ENDOGENOUS MONEY - MAX KEISER I WAS WRONG ON BITCOIN

Max, Max, Max. I am sorry. I was blind. You were right, I was wrong.

Why couldn’t you just tell me how you felt? What Bitcoin really meant to you? Why it is truly unique? You said it is beautiful and elegant, you described it as special.

WHY Max? Why did it end this way? Can I do something to fix our relationship? Our time apart has made me realise that BITCOIN is really special, precious. You just did not communicate it clearly or perhaps I just did not understand.

Can we see a counsellor? Once you read this email perhaps you will see how I misinterpreted your explanation. I am hoping you understand my words were harsh, I tend to talk a different language when on the defensive.

DEEP BREATH… HERE GOES.

There was a time I thought I knew it all. A time when I thought I understood money, the way it was created, circulated, used and abused. I supported you Max and stood right beside you when you were fighting against the banks. I miss those days, think about them a lot. We were a team, we dared to dream we could make a difference, motivate support and usher in a new zeitgeist.

Are you seeing someone else now? I noticed you dating and courting that actor comedian last week, what’s his name? Russel Brand? Is it he who you choose to conquer the world with?

I want you back Max, so here is why I was wrong on Bitcoin –

I was wrong on Bitcoin and its potential because I was so stuck on you comparing it to Gold. I thought you were off base with that. It was a deal breaker for me and that began my frustration and fostered my resentment. I couldn’t reach you, you closed me down and refused to talk.

So this is my letter to explain. I confused your message and hyper focused on you comparing bitcoin to gold. I misinterpreted your focus on central banks and banks in general. I acknowledge that central banks can “print money”, I see the incestuous relationship between the financial sector and the policy makers. It really is a case of who co-opted who and trying to answer that is as impossible as trying to solve the chicken and the egg scenario.

You have a complex mind and a unique filter on the way you view the world Max and let’s face it, I am not at your level nor am I a mind reader. I wish to convey so you are aware that at times connecting the dots is a more arduous task than you  might otherwise think for me. This being said our time apart has made me think about where your mind was at with Bitcoin.

I had the light bulb moment last night as I joined the dots to see that Max understands “endogenous money” and the role it plays in the creation of economic cycles. Max, you understand that if history is anything to go by the incestuous relationship between banksters and government will go on, as will the cycles.

There was an opportunity for real reform when Obama said “Yes we can” before his first term as president. The markets were in turmoil, it was clearly time to change the system and reform the banking sector and financial sector in a meaningful way.

We got nothing, nada, zilch! It turned out to be a pretend-a-thon watered down policy and quickly “yes we can” turned to a bank lobby forced “maybe we won’t”. I feel you Max, I now understand your cynicism. It broke my heart that your crusade at times might see some people hurt whilst ignoring  the end goal that global acceptance of Bitcoin may just put an end to these vicious economic cycles.

Bitcoin can help with this. Bitcoin takes power out of the politician’s hands, and the banksters ability to lobby for that power. Bitcoin means we do not need to answer the who co-opted who nor solve the chicken or the egg question.

Bitcoin can control “endogenous money” creation and when it is all said and done a decentralised system means each individual becomes their own bank where they assess their own risk and control the value they get for their bitcoin. They are not subject to Central Bank currency wars and the impact on their purchasing power.

Bitcoin understands “endogenous money”, that is all you had to say to me MAX. It is beautiful because whilst other theories like Modern Monetary Theory and Keynesian, Austrian schools of thought have some great individual aspects, they fail to really understand how to control “endogenous money” and to empower individuals to make their own risk assessment not leave it to the banksters and politicians.

Professor Steve Keen has the idea, post Keynesians understand. Banks create “endogenous money” out of thin air so controlling that involves a raft of policy changes we know we will never get because Banks don’t want to be controlled or restricted and politicians want to get re-elected. Bitcoin controls endogenous money and puts the risk back in the hands of individuals.

 A decentralised power base reduces exploitation to individual transactions whereby one individual decision does not put another person’s bitcoin at risk. Bitcoin by design restricts the ability for collective extractionist avenues such as those explored by institutions like the banks and financial sector that triggered the last financial crisis.

A Bitcoin dominated monetary system creates a more organised decentralised individual control of endogenous money and that makes it Beautiful and elegant. It does not make it gold, but it does make it precious and special. It can work to grow a capitalist economy by attacking the root cause of economic cycles which is the predatory creation of endogenous money. More on this less on the “bitcoin is just like gold” and the message would resonate.

 

May I suggest perhaps a Keiser Report with Professor Keen on the integration of Bitcoin and Post Keynesian theory on endogenous money might be a great way to clear the air between you and I, after all, I have never quit respecting you, I was just hurt!

Hope this email reaches you through my twitter network and that you find it in your heart to accept my apology and see it comes from a genuine place (and you find the humorous side to my message)

Best Regards,

Phil

DOES WALMART KNOW USA TRADE POLICY IS ABOUT TO GO PROTECTIONIST?

After a long hiatus from bloggersphere I felt a timely need to push out a post on a topic that seems to be gaining momentum. I covered in a previous post here http://carneycapitalmanagement.blogspot.com/2014/03/central-banks-gold-accumulation-first.html the fact I believed that the leaders of the world economic powers were working toward a “hidden solution”. It was simply absurd, in my opinion back then, to believe that the system in its current form would or could survive.

 

My suggestion was that the huge acquisition of Gold by the central banks of nations such as China and Russia was the first step toward a new system. Less than a week ago that prediction took one giant leap towards reality as the BRICS nations signalled their interest in pursuing their own miniature trading bloc version of the IMF.

 

This is designed to put pressure on the current system that sets its roots with the World Bank and the International Monetary Fund (IMF) front and centre. It seems the BRICS nations, China and Russia in particular have grown increasingly frustrated at their representation at the IMF and the World Bank both of which are dominated politically by the USA.

 

Here  http://www.aljazeera.com/indepth/opinion/2014/07/brics-bank-beijing-consensus-201472183428811634.html  is a great article that sets the tone and presents the case that transition and change is gaining momentum.

 

I am surprised and alarmed at the complete lack of coverage this is getting in the news given that this move has major implications for the global economy and also possibly world security and stability. The move by the BRICS nations is a direct challenge to the current status quo and although it is but the first step, the step is a monumental one.

 

As I look back and re-examine my post on gold accumulation mentioned earlier in this entry I also see much of the turmoil and tensions escalating. I see Russia and the USA in the most volatile of relations positions since the cold war. China now stands with Russia in this new trade and BRICS institutional deal. If that is not frightening enough then turn to the Ukraine and the Middle East, Egypt, Thailand, protests escalating in just about every corner of the globe, even in Australia.

 

The world is like one giant tinder bundle waiting for the spark and ignition, deteriorating relationships amongst leaders of economic and nuclear powers and within sovereign nations, people protesting and rallying with some internally combusting.

 

There is no doubt that the currency wars and economic wars are being waged, but are we now about to see a return to the old protectionism days? Is the world transitioning and following the historical flow of economic crisis, currency wars, trade wars then finally real wars?

 

Before anyone dismisses my call on protectionism, trade wars as alarmist or contrarian I beg you to read further and perhaps take off that panglossian piece of eyewear you call your glasses because they are clearly distorting your vision.

 

Protectionism and trade wars are brewing behind the scenes, we are seeing the little hints as the major players move their chess pieces around the board looking for a check mate. The recent BRICS move may have caught the USA by surprise a little, but it seems they have responded with new deadlines on Ukraine and are now questioning Russia’s  involvement in that conflict. There have been more economic SANCTIONS, yes SANCTIONS. Can you see them now you took the set of panglossians off?

 

Sanctions are trade restrictions, the beginnings of a trade war perhaps? Is Russia concerned? Perhaps a little less now that China has united with them on this new BRICS deal making it a financial powerhouse group as well as a nuclear and military juggernaut.

 

It was brought to my attention by a close friend here in the USA that Walmart had been on a “Buy American Program” drive that was initiated in 2013. As my readers likely know, err hmmm, I am not a cynic, cough cough. I believe Walmart when they say they want to bring the jobs back to the USA and that they have a deep care and love for the American people. Here is a WSJ article that generated this blog.

 

 Have a read  http://online.wsj.com/articles/the-hard-business-of-restarting-u-s-factories-1405629782

 

If you detected the cynicism– ometer exploding off the charts you are right because when all is said and done, actions speak louder than words. For years Walmart has built a business on the back of the China production line, box after box, TV after TV. It has shipped the jobs overseas, exploited China and contributed to the decline in USA manufacturing jobs that have now been replaced by forklift drivers and dispatch personnel.

Indeed nearly everything comes in a flat pack, easy to load in and out of a container, space conservationists! Now we are to believe Walmart has had a change of heart, that in the face of declining sales they want to revamp production locally and support American jobs. Is your level of cynicism rising yet?

Let me go on. Walmart wants to make TV’s here in the USA, all the components too. It wants to take advantage of the HIGHER costs of production in the USA. Walmart has never really cared about prices have they, what is their slogan again? Walmart everyday LOW PRICES!

Maybe they want to change it to “Everyday HIGH prices” just to support American jobs. Perhaps the next step will be to join in the fight to raise the minimum wage here in the USA also. The higher the price the more the new slogan will fit.

If you are not convinced this “Buy American” drive does not pass the smell test you likely have a blocked nose or missed out when god handed out your senses.

Walmart has lead the decline in manufacturing here in the USA. They have had a neutral stance at best on the minimum wage debate and hold huge power with politicians and are the largest single employer of minimum or close to minimum wage earners in the USA.

The key to the article is not in what Walmart said, but in what the newly anointed manufacturer for Walmart said. The punchline lies here “Tariffs are an unforeseen problem. When Element planned the factory, it expected Congress to extend an exemption from a 4.5% tariff on television panels, but that didn't happen” and  "There are only so many places where I can absorb 4.5% in a very margin-oriented business," Mr. O'Shaughnessy says. "Right now, we're eating it."

It seems that the USA policy lead out of Washington maybe signalling a shift away from import tariff exemptions on Chinese imported components. I note that in the Wall St Journal that published the Walmart piece has also provided another two articles supporting this tariff policy shift. These articles can be read here http://online.wsj.com/articles/shoemaking-gets-a-foot-in-the-door-in-the-u-s-1405294724  and here http://online.wsj.com/articles/just-whose-job-is-it-to-train-workers-1405554382  covering the shift inwards to training people in the USA and c ompleting a trifecta of articles inside of 2 weeks.

 If this is the case, then Walmart has moved to shore up an alternative supply chain locally to protect itself from them protectionism policies that may be right ahead. Walmart has built its gargantuan business model around the China production growth story. If tariffs and sanctions were to render their current competitive advantage null and void, they need a new one, in this case it is hidden in their message "Buy American".

 

If you read the signs, take off the panglossians, pick up on the scent and join the dots you may find yourself drawing the same conclusion that I have. Walmart and its “Buy American” push is a disingenuous pitch, hidden and motivated by self interest, to a confused public that have been deserting the company en masse.