The Golden Rule - 1871 to 1913 Classical Gold Standard

Written By: The WealthCycles Staff
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testiomials Then something magical happened... international trade and foreign investment exploded! Countries found it more advantageous for their economies to end the protectionism that was considered normal and engage their neighbors in trade. Barriers fell, tariffs were eliminated, and a new era of international business and prosperity was ushered in.”

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Back on February 9 we wrote Understanding the Uptrend in Wealth Cycles describing the Kondratiev long-term price cycle. Near the end of the article we cite the “white swan” event that will punctuate the economic upswing as the cycle turns from winter, to spring, and then to summer.

The White Swan: Molten-salt cooled carbon-negative thorium nuclear power.

In other words, continual, limitless degradation of the economy and our "blue marble" is not inevitable—this little-known energy technology holds the promise of prosperity for both humanity and Earth.

We put up a 4-minute clip on the subject, and reported again in June on Chinese progress toward a zero-pressure molten salt reactor that will consume thorium. Let’s rewind.

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QE Event Horizon - Open-Ended Printing by Federal Reserve

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The grownups of the European Union all got together for a nice dinner in Brussels last night, but the “peripheral nation” children refused to eat their vegetables unless they were first promised dessert.

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Just 30 months ago, the world watched in horror the suffering and misery of hundreds of thousands of Haitians in the aftermath of a magnitude 7 earthquake that left an estimated 250,000 dead and 1.5 million displaced. Even as international aid poured into the country, many despaired that Haiti, one of the world’s poorest nations and plagued by generations of corruption and violence, would ever have the means to truly recover. The tiny island nation and its 10 million inhabitants, already so vulnerable and struggling against seemingly insurmountable odds, appeared to have been dealt a knock-out punch.

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Bank of England Takes Reins of UK Economy

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Spanish Bail Out Banks on German Vote

Rumors of a bank bailout, months before a bank bailout, are counterproductive, because it admits the need, putting upward pressure on the interest rate at which Spain can borrow funds. Here is Spanish Prime Minister Mariano Rajoy on the 28th of May:

"There will be no rescue of Spanish banks."

Rajoy denied needing external help for months, before deciding to ask frantically for external help in the middle of last week, and then, according to the media,“officially” filing for help again on Saturday. The help Rajoy desires is to prolong the jobs of Spanish bankers whose banks have gone broke. A capitalist would allow broke banks to go into bankruptcy, allowing prudent lenders to take their place. Sadly, capitalism has fallen to socialism across all political boundaries. The fact is, after all of the bluster, it costs both Spain and Italy more to loan money today than it did last week.

Simply put, bonds are debt. Bonds basically say: "I owe you (IOU) X-amount of currency, plus X-amount of interest." —Michael Maloney, Guide to Investing In Gold & Silver. But, there is more to it than that. Bonds set the cost of borrowing, determine international currency flows, and play a huge role in determining the value of each nation’s currency. That means bonds have a direct effect on the dollars, euros, pesos or yuan in your wallet or bank account.

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Graphite Offers Promise of Future Energy Security

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Graphite is one form of, or allotrope of, carbon; diamond is another. In nature, graphite takes three forms: crystalline, or flake graphite; amorphous or fine particle graphite; and lump or vein graphite, which is most rare and closest in hardness to diamonds.

Graphite has been used by humans in one way or another since the stone age. It conducts electricity, is a natural lubricant, and is resistant to very high temperatures. Natural graphite has long been used in refractories—heat-resistant liners for industrial equipment such as blast furnaces, batteries, steelmaking, brake linings, foundry facings, lubricants—and pencils.

The tangible things that we eat, use and/or buy. Commodities that are traded include Cattle, Cocoa, Coffee, Copper, Corn, Cotton, and Crude Oil, just to cover the Cs. Gold, silver and platinum also are traded on the commodities exchanges as futures contracts.

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Global Recession - Cotton Joins Copper in Confirming Slowdown

Cotton mills are slowing production, in tune with the slowdown in global economic demand, a recession caused by the global financial crisis. “When things go south, cotton moves first,” said Ron Lawson with Logic Advisors in the Financial Times (FT) today. Everyone is aware of copper’s market-assigned Ph.D. namesake - Doctor Copper, used because the ubiquitous industrial metal routinely leads market direction. After warning of the upcoming stock market sell-off in March (here), we checked in with Dr. Copper a bit over a month later, on April 25, to see if it was beginning to confirm our views of cyclicality. The cyclicality is caused by the roughly annual announcement of inflation, and the subsequent scheduled termination of the printing program causing the expansionary flow. Barclays illustrates in the chart below how, after the printing flow ends, the ever-present recession becomes apparent, and stocks begin to trade at lower prices.

The basic format of an economic cycle is expansion, leading to crisis, followed by recession, and finally recovery, which leads back to expansion. The timing of basic economic cycles can be predicted with some regularity.

The tangible things that we eat, use and/or buy. Commodities that are traded include Cattle, Cocoa, Coffee, Copper, Corn, Cotton, and Crude Oil, just to cover the Cs. Gold, silver and platinum also are traded on the commodities exchanges as futures contracts.

Simply put, bonds are debt. Bonds basically say: "I owe you (IOU) X-amount of currency, plus X-amount of interest." —Michael Maloney, Guide to Investing In Gold & Silver. But, there is more to it than that. Bonds set the cost of borrowing, determine international currency flows, and play a huge role in determining the value of each nation’s currency. That means bonds have a direct effect on the dollars, euros, pesos or yuan in your wallet or bank account.

Exchange-Traded Funds (ETFs) are securities that trade like stocks but are supposed to track the price of an index like the Dow or S&P 500 instead of an individual company, or they may be designed to track the price of a commodity like oil, gold, or silver.

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Global Economic Slowdown Ensues

More than a quarter year has passed since we last extolled the fact that we are in what could be considered nothing short of dramatic economic contraction (see Economic Contraction; AA Double Dip). In fact, what we are experiencing is a depression, sugar-coated with stimulus, spending, and projects detrimental to the efficient allocation of raw goods and labor. This means worsening unemployment and further declines in the standard of living over the medium-term.

The natural rate of unemployment, it is considered to be consistent with a level of unemployment that predominantly comprises voluntarily unemployed workers. In other words, those members of the labor force who really want a job have one.

The tangible things that we eat, use and/or buy. Commodities that are traded include Cattle, Cocoa, Coffee, Copper, Corn, Cotton, and Crude Oil, just to cover the Cs. Gold, silver and platinum also are traded on the commodities exchanges as futures contracts.

A fiat currency is created by a government decree. The Latin word fiat means “let it be done.” And with the stroke of a pen, or the crank of a printing press, “money” is created. Fiat currency has no inherent value—the paper that a $100 dollar bill is printed on is surely not worth $100. It might have been worth a few cents before the government ruined its utility as scrap paper by printing green words and numbers all over it! Compare this with gold, which is a precious, rare metal that is, in many cases, the only substance on earth that can be used for certain human purposes, including science, medicine, and of course—adornment.

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