Personal and political freedoms are inseparable from economic freedom. To this end, economic freedom is contingent upon an economy that transacts using honest money that’s free from coercion.
Volumes have been written on America’s experience with money of varying veracity. Here we’ll touch on a few key events.
Article I, Section 8, of the U.S. Constitution empowers Congress to coin money and regulate its value thereof. Article I, Section 10, specifies that no state shall make anything but gold and silver coin a tender in payments of debts.
The Federal Reserve Act of 1913, passed by the 63rd Congress and signed into law by President Woodrow Wilson on December 23, 1913, established the Federal Reserve System, the central bank of the United States. The Federal Reserve Act also delegated the right to issue money from Congress to the Federal Reserve.
In this regard, the current U.S. dollar, a Federal Reserve Note, is illegal money. It is issued by the Federal Reserve – not Congress – in direct violation of the U.S. Constitution. Moreover, when states collect tax dollars that are devoid of gold or silver coin, they violate the Constitution. Continue reading
The mighty U.S. dollar spent a good part of the year beating up on other currencies. From January to mid-October, the dollar rose 13 percent against the euro, 22 percent against the Japanese yen, and 6 percent against emerging market currencies.
And while the dollar rose less against emerging market currencies than against Europe and Japan, the thrashing was particularly brutal. Many emerging economies – like Sri Lanka, Zambia, Pakistan, Argentina, Turkey, and others – that borrow in dollars, are now on the hook to repay those loans using their local currencies of diminishing relative value.
Perhaps the worst of the dollar’s rapid rise is over. We don’t know. But over the last month the dollar has rolled over from the 20-year high attained on the dollar index.
Specifically, the dollar index is up over 10 percent year-to-date. Over the last 30-days, however, it has fallen more than 3 percent.
After slipping below 96 cents in September, the euro has risen to nearly $1.04. The British pound has also bounced from its September all-time low. The Japanese yen has slightly rebounded from a brutal skid to a 32-year low against the dollar. Continue reading
On February 11, 2021, the share price of Opendoor Technologies Inc. (NASDAQ: OPEN) hit an all-time closing high of $35.88. As of market close on Thursday, the stock was trading at just $1.87. That’s over a 94 percent loss.
Should you buy the dip?
Opendoor, if you’re unfamiliar with the business, is an online – iBuyer – company that buys and sells residential real estate. Through its web-based platform, Opendoor provides instant cash offers to property owners. For potential sellers, the process is very slick and very convenient.
Sellers that use Opendoor skip the tedium and all the phony interactions that come with real estate agents. They also skip the ridiculous open houses, and the bummer of their nosy neighbors and other looky-loos trampling through their staged home.
In fact, with Opendoor, selling a house is as simple as selling an old pair of trousers on eBay. For this service, Opendoor charges a fee that’s comparable to a real estate agent’s commission. Continue reading
On Thursday, the Bureau of Labor Statistics reported that consumer prices, as measured by the consumer price index (CPI), inflated at an annual rate of 7.7 percent in October. Investors went bananas on this apparent pullback in the headline CPI.
The stock market responded with one of its biggest single day rallies in history. The S&P 500 jumped over 5.5 percent. The NASDAQ jumped over 7.3 percent. Of greater note, the yield on the 10-Year Treasury note dropped to just 3.81 percent – its lowest yield in over a month.
So, is raging consumer price inflation no longer a concern? Has the ugly storm come and gone? Can Powell now pivot?
Probably not. More than likely, consumer price inflation will rage throughout the decade. Regardless, now’s not the time to go all in on stocks. We’ll explain why in just a moment. But first several words on consumer price inflation.
Consumer price inflation, remember, is an effect of money supply inflation. The Federal Reserve inflated its balance sheet with upwards of $5 trillion in digital monetary units – created out of thin air – between September 2019 and April 2022. Continue reading