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- Maps from Russia and Turkey tell very different stories about the downed jet
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- NATO Is Harboring ISIS, And Here's The Evidence
- Reputation In An Information Age
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- Let's talk, Turkey: Downing of Russian SU-24 bomber just doesn't add up
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- Whale Fall
Our first observation is that trends in the USD tend to last for some time, so if this rally follows the pattern of previous rallies, it’s unlikely to have run its course in one year.
Secondly, previous rallies paused for a multi-month consolidation period before launching upward for the second leg of the long-term rally.
Thirdly, the USD rose sharply to previous peaks and then round-tripped back to the 80 level.
This raises the question: How high could the dollar rise in this rally?
- Other currencies are inflating faster than the USD
- The USD is still backed by a preponderance of the world's assets
- The potential for a global currency crisis is rising
- Why USD will be the (initial) safe haven when it arrives
In Part 1, we reviewed the technical evidence in support of a second move higher in a multi-year U.S. dollar rally. Here in Part 2, we ask: What conditions might drive such a move higher?
To answer this question, let’s start with another question: What’s scarce in the world of foreign exchange (FX)?
We ask this because capital, profits and gains flow to what’s scarce and in demand. This boils down to supply and demand: gains go to whatever is in high demand and scarce, and whatever is not in demand and over-supplied will lose value.Supply and Demand
Like every other commodity, currencies respond to supply and demand: whatever currency is scarce and in demand will rise, while currencies that are in oversupply and not in demand will decline.
Though many presume the world is awash in dollars as a result of Federal Reserve quantitative easing, the reality is that expansion of USD via bank loans (credit) and Fed money-creation is modest compared to the expansion of other global currencies such as China’s renminbi (RMB), a.k.a. yuan.
Consider this chart of bank credit expansion in the U.S. and in China since the onset of the “Great Recovery” in early 2009: China’s bank credit has soared by 260%, a sum that is roughly 140% of China’s entire Gross Domestic Product (GDP), while U.S. bank credit rose by a modest 12% of U.S. GDP.
If we compare M2 money supply, we find...
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Learn about how to use your surroundings and nature's signs to guide your way and rely less on electronic tools.
This morning two Turkish F-16 fighters shot down a Russian jet, claiming that it was in Turkey’s airspace after it had ignored repeated warnings.
There are two problems with this story. The first is that Russia claims to have evidence that the Russian jet never left Syrian airspace. The second is that even if the Russian jet had strayed into Turkish airspace, Turkey knew there was zero threat to its security from a single Russian jet. Everybody and their uncle knows what Russian jets are doing in the area.
This means that NATO, of which Turkey is a member, had given a greenlight to the idea of shooting down Russian planes.
GCUC 2015's unconference schedule. Events are a great way to market a coworking space. Photo by author.
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- Now the truth emerges: how the U.S. fuelled the rise of Isis in Syria and Iraq
- Home Of The Not-So-Brave
- Putin: Downing of Russian jet over Syria stab in the back by terrorist accomplices
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In today’s complex economy how do we progress financially from where we are today and the life of abundance we seek? This is the first question a financial advisor will ask us. It is seldom an easy question to answer because the quality of our life isn’t measured purely in financial terms. There are multiple factors including our work, our family and, fundamentally, our values. How does our quest for financial wealth balance with the people and planet upon whom we depend? Surprisingly, it all begins with soil.
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I am often told that money is like energy; that it flows around the community creating economic activity remaining essentially the same, never being destroyed. But this metaphor doesn't satisfy me. it works quite well for cash whether fiat or backed, but most of our money is not cash and in fact behaves very differently.
It is tempting when exploring the True nature of money, as theologians study the bread in the Eucharist, to study the tokens and the exchanges. One popular approach is to posit a substance called 'value' which resides in the tokens, either intrinsically because the tokens are made of some valuable stuff (use value), or by government decree (exchange value). This is a bit like the theory of transubstantiation in which the bread 'changes' into into the body of Christ.
But this whole approach assumes that money is some kind of stuff which moves from hand to hand. Even fiat money is a commodity insofar as I value it more than what it can buy.
When we look at the different ways of issuing money, we see clearly that 97% of modern money is NOT a commodity. It comes from nothing and exists only on bank balance sheets. This is accounting money, the kind used in mutual credit systems. And it has some other interesting properties:
- For every unit of money created as a liability, there is a corresponding asset created with equal and opposite value
- The money flows into circulation and at the appointed time some money - not necessarily the same money is pulled out of circulation and cancelled out against the asset, leaving nothing.
- When we look at cash we might imagine each piece moves around the economy independently of other money, like a ball bouncing randomly around a pinball machine. But with accounting money you can't mark the bills and track one piece of money just like you can't pinpoint an electron. A better analogy is a field
At least, that's when it works.
When we treat money as a commodity, the flows get out of sync. When we hoard money and relend the same money twice we prevent it from returning to source. When we just read the peaks and not the troughs, we miss the coming tsunami.
When, for cultural reasons, borrowers take all the responsibility and risk, while lenders charge rent on their absent 'property' the two parties will never dance well together, leading to gluts and dearths and arhythmia.
So I think that credit money, accounting money is very much like electricity, and the conceptual leap we need to make if we want master it is as big as from Newtonian mechanics to Quantum mechanics.
Precious metals sank to 5-year lows during this past week. The long painful price decline that began at the end of 2011 still continues unabated. Holders of gold & silver are understandably wondering if their faith in precious metals has been misplaced.
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