Archive for investing

Ron Paul and Mark Spitznagel Talk Freedom, Farming, and the Fed

6870Mises Daily Friday:

Investor Mark Spitznagel and Ron Paul discuss agriculture policy, Wall Street, fiat money, investing, and Ron Paul’s plans for the future.


The War on Savers Continues

1024px-Sparschwein_Haspa02I noticed a new press release from RateWatch in my in-box today, claiming that “First Change In CD Rates In Over Two Months Offers Hope For Savers.”

It seems that interest paid on CDs has gone up some microscopic amount, so we can now all be generously rewarded by the banks for lending the banks some of our surplus cash. If you put ten grand in a bank for a few years, you may now earn about 0.75 percent on that. If you have $100,000 burning a hole in your pocket, you can get an even better rate.

Back on planet Earth, few people have even $10,000 lying around, and if they are extremely prudent middle-class or lower-income people who managed to scrape together that kind of savings, they can expect it to lose value continually because there is no relatively safe place that pays interest even close to the official rate of inflation for mere ordinary people. If you have access to a hedge fund, it may be another matter, but just as the central banks have planned, with their negative interest rates  in Europe and near-negative rates here, ordinary savers are punished for the good of huge politically-connected investors who don’t need to rely on savings accounts or CDs.

But if you’re in the business of selling CDs, things are looking a little better, I suppose.  Check out these sky-high rates for CDs.

Says RateWatch:

First Change In CD Rates In Over Two Months Offers Hope For Savers

“National averages of CD rates held steady for more than two months, but recent comments from Fed officials suggest that the central bank will begin to raise the benchmark interest rate in the first half of 2015,” reported Joe Deaux, Economics Analyst at TheStreet. “More than five years removed from the 2008 financial crisis, savers are still dealing with historically low CD rates. But the possibility of faster-than-anticipated rising inflation and the near-end to economic stimulus means rates could be going up soon. This is good news for savers looking to park their cash in the intermediate future.”


This Week

Money Market 0.15

1 month CD 0.11

3 month CD 0.15

6 month CD 0.23

1 year CD 0.36

2 year CD 0.55

3 year CD 0.75

4 year CD 0.93

5 year CD 1.14

Investors and Austrian Economics

6795Mises Daily Friday:

Robert Blumen, a software engineer with a background in financial applications, recently spoke with the Mises Institute about the Austrian School’s growing influence among investors. CEO talks Bitcoin, Austrian School’s CEO Patrick Byrne explains some reasons why Overstock now accepts Bitcoins:

Fortune: Do you own any bitcoins?

Patrick Byrne: No. I own gold.

Really, how much gold?

A lot. Let’s just say enough that if zombies walked the Earth I will have enough gold that me and mine are taken care of.

But you’re obviously a bitcoin fan. Why?

There are business and philosophical reasons. First, the business reason: I think there are a legitimate number of consumers who want to be able to shop with bitcoin. They like the anonymity of the currency. So far, the market has only served them with shady websites, like Silk Road. Also, it saves us about 2% from interchange fees. It’s no secret that our net margin is about 2% now. And so the savings would be a very substantial improvement to our bottom line.

As far as the philosophical reason: I am from the Austrian School of Economics, which means we’re the guys who hate fiat money. The long-run value of all fiat money is zero. If you believe in limited government, you want to have a monetary system that is based on something where no government mandarin can just create money with a stroke of a pen. Gold is a solution, we’re not going to bring back the gold standard any time soon. We’re not going to get rid of the Federal Reserve any time soon, so bitcoin is a step in the right direction.

The Dao of the Austrian Investor

6615Mark Thornton writes in today’s Mises Daily

As a young trader in the bond pit at the Chicago Board of Trade, the author was lucky enough to come across Hazlitt’s Economics in One Lesson and Mises’s Human Action. He found in these books a theoretical explanation for the otherwise perplexing world of primary markets at the Chicago Board of Trade. He later partnered with Nassim Taleb of Black Swan fame and later still opened his own firm to employ his concept of “Austrian Investing.”

In a similar manner, he shows how fire-suppression policies of the government are like government intervention in the economy. Fire-suppression policy aims to put out most forest fires as soon as possible. This can lead to too much underbrush so that fires can become catastrophic is scope. This is an illustration from nature of the havoc caused by government intervention meddling in nature’s competition. In the economy, the government’s central bank can try to suppress recessions and deflation, but this can result in catastrophic depressions, like the Great Depression. As Rothbard showed in his America’s Great Depression, President Hoover’s interventions to suppress deflation and depression only made things worse.