It is interesting to see how the stock market reacts to
news. What news is irrelevant, or
whether it’s good or bad. The fact is
that with the speed of trades increased through the use of electronic media,
the market can react instantly to anything and everything, and the gamblers and
speculators are, of course, experts at making money whichever way it goes.
This makes sense.
Investors who are in for the long haul are (up to a point) indifferent
to the day-to-day swings in the market.
Their goal is a steady and stable rise in the value of the “underlying”
reflected in a steady growth of the value per share, a steady and predictable
income stream from dividends, or both.
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| Gambling for fun and profit. |
A gambler or speculator can’t wait that long. He or she needs instant returns to be able to
continue placing bets. With the speed of
electronic trading, it’s easier to spot a trend and take advantage of it, and
go “long” or “short” depending on which way the smart money is betting. It’s much better than betting on the dogs or
horses, because you can place bets as to which stocks will win or lose
competing against themselves, not other stocks!
You don’t have to worry about which comes in first or last, or by how
much, just whether they’re going up or down.
With volume, a tiny change can mean huge profits, and with electronic
trading, profits can be realized instantly.
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| No production, no consumption. |
The problem the global economy faces in light of the easy
money attitude of the markets and government, is how to promote not only
production of marketable goods and services, but to make certain that everyone
can participate in that production. This
is consistent with Say’s Law of Markets, to say nothing of St. Paul, who
reminded the Thessalonians that anyone who refused to work (produce) shouldn’t
expect to eat (consume). So what are we
doing to try and give everyone the opportunity to be productive?
• Mark the annual “Rally at the Fed” on your calendar for April 11, 2014. This year’s could be a pivotal event, as the
Federal Reserve did not begin operation until November of 1914, making this
year the “real” centennial of the central banking system of the United States. What with the obvious need for an
asset-backed and elastic reserve currency to secure the foundations of the
global financial system, more attention should be paid to the original purpose
of the Federal Reserve. It was not
established to finance government, but provide an elastic and asset-backed
reserve currency to promote private sector growth and development.
• We had some more interesting meetings early this week with
people who are interested in exploring the application of Just Third Way
principles in the insurance industry and community development.
• Discussions continue with Deacon Joseph Gorini, Chairman
and CEO of Evangelization Enterprises Inc.
Due to some unforeseen circumstances things are not moving as fast as any of us
would like, but (as they say) “stuff happens.”
Given the massive inertia of bad ideas throughout the world, any
progress or even signs of progress are both hopeful and gratifying at this
point.
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| At least the tulip bulbs existed. |
• Illustrating the dangers of dealing in virtual commodities
(specifically Bitcoins) that have no inherent connection with the present value
of existing or future marketable goods or services in the economy, the Mt. Gox
bankruptcy, caused by the “disappearance” of something that didn’t really exist
in the first place, now has a new twist:
the owners “found” 180,000 or so Bitcoins in an old format “wallet” . . . and
started moving them around after filing for bankruptcy. Oops.
You’d think they’d be more clever at hiding non-existent assets from
their creditors.
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| Hjalmar Horace Greeley Schacht |
• Speaking of funnymoney, the recent “stress tests” of the U.S. banking system revealed that they have enough “capital” (i.e., currency backed with government
debt instead of hard assets) to withstand a national or global economic
downturn.
Assuming, of course, that the U.S. currency retains its place as the global
reserve currency, which is increasingly unlikely. The Number One Rule for a reserve currency is
that it must be asset-backed. Not “may,” or “it would be nice.” MUST. And (surprise) government debt is not an
asset. It’s a liability. A government can’t back its own currency with
its own liabilities for any sustained length of time, or (especially) if it is
not convertible on demand into an asset-backed reserve currency. Elasticity of the reserve currency is a good
idea, too, but is not (strictly speaking) essential, as Hjalmar Schacht proved
with the Rentenmark. That, however, is
only one problem. The other is the
current mindset that assumes that government regulation, and not proper
internal controls, is sufficient to ensure a sound financial system. As long as financial institutions continue to
combine incompatible functions, such as both investment and commercial banking,
there is the potential for disaster. This
violates basic principles of internal control, which all the good will and
government regulation cannot overcome.
• Amazon is still using CESJ Director of Research Michael D.
Greaney’s book, So Much Generosity,
a survey of the fiction of Cardinals Wiseman and Newman, and Monsignor Robert
Hugh Benson, as a “loss leader.” Today
it’s down a few more dollars to $10.93.
While you might have missed the best
deal, that is still almost a 50% savings off the cover price. The book is
published by Universal Values Media, Inc., which has a co-marketing arrangement
with CESJ.
• As of this morning, we have had
visitors from 53 different countries and 56 states and provinces in the United
States and Canada to this blog over the past two months. Most visitors are from
the United States, Canada, the United Kingdom, Australia, and Germany. The most
popular postings this past week were “Thomas Hobbes on Private Property,” “Aristotle on Private Property,” “The Fulton
Sheen Guy,” “Economic Emancipation, III: Why NOT Capital Homesteading?” and “Henry
George v. Cardinal Gibbons.”
Those are the happenings for this week, at least that we
know about. If you have an
accomplishment that you think should be listed, send us a note about it at
mgreaney [at] cesj [dot] org, and we’ll see that it gets into the next
“issue.” If you have a short (250-400
word) comment on a specific posting, please enter your comments in the blog —
do not send them to us to post for you.
All comments are moderated anyway, so we’ll see it before it goes up.
#30#
