WealthCycles readers may know we have frequently referred to fractional reserve banking, and the global monetary system, for that matter as Ponzi or pyramid schemes. The term “Ponzi scheme” is frequently in the headlines, in a local news item in which some local sharpie has bilked senior citizens or his drinking buddies out of a few grand, or in nationally notorious scandals such as Bernie Madoff’s fraudulent operation and subsequent conviction. But what or who is a “Ponzi,” and how did these nefarious schemes get such a funny name?
Blogs on How to Invest, Gold & Silver, and Economics 101
Mar 14 2014
Mar 08 2014
Once virtually abandoned by the mainstream, many ideas associated with Austrian School economics have been increasingly in the spotlight, and in the public consciousness, in recent years. Some of the attention resulted from the popularity of Congressman Ron Paul, who, particularly during his third presidential run in 2012, captured the attention of the millennials, the last generation born in the 20th century.
The appeal of Paul’s anti-establishment economic theories is understandable: raised on expectations of upward mobility instilled in their baby boom parents, today’s young people have emerged into adulthood to face the sad reality that their prospects aren’t as good as their parents’ were, and furthermore, may never be. It is a turbulent, uncertain era that is prompting many to examine what they’ve been taught to believe about what creates prosperity and how economies function. Even if Main Street remains unfamiliar with the terms “Austrian economics” or “Keynesian economics,” its citizens can plainly see that the status quo isn’t all it’s cracked up to be and conclude that different solutions are needed.
Mar 01 2014
The fallacy that inflation is beneficial has gained great traction in recent years. The generation of working, saving U.S. taxpayers that lived through the runaway inflation of the 1970s came out of it convinced that inflation must be stomped out at all costs. But it turned out zero inflation wasn’t so great for the sectors of society with the most the economic and political power—government and political leaders, financial institutions and the banking system. So a process of re-education of the public began, with central bankers and politicians explaining that a certain level of inflation was necessary to create jobs and allow the economy to grow, and mainstream media obligingly echoing the conventional wisdom.
From that highly effective propaganda campaign emerged what is now widely accepted as economic dogma, that a slow, steady rise in inflation at some pre-determined rate is the optimal condition for healthy economic growth.
Feb 21 2014
Wave after wave of credit- and debit card breaches, perhaps most famously the theft of the financial and personal information of some 110 million Target customers during the holiday season, have left consumers shocked and increasingly wary of using the plastic in their wallets. The consequences are not limited to fraudulent charges and the inconvenience of having to re-establish identity: With the interconnection between retailers and financial institutions, large-scale breaches could conceivably bring down large banks and cripple the financial system. Perhaps even more concerning to government and central bankers is the possibility that a plastic-shy population might learn to live within its means, potentially shutting down the debt-fueled engine that keeps the economy humming.
Feb 05 2014
Despite silence and zero denials from the conventional media outlets, our post Media Gets It Wrong — Debt Ceiling Suspended (Permanently), Not Raised, appears to have got it right and offers a cautionary observation on prospects for the value of the Federal Reserve’s dollar in the months and years ahead.
Despite a big to-do about the impending Congressional battle over raising or refusing to raise the debt levels in one way or another (ceiling began in 1917), the newly enacted law of the land in the U.S. remains unmentioned in mainstream media, with annual theater proceeding just as it has for hundreds of years.
On October 20, 2013, U.S. law changed to transfer final spending authority from the legislative to the executive branch. The little-noticed yet epic transfer of power was enacted as part of the Continuing Appropriations Act passed on October 17, 2013.
Jan 25 2014
Canada completed the conversion of its banknotes from cotton-based paper to polymer, or plastic, bills at the end of 2013, just about the time Bank of England announced it would join Canada and another 20-some nations by switching to plastic currency. Since plastic bills cost nearly twice that of paper bills, the question is why countries would make the change now, especially with a growing push by banks to convert consumers to digital payment systems. The pat answer is to combat counterfeiting, which had already begun to drop in Canada before the new polymer bills were introduced. Advanced new sensors that can be embedded in plastic film may offer a hint of the true potential for plastic-based currency.