Taking back government

Governments are out of control

With the bail outs and quantitative easing governments are successfully keeping up the illusion of prosperity at the cost of impoverishing future generations. This will effect all of us in one way or another (that includes Australia).  I have written on this at length in a previous article entitle unfolding economic shift. Whilst spending vast amounts of money many governments are also eroding personal liberties, conducting illegal activities, vote rigging and working in increasing secrecy whilst intruding more and more  onto our own privacy.

The recent evidence brought out by Edward Snowden highlighting the widespread government secret surveillance to people around the world shows how this is becoming routine in some countries. Privacy International recently published the a study that showed how endemic this is becoming (see below).

surveillance-societies-map1 [Read more…]

How to buy Bitcoins

bitcoin_dollarLast month I  wrote a post about what Bitcoin is and how it works and why it is important. I explained how the coins are mined and how nowadays mining Bitcoin is not something that I would  recommend. I also mentioned that I planned on buying Bitcoin and in this post I explain the challenges and what I learnt in the process.

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My Top 10 Books 2013

People that don’t read books are missing out.

I love books I also love consuming information through media such as podcasts. However books provide a method of learning complex topics in a way you cannot learn from other media. I wrote an article on the effect of media and critical though on the usethetrivium website.
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Unfolding Economic Shift

The world is changing, we are currently witnessing a shift in power which will have a huge impact on people that don’t see it coming. Brazil, Russia, India, China and South Africa and now Australia by making the decision to trade directly with china are moving off the US dollar as reserve currency it marks a move in world power away from US and European dominance.

Ultimately the western currencies will devalue and economic power and output will move to the places where they are protected from the financial meltdown. The countries in the BRICS alliance are well placed to be the beneficiaries of the shift. Coorporations and transnational companies and individuals may well benefit from all the mess but most of the non-informed propagandised public will be hurt significantly in the panic and by the lower standard of living that will accompany the shift.

In this post I will describe what being a reserve currency means and my view on the possible sequence of events and impacts of the coming economic shift.

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Silver is the best hedge against Inflation

Silver has a great deal of potential upside.

There is less silver available today than there was 100 years ago as silver is consumed by industry . Silver is approaching an all time high vs the cost of gold it is  50 times more expensive than gold  compared with a multiple of 30 in 1985 and roduction costs for silver when compared Gold is only 17 times as much.

So silver prices could be different if based on

  • Gold / Silver price Ratio (at 1985 ratio)  $60
  • Production cost ratio  $105
*details on my numbers are lower down in the post
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Is now a good time to buy a house?

A friend of mine asked me for my opinion on whether he should buy a house right now. To answer the question properly I had to explain where I think the world economy is going and the causes.

When making an investment decision you need to weigh up the downsides versus potential upside. House prices are related to economic performance and interest rates so you need to look at these two items to come to a decision.

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Financial Collapse?

 
I have been of the opinion for about 3 years that the troubles with the financial economy are terminal and none of the bailout nonsense is going to do anything apart from make it worse. I expect people in the UK and US to see there savings and investments being wiped out (after devaluation and collapse of the euro). Currently Australia is looking pretty good compared to elswhere however if (when) the banks fail I would expect that to cause either a bailout (therefore currency devaluation) or bank faliure here too.

A friend of mine from my finance club sent me the video below – its dynamite. When the BBC interviewed this bond trader they got what they didn’t expect!

Also on the subject of the ecionomy theres a new video by juice media out

If you want to know more about things finanical then you can find alot of stuff on The real Truth about money

Shadow stats is also a great place to dig into economic data if your interested

The crash course video course is also an excellent film that explains the basics of all things economic

Bank Reserve Requirements 2011

china-reserve-bank-inflationI went to my bank to get some money to by my new car the other day. I needed $4000. They told me that officially I needed to give 24 hours notice for cash withdrawl over $2,000 however they had enough today so they could give me my $4000. Now my bank is probably a bit smaller than ANZ but I found this quite startling. It got me wondering about how much money banks have in reserve.

A note about Reserve banking . Banks don't need $100
dollars to lend you $100.The US has a requirement that
the banks have to at least own equity worth 10% of the
total loans outstanding. So if Citibank only actually 
owned $10 then the sum of all the loans they could
make could not exceed $100.

So I did a little investigation and what I found (with a quick look on wikipedia) concearned me somewhat. I knew that the US had a 10% requirement I didn’t know though that the UK and Australia does not require any reserve requirement whatsoever. So they can make money loaning money they don’t have. I wish I could do that.

Country?
Required reserve (in %)?
Note?
Australia
None
Statutory Reserve Deposits abolished in 1988,
replaced with 1% Non-callable Deposits[5]
Canada
None
 
Mexico
None
 
New Zealand
None
1999 [2]
Sweden
None
 
United Kingdom
None
 
Czech Republic
2.00
Since 7 October 2009
Eurozone
2.00
Since 1999[6]
South Africa
2.50
 
Switzerland
2.50
 
Poland
3.00
 
Chile
4.50
 
India
6.00
as per RBI.
Bangladesh
5.50
Raised from 5.00. Effective from 15 May 2010
Lithuania
6.00
 
Pakistan
5.00
Since 1 November 2008
Taiwan
7.00
[7]
Latvia
8.00
 
Jordan
8.00
 
Malawi
15.00
 
Zambia
8.00
 
Burundi
8.50
 
Hungary
2.0
 
Ghana
9.00
 
United States
10.00