Global Wealth Distribution 2013

Cred­it Suisse have just released their lat­est Glob­al Wealth Data­book 2013

The most inter­est­ing point is this dia­gram rep­re­sent­ing Glob­al Wealth dis­tri­b­u­tion:

distribution of wealth around the world for 2013

Glob­al Wealth Pyra­mid 2013

If you have a net worth of over 1m USD then con­grat­u­la­tions — you have done extreme­ly well. You are in the top 0.7% of the Worlds Pop­u­la­tion. You lucky, lucky, lucky .… Stag­ger­ing. Con­verse­ly almost 70% of the world have less than 10k USD wealth.

Here’s an inter­est­ing quote from the report:

Apart from the rich lists, which cov­er a rel­a­tive­ly small num­ber of named indi­vid­u­als, there is a  scarci­ty of infor­ma­tion on wealth hold­ings above USD 1 mil­lion. Sur­vey details are patchy at best, and offi­cial sta­tis­tics based on tax returns are often inad­e­quate giv­en the com­plex­i­ty of  wealth own­er­ship arrange­ments.

Down­load a copy of the PDF report here — its inter­est­ing read­ing. And while you are there grab a copy of the Glob­al Wealth Report 2013 — it’s worth a skim too.

© Copy­right MMXIII RagingGoldenBull.com

IMF “to admit mistakes” in handling Greek debt crisis and bailout — My response…

Here is a short piece that I felt I had to inter­ject at The Guardian (UK)

RagingGoldenBul unleashes on The Guardian (UK) about the IMF (International Mafia Federation)

Rag­ing­Gold­en­Bul unleash­es on The Guardian (UK) about the IMF (Inter­na­tion­al Mafia Fed­er­a­tion)

😉

Rag­ing­Gold­en­Bul — 05 June 2013 6:54pm

Rec­om­mend: 77

Let us not ponce about the prover­bial bush here my brethren:

The IMF (short for: Inter­na­tion­al Mafia Fed­er­a­tion) is noth­ing more than anoth­er pho­ny instru­ment cre­at­ed by the US gov­ern­ment, for the US gov­ern­ment, along with World Bank at that infa­mous Bret­ton Woods (1944) meet­ing where they strong armed the rest of the world over 21 long, gru­el­ing, and I would put it to you ardu­ous days (blood must have been pour­ing from the poor del­e­gates ears after day 12) while the world was still at WAR. Pic­ture it.

Oh how they seized their chance, dragged in John May­nard Keynes (UK in col­lu­sion – spe­cial rela­tion­ship you know), and invent­ed a crock, because no one had any choice. No Choice.

It is well known that M. Lagarde (after they ditched DSK) let the cat out of the “bail-in” bag way too ear­ly for the FedReserve, and the ECB, and thus both the Bernanke and the Draghi are now sour-puss­es. After those tril­lions of USDs that heli­copter Ben print­ed-up, M. Lagarde blew it in one momen­tary lapse of rea­son. Now Ben will bail-out him­self of the pic­ture at end of the cur­rent term as Gov­er­nor of the Fed.

Every­one knows that “Bail-ins” are com­ing now to a Bank near you real soon.…Are you ready for that?

Why does any­one lis­ten to a word these guys (Inter­na­tion­al Mafia Fed­er­a­tion) say any­more? Why do they point to them as if they are cred­i­ble?

It all leads back to one thing — US Dol­lar hege­mo­ny, and any­thing to keep that pup­py alive – alas brethren, the end is nigh.

Please excuse my rather fruity and col­or­ful lan­guage (sausage I hate US Eng­lish 😉 )…

Orig­i­nal Arti­cle:

The Inter­na­tion­al Mon­e­tary Fund is to admit that it has made seri­ous mis­takes in the han­dling of the sov­er­eign debt cri­sis in Greece, accord­ing to inter­nal reports due to be pub­lished lat­er on Wednes­day.

Doc­u­ments pre­sent­ed to the Fund’s board last Fri­day will reveal that the Wash­ing­ton-based organ­i­sa­tion under­es­ti­mat­ed the dam­age aus­ter­i­ty would cause to the euro­zone coun­try, which has required two bailouts in the past three years.

The Wall Street Jour­nal report­ed that the papers would say that finan­cial sup­port from the Fund, the Euro­pean Cen­tral Bank and the Euro­pean Com­mis­sion had bought time for Greece but had only been made pos­si­ble because the IMF had bent its own rules to make the coun­try’s debt look more sus­tain­able than it was. Accord­ing to the WSJ report, Greece failed to meet three of the Fund’s four tests to qual­i­fy for help.

A Fund spokes­woman said: “We will be pub­lish­ing a num­ber of papers on Greece lat­er today. The board met last Fri­day to dis­cuss sev­er­al doc­u­ments on Greece includ­ing the review of its pro­gramme and its annu­al eco­nom­ic assess­ment.”

Greece became the first euro­zone nation to require a bailout by the inter­na­tion­al com­mu­ni­ty in 2010, but need­ed a sec­ond round of finan­cial assis­tance in ear­ly 2012 when a deep reces­sion and high inter­est pay­ments threat­ened to send its debts spi­ralling out of con­trol.

The so-called troi­ka of the IMF, ECB and EC forced pri­vate sec­tor bond­hold­ers to write down the val­ue of their Greek bonds in an attempt to bring the coun­try’s debts down to sus­tain­able lev­els of 120% of nation­al income by 2020.

Chris­tine Lagarde, the man­ag­ing direc­tor of the Fund, has said many times over the past year that Greece should now be in a posi­tion to pay off its debts, but the WSJ reports that IMF staff believe this can­not be said with any cer­tain­ty.

In Athens, offi­cials react­ed with bare­ly dis­guised glee to the news.

The report con­firms what Greek offi­cials have long said: that the first bailout of uncom­pro­mis­ing bud­get cuts and tax increas­es, the price of 110 bn euro in emer­gency funds in May 2010, was the wrong pre­scrip­tion for a coun­try not only bat­ting a mon­u­men­tal debt load but ram­pant tax eva­sion and a flour­ish­ing black econ­o­my.

Under the weight of such mea­sures – applied across the board and hit­ting the poor­est hard­est – the econ­o­my, they said, was always bound to dive into an eco­nom­ic death spi­ral. “For too long they [troi­ka offi­cials] refused to accept that the pro­gramme was sim­ply off-tar­get by hid­ing behind our fail­ure to imple­ment struc­tur­al reforms,” said one insid­er. “Now that reforms are being applied they’ve had to accept the bit­ter truth.”

The Greek media recent­ly quot­ed IMF man­ag­ing direc­tor Chris­tine Lagarde describ­ing 2011 as a “lost year” part­ly because of mis­cal­cu­la­tions by the EU and IMF. The author­i­ta­tive Kathimeri­ni news­pa­per said the report iden­ti­fied a num­ber of “mis­takes” includ­ing the fail­ure of cred­i­tors to agree to a restruc­tur­ing of Greece’s debt bur­den ear­li­er – a fail­ure that had had a dis­as­trous effect on its macro-eco­nom­ic assump­tions.

From what we under­stand the IMF sin­gles out the EU for crit­i­cism in its han­dling of the prob­lem more than any­thing else,” said one well-placed offi­cial at the Greek finance min­istry. “But acknowl­edge­ment of these mis­takes will help us. It has already helped cut some slack and it will help us get what we real­ly need which is a hair­cut on our debt next year.

See the full sto­ry: http://www.guardian.co.uk/business/2013/jun/05/imf-admit-mistakes-greek-crisis-austerity#comment-24097893

© Copy­right MMXIII RagingGoldenBull.com

Video — The Ascent of Money: A Financial History of The World by Niall Ferguson

Niall Fer­gu­son is a his­to­ri­an extra­or­di­naire and this is a stonk­ing doc­u­men­tary. Care­ful it is four hours long! As Niall says in the doc­u­men­tary:

Not Know­ing this stuff can seri­ous­ly affect your wealth.

http://www.niallferguson.com/about

© Copy­right MMXIII RagingGoldenBull.com

John Embry on Gold and Silver

Here is a recent inter­view with John Embry for the Hera Research Newlet­ter (HRN):

HRN: Thank you for join­ing us today. Let’s talk about gold stocks.

John Embry: Gold stocks rep­re­sent a tremen­dous val­ue in rela­tion to the price of gold and to the fun­da­men­tals of the sec­tor. There has been tremen­dous short­ing activ­i­ty by hedge funds and, as a result, ded­i­cat­ed gold funds have expe­ri­enced redemp­tions. Retail investors, who are nat­ur­al buy­ers of these stocks, have been anni­hi­lat­ed by the price action. This has cre­at­ed one of the finest oppor­tu­ni­ties, if not the finest oppor­tu­ni­ty, that I have ever seen.

HRN: Do you have a short term price tar­get?

John Embry: I don’t look at short term price charts for gold. In a mar­ket as heav­i­ly inter­fered with as this one, charts can be made to look any way you want in the short run. As I see it, if you don’t like gold at these prices, then you must like cur­ren­cies. My part­ner Eric Sprott often says, the U.S. dol­lar is the best look­ing horse in the glue fac­to­ry. If the U.S. dol­lar is the world’s strongest cur­ren­cy, that’s the best endorse­ment for gold that I can think of.

HRN: Do you believe that cur­ren­cies are los­ing val­ue?

John Embry: The fact is that economies are slow­ly melt­ing down. The prob­lem is exces­sive debt in almost every cor­ner of the world. The only way to deal with the debt is through aggres­sive growth, but fab­ri­cat­ing growth through more debt won’t work. The idea that you can get the econ­o­my to move for­ward by cre­at­ing even more debt just does­n’t wash. We can’t ser­vice the exist­ing debt, even at arti­fi­cial­ly low inter­est rates. I don’t see any easy way out. We have to get the exces­sive debt out of the finan­cial sys­tem. Either pol­i­cy mak­ers are going to cre­ate mount­ing infla­tion or there will be a defla­tion­ary debt col­lapse.

HRN: Europe seems to be a case in point. Do you think the Euro will break up?

John Embry: The Euro­crats who con­struct­ed the cur­ren­cy aren’t going to give it up eas­i­ly. The key is how much the Ger­mans are going to go along with. They real­ize that there’s a huge loss for them if the Euro falls apart. I would­n’t want to be in Ger­man Chan­cel­lor Angela Merkel’s shoes. Ger­many is trapped in the Euro because it relies on exports and Ger­man banks hold the debt of oth­er Euro­pean coun­tries. Despite the bailouts and the infla­tion­ary poli­cies of the Euro­pean Cen­tral Bank (ECB), Ger­many does­n’t have much choice.

HRN: How can Euro­pean gov­ern­ments solve their debt prob­lems?

John Embry: The prob­lem is that it would take a hor­rif­ic debt col­lapse to set the stage for future expan­sion. There is no politi­cian on earth that wants that to hap­pen on their watch. Con­se­quent­ly, pol­i­cy mak­ers will resist defla­tion and we’re going down the oppo­site road, which means mount­ing infla­tion or pos­si­bly hyper­in­fla­tion. I don’t think politi­cians will change the sys­tem. I think the sys­tem will change the politi­cians.

HRN: Can the econ­o­my recov­er in a high infla­tion sce­nario?

John Embry: Cre­at­ing even more debt is not going to work. To me, high infla­tion is the most cor­ro­sive thing that can hap­pen to an econ­o­my or to a coun­try. I’m real­ly wor­ried that neo­clas­si­cal, Key­ne­sian econ­o­mists like Paul Krug­man, who are pre­scrib­ing even more debt, will bring about a col­lapse.

HRN: Are these prob­lems the result of Key­ne­sian eco­nom­ics?

John Embry: If you real­ly applied Key­ne­sian­ism as Keynes orig­i­nal­ly envi­sioned it, the gov­ern­ment was sup­posed to run sur­plus­es when the econ­o­my was grow­ing to pay for the deficits that would be cre­at­ed dur­ing down­turns. That’s been con­ve­nient­ly for­got­ten. We’ve had an astound­ing build up of debt. I don’t think peo­ple ful­ly real­ize how seri­ous this is. I’m amazed at how com­pla­cent peo­ple are. We’ve nev­er been in a posi­tion like this in the entire his­to­ry of the world.

HRN: Why do you think peo­ple are so com­pla­cent?

John Embry: I think it’s cog­ni­tive dis­so­nance. When con­front­ed with some­thing that’s real­ly unpleas­ant, and to which there’s no easy solu­tion, the aver­age per­son will basi­cal­ly block it out and look for some­body to tell them that every­thing is fine. The main­stream news media and the gov­ern­ment are doing that as we speak. Con­se­quent­ly, the aver­age per­son does­n’t have a chance of under­stand­ing what’s going on. The man in the street does­n’t have a clue what’s com­ing.

HRN: What about invest­ment pro­fes­sion­als?

John Embry: I have a lot of close friends who have been in the invest­ment busi­ness for 40 years and they don’t want to hear it.

HRN: Won’t the Fed­er­al Reserve and oth­er cen­tral banks sim­ply bail out the sys­tem?

John Embry: They think that print­ing mon­ey will buoy the mar­kets and that that’s good, but it won’t solve any of the prob­lems. Although you may get a momen­tary lift in the finan­cial mar­kets, when it plays itself out we’ll be back in the same sit­u­a­tion, but with mon­ey that’s being sys­tem­at­i­cal­ly destroyed.

HRN: Does print­ing mon­ey work in the short term?

John Embry: There are nom­i­nal prices and real prices. Print­ing mon­ey is very decep­tive and peo­ple are con­fused by its effects. I am only inter­est­ed in real returns, not nom­i­nal returns. If you have a nom­i­nal return that’s caused by infla­tion, you’re los­ing mon­ey because gov­ern­ments tax nom­i­nal gains.

HRN: Can gov­ern­ments inflate their way out of debt?

John Embry: The U.S. fed­er­al gov­ern­ment, for exam­ple, has reached a stage where forty cents of every dol­lar spent at the fed­er­al lev­el is bor­rowed and a lot of that mon­ey has been print­ed. There has nev­er been a case in his­to­ry where that has­n’t led to finan­cial dis­as­ter. If you study any empir­i­cal evi­dence, they’re in a hope­less posi­tion. They’ve only been able to get away with it so far because the U.S. dol­lar is the world reserve cur­ren­cy. If the Unit­ed States was­n’t able to print mon­ey and was trapped in the Euro­pean Union, it would just be a mas­sive Spain.

HRN: So, gov­ern­ments can’t inflate away their debt?

John Embry: Infla­tion is the eas­i­er, more expe­di­ent route to take, but I would not rule out an acci­dent. For exam­ple, if pol­i­cy mak­ers push aus­ter­i­ty too far they could trig­ger a defla­tion­ary spi­ral that would be impos­si­ble to reverse. I sub­scribe to the Aus­tri­an the­o­ry of eco­nom­ics. In his book Human Action, Lud­wig von Mis­es wrote that there is no way to avoid the col­lapse of a cred­it boom and that more cred­it expan­sion sim­ply destroys the cur­ren­cy.

HRN: Don’t infla­tion­ary poli­cies help banks and sup­port the finan­cial sys­tem?

John Embry: The ECB could do anoth­er Long-Term Refi­nanc­ing Oper­a­tion (LTRO) or the Fed­er­al Reserve could buy more U.S. Trea­suries in the open mar­ket but that’s not real­ly solv­ing the prob­lem. If you actu­al­ly eval­u­at­ed the bank­ing sys­tem and marked all the assets to mar­ket, the sys­tem would be insol­vent.

HRN: And the basic prob­lem is too much debt and lever­age?

John Embry: The over the counter (OTC) deriv­a­tives sit­u­a­tion is so sur­re­al I can’t begin to express it. Cor­rect­ly cal­cu­lat­ed, the notion­al val­ue of all OTC deriv­a­tives is in excess of one quadrillion dol­lars glob­al­ly. The vast major­i­ty are relat­ed to inter­est rates. Cen­tral banks have to keep cre­at­ing liq­uid­i­ty to pre­vent these instru­ments from col­laps­ing.

HRN: What can the Fed­er­al Reserve and oth­er cen­tral banks do?

John Embry: They’re lost either way. They’re run­ning a mas­sive lab exper­i­ment with mon­e­tary pol­i­cy and don’t have a clue what the out­come is going to be.

HRN: Do you think the U.S. econ­o­my can grow its way out of debt?

John Embry: When I was a kid back in the 1950’s, most women did­n’t work. Amer­i­cans main­tained their stan­dard of liv­ing by putting a sec­ond per­son to work. When that was expend­ed they made up the dif­fer­ence by going into debt and, even­tu­al­ly, they used their homes as cash machines. Now stu­dent loans total more than $1 tril­lion. I just don’t see where the con­sumer demand is going to come from going for­ward. You can’t get blood out of a stone.

HRN: What do you think the out­come is going be?

John Embry: I believe that before this is over we’ll have a new cur­ren­cy sys­tem, prob­a­bly backed by gold.

HRN: Do you sup­port the gold stan­dard?

John Embry: One of the great­est peri­ods of wealth cre­ation was when we had a gold stan­dard in the sec­ond half of the 19th cen­tu­ry. It’s hard to believe that it’s going to be 41 years since there has been gold back­ing for any of the major cur­ren­cies in the world. That is what has allowed the mas­sive build up of debt that we have today. If there had been a gold stan­dard, we would­n’t be in the posi­tion we are in. West­ern gov­ern­ments don’t want the gold stan­dard because it restricts their abil­i­ty to dole out favors.

HRN: But the gold stan­dard does­n’t pre­vent finan­cial pan­ics.

John Embry: There are always going to be finan­cial pan­ics, but, under the gold stan­dard they tend to be short term. If we had had a gold stan­dard, there would have been a num­ber of cleans­ing peri­ods where excess debt was elim­i­nat­ed. The Fed­er­al Reserve allowed the build up of debt that led to the stock mar­ket bub­ble and crash of 1929 and to the Great Depres­sion, which was fol­lowed by World War II. It took about a decade to build up the debt and more than a decade to deal with the fall­out. It’s tak­en more than 40 years to build up the debt we have today and I don’t know how long it’s going to take to cor­rect it.

HRN: What does this mean for the aver­age per­son?

John Embry: I think liv­ing stan­dards of most peo­ple in the world, par­tic­u­lar­ly in the West are going to decline pre­cip­i­tous­ly. The Fed­er­al Reserve recent­ly report­ed that the net worth of the medi­an Amer­i­can fam­i­ly has fall­en near­ly 40% since 2007 after adjust­ing for infla­tion. Before this all plays out, I think the per­cent­ages are going to be far larg­er.

HRN: Do you fore­see any wider impact on soci­ety?

John Embry: When I was grow­ing up in the Unit­ed States after World War II, I did­n’t real­ize how remark­ably for­tu­nate we were as a soci­ety to have such a strong mid­dle class. Sel­dom in his­to­ry has there been a mid­dle class to equal what tran­spired in the U.S. and Cana­da from the 1950s to the 1980s. We basi­cal­ly took it for grant­ed because that’s all we ever knew. The mid­dle class in the Unit­ed States is dis­ap­pear­ing. What hap­pens is that you have mas­sive pover­ty and a small wealthy class. It’s one of the worst things that can hap­pen to a soci­ety and it can lead to civ­il unrest. If there’s no rea­son to buy into the sys­tem, peo­ple will act up.

HRN: Do you view gold and sil­ver as com­modi­ties?

John Embry: I view gold and sil­ver as mon­e­tary met­als. The main­stream news media con­flates gold and sil­ver with indus­tri­al com­modi­ties, but they’re real­ly a com­peti­tor to the cur­ren­cy sys­tem. Gold is the antithe­sis of paper mon­ey.

HRN: I’ve read that cen­tral banks are buy­ing gold.

John Embry: Con­fi­dence in cur­ren­cies is mis­placed. There is a strong flow of gold from West to East. The Chi­nese, Indi­ans, Rus­sians and Viet­namese know per­fect­ly well what’s going on with the U.S. dol­lar and the Euro. They are buy­ing phys­i­cal gold and the West has been stu­pid enough to sell it to them.

HRN: What’s your view on Chi­na?

John Embry: I’m not opti­mistic on Chi­na in the short run. The Peo­ple’s Bank of Chi­na (PBoC) recent­ly cut bank reserve require­ments by 150 basis points to stim­u­late 1.2 tril­lion yuan ($190 bil­lion) of new lend­ing because they don’t want growth to fall from around 8% to 7%. As I see it, they’ve dined out on West­ern profli­ga­cy for 20 years and have become the most unbal­anced econ­o­my in the world. An inor­di­nate amount of Chi­na’s eco­nom­ic activ­i­ty is gen­er­at­ed by exports and by all man­ner of cap­i­tal spend­ing on man­u­fac­tur­ing, real estate, infra­struc­ture and more. The slow­down in the world econ­o­my has revealed mas­sive over­ca­pac­i­ty in many sec­tors.

HRN: Can Chi­na devel­op a con­sumer-dri­ven econ­o­my?

John Embry: The idea that Chi­na’s econ­o­my can morph into a con­sumer-dri­ven econ­o­my is pre­pos­ter­ous. The very same con­sumers are employed in sec­tors like man­u­fac­tur­ing where there is mas­sive over­ca­pac­i­ty. If the world slides into anoth­er glob­al reces­sion, which is not beyond the realm of pos­si­bil­i­ty, I don’t see how Chi­na stays out of it and if they don’t then there’s no engine of growth left in the world.

HRN: So, even with a ris­ing mid­dle class, Chi­na remains depen­dent on exports?

John Embry: The fact is that Chi­na has become the world’s man­u­fac­tur­er but the abil­i­ty of their two largest cus­tomers, Europe and the Unit­ed States, to con­sume is being con­strained. Chi­na is not going to be able to keep sell­ing more year over year. The HSBC man­u­fac­tur­ing index has fall­en to reces­sion­ary lev­els.

HRN: It has been pre­dict­ed that Chi­na will become the world’s largest econ­o­my. Do you think that’s true?

John Embry: I think Chi­na will prob­a­bly dom­i­nate the 21st cen­tu­ry. The U.S. dom­i­nat­ed the 20th cen­tu­ry but it went through some very tough times in the first half of the cen­tu­ry.

HRN: With a slow­down in Chi­na, what’s your view on com­modi­ties like cop­per or crude oil?

John Embry: In the short term, I’m wor­ried about com­modi­ties. In a deep glob­al reces­sion, I expect there will be extreme mon­e­tary debase­ment, which will hold up the nom­i­nal prices of com­modi­ties more than sup­ply and demand fac­tors would sug­gest.

HRN: Do you fore­see a bear mar­ket in com­modi­ties?

John Embry: We are in a short-term bear mar­ket that will be arrest­ed by mon­e­tary debase­ment.

HRN: But there are val­ue buy­ing oppor­tu­ni­ties?

John Embry: Giv­en my views on cur­ren­cies, com­modi­ties that are already depressed could be decent repos­i­to­ries for wealth. I like agri­cul­tur­al prod­ucts. As the glob­al econ­o­my con­tin­ues to devel­op, I think the sup­ply of food is going to be a major issue.

HRN: How can investors pro­tect their assets in a glob­al reces­sion?

John Embry: The only things I’m com­fort­able hold­ing are pre­cious met­als and, because they are so cheap now, pre­cious met­als min­ing shares.

HRN: Where do you think the price of gold will end up?

John Embry: I’m more con­cerned with how many ounces I own than with how many U.S. dol­lars I can get for them at any giv­en point in time. Gold and paper mon­ey are going in oppo­site direc­tions.

HRN: Thank you for your valu­able time.

John Embry: It was my plea­sure.

© Copy­right MMXII RagingGoldenBull.com

Yra Harris predicts Gold will Close Higher at Year End

Yra Har­ris is called a “trader’s trad­er.” He says the lat­est deal on Greek debt is just

pre­tend and extend.… ”

The real prob­lem is Spain because they’re big, they’re in debt and they have 27% unem­ploy­ment.” Every­one in the West­ern world is deal­ing with the sov­er­eign debt mess by print­ing mon­ey and sup­press­ing inter­est rates.

 

Har­ris pre­dicts:

As long as real yields are neg­a­tive, of course, gold is going to go up.”

Har­ris is afraid infla­tion could get out of con­trol and says:

It’s like being a lit­tle preg­nant, you can’t real­ly con­trol it. Noth­ing destroys democ­ra­cy like inflation–end of sto­ry.”

If Democ­rats and Repub­li­cans can’t reach a deal to avoid the so-called “fis­cal cliff,” then Har­ris con­tends,

Defla­tion … is bull­ish for gold because every­body knows what the cen­tral bank will do to answer the call … the Fed will become that much more aggres­sive.”

No mat­ter what, Har­ris is bet­ting that

gold will be high­er by the end of the year.”

© Copy­right MMXII RagingGoldenBull.com

Quote — Voltaire on The Real Value of Paper Money

Voltaire

a sketch of the young Voltaire

Voltaire — A hell of a guy

 

Paper mon­ey even­tu­al­ly returns to its intrin­sic val­ue – zero.”

Voltaire believed back in the 1700’s that paper mon­ey was worth­less — Did he know that the Fed­er­al Reserve was com­ing lat­er down the road of time?

François-Marie Arou­et, known by his nom de plume Voltaire, was a French Enlight­en­ment writer, his­to­ri­an and philoso­pher, and some­one who under­stood that paper mon­ey was not real­ly mon­ey. Yep, we know that too now …

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Mark Carney Announced as next Governor of the Bank of England

A shock and sur­prise announce­ment from George Osbourne today as he announced the Cana­di­an Mark Car­ney as the next Gov­er­nor of the Bank of Eng­land. Do not doubt that this is one of the top jobs in the UK.

Mr. Mark Car­ney will be next Gov­er­nor of the Bank of Eng­land

George Osbourne defend­ed his deci­sion by stat­ing that Mr. Car­ney was:

The out­stand­ing Cen­tral Banker of his gen­er­a­tion.”

He also said that he was the best man for the job in the whole world bar none. I think it speaks more for how unsuit­able the home grown UK tal­ent was than any­thing else.

This is the first time since the cre­ation of the Bank of Eng­land back in 1694 that it has been gov­erned by a non British sub­ject, in this case a Cana­di­an. But Mr. comes high­ly qual­i­fied for the job.

He has man­aged arguably the best econ­o­my in the world Cana­da which has not had one bank bailout. In fact he has come through with his rep­u­ta­tion enhanced. He under­stands Cap­i­tal Mar­kets. He worked for Gold­man Sachs for 13 years (pos­si­bly not such a good thing! Could this be a case of Gold­man get­ting “their man” into the BoE, and a “print­er” into the sys­tem?). He speaks flu­ent French, went to Oxford Uni­ver­si­ty, already lived in the UK for a decade, his wife and chil­dren are British sub­jects, and he will apply for British cit­i­zen­ship.

Mr. Car­ney is also the cur­rent chair­man of the board of the Finan­cial Sta­bil­i­ty Board (FSB) which in itself is a con­sid­er­able achieve­ment and vote of con­fi­dence as this orga­ni­za­tion includes all G20 nations

This is a slap in the face for Mr. Paul Tuck­er who was tout­ed as the next Gov­er­nor . Too bad, LIBOR scan­dal for sure screwed that one up, and his deal­ings with Mr Bob Dia­mond.

In anoth­er depar­ture from the norm he will only serve a 5 year term instead of the more usu­al 8 year, and Char­lie Bean will stay on serv­ing his cur­rent term.

Big Ques­tion: How will this effect the UK mon­ey print­ing prac­tices and will we see more Quan­ti­ta­tive Eas­ing with Mr. Car­ney at the helm?

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