Currency đź’´

The Significance of the Velocity of Money | Armstrong Economics

Posted on by johnbarleycorn12

QUESTION: Greetings Marty, I have followed you since the old Money Radio days! Can you help me understand the disparity between the declining velocity of money, the growth of the economy and what the natural consequence may be? Thank you for your willingness to share your knowledge! Regards, MRM ANSWER: Oh yes. Buzz Schwartz was a fantastic guy. I enjoyed doing his show there in California. The economic growth has been declining for decades as has the velocity of money, As the velocity declines, it shows that people are either saving more or they do not have disposable income after taxes to spend. Normally, the velocity will decline and that is a sign of a recession. This is the normal reaction when people save and do not spend. However, if you are not in an economic recession/depression there is no FEAR FACTOR of what the future will bring, then the velocity declines because people really do not have the money after taxes to spend. This is one reason I keep harping on – it’s the taxes stupid! In the USA, the velocity bottomed during the 2nd quarter of 2017 and has started to turn up with Trump lowering taxes. This is the first uptick since the decline began from the 3rd quarter of 1997 when the capital flows began to shift creating the 1997 Asian Currency Crisis. When Obama raised the tax rate from 35% to 39.6% in 2013, that began the real sharp decline. The decline in the velocity of money and the rising burden of taxation is very alarming. That has been the worst combination which has suppressed the Euro zone economy. We see this with central banks setting targets for 3% inflation and they cannot reach that level.
— Read on www.armstrongeconomics.com/uncategorized/the-significance-of-the-velocity-of-money/

Currency Inflation That Most Never Noticed | Armstrong Economics

Posted on by johnbarleycorn12

QUESTION: Mr. Armstrong; I find your anecdotes fascinating and very enlightening how you always bought German cars and made money on them. Is currency the primary reason people often think something is a good investment when in fact it is really just currency fluctuations? PVB ANSWER: You are hitting the nail right on the head. The decline in the dollar throughout the 1970s made German cars appear to appreciate and this was attributed to quality. This was the entire reason why the German car industry exploded. I have often stated at WEC conferences that I made the same play with a Ferarri in London. When the British pound dropped to $1.03 in 1985, I ran out and used the currency to make some deals. I bought a 328 Ferarri for about $30,000 when in the US it was a $50,000 car. Because the pound had dropped, Ferarri could not afford to sell them in Britain at that price so they raised it £45,000. As you can see from the chart I provided, the pound bottomed in February 1985 at $1.0345. After Ferrari raised the price and then the pound went to nearly $2, suddenly a car that cost me $30,000 had a replacement cost of almost $100,o00. This is what led to many people buying several Ferraris and garaging them thinking that the car was the investment. Currency Inflation is probably the most misunderstood economic force in the matrix. Probably 99% of economists and investors remain ignorant of such trends because they have never dealt in the international world of finance and focused only domestically. Those of us who have been hedge fund managers and worked internationally understand the fluctuations of currency and its impact. This is a lesson still not taught in school and politicians remain oblivious to the real implications.
— Read on www.armstrongeconomics.com/armstrongeconomics101/economics/currency-inflation-that-most-never-noticed/

Classic cars are often a good investment

Banks Freezing Cyrpotcurrency Accounts under Presumption of Guilt? | Armstrong Economics

Posted on by johnbarleycorn12

The story running around on Bitcoin.com news tells the tale of an individual who legally sold large amounts of cryptocurrency at a profit found that Clydesdale Bank decided to freeze all assets involving people who had been involved in cryptocurrencies. The man had no criminal convictions and had always complied with British laws on financial regulations and taxation. Nevertheless, he told Bitcoin.com: “My bank account has been blocked by Clydesdale Bank without any warning or explanation and my money frozen.” The bank manager said that the bank no longer wanted to do business with “that kind of people” who were involved in cryptocurrencies. This is the problem that is emerging as part of the Hunt for Taxes. It is “assumed” that the majority of people who made money in cryptocurrencies never reported their gains. Whether that is true or not is really not the subject here. It is a “presumption” of guilt that is taking place. The very same thing took place with American outside the USA because of the law FATCA. It is not illegal for an American to have an account outside the USA. It is “presumed” he is not reporting his overseas income. Under FATCA, a foreign institution MUST report to the USA anything an American is doing overseas or THEIR assets will be confiscated in the USA. The risk that an American is not paying their taxes on an account at a bank in Europe then would subject that bank’s assets in the USA to be confiscated. The easy solution was to refuse to accept accounts of Americans – plain & simple. Hence – no risk. Many banks are looking at the cryptocurrency world with the same tinted glasses. They fear getting caught up in a client who made a lot of money from cryptocurrencies and they get caught in the crosshair of tax agents who then say they should have known! Welcome to the PRESUMPTION OF GUILT when it comes to taxes. It is your burden to even prove your money is really yours AFTER taxes.
— Read on www.armstrongeconomics.com/world-news/cryptocurrency/banks-freezing-cyrpotcurrency-accounts-under-presumption-of-guilt/