Four Reasons You Shouldn’t Buy Bitcoins

posted in: Opinion | 0

Timothy B. Lee 4/03/2013

Discussion of the digital currency known as Bitcoin is divided into two camps. People who understand the currency well tend to be enthusiastic boosters. Those who are citical of Bitcoin tend not to understand the currency very well and, as a consequence, their criticisms tend to be superficial, misguided, or just plain wrong.

That’s unfortunate because Bitcoin does have some real weaknesses. The lack of knowledgeable critics has created an echo chamber effect that I worry may produce (or may have already produced) a bubble. I’m generally a Bitcoin fan (and, full disclosure, I own some Bitcoins), but in the interest of balance, here are four reasons you should think twice before buying Bitcoins.

Losses. Traditional financial products have strong consumer protections. If someone makes a fraudulent transaction with your credit card or your bank goes belly-up, there are laws in place to limit consumer losses. Bitcoin has no such safety net. If your Bitcoins are lost or stolen, there’s no intermediary with the power to make you whole… >>MORE (

How Roosevelt Secretly Ended the Gold Standard

posted in: Opinion | 0

Executive Order 6102Eric Rauchway Mar 21, 2013

On March 4, 1933, Franklin D. Roosevelt became president for the first time, promising an “adequate but sound” currency. The next day, a Sunday, he closed the nation’s banks. “We are now off the gold standard,” he privately declared to a group of advisers. Goldbugs in the president’s circle immediately began prophesying doom. One of his aides, Lewis Douglas, proclaimed “the end of Western civilization.”

How Roosevelt took this fateful step has been the subject of debate among historians, many of whom believe that the president flailed his way through his first weeks in office, and only gradually came to the decision to take the country off gold that April. But the evidence suggests that Roosevelt intended to do so from Day One for very specific reasons, although he delayed letting the rest of the country in on his plans.

Minutes after FDR had made his unsettling private disclosure, a secretary told him that reporters were clamoring to know if the U.S. had left the gold standard. “Tell them to ask a banker,” Roosevelt said. He clearly did not yet wish to say the truth publicly. First, he needed depositors to return the gold they had withdrawn in panic in the weeks preceding his inauguration.

By Tuesday, Americans had begun to bring gold in large quantities back to the banks. Perhaps they were shamed by the president’s identifying hoarding as the source of the panic, or maybe they feared prosecution under new penalties, including a tax on hoarding, then being discussed in Washington as ways of ensuring that gold came back to the Treasury. The Federal Reserve announced that it had the names of those who had taken out gold… >>MORE(

Hear Franklin D Roosevelt Fireside Banking Chat March 12, 1933

If Alan Greenspan Wants To ‘End The Fed’, Times Must Be Changing

posted in: Opinion | 0

Nathan Lewis Forbes 3/14/2013

FOR A LONG TIME, gold standard advocates in the United States have had differing viewpoints about whether a new gold standard system might take place with existing institutions, such as the Federal Reserve, or whether it would take place with new institutions, and the Federal Reserve would in effect be disbanded or rendered irrelevant, writes Nathan Lewis of New World Economics.

During the 1980s or 1990s, it seemed politically impossible to even consider a situation in which the existing monetary plumbing would be torn out and replaced with some “free banking system” or other such solution. The Fed, under Greenspan and Volcker, seemed to have a pretty good handle on things. The economy was doing well and people were enjoying a Great Bull Market in both stocks and bonds. This was not the time when you throw everything overboard for some goofy new idea…(snip)

…Let’s see what Alan Greenspan has been saying recently:

“We have at this particular stage a fiat money which is essentially money printed by a government and it’s usually a central bank which is authorized to do so. Some mechanism has got to be in place that restricts the amount of money which is produced, either a gold standard or a currency board, because unless you do that all of history suggest that inflation will take hold with very deleterious effects on economic activity… There are numbers of us, myself included, who strongly believe that we did very well in the 1870 to 1914 period with an international gold standard.”

In the same January 2011 interview, Greenspan apparently wondered out loud if we even require a central bank!….>>MORE(


Gold: Golden for the Wrong Reason

posted in: Opinion | 0

By Matthew Zeitlin  March 18, 2013

One of gold’s most prominent bulls, John Paulson, the asset manager who made more than $1 billion betting on the housing downturn, is tarnished.

Bloomberg reported that Paulson’s $900 million gold fund is down 26% through the beginning of March, after falling 25% last year. The fund has been hurt by the price of gold falling to around $1,600 off its all-time high of more than $1,900, which it hit in Sept. 2011. Paulson told clients that “his Gold Fund would beat his other strategies over five years because the metal was the best hedge against inflation and currency debasement as countries pump money into their economies.”

Paulson echoes comments from Ray Dalio, the man behind the $140 billion hedge fund Bridgewater Associates. Dalio told Barron’s in March 2011, “Currency devaluations are good for stocks, good for commodities, and good for gold.”

The price of gold has fallen off those highs and, so best we can tell, another economic crisis isn’t happening soon, meaning investors are less likely to flock toward the most prominent bearish investment. But gold’s effectiveness as just that — protection against the worst economic and financial distress — is also under attack.