Tag Archives: Monetary History

What is the Trend Telling Us? Robert Mundell’s Monetary History


 Does anyone sense a trend over the past three hundred years?

The severing of the dollar link to gold in 19171 and the movement to flexible exchange rates in 1973 removed constraints on monetary expansion. The dollar emerged as the only international money and, in the words of Robert Mundell:

The U.S. Federal Reserve could now pump out billions and billions of dollars that would be taken up and used as reserves by the rest of the world. Not only that, but US government Treasury bills and bonds became a new form of international money. Dollars became the reserves of new international banks producing money in the Eurodollar market and other offshore outlets for international money. The newly elastic international monetary supply was now made to order to accommodate the supply shock of the oil price spike at the end of 1973. The quadrupling of oil prices created deficits in Europe and Japan which were financed by Eurodollar credits, in turn fed by US monetary expansion. The Fed argued that its policy was not inflationary because the money supply in the United States did not rise unduly. The fact is that it had been exported to build the base for inflation abroad. As I showed in an article published in 1971 (IMS in the 21st Century Robert Mundell and mundell-lecture), it is the world, not the national dollar base that governs inflation. Prices rose 3.9 times in the quarter century after 1971, by far the most inflation than at any other time in the nation’s history.

Our Current Situation


Our choices are to restructure the debt, grow our way to repayment and/or print. What choice will the Fed make?Money-TMS-2

US money supply TMS-2 (components by legal categorization) since 1960 – by Michael Pollaro.

If there were a free market for money, unexpected sudden increases in the demand for money (due to exogenous events like e.g. the threat of war) would likely also see a reaction from the supply side.  However, the increase in resources devoted to obtaining a larger supply of the money commodity (in a free market, money would be a commodity with a pre-existing use value) would be strictly guided by the wishes of consumers. Moreover, even if the money supply were completely fixed, a demand for higher cash balances would simply lead to adjustment by raising money’s purchasing power until the higher demand was satisfied (we are assuming that if a free market in money were to obtain, the entire economy would likely be unhampered; prices and wages would be free to adjust).

Given the enduring popularity of inflationary policies, we suspect that lessons that should have been learned long ago will have to be relearned – the hard way.

Read the article on why many hope for a return of inflation: http://www.acting-man.com/?p=26808t

Meanwhile the market sets up with its Fed induced distortion: http://www.cnbc.com/id/101137648

140 Years of Monetary History in Ten Minutes



“Fighting for Peace is like Screwing for Virginity” — George Carlin.

A Must-See Video on Monetary History:

http://hiddensecretsofmoney.com/blog/140-Years-Of-Monetary-History-In-10-Minutes  (Yes, there is the fear sale–buy precious metals since the world will end, but look past that to learn about monetary history in an entertaining video.  You can also view Mike Mahoney’s other videos.) 

The difference between currency and money: http://hiddensecretsofmoney.com/videos/episode-1 (Hint: Money is a store of value.) www.moneyfornothingthemovie.org

Gold: https://www.valcambigold.com/charts.aspx

Things that make you go Hmmmm… ttmygh_26_aug_2013

Whenever a government puts restrictions or controls on a commodity, you buy!

India and Gold

Gold miners: http://denaliguidesummit.blogspot.ca/2013/08/hurricane-surge-for-gold-miners.html

1987 Edwards_0 Pzena_Commentary 2Q13 or Value vs. Growth Investors

RC&G_Investor_Day_2013 Sequoia’s Investor Day

Meet the New Federal Reserve Chairman


Aristotle on Tyrants

Submitted by Simon Black of Sovereign Man blog,

Nearly 2,400 years ago, Aristotle wrote one of the defining works of political philosophy in a book entitled Politics.

It’s still incredibly relevant today, particularly what he writes about tyranny.

The ancient Greeks used the word ‘turannos’, which referred to an illegitimate ruler who governs without regard for the law or interests of the people, often through violent and coercive means.

Aristotle attacks tyrants mercilessly in his book, and clearly spells out the criteria which make a leader tyrannical. You may recognize a few of them:

  1. Aristotle suggests that a tyrant rises to power by first demonstrating that he is a man of the people:

“He ought to show himself to his subjects in the light, not of a tyrant, but of a steward and a king.”


“He should be moderate, not extravagant in his way of life; he should win the notables by companionship, and the multitude by flattery.”

  1. But once in power, a tyrant uses all available means to hold on to power, including spying on his people:

“A tyrant should also endeavor to know what each of his subjects says or does, and should employ spies . . . and . . . eavesdroppers . . . [T]he fear of informers prevents people from speaking their minds, and if they do, they are more easily found out.”

  1. Furthermore, Aristotle tells us that a tyrant thrives by creating division and conflict– “to sow quarrels among the citizens; friends should be embroiled with friends, the people with the notables [the rich]. . .”
  2. Controlling the economy and stealing the citizens’ wealth is also another mark of a tyrant:

“Another practice of tyrants is to multiply taxes. . . [and] impoverish his subjects; he thus provides against the maintenance of a guard by the citizen and the people, having to keep hard at work, are prevented from conspiring.”

  1. And as Aristotle points out, a tyrant also attempts to disarm the people such that “his subjects shall be incapable of action” because “they will not attempt to overthrow a tyranny, if they are powerless.”
  2. Naturally, a tyrant “is also fond of making war in order that his subjects may have something to do and be always in want of a leader.”
  3. Aristotle also tells us that tyrants hunt down those who oppose their power:

“It is characteristic of a tyrant to dislike everyone who has dignity or independence; he wants to be alone in his glory, but anyone who claims a like dignity or asserts his independence encroaches upon his prerogative, and is hated by him as an enemy to his power.”

  1. Ultimately, though, Aristotle concludes that “No freeman, if he can escape from [tyranny], will endure such a government.”

He’s right. And in the past, people had to rise up in the streets to defeat tyranny.

Fortunately, there are many tactics available to freedom-oriented people today that don’t involve violent revolution.

For rational, thinking people who find themselves living in a state that is rapidly sliding into tyranny, one of the most important steps to take is reducing exposure to that government.

If you live, work, bank, invest, own property, run a business, hold your precious metals, store your digital data (email), etc. all in the same place, you are running some serious ‘sovereign risk’.

In many cases, you can move precious metals overseas, set up a foreign bank account, or create an offshore, encrypted email account with a few mouse clicks.

Take a look back at Aristotle’s points. If the majority of them look familiar, it may be time that you look around the world for alternatives.

US planned war on Syria (What a surprise!)


Kyle Bass on Europe and US Monetary History

Kyle Bass on Europe

30 minute video: Kyle Bass on Europe’s problems. Highly recommended. http://www.economicpolicyjournal.com/2011/11/hot-why-japan-is-going-to-go-way-of.html

US monetary History: The Past and Perhaps Our Future

Larry Parks, Founder of the Foundation for the Advancement of Monetary Education (“FAME), testifies before Congress. The transcript provides a synopsis of US monetary history.