Showing posts with label Banking. Show all posts
Showing posts with label Banking. Show all posts
Monday, July 03, 2023
Nigel Farage's Bank of 40 years Closes ALL His Accounts!
Monday, September 12, 2011
Counterfeiting Gold
UT Endowment Fund buys $1 Billion in gold bullion and takes physical delivery because COMEX does not have enough gold to cover even 5% of their futures contracts.
Futures trader Ralph Preston calls their physically holding what they actually bought, "poor sportsmanship."
Allowing people to trade contracts to buy and sell gold that does not actually exist creates the appearance that there is more gold than there actually is. This drives down the price of gold. Increasing the margin requirements results in brokerages calling margin accounts forcing people to either sell contracts or add money to their account. Many will sell contracts. This creates the appearance of a contraction and drives prices down. In this way the price of gold can be fraudulently manipulated by a few people. Although this type of manipulation is legal (of the form of law), it is not, in fact, lawful or proper. It allows the transfer of wealth to those who know in advance about the margin changes from those who do not know in advance about the margin changes. Such transfer of wealth constitutes theft by unjust enrichment.
However, the guilt is not all one-sided. It requires the willing participation of those who will trade commodities without taking possession of them. If everyone took control of all commodities they wished to trade (which would require full payment), there could be no margin trading and thus no ability for those who control the brokerages to steal money from those who don't by indirectly manipulating the market. Once again, God is not mocked. Destruction and loss accompany theft.
Futures trader Ralph Preston calls their physically holding what they actually bought, "poor sportsmanship."
The call to take delivery is more of a challenge to the system and it borders on the anarchistic,” said Ralph Preston, a principal at Heritage West Financial Inc., a San Diego company that specializes in futures trading. “It’s like the Republicans trying to overturn President Obama over the birth certificate issue. It’s poor sportsmanship.”
Allowing people to trade contracts to buy and sell gold that does not actually exist creates the appearance that there is more gold than there actually is. This drives down the price of gold. Increasing the margin requirements results in brokerages calling margin accounts forcing people to either sell contracts or add money to their account. Many will sell contracts. This creates the appearance of a contraction and drives prices down. In this way the price of gold can be fraudulently manipulated by a few people. Although this type of manipulation is legal (of the form of law), it is not, in fact, lawful or proper. It allows the transfer of wealth to those who know in advance about the margin changes from those who do not know in advance about the margin changes. Such transfer of wealth constitutes theft by unjust enrichment.
However, the guilt is not all one-sided. It requires the willing participation of those who will trade commodities without taking possession of them. If everyone took control of all commodities they wished to trade (which would require full payment), there could be no margin trading and thus no ability for those who control the brokerages to steal money from those who don't by indirectly manipulating the market. Once again, God is not mocked. Destruction and loss accompany theft.
Friday, March 06, 2009
An Ancient Solution - Just Cancel the Debt
There are numerous sins and innumerable follies on which the collapse of the financial world and the global economy could be blamed. None of them, incidentally, have any connection to free enterprise or a shortage of legislation. The solution, on the other hand, has everything to do with the free market and the removal of harmful, monopoly granting legislation.
As it turns out, the free market could solve the crisis without any stimulus from Congress, if it was simply allowed to operate without additional crippling legislation. The situation in a nutshell is that foolish borrowers over-committed themselves, incurring debts that would take the rest of their life to repay. Greedy bankers illegitimately created the principal, hoping to receive interest on money for which they did not labor. Of course, God is not mocked. Only the Creator can create ex nihilo. The money created out of nothing disappeared even faster than it was created, taking with it the hopes and dreams of those whose wealth was built on it.
As Michael Hudson notes, Lehman's mortgages were trading at 22 cents on the dollar before it was nationalized, meaning that people were buying the notes for less than a quarter of what the loan originator paid in funding the loan. So with no intervention, Lehman Brothers loses lots of money, their employees don't get their bonuses and the company goes bankrupt. Yes, investors will lose money; but life and the economy will go on. Enron's bankruptcy, while destroying investor confidence in the veracity of CEO's and accounting firms and wiping out those who were over-invested in its stock, had little negative impact on the overall economy.
The benefit, on the other hand, of allowing the free market to buy these "toxic" notes at steep discounts (i.e. 80% or more) is that the new owners of these notes can go to the foolish borrowers and cut their mortgage by 75% turning a $400,000 mortgage into a $100,000 mortgage or a $100,000 mortgage into a $25,000 mortgage and not have lost a penny doing so. With a much lower loan, many of the foolish borrowers might have a reasonably good chance of paying their mortgage or at least selling their home for the value of the mortgage. Property prices would fall, making home ownership affordable for more people and gradually restoring demand for housing. Since many lenders will have lost their shirt, loans will be much harder to get, thereby slowing the creation of a new bubble. (To prevent a new bubble, existing laws granting monopoly power to some corporations to create new money must be repealed.) This could all happen without any help from Uncle Sam and without further impoverishment of taxpayers. And, it puts the burden on the those who should rightfully bear it- those who unjustly profited by the illicit creation of money in the first place.
This solution is outlined in this delightful interview with Michael Hudson. Thanks Mom for bringing it to my attention.
As it turns out, the free market could solve the crisis without any stimulus from Congress, if it was simply allowed to operate without additional crippling legislation. The situation in a nutshell is that foolish borrowers over-committed themselves, incurring debts that would take the rest of their life to repay. Greedy bankers illegitimately created the principal, hoping to receive interest on money for which they did not labor. Of course, God is not mocked. Only the Creator can create ex nihilo. The money created out of nothing disappeared even faster than it was created, taking with it the hopes and dreams of those whose wealth was built on it.
As Michael Hudson notes, Lehman's mortgages were trading at 22 cents on the dollar before it was nationalized, meaning that people were buying the notes for less than a quarter of what the loan originator paid in funding the loan. So with no intervention, Lehman Brothers loses lots of money, their employees don't get their bonuses and the company goes bankrupt. Yes, investors will lose money; but life and the economy will go on. Enron's bankruptcy, while destroying investor confidence in the veracity of CEO's and accounting firms and wiping out those who were over-invested in its stock, had little negative impact on the overall economy.
The benefit, on the other hand, of allowing the free market to buy these "toxic" notes at steep discounts (i.e. 80% or more) is that the new owners of these notes can go to the foolish borrowers and cut their mortgage by 75% turning a $400,000 mortgage into a $100,000 mortgage or a $100,000 mortgage into a $25,000 mortgage and not have lost a penny doing so. With a much lower loan, many of the foolish borrowers might have a reasonably good chance of paying their mortgage or at least selling their home for the value of the mortgage. Property prices would fall, making home ownership affordable for more people and gradually restoring demand for housing. Since many lenders will have lost their shirt, loans will be much harder to get, thereby slowing the creation of a new bubble. (To prevent a new bubble, existing laws granting monopoly power to some corporations to create new money must be repealed.) This could all happen without any help from Uncle Sam and without further impoverishment of taxpayers. And, it puts the burden on the those who should rightfully bear it- those who unjustly profited by the illicit creation of money in the first place.
This solution is outlined in this delightful interview with Michael Hudson. Thanks Mom for bringing it to my attention.
Wednesday, December 24, 2008
Understanding the Dollar Crisis
In the summer of 1969 Percy Graves, a close friend and student of Professor Ludwig von Mises, gave a series of 7 lectures in Buenos Aires to overflow crowds at the Centro de Estudios sobre la Libertad on the dollar crisis. One of those lecutures dealt with the specifics of the 1929 Depression in some detail. Apparently there were Argentinians concerned enough about that crisis that they were willing to invest 7 nights of the life so as not to repeat that economic calamity in their country.
Would that Americans were so inclined.
The great irony is that if one changed 1929 to 2009 and added 80 years to the other dates, Professor Graves could have given the same lecture today word for word and been right on the mark. The only difference at this point is that we don't yet have the diaries and papers of the key players of the 2009 crisis.
The biggest and most dangerous misunderstanding regarding both of these economic crises is that they somehow represent a failure of the free market instead of the failure of government management of the economy.
Mises was once asked by a graduate student at his University of New York seminar what he thought the government should do during a depression. Mises replied in his quiet manner by presenting his free market position in a few well chosen words. Aghast, the student replied, " You mean the government should do nothing?"
Mises leaned back as he frequently did and said, " Yes, but I mean the government should start doing nothing much sooner."
You can download a complete transcript of this lecture here.
Would that Americans were so inclined.
The great irony is that if one changed 1929 to 2009 and added 80 years to the other dates, Professor Graves could have given the same lecture today word for word and been right on the mark. The only difference at this point is that we don't yet have the diaries and papers of the key players of the 2009 crisis.
The biggest and most dangerous misunderstanding regarding both of these economic crises is that they somehow represent a failure of the free market instead of the failure of government management of the economy.
Mises was once asked by a graduate student at his University of New York seminar what he thought the government should do during a depression. Mises replied in his quiet manner by presenting his free market position in a few well chosen words. Aghast, the student replied, " You mean the government should do nothing?"
Mises leaned back as he frequently did and said, " Yes, but I mean the government should start doing nothing much sooner."
You can download a complete transcript of this lecture here.
Thursday, March 09, 2006
An Honest Bank
Amidst the usual news of ongoing torture in communist China ( Tiananmen dissident Yu Dongyue was recently released from prison physically scarred and suffering from a complete mental breakdown) and ominous credible comparisons of the EU commission to the Soviet Politburo (Former Soviet Dissident Warns For EU Dictatorship by Paul Belien, The Brussels Journal Tuesday, February28, 2006) I came across some very encouraging news, an honest bank.
Prosper.com, a San Francisco start-up began operations recently combining e-bay auctions and bank lending to bring borrowers and lenders together with minimal risk.
It's honest because the act of loaning does not create money resulting in payments being received for which no work was performed or no capital invested.
It will be interesting to see how long this challenge to the financial monopoly is allowed to exist and how big it becomes. But while it lasts, if one needs to become a servant, at least one can enslave himself to an honest master.
Prosper.com, a San Francisco start-up began operations recently combining e-bay auctions and bank lending to bring borrowers and lenders together with minimal risk.
It's honest because the act of loaning does not create money resulting in payments being received for which no work was performed or no capital invested.
It will be interesting to see how long this challenge to the financial monopoly is allowed to exist and how big it becomes. But while it lasts, if one needs to become a servant, at least one can enslave himself to an honest master.
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