligan/6142648/Stop-using-Keynes-name-to-justify-wild-fiscal-experiments.html

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Friday 11 September 2009

Dr. Michael Hudson - The Land Problem



http://en.wikipedia.org/wiki/Michael_Hudson_%28economist%29

http://www.michael-hudson.com/articles/debt/Hudson,RoadToSerfdom.pdf

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A Reply to Georgist Criticisms by Murray N. Rothbard

Georgism, named after Henry George (1839-1897), is a philosophy and economic ideology that holds that everyone owns what they create, but that everything found in nature, most importantly land, belongs equally to all of humanity. Henry George is best known for his argument that the economic rent from land should be shared equally by society rather than falling into hands of private individuals. Most early advocacy groups described themselves as Single Taxers, and George endorsed this as being an accurate description of the movement's main political goal – the replacement of all taxes with a land value tax.

Fred Harrison - The modern Georgist:

http://en.wikipedia.org/wiki/Fred_Harrison_%28Author%29




http://mises.org/rothbard/georgism.pdf

http://en.wikipedia.org/wiki/Georgism

http://en.wikipedia.org/wiki/Geolibertarianism

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Thursday 10 September 2009

Austrian vs. Neoclassical Analytics



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How The Federal Reserve Bought The Economics Profession


The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.

This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed's thrall, the economists missed it, too.

"The Fed has a lock on the economics world," says Joshua Rosner, a Wall Street analyst who correctly called the meltdown. "There is no room for other views, which I guess is why economists got it so wrong."

http://www.huffingtonpost.com/2009/09/07/priceless-how-the-federal_n_278805.html

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Wednesday 9 September 2009

Mike Shedlock - The Deflationary Austrian ?



http://globaleconomicanalysis.blogspot.com/

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Monday 7 September 2009

China spells it out - will dump the dollar and buy gold


"We hope there will be a change in monetary policy as soon as they have positive growth again," he said at the Ambrosetti Workshop, a policy gathering on Lake Como.

"If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," he said.

China's reserves are more than – $2 trillion, the world's largest.

"Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets," he added.
http://www.telegraph.co.uk/finance/economics/6146957/China-alarmed-by-US-money-printing.html

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Goldman Sachs IS the US government !



http://www.goldmansachs666.com/

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Paul Krugman essay on the history of economic thought leaves out the Austrian School and Mises !

Would you buy a used economic theory from this man ???




http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html?_r=1&em=&pagewanted=print


If you want to learn real economics start here:
http://mises.org/

You could be an Austrian and not even know it ! Take the quiz and find out:
http://mises.org/quiz.aspx

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Gold and Silver Super Bull Market ???



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Friday 4 September 2009

Panama Has No Central Bank and No Inflation



Since It's creation by the US in 1903 Panama has never had any inflation problems or monetary collapses. It has over 100 banks, all financially sound.

The absolute absence of a central bank in Panama created a completely market driven money supply. Panama’s economy has also chosen the US dollar as its main currency. The country must buy or obtain their dollars by producing or exporting real goods or services; Panamanians cannot create money out of magic.

more ...

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The IMF is now a world central bank printing a world fiat currency and world inflation !


As of this weekend, the world is 250 billion dollars "richer". No products were produced. No taxes were raised. Not even one cent was borrowed. The IMF simply created a bookkeeping entry on behalf of those countries it felt worthy of receiving additional reserves. The reserves, SDRs, are a claim to "hard currency". The hard currency will be provided by those with "sufficiently strong external positions”, in other words, surplus nations.

There is no reason for surplus nations to part with hard currency, save two, that I can think of: Altruism or Power. And in my opinion they are having a go at the latter. My read on this is that the surplus nations have just made an end run around the United States and the US Congress who have veto power over IMF decisions. Surplus nations can now provide “voluntary trading arrangements” with non-surplus (importing) nations with the IMF as "broker". This sounds like a mechanism for the surplus nations to provide buying power to importing nations at the expense of us all.

The ability to inflate has now been augmented. It has transcended national boundaries from national central banks to a world central bank. This "new" bank now has the power to create money. Inflation is no longer limited to one currency but will affect all paper currencies in the world. We now have the prospect of a synchronized international inflation. It's not enough that citizens throughout the world had to keep a keen eye on their nations central bank, now we all need to keep an eye on the IMF.

The "IMF's Board Of Governors", a group never elected to office, unknown to most, and accountable to no one, has now gained the power to create new claims on production without legal limits or oversight from any regulatory body. All it need do is vote for more SDRs.

Given the "announcement in the dead of night" tactics just employed, I suggest we all sharpen our eyesight. This development doesn't change the inflation outlook for the next month or even for the next year. But make no mistake -- the "powers that be" just took the fiat system and the inflation threat to a new level.


http://www.kitco.com/ind/Nathan/aug312009.html


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