I like to think about Australia as to be a wild territory: nature, seas, oceans and animals. There are cities, too. More than just cities: Australia is considered a country that is part of the First World Countries. In any case, no doubts, Australia minds me 2 things: kangaroos and of course.. the Australian dollar.
The history of a currency is strictly linked to the historical events and, as the most of you know, it’s strictly linked to banks. So what about Australia? The discovery of the Australian continent is almost modern history. I mean, in 1606 a Dutch Vessel landed in Australia: it was the first official landing. What after it? Dutch explorations continued through the 17th. During the 17th and the 18th centuries, other European countries explored the Australia continent. In 1770, the Lieutenant James Cook chartered, for the first time, a portion of the Australian cost: the East Coast. When Cook came back to Britain, he reported a positive judgment with regard to a possible colonization. In 1778, British ships landed in Australia with the idea to colonize it. In detail, Britain established a penal colony. During the 19th century new colonies were established. Up to 1851 all the Australian territories were colonized. 6 were the colonies: Queensland, New South Wales (which included the currently Northern Territory), Victoria, Tasmania, South Australia and Western Australia. And so we arrive to the 20th century. In 1901 through a referendum, the 6 colonies formed one nation. In detail when the Constitution of Australia became effective, on 1st January 1901, the colonies became states of the Commonwealth of Australia.
The birth of the Japanese Yen
What do you know about the currency currently used in Japan? Almost all know that it is the Japanese Yen. What more? Which is the link between the Japanese Central Bank and the Yen? How to explain the Yen swinging? It’s a quite common matter the currencies devaluation. It’s a less common matter the currencies appreciation. It’s an extraordinary matter the Yen appreciation in the last 60 years. So, what is happened? Can it be that the US have a hand in this matter?
Dude, if you want answers, you are exactly in the right place.
A general introduction: Japan has a millenary culture. Japanese culture covers all possible fields: literature, music, visual art, theatre, architecture and so on. Japan is well known for emperors, wars, samurai. But maybe you are more familiar with geishas or sushi. Well. This is not the point.
Let’s turn to the Japanese currency, the Yen. The Yen is a relative young currency. In fact, it has been introduced in Japan only during the 19th century. The first formal Japanese currency dates back to the 8th century. It was the “Wadōkaichin”. Soon this currency become debased. Therefore in the 10th, it was abandoned and was replaced by rice. During the 12th – 17th a Chinese coinage was adopted. That’s because of the increasing commerce with China. Finally during the 17th – 19th century the Tokugawa currency was adopted. Tokugawa was a unitary and independent metallic monetary system which denominators were metals: bronze, silver and gold, of course. In the past money had an intrinsic value. It was linked to commodities, in the specific to metals.
And here we arrive to the Japanese Yen. The adoption of the Yen is a quite strange story. It is strictly related to the Chinese currency history. As often happen, trades played a fundamental role. In detail the American-Asian trades. Let’s continue. In the 19th century, the silver Spanish dollar coins widespread throughout China and Japan. Starting from 1840 some American and Asian regions started to replace the Spanish dollar with regional currencies, the Mexican Peso in Mexico and the Hong Kong Silver Dollar in China . But Chinese people were not happy. They preferred the old Spanish dollar. You know, what is known is sometimes better of what it is not known. As consequence the Hong Kong government sold the mint machinery for minting the new Chinese currency to Japan. This is the birth of Yen. Formally the currency was adopted by the Meiji government in 1871 through the New Currency Act (1871). In practice the Act introduced the gold-silver standard currency system.
And here as always the same tale. A new currency, a national bank and the shift of the monetary power from governments to banks. Before 1872 in Japan there were 153 banks. In 1872 through the National Bank Act the National Japanese Banks were reduced to 4. All 4 banks printed Yen. In 1877, in order to finance the Seinan Civil War, the 4 National Banks printed notes and notes. The result was a severe depreciation of the currency. In other words: in that years, in Japan a severe inflation incurred. Here an oddity. For financing the Seinan Civil War, not only the government of Japan printed money. Of sure, the government’s rebels needed money too. So what happened? The leader of the rebellion started to print a new paper money! The ways for financing wars are always the same.
In 1882 a central bank, the National Bank of Japan was established. The aim was to centralize the issuance of convertible notes. I remember you, that before there were 4 National Banks. So what better explanation for the establishment of a new Institution? The Central Bank. Just a tip: national does not mean owned by citizens. It means that the bank issues national money. As a proof, the National Bank of Japan was from the beginning partly privately owned.
And so we arrive to 1897. In 1897 Japan switched from the gold-silver standard to the gold standard. That’s due to the strong devaluation of the silver coins.
And here we arrive to the First Word War. The history is always the same. During the First Word War the convertibility of the Yen currency into gold was suspended. Then was re-established. At the end, in 1931 it was suspended again. In 1942 the Bank of Japan law suspended the obligation to convert the Yen notes into gold. An era of flat currency started.
On 25 April 1949, according to Bretton Woods agreement, the Japanese Yen was fixed at 360Y per 1 US$. In December 1971 according to a new agreement, the so called Smithsonian Agreement, the Japanese Yen was fixed at 308Y per 1 US$. In 1973, like quite all the major currencies, the Japanese Yen become a floating currency. During the following years the value of the Japanese Yen floated up and down, down and up. The currency was gone crazy.
During the 80s due to higher interest rates, foreign investments (in particular in the Us) were more convenient than Japanese investments. The Yen devaluated, the dollar appreciated. What does it mean? The Japanese debt decreased. Moreover exports became cheaper and imports became more expensive. The opposite was true for the US. That was not good for the US.
You know, US are really clever in finding solutions. In 1985 a new agreement, the so called Plaza Accord, established the overvaluation of the US Dollar. As consequence the Yen started to rise. At first it was ¥239 per US$1. Then ¥128 per US$1, then ¥123 to US$1, finally in 1995 it was ¥80 per US$1.
Currently (2013) the Japanese Yen is exchanged at ¥100 per 1US$. Therefore in the last 60 years there has been a 70% appreciation (from¥ 360 per Dollar to ¥100 per Dollar).
Note that meanwhile the Japanese Yen appreciated with respect to the US Dollar, the Japanese Yen incurred in both strong devaluation and strong appreciation against Gold. The numbers will proof the sentence. In the early 1980s an ounce of Gold was exchanged against 150.000 Yen. Then in 1998 the exchange became 40.000Yen an ounce. Today the exchange is 130.000Y an ounce. Yen behaves differently to Gold with respect to the US Dollar.
Be aware, have plans.
Matt
The Birth of the Canadian Dollar
Canada, you know, is wonderful. People here are very polite and friendly. The country reminds me the years of College. In fact, my Business teacher was Canadian. I really have a good memory of him.
Sure you know the Canadian dollar is a commodity based currency. Be careful, there is a trick. Commodity based currency doesn’t mean that the currency is linked to a commodity. It means there is a tight correlation between the currency and the commodity. In general this is the name given to currencies of countries that depend widely on exportation of row materials. Canada, you know, is rich of oil. That’s the trick. The trick explains how has been possible that a commodity based currency has devaluated by 300% in just 30 years. What’s more about the Canadian dollar?
Let’s proceed in order. The birth of the Canadian dollar is related to the colonial history of the country. You know, at the beginning Canada was in part an English colony, in part a French colony. But it isn’t all: in Canada there were also Portuguese, Spanish and Russian settlements. Well, I’m not interested to write about history. If you are interested, you can simply read a book of Canadian history. For me, it’s enough you know that due to the 7 years’ war between Great Britain and France and due to the Great Britain’s victory, in 1763 France ceded Canada to Great Britain. As years went by Portuguese, Spanish and Russian settlements disappeared or became British/US territories. In the 1800s Canada was almost entirely a British colony.
So what about the Canadian currency? In the first decades of the 1800s in the British Canadian colonies there were two main currencies: the first, was the Canadian pound, while the second was the US dollar. The first one was based on a pre decimal accounting system currency (halifax rating) while the second one was based on a decimal accounting system.
The 1850s were characterized by disputes on which currency to adopt. Local people desired to adopt the US dollar currency due to the increasing commercial exchanges with the US. Great Britain, of sure, wanted for its colonies the pound. In order to pacify people, in 1853 the Legislative Council and Assembly of the Province of Canada issued an Act. With this Act it was introduced a gold standard system based on both the British gold coins and the American gold eagle coins. However only in 1857 in the Province of Canada an official coinage was introduced: it was a decimal system coinage, perfectly aligned with the US currency. The British gold coin still remained. In 1859 also notes were printed according the decimal system.
the canadian dollar note
What about the other colonies? New Brunswick, Nova Scotia, Newfoundland and Prince Edward Island. In 1861 New Brunswick and Nova Scotia adopted a decimal system coinage, perfectly aligned with the US currency. In 1865 Newfoundland adopted a decimal system coinage based on the Spanish dollar. In 1871 Prince Edward Island adopted the US decimal system dollar.
But this is not the end. In 1871 the Canadian parliament passed the Uniform Currency Act. The aim was to adopt in all Canadian colonies a shared Canadian dollar.
This until the war.
As you know, due to the first world war the need of paper money increased. On April 10, 1933 the gold standard was abolished. And voilà. On July 3, 1934, the Bank of Canada act established the Bank of Canada as to be a privately owned corporation.
Before the Bank of Canada the Canadian Treasury was responsible for printing Canada’s bank notes. During the great depression people needed a guilty. The guilty was pinpointed to be the Canadian Treasury. So, in 1933, the prime minister of Canada, R.B. Bennet, as he took care of people, established the Royal Commission on Banking and Currency. Hugh Pattison Macmillan, a Scottish judge, conducted the Royal Commission. In a report Macmillan suggested the establishment of a central bank. Well. The next year, on 3 July 1934, the bank of Canada act received the royal assent. And in 1935 the bank of Canada were sold to the public through shares emissions.
If I’m not wrong it’s always the same tale. The Canadian dollar is as most of currencies a flat currency owned by private individuals.
Have a nice day.
Matt
The birth of the Swiss Franc
I love Switzerland. It’s a lovely country. I love Swiss Franc, too.
Of sure, Switzerland is a different country. It’s one of a kind. As everybody knows, Switzerland is a peacefully and rich country where people work hard. Switzerland is then famous for cheese, chocolate and clocks. In one word: Switzerland is amazing. And the history of the Swiss Franc confirms it. So, when does the Swiss Franc do its appearance? Why?
Before the Helvetic Republic (1798-1803), in Switzerland there were self-governed cantons. Each canton plus some other organizations such as cities and abbeys forged coins. The result was 860 outstanding different currencies.
With the Helvetic Republic, in 1798, a currency based on the Berne Thaler was introduced (do you remember the link between the thaler & the dollar?). This currency, forged up to 1803 was the ancestor of the Swiss Franc. The Berne Thaler value was equal to 6 ¾ grams of pure silver or 1 ½ French franc. It was the ancestor because, for the first time the same currency was, not shared but used a model in several Swiss cantons. In any case the Berne Thaler disappeared in 1803.
From 1803-1850, the chaos. In Switzerland (more or less 15,940 sq mi) there were 8,000 different coins and notes. 1 different currency every 1.99 sq mi. It’s amazing, isn’t it? Well, between 8,000 different currencies more or less 1,200 were forged in the Switzerland. The other 6,800 coins (85%) were forged abroad. You know, coins were the evolution of barters: they were a measure of value used in exchange of goods and services. So coins should make exchanges easier. But with such a huge amount of currencies, it wasn’t so. It was really complicated.
In 1847 a relevant factor happened: the Sounderbund War: 27 days of civil war that ended with a period of restoration. As results, in 1848, the new Swiss Federal Constitution came into force. And here we are. The Swiss Federal Constitution provided the Federal Government, the exclusive power to forge money in Switzerland. Successively in 1850 with the Federal Coniage Act the Swiss Franc was introduced. This was the birth of the Swiss Franc.
What’s happen after? Shortly..
In 1891 a modification of article n.39 of the federal constitution took place. As consequence the right to forge and print the Swiss Franc switched from the Federal Government to a National bank. So some years later, it was 1905, the Swiss National Bank (SNB) was founded.
In 1914 the First World War began and the Swiss Franc value stopped to be directly linked to precious metals.
You know. As Bretton Woods. As always tales repeat.
Be aware, have plans.
Matt
The birth of Pound Sterling
The Pound Sterling is the world’s oldest currency still in use. It’s an hard currency. Origins go back to the Anglo-Saxon England.
Its value was equal to 240 silver pennies or better to one pound silver.
The King Offa of Mercia (757-796) introduced the silver penny copying the currency system of Charlemagne’s Frankish Empire. In fact also in the Carolingian empire, 240 pennies weighed 1 pound (the Charlemagne’s libra).
The penny swiftly spread throughout Anglo-Saxon kingdoms and became the standard coin of what was to become England.
Until 1158 pennies were in fine silver. Then King Henry II introduced a new coniage with a little less silver.
During the reigns of Henry VIII and of Edward VI the silver coinage was drastically debased. In 1526 a troy pound was redefined as 5,760 grains (373 g).
Few decades later, during which a new gold coniage and an unofficial gold standard system appeared, in 1694, the bank of England was founded, followed one year later by the bank of Scotland.
This is the point. The fine line between banks and money. You know: banks are not mushrooms. They don’t grow up by themselves.
Why a fucking bank now? Well.
The bank of England was established to raise funds for the King William III’s war (a member State of the European-wide coalition) against France. And these are the classified papers on the Pound Sterling. Click here.
The war was better known as the Nine Years War (1688-1697). As already stated the main actors were France and the European-wide coalition (of which the Anglo-Dutch King William III belong). At the end due to the victory of France, the French King Louis XIV became the most powerful monarch in Europe. He was so powerful that he was a menace to everyone.
But let take a step backward to the foundation of the Bank of England. Before the Nine Years War.
James II, the just ascended king to the throne of England was not the legitimate heir to the England throne. Moreover he was Catholic. You know, after more or less two centuries the idea of going back to the Roman Catholicism was not welcome. Therefore the immortal seven asked to William III of Holland, one of the king of England’s relatives, to replace the king of England. And so William III of Holland replaced James II.
And here, a new character appeared: William Paterson. This gentleman was trying to collect funds for financing his project: the “Darien scheme“. A sort of double project: to found a bank for financing the “Darien scheme”. And so we arrive to the creation of the Bank of England.
Here we go. With the Bank of England the issuing of paper money started.
The Pound Sterling was the official currency not only in England but also in several English colonies and dominions.
I could go on infinitely on Paterson, catholics, jews, the Mercer’s chapel and the Queen.
But this is not my purpose. If you are interested in the GB history you can ask to some historiographer. Maybe you can watch CSI: Miami to collect hints and reconstructing events.
The foundation of the Bank of England was the beginning of the fiat currency in England: the Pound Sterling. The beginning of a practice still in use.
So even in England, the pretext of the war, was the way used for establishing a flat currency.
Let me conclude with few considerations about the Pound Sterling.
If you have already read the post about the Forex Scam you should know the Bretton Woods agreements.
In that circumstances the USA pegged the Pound Sterling to the U.S. Dollar at a rate of 1£ = 4.03$. It was in 1940.
Actually the Pound Sterling is exchanged at 1£:1.68$. It seems the Pound Sterling has lost power against the dollar during the last seventy years.
And not only against the Dollar.
As I love gold and silver let me do some other comparisons. In 1940 the Dollar exchanged 35$ for one Gold Ounce and for 8.68 Pound Sterling. Today a Gold Ounce is exchange with 1252 Dollars and for 745.611 Pound Sterling.
I’m not a genius in math, but if mathematics is an exact science the Pound Sterling devaluated of about 8490%.The Dollar devaluation has been of 3477%.
Is it a plan to level out the currencies power?
Be aware, have plans.
Matt
The birth of Euro currency
Euro: the united currency of the Eurozone.
The Euro currency was introduced in1999. From January, 1 1999 to January, 2 2002 for the involved countries a trial period began. Both the national and the Euro currencies were in circulation.
Then since 2002 the Euro
has been the only outstanding currency of the Eurozone.
The countries involved in the Eurozone project were 12. Subsequently other countries adopted the Euro. Today the Eurozone countries are 18. The dream was: free people and good circulation, a unique currency. As a big family. Like Uncle Sam. Like China.
A great union, a great currency!
Now, fifteen years later things are changed. In some Euro countries it’ s a life of hell.
The scenario is different: the happy and integrated family has disappeared. Each country seems to be separate from the others. Each country has different problems from the others. And different interests.
The official plan was to unify countries. The result has been the contrary.
It is not my opinion. Facts only facts.
How can it be possible? So noble purposes, so different effects? The answer is quite obvious. Politicians provide the answers. All their arguing are prepared. Politicians’ words are just to win people over.
Change the word “unify” with “divide” in the following sentence: “we want a unique currency, the Euro, to unify”. Now you will have the answer. Now you know the plan.
The majority of the EU citizens wouldn’t have accepted Euro as currency for dividing Europe. They wouldn’t have cast their vote for it. “ Unify” has been the solution.
I know for sure, that now a lot of people would like to go back to the national currency. They don’t want Euro any more. Due to Euro, now a lot of the Eurozone citizens up to one’s neck in troubles: economic troubles. Now it’s too later.
The truth is out. The Euro has divided countries. Now the question is: how have the Euro divided countries? Well, it was the year 1992. All was publically published. There was the Maastricht Treaty also known as Maastricht Tricky.
What is the Maastricht Treaty? The Maastricht Treaty provides to the EU countries the criteria for the adoption of Euro. Four are the criteria to be part of the European and Monetary Union:
1. Inflation rate: it should be no more than 1.5 percentage points higher than the average of the three best performing (lowest inflation) member states of the EU;
2. Government finance:
- the ratio of the annual government deficit to the gross domestic product (GDP) must not exceed 3%;
- the ratio of gross government debt to GDP must not exceed 60%
3. Exchange rate: applicant countries should have joined the exchange-rate mechanism (ERM II) under the European Monetary System (EMS) for two consecutive years and should not have devalued its currency during the period.
4. Long-term interest rates: the nominal long-term interest rate must not be more than 2 percentage points higher than in the three lowest inflation member states.
Simple, isn’t it? It’s like at Coney island: min height to ride 44″. Ergo: someone rides someone not.
Many people think these criteria have advantaged Germany and France.
Many others think that southern European countries are old and lazy. Politicians are depraved and they are not able to do what it is required.
Without thinking which countries have been advantages and which ones have been fucked, my considerations are quite simple.
Due to the Maastricht Tricky the Eurozone countries monetary sovereignty has passed to the European Central Bank. In descending order, the major shareholders are: the Central Banks of Germany, France and England. Check by yourself.
Italy has 12.3108% stake and England has 13.6743% stake.
England. Have you ever been in London? I’ve never seen one Euro there.
Be aware, have plans.
Matt
The birth of the dollar
As you know the U.S. Dollar is the official currency of the United States of America. It is a wonderful piece of paper: green, with a lot of images. Honestly there are a lot of people that would like to use the US Dollar as a toilet paper instead of using it for paying bills.
In any case the Dollar is currently the official currency of the United States of America.
“Dollar” comes from an ancient Czech word: “thaler” (1500 a.C.). As in Germany the phonetic for “t” was/is “d” then “thaler” became “daler”. As “dalers” widespread through Spain, due to phonetic and linguistic reasons, “dalers” became “Dollar”.
Which is the link between the Spanish Dollar and the US? Going back to the US colonial period there is the answer. In the US colonial period there were three kinds of money: the commodity money (barters), the coins and the paper money.
Commodities money were, for example, tobacco and wampum. The most outstanding coins were Portuguese and Spanish coins so the famous Dollars (that gave the name to the current US Dollar). Finally there were paper money. Each colony/government had its own paper money: its continental currency.
In 1690, the first authorized paper money was issued by the Province of Massachusetts Bay. Soon also the other colonies started to print paper money.
Why did Colonies need paper money? Weren’t commodities and coins enough? The answer is simple: because of wars. Gold and silver weren’t enough for financing wars. Bills could be printed with no limits.
Printing green pieces. What amazing escamotage. Really. How to finance wars if the resources are not enough? Limiteless papers are the answer. Moreover the value of these notes was established by governments. Governments decided the amount of gold and silver at which notes could be exchanged.
What about the consequences of printing money without limits? Inflation of sure. Inflation = depreciation or better a loss of the paper value. The same paper value could be exchanged with less gold/silver.
In order to curb the inflationary effects of printing money, the British Parliament passed several Currency Acts:
- the Currency Act of 1751. The Act established that printed money had legal tender for public debts but not for private debts;
- the Currency Act of 1764. Paper currency had no more legal tender both for public and private debts. The Act created a lot of tensions between the British Parliament and the US Colonies. Therefore in 1773 another Act was promulgated.
- the Currency Act of 1773. Colonies could issue paper money as legal tender only for public debts.
And so we arrive to the American Revolutionary War (1775) and to a series of currency defaults. Four continental defaults occurred:
- the continental currency default of 1779;
- the default of continental domestic loans of 1782;
- the greenback default of 1862;
- the liberty bond default of 1934;
The liberty bond default increases the US depression and trade reduction during the 1930s contributing to fermenting World War II. So we arrive to the Bretton Woods international monetary agreements in 1944.
It passed more or less 50 years before to arrive to current Dollar Bill. A lot of time during which some people had had time for thinking on what to write and print on bills.
50 years. And well. Which is the result? The Dollar. The wonderful US Dollar.
Usually I don’t care about the images printed on notes but let me say that there is a lot of stuff on the Dollar bill.
I’m not an expert of symbols. But on the US Dollars symbols are self evident.
Well. This is the tale.
Symbols or not the financial system is a scam.
Someone pays and someone else receives.
Yeah.
In this case for example we pay interests to banks and banks receive money.
A lot of money.
Be aware, have plans.
Matt
How to get rich with tax liens
Would you like to be rich? If your goal is to be rich, you’re on the right place at the right moment. Sure you are.
So how to get rich? This isn’t an easy question. In fact you can be rich in different ways, following different paths. Of sure, you have to want to be rich. Second, you have to find the way. Your own way.
So, how to get rich with tax liens? You should already know what tax liens are. Just to remember you. Tax liens are liens imposed by law on properties in order to secure the payment of taxes. They are certificates issued by the US Counties. The point is: how to get rich with tax liens?
It’s difficult to become rich with tax liens (but not impossible). In any case tax liens are really interesting investments. They’re investments with a rate of return of about 18%, 25%, 36% (it depends both on every single tax lien and on the issuing County). Tax liens can be a step toward richness. Low risks, high profitability.
18%, 25%, 36%… it reminds to me the last summer. End of July, maybe. I had a dinner with Edward, Taylor, Catharine (Kate) and as always my bride. When my bride and me arrived at Edward’s home, Taylor and Kate were speaking about money. Or better about Kate’s new account in a new bank. Kate had changed bank. She was explaining to Taylor the advantages the new bank offered to her. In detail, Kate was really struck about the interest rate. In fact the new account yielded Kate 4,5% interests. I smiled. 4,5%.
I immediately thought to tax liens. Tax liens and the 18% interests or more. Of sure 4,5% was good. Considering that inflation was more or less 2%, Kate had 2,5% gain. Considering account fees… the gain was a little bit reduced. In any case she was in gain. But such a misery if comparing to 18-36%. I began talking about tax liens. At that point also Edward and my bride arrived. A discussion about tax liens began. Taylor claimed that banks and accounts were zero risk investments. But there are no investments without risks. Banks can fail. Tax liens are investments characterize by high profitability and low risks.
Also banks invest in tax liens. You know, don’t you? In some States, such as New York or Ohio, only big agencies or big banks can subscribe tax liens. Do you think banks will invest without profit? Of sure not. In any case banks don’t propose tax liens as investments. This is because they can’t charge commissions on tax liens.
Tax liens can be a way to make money. It’s a way to help people that are in financial difficulties. Of sure, tax liens are better investments than bank accounts. Moreover, interests are not the only way to profit from tax liens. You know, if the owner doesn’t pay the property taxes on the property linked to the tax lien certificate then the tax lien owner will be the new property owner. And the property will be free from previous debts.
How to get rich? Maybe tax liens don’t make you rich. Or maybe yes?
Matt
The debt clock
Tick tock, tick tock, tick tock… it isn’t the Peter Pan tick tock crocodile. That’s the debt clock ticking.
The debt clock is simply a way to track the world public debt. Just now, what does the debt clock show? The right answer is: the debt clock shows $ 58,248, 95x,xxx, xxx ($ fifty eight trillion). This is the amount of public debt. Or better…
… the right answer is: it isn’t possible to fix the world public debt. The debt clock is merciless. Second after second, the debt clock hands move. And the world public debt moves, too.
It moves really, really fast. Second after second, the world public debt increases more of less about thousands of dollars.
Let’s take a step forward. What’s the public debt? Is public debt good or not? And if not, why? Public debt, is nothing else that the debt owned by central governments. High levels of government debt are of sure a problem. When governments are not more able to repay debts, they fail. And, you know, that bankruptcies cause economical instabilities. The case of the US failure would cause a global economic and financial instability. A global catastrophe.
So, given $ 58 trillion of world public debt, which is the governments public debt ? It’s:
1. United States ($ 17,510,xxx,xxx,xxx)
2. Japan ($ 10,018,xxx,xxx,xxx)
3. China ($ 5,055,xxx,xxx,xxx)
4. Germany ($ 2,950,xxx,xxx,xxx)
5. Italy ($ 2,911,xxx,xxx,xxx)
6. France ($ 2,643,xxx,xxx,xxx)
7. United Kingdom ($ 2,152,xxx,xxx,xxx)
8. Spain ($ 1,344,xxx,xxx,xxx))
9. Brazil ($ 1,110,xxx,xxx,xxx)
Xxx,xxx,xxx stand for values between 1, 000,000,000 and 0.
It comes from that the United States is the government most in debt. In itself this data seems not so relevant. In fact the right way to measure debt is the “debt- GDP ratio”.
In any case it’s wrong to undervalue public debt levels. That’s because:
- higher is the debt, higher is the debt growth rate;
- high debt means high interests.
But it isn’t all. High public debt is related to inflation. If public debt is paid printing new money, high levels of inflations are the result. I’ll tell you about Zimbabwe.
But it isn’t all. The United States are the government more in debt. So, what’s about debt ceiling?Is the global economy in threat?
Debt ceiling, inflation, debt-GDP ratio, interests on debt are other stories. I’ll tell you more in the future.
Matt
Inflation: how much do you know about it?
Yesterday I went with my bride to Johns’ house, one of my bride’s friends. After a tasty dinner and a good talk, we watched a really interesting DVD all together. The title of the movie was “In time”, the director was Andrew Niccol. I say a really interesting DVD because the movie inspired the post of today. To be true the movie gave me many points of inspiration.
In detail Dayton, the main character, toward the end of the movie, says more or less the following words: “It’s useless to provide more time (money) to people. They (the system)will increase time rates (prices). Therefore people will be poor as before”.
As you probably have understood, today I’ll write about inflation. Inflation is simply the increasing of the price of goods and services over a period of time. But what it is important is what inflation implies. To make it simply:
_ suppose wages and salaries increase as goods and services prices. Then people are neither richer nor poorer than before.
_ suppose wages and salaries are the same as before but that goods and services prices increase. Then people are poorer.
An example can better explain it. Suppose my wage is $ 1,200. Suppose now that 1 milk (regular) costs $1.00, 12 eggs cost $2.25, loaf of fresh white bread (500g) costs $2.39, apples (1kg) cost $3.71 and so on.
Now prices increase, that is 1 milk (regular) costs $2.00, 12 eggs cost $3.50, loaf of fresh white bread (500g) costs $2.90, apples (1kg) cost $3.78 and so on. My wage increases at the same as prices. It’s now $ 1,300. So, I’m neither richer nor poorer than before.
Now prices increase, that is 1 milk (regular) costs $2.00, 12 eggs cost $3.50, loaf of fresh white bread (500g) costs $2.90, apples (1kg) cost $3.78 and so on. My wage is still $ 1,200. So, I’m poorer.
Do you agree with me? It’s self evident.
Inflation is a really insidious illness. Law rates of inflation are themselves good for the economy. The problem is that people don’t perceive inflation. Or better people do not perceive to be poorer due to inflation. They perceive prices increase, they complain and then it’s all. Someone doesn’t even know what inflation is. Or better, if you have read the post it’s sure now you know. News always speak about the rates of inflation. But inflation doesn’t seem a people’s matter. It seems a matter of interests for economists and banksters. Nothing so wrong!!!
That’s because inflation makes you poorer and you don’t know it. If you are so lucky you have received a rise in salary, and you feel richer now, inflation fucks you. You are the same as before. The problem is that you don’t know it. That’s what economist know as “money illusion”. People thinks in nominal terms instead of real terms. So if you don’t know things, everything turns up to be no more than illusion. You feel richer but you aren’t. You feel the same but you aren’t.
But inflation is a long story. What happen when prices increase too much (hyperinflation) or at the opposite when prices decrease (deflation)?
Which is the relation between hyperinflation, monetary supply, monetization of the debt, governments’ debt, US debt ceiling and so on? I have told you it’s a very long, long story. In the next posts I’ll tell you more. I’ll tell you about my grandmother’s experience with inflation. The story took place in Germany, after the Second World War.
Matt
Tax liens to help people
What are tax liens? How does they work? Tax liens belong to a really interesting and quite unexplored world.
Let’s me now introduce tax liens to you.
First of all some boring stuff: definitions and things like that.
What does tax liens are? Tax liens are liens imposed by law on properties for securing taxes payments.
So, how does taxes work in the USA? Which taxes US citizens have to pay?
In the United Stated taxes are administrated:
• at federal level by three administrations: the IRS (Internal Revenue Service) that is the federal government agency responsible for collecting taxes, the TTB (Tax and Trade Bureau) known as the Alcohol and Tobacco Tax and Trade Bureau and the US Customs and Border Patrol that administrates taxes on imports;
• at a state level by an administration referred as the Department of Revenue or Department of taxation. It’s a state taxing authority that differs from state to state;
• at a local level by local administration.
US citizens usually have to pay the following taxes: income taxes, gift taxes, sales and exercise taxes, estate and property taxes. In case of employers and employees there are also payroll taxes.
Tax Lien Certificates are Certificates issued by the county government when property taxes are not paid. These Certificates claims that a lien has been placed upon the property. Tax Lien Certificates are then sold through an auction process to investors of many US counties and municipalities . Selling price is determined by different variables such as the amount of unpaid taxes and by the specific Tax Lien Certificates operating costs. At the term the Tax Lien Certificates owners (the investor), will receive an annual fixed interest rate from 8% to 36% plus the previous unpaid amount of taxes on property. The Certificates term changes from 1 to 3 years. In case the property owner fails to pay back unpaid taxes and interests over them then the investor becomes the new owner of the property. In fact tax liens have precedence over all other liens.
But, the point is: how can Tax Lien Certificates help people in trouble? Thanks to Tax Lien Certificates investors pay the rightful owner’s unpaid taxes. At same investors provide him extra time for finding money and repay the debt. So investors give the owner the possibility and the time for paying his debt. Time ranges from 1 to 3 years. You know, private companies (such banks and “friends” like that), don’t give people so much time for paying debts before taking away the house. That’s what I know. So that’s the way, for helping people.
But it isn’t all. Also Tax Lien Certificates are a way for providing benefits to the community. That’s because taxes are necessary to Counties for providing public services. Paying taxes, that otherwise will be not paid, would help Counties providing services to citizens.
Yesterday, I met George, a big house owner with financial problems. I bought the Tax Lien Certificate that allowed him to stay at his home and above all to still be the owner of his home. George explained to me his personal situation. He told me about her wife Margaret and their 2 children. He told me that Margaret is an housewife and that she takes care of the children during the day. He also told me about his financial problems. He explained me that two months ago his company has fired 100 people due to internal reorganization. So now George is at home. Yesterday morning, George received a good new. He will start the new job the next week. He had a lot of problems. But now the past is gone. The future seems full of hopes for George.
These are moments in which I feel really satisfied and proud to be an investor.
With Tax Lien Certificates we can support Counties and we can support owners with financial problems. Thanks to Tax Lien Certificates I can feed my family.
Tax Lien Certificates are more than investments. It means helping each others.
Have a nice week,
Matt
The US debt ceiling
Do you still think the United States of America cannot fail? In the past the US have declared default at least 6 times. Last default was in 1971 (For more infos click here). Being one of the largest world economy don’t guarantee against defaults. Due to globalization, the default of one of the top world economy would provoke a global crisis or better a global economic collapse. Of sure the US debt default would impact not only on China, the major US bond holder, but on the whole world economy.
Recent news suggest a new US default is possible.
Let’s start with some definitions. What’s the debt ceiling? It’s a mechanism adopted in the US in order to limit the national debt the Treasury can issue. In other words it’s a mechanism to limit government spending. When the debt limit is reached, some extraordinary measures should be adopted both for financing government expenditures and for paying previous obligations. Moreover the debt ceiling limit the payment of issued obligations but not the issue of new obligations. The impossibility to adopt extraordinary measures when the debt limit is hit cause a sovereign default. And of course you can imagine the impact of the US government default on the world economy.
Let’s turn to news. In 1995, 2011 and 2013 there were three debt ceiling crisis. In 1995 the Republican President Bill Clinton and the Democratic Congress had a first dispute on debt ceiling. At the end a balanced budget agreement was proposed and more federal spending were cut.
In 2011 another debate on debt ceiling took place. The federal spending were close to hit the debt limit. Therefore in 2011 a negotiation on how to solve the crisis took place. The crisis solved with the introduction of the Budget Control Act. The debt ceiling was raised from $14.3 trillion to $14.7 trillion with the opportunity of increasing it in the next months. Moreover the Budget Control Act required spending cuts by $900 billion over the next 10 years and a special committee in order to identify further cuts. Another consequence was on the US rating. For the first time, a rating agency such as Standard and Poor’s cut the US rating from AAA to AA+. So for the first time, one of the top world economy has been shaken.
Turning to 2013 and to the last debt ceiling crisis.
On December 31, 2012 the government technically reached the debt ceiling.
January 2013: it was the beginning of a very long and debated year on debt ceiling. New extraordinary measures had to be adopted.
On February 4, 2013 with the “No Budget, No Pay Act of 2013” the US debt ceiling was suspended up to May 18, 2013.
On May 19, 2013 the debt ceiling was reinstated. The limit was of $16.7 trillion. That’s in order to respect the borrowing made during the suspended period. No previsions were made about debt ceiling next commitments. In any case it was sure that “extraordinary measures” had to be adopted again. In Summer Treasury warned Congress about a possible US default. According expectations it was required to raise the debt ceiling.
On October 16, 2013 with the Continuing Appropriation Act 2014 the debt ceiling debt ended: the debt ceiling was suspended up to February 7, 2014 and at same government agencies could receive funds until January 15, 2014.
But that’s not all. On December 20, 2013 the US Treasury Secretary announced that when the debt ceiling suspension will expire on February 7, 2014 the US will hit the debt limit again. Therefore other “extraordinary measures” will occur. The Congress will probably raise the nation’s borrowing limit. This for avoiding the US default.
The US federal debt seems to be an endless problem. This is because up to now the government has provided short term solutions. Probably in the future the government will suspend the debt ceiling again. It’s like to postpone the problem without solving it. The worst scenario would be the US default. When the US debt will increase so much to become unmanageable the default is the only way. The US economy differs from the emerging economies such as the Chinese economy, the Indian economy and so on. That is because the US economy such as other developed world economy have slow economic growth. That’s the problem. Keeping constant taxation laws, Increasing government debt cannot be compensated by increasing tax revenues. That’s due to the slow GDP increases.
Changing taxation or cutting federal spending are a huge political matter.
Look at the following chart.
US Debt/GDP – debt ceiling forecasting – Source: FRED
It’s to you answering to the question: will the US default be the end of the never-ending story?
The World Economy
World Economy – Country Income Groups
What is the world economy?
Well. I want to be a dickhead and provide you the academic version of “ World Economy ”. (I have doubts you will not sleep before finishing to read the post)
But you can do it. Try to do it.
A simply way to manage the “world economy” notion is to start with some definitions.
The world economy can be defined as a worldwide activity between different countries. Being these countries’ economy strictly correlated, their own economy could affect positively or negatively the other countries’ economy.
The world economy is an economy based on economies of all the world countries’ national economy.
The world economy is the economy of global society in opposition to local economy that refers to national economies.
Summarizing, the world economy is the economy of the global society. The world economy should take into consideration the value of the production of all the world. Therefore for evaluating the world economy legal markets but also illegal markets and black market goods should be considered.
How to measure the world economy? There are different ways to measure the economy of nations such as: GDP, consumer spending, stock markets, exchange rates, interest rate, government debt, rate of inflation, unemployment, balance of trade and so on.
In any case the most common way to measure it is GDP. The GDP (Gross Domestic Product) is the market value of all the goods and services produced by labor and property. GDP refers to a country. The world economy is the aggregation of all the countries’ GDP of the world. Moreover in order to compare the world economy variation during years, the national GDP should be adjusted by inflation.
There are two different ways to compute GPD. They are:
the Current Currency exchange rate. The national GDP can be converted into one base currency according to current currency exchange rates in the international exchange market. The most used currency to convert is the American Dollar
the Purchasing Power Parity (PPP) exchange rate. The national GDP can be converted using the Purchasing Power Parity that is a theoretical exchange rate according to which an identical good in different countries, if expressed in the same currency, has the same price. Also in this case the American Dollars is the currency used to convert.
Using GDP as the mean for measuring it, in 2012, the world economy could be estimated in about 101,002 trillionsof American Dollars (GDP (PPP) – according to the World Bank).
Of sure the previous data, 101.002 trillions of American Dollars, is an approximation: changing the Institute it’s possible to obtain different estimates. According to the International Monetary Found the global GDP (using the PPP exchange rate) is about 98,714 trillions of American Dollars. According to the CIA World Fact-book the global GDP (using the PPP exchange rate) is about 100,003 trillions of American Dollars.
Measuring GDP using the Current Currency exchange rate, different results come from.
Moreover, missing information create distortions. Take into consideration illegal economies, black economies and so on. Of sure these economies are not considered in official statistics.
To sum up: it’s really difficult to quantify the world economy.
Well, are you sleeping? Me too. Let’s go on.
DEVELOPED, DEVELOPING AND LEAST DEVELOPED COUNTRIES
In order to better understand the world economy let’s classify the world in the following three categories:
developed countries;
developing countries;
least developed countries.
DEVELOPED COUNTRIES
While there is no one set definition of developed countries, the term refers to countries characterized by highly developed economies. Therefore the most used criterion for classifying developed countries are economic criterion such as GDP, per capita GDP, level of industrialization and standard of living. An interesting way for classifying countries as to be developed countries is looking at the economic sectors. Which is the economic situation of these countries? Developed countries are post-industrial economies where wealth is produced more in the third (the service sector) than the second sector (the industrial sector).
Developed countries are the world’s top economies.
Which countries are developed countries? As already stated, due to the lack of a unique definition, different criterion can be used. According to the criterion there exist several and different lists. Developed countries lists are provided by the United Nations Development Programme, CIA, FTSE Group (a British provider of stock market indices and other data services), OECD, by the International Monetary Fund and by the World Bank.
According to the United Nations Development Programme, developed countries are characterized by high level of human development. Therefore the classification is based on the Human Development Index. It’s an index that takes into consideration income, productivity but also educational opportunities and health conditions. In 2013 the list of developed countries (in the following picture, see “very high human developed countries”) included 47 countries. The list is the following:
World economy – developed countries
Norway, Australia, United States, Netherlands, Germany, New Zealand, Ireland, Sweden, Switzerland, Japan, Canada, South Korea, Hong Kong, Iceland, Denmark, Israel, Belgium, Austria, Singapore, France, Finland, Slovenia, Spain, Liechtenstein, Italy, Luxemburg, United Kingdom, Czech Republic, Greece, Brunei Darussalam, Cyprus, Malta, Andorra, Estonia, Slovakia, Qatar, Hungary, Barbados, Poland, Chile, Lithuania, United Arab Emirates, Portugal, Latvia, Argentina, Seychelles and Croatia.
According to CIA, in 2012, developed countries are “market-oriented economies of the mainly democratic nations in the Organization for Economic Cooperation and Development (OECD) plus Bermuda, Israel, South Africa, and the European mini-states. Generally these countries have a per capita GDP in excess of $15,000 although four OECD countries and South Africa have figures well under $15,000 and eight of the excluded OPEC countries have figures of more than $20,000” (the World Factbook-CIA). Developed countries are 34. They are:
Andorra, Australia, Austria, Belgium, Bermuda, Canada, Denmark, Faroe Islands, Finland, France, Germany, Greece, Holy See, Iceland, Ireland, Israel, Italy, Japan, Liechtenstein, Luxembourg, Malta, Monaco, Netherlands, NZ, Norway, Portugal, San Marino, South Africa, Spain, Sweden, Switzerland, Turkey, UK, US.
The FTSE Group provides a financial market oriented definition of developed countries. Developed countries should have high income economies, detailed requirements with regard to market and regulatory environment, custody and settlement, dealing landscape, derivatives and size of market. In 2012 developed countries were 26:
Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Singapore, South Korea, Spain, Sweden, Switzerland, United Kingdom, US.
The International Monetary Fund definition of developed countries is based on the following parameters:
per capita income level;
export diversification;
degree of integration in the global financial system.
In 2012, the list included 35 countries:
Imf – World economy . developed countries
Australia, Austria, Belgium, Canada, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Iceland, Israel, Italy, Japan, Luxembourg, Malta, Netherlands, Norway, Portugal, San Marino, Singapore, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Taiwan, United Kingdom, US.
Only during the 1997-2012 period Hong Kong, Israel, Singapore, South Korea, Taiwan, Cyprus, Slovenia, Malta, Czech Republic, Slovakia, Estonia and San Marino passed to be developed countries.
The World Bank defines developed countries as countries characterized by high income (GNP per capita was $12,616 or more in 2012). There are 75 countries. The list is the following:
Andorra, Antigua and Barbuda, Aruba, Australia, Austria, The Bahamas, Bahrain, Barbados, Belgium, Bermuda, Brunei, Canada, Cayman Islands, Channel Islands, Chile, Croatia, Curaçao, Cyprus, Czech Republic, Denmark, Equatorial Guinea, Estonia, Faroe Islands, Finland , France, French Polynesia, Germany, Greece, Greenland, Guam, Hong Kong, Iceland, Ireland, Isle of Man, Israel, Italy, Japan, South Korea, Kuwait, Latvia, Liechtenstein, Lithuania, Luxembourg, Macao, Malta, Monaco, Netherlands, New Caledonia, New Zealand, Northern Mariana Islands, Norway, Oman, Poland, Portugal, Puerto Rico, Qatar, Russia, Saint Kitts and Nevis, San Marino, Saudi Arabia, Singapore, Sint Maartin, Slovakia, Slovenia, Spain, St. Martin, Sweden, Switzerland, Trinidad and Tobago, Turks and Caicos Islands, United Arab Emirates, United Kingdom, United States, Uruguay and U.S. Virgin Islands.
Then there is Taiwan of sure!!!
DEVELOPING COUNTRIES
As for developed countries, also for developing countries there are no one set definition and criterion. What is the economy of these countries? Developing countries are characterized by low income, low degree of industrialization and medium-low standard of living. They locate in the middle with respect to the world economic ranking. In any case among developing countries there are some of the fastest growing economy in the world.
Which countries are developed countries? The United States Development Programme, the International Monetary Fund and the World Bank provide different lists.
According to the United Nations Development Programme (UN) a country’s development is measured according to the following criterion:
GDP (gross domestic product);
life expectancy (health, nutrition, death age);
rate of education/literacy.
In order to capture all the previous variables, the UN uses an indicator: the Human Development Index (HDI). According to the results of the HDI, in 2012, the list of developing countries is composed by 47 high human development countries and by 47 medium human development countries.
World economy . developing countries
High human development countries
Bahrain, Bahamas, Belarus, Uruguay, Montenegro, Palau, Kuwait, Russia, Romania, Bulgaria, Saudi Arabia, Cuba, Panama, Mexico, Costa Rica, Grenada, Libya, Malaysia, Serbia, Antigua and Barbuda, Trinidad and Tobago, Kazakhstan, Albania, Venezuela, Dominica, Georgia, Lebanon, Saint Kitts and Nevis, Iran, Peru, Macedonia, Ukraine, Mauritius, Bosnia and Herzegovina, Azerbaijan, Saint Vincent, Oman, Brazil, Jamaica, Armenia, Saint Lucia, Ecuador, Turkey, Colombia, Sri Lanka, Algeria, Tunisia.
Medium human development countries
Tonga, Belize, Dominican Republic, Fiji, Samoa, Jordan, China, Turkmenistan, Thailand, Maldives, Suriname, Gabon, El Salvador, Bolivia, Mongolia, Palestine, Paraguay, Egypt, Moldova, Philippines, Uzbekistan, Syria, Micronesia, Guyana, Botswana, Honduras, Indonesia, Kiribati, South Africa, Vanuatu, Kyrgyzstan, Tajikistan, Vietnam, Namibia, Nicaragua, Morocco, Iraq, Cape Verde, Guatemala, Timor-Leste, Ghana, Equatorial Guinea, India, Cambodia, Laos, Bhutan, Swaziland.
The International Monetary Fund(IMF)classifies developing countries (as already stated)according to per capita income level, export diversification and degree of integration into the global financial system. As, the IMF classifies countries in only two groups, developed and developing countries, it’s obvious that developing countries are all countries not mentioned in the developed countries list. Therefore, in 2012, the list of developing countries is composed by 154 countries:
IMF – World economy . developing countries – source: Wikimedia commons
Afghanistan, Albania, Algeria, Angola, Antigua and Barbuda, Argentina, Armenia, Azerbaijan, Bahamas, Bahrain, Bangladesh, Barbados, Belarus, Belize, Benin, Bhutan, Bolivia, Bosnia and Herzegovina, Botswana, Brazil, Bulgaria, Burkina Faso, Burma, Burundi, Cambodia, Cameroon, Cape Verde, Central African Republic, Chad, Chile, China, Colombia, Comoros, Democratic Republic of the Congo, Republic of the Congo, Costa Rica, Côte d’Ivoire, Croatia, Djibouti, Dominica, Dominican Republic, Ecuador, Egypt, El Salvador, Equatorial Guinea, Eritrea, Ethiopia, Fiji, Gabon, The Gambia, Georgia, Ghana, Grenada, Guatemala, Guinea, Guinea-Bissau, Guyana, Haiti, Honduras, Hungary, India, Indonesia, Iran, Iraq, Jamaica, Jordan, Kazakhstan, Kenya, Kiribati, Kosovo, Kuwait, Kyrgyzstan, Laos, Latvia, Lebanon, Lesotho, Liberia, Libya, Lithuania, Macedonia, Madagascar, Malawi, Malaysia, Maldives, Mali, Marshall Islands, Mauritania, Mauritius, Mexico, Federated States of Micronesia, Moldova, Mongolia, Montenegro, Morocco, Mozambique, Namibia, Nauru, Nepal, Nicaragua, Niger, Nigeria, Oman, Pakistan, Palau, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Qatar, Romania, Russia, Rwanda, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, São Tomé and Principe, Saudi Arabia, Senegal, Serbia, Seychelles, Sierra Leone, Solomon Islands, Somalia, South Africa, South Sudan, Sri Lanka, Sudan, Suriname, Swaziland, Syria, Tajikistan, Tanzania, Thailand, Timor-Leste, Togo, Tonga, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Tuvalu, Uganda, Ukraine, United Arab Emirates, Uruguay, Uzbekistan, Vanuatu, Venezuela, Vietnam, Yemen, Zambia, Zimbabwe. Cuba and North Korea are not officially classified by the IMF as to be nor developed neither developing countries but they are.
Finally the World Bank considers developing countries, all countries with:
upper middle income: in 2012 GNI (Gross National Income) per capita between US$4,086 and US$12,615;
lower middle income: in 2012 GNI per capita between US$1,036 and US$4,085.
The list of developing countries is composed by 55 upper middle income countries and by 48 lower middle income countries.
Upper middle income countries
Albania, Algeria, American Samoa, Angola, Argentina, Azerbaijan, Belarus, Belize, Bosnia and Herzegovina, Botswana, Brazil, Bulgaria, China, Colombia, Costa Rica, Cuba, Dominica, Dominican Republic, Ecuador, Fiji, Gabon, Grenada, Hungary, Islamic Republic of Iran, Iraq, Jamaica, Jordan, Kazakhstan, Lebanon, Libya, Macedonia, Malaysia, Maldives, Marshall Islands, Mauritius, Mexico, Montenegro, Namibia, Palau, Panama, Peru, Romania, Serbia, Seychelles, South Africa, St. Lucia, St. Vincent and the Grenadines, Suriname, Thailand, Tonga, Tunisia, Turkey, Turkmenistan, Tuvalu and Venezuela.
Lower middle income countries
Armenia, Bhutan, Bolivia, Cameroon, Cape Verde, Republic of Congo, Côte d’Ivoire, Djibouti, Arab Rep. Of Egypt, El Salvador, Georgia, Ghana, Guatemala, Guyana, Honduras, India, Indonesia, Kiribati, Kosovo, Lao, Lesotho, Mauritania, Fed. Sts. of Micronesia, Moldova, Mongolia, Morocco, Nicaragua, Nigeria, Pakistan, Papua New Guinea, Paraguay, Philippines, Samoa, Sao Tomé and Principe, Senegal, Solomon Islands, Sri Lanka, Sudan, Swaziland, Syrian Arab republic, Timor-Leste, Ukraine, Uzbekistan, Vanuatu, Vietnam, West Bank and Gaza, Rep. of Yemen and Zambia.
LEAST DEVELOPING COUNTRIES
Least developed countries are characterized by poverty or extreme poverty. These countries can be classified as the worst economies in the world. Most lest developed countries are located in Africa and in Asia-Oceania plus Haiti (America).
African countries are characterized by extreme poverty, high rate of death (AIDS is widespread in most parts of Africa). From the political point of view, there is lack of political and social stability (civil/ethnic wars), corruption. Very often there are authoritarian governments.
Passing to the Asian-Oceania countries, which is the economic situation of these countries? They are characterized by fist sector economies based on mono-cultures. The most part of governments are quite stable and based on democracy.
According to the United Nations Development Programme (UN), least developed countries are characterized by poverty (tree-year average per capita Gross Domestic Product less than 1.036$ more or less), low levels of health, nutrition and education and economic instability.
The list of least developed countries are composed by 49 countries:
World economy – least developed countries
Angola, Benin, Burkina Faso, Burundi, Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, The Gambia, Guinea, Guinea-Bissau, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Rwanda, São Tomé and Principe, Senegal, Sierra Leone, Somalia, South Sudan, Sudan, Togo, Tanzania, Uganda, Zambia, Afghanistan, Bhutan, Bangladesh, Cambodia, East Timor, Kiribati, Laos, Myanmar, Nepal, Samoa, Solomon Islands, Tuvalu, Vanuatu, Yemen, Haiti.
Afghanistan, Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Dem. Rep. of Congo, Eritrea, Ethiopia, The Gambia, Guinea, Guinea-Bissau, Haiti, Kenya, Dem. Rep. of Korea, Kyrgyz Republic, Liberia, Madagascar, Malawi, Mali, Mozambique, Myanmar, Nepal, Niger, Rwanda, Sierra Leone, Somalia, South Sudan, Tajikistan, Tanzania, Togo, Uganda and Zimbabwe.
The World Bank classify as least developed countries those countries with low income (GNI per capita less then US$1,036). Countries (36) are the following:
Afghanistan, Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Dem. Rep. of Congo, Eritrea, Ethiopia, The Gambia, Guinea, Guinea-Bissau, Haiti, Kenya, Dem. Rep. of Korea, Kyrgyz Republic, Liberia, Madagascar, Malawi, Mali, Mozambique, Myanmar, Nepal, Niger, Rwanda, Sierra Leone, Somalia, South Sudan, Tajikistan, Tanzania, Togo, Uganda and Zimbabwe.
So, here we are. If you have been able to follow the post up to this moment, now it would be a cinch to read the next part.
Matt
How to be rich with markets
How to be rich wih markets? I don’t know.
I know few people who make money in financial markets. But no one has become rich.
Sure I don’t know anyone who can explain me how to be rich with markets.
First of all, I value to specify what richness is.
I’m not referring to inner riches. It’s, of sure, the most important of all.
In this post, I’m referring to money. My dear money.
With “how to be rich” I refer to both earning a lot of money and having free time.
Sure. You’re not rich without time.
Following markets you don’t have enough free time. You need to look at the screen many hours in a day.
How can you stay with your family?
How can you meet your friends?
How can you stay with your loved ones?
When I started to operate in the Forex scam I was so unaware, so ignorant, so incompetent that my trading was based on news. In that period I believed to become rich just trading online.
Let me to confide you a secret.
Through the Forex scam you can make a lot of money. But you will never be rich.
You can spend your life selling courses. You can live on that. But nothing else.
Forget palms, forget easy money, forget to be rich in this way.
Be aware it’s a job like another one. You need time for making money.
Trading is just a way for making money online.
So why am I focused to explain to you how to trade?
Am I foolish?
Yes. I’m foolish.
Have you looked around?
Banksters block entrepreneurs. People are without job. There are social problems everywhere.
And the Forex scam is one of the most profitable job of the world.
In my opinion it is the most beatiful job of the world.
Thanks to the Forex scam, you can understand how to make money online by yourself.
Simply using your eyes.
You don’t need Governments, Banksters, Mr Obama and so on. You only need yourself.
I’m a trader wirh profitable earnings. Maybe I’m not the best one. But I have profits.
I’m one of the 5-10% traders of the world that operate with profit.
I’m sure my experience and knowledge will help you to become financially free.
So. First rule. You should not believe to be rich with the Forex scam.
What you can do with the Forex scam and with online trading is just to understand how to make money online.
Try to find out advantages.
You will not have a boss. It’s a very profitable job.
This is the starting point. If you are able to make money independently that is a good starting point.
Now look at my profit with the Forex scam.
I totalized 300 Dollars in three hours.
Not much.
I’m not a genius. But if you make money online and you make 300 Dollars every day, at the end of the week you will earn 1.500 Dollars.
In four weeks you will have 6.000 Dollars. It’s not so much. It’s true.
But I’m sure that is better than a White House employee’ s wage.
It means 72.000 Dollars per year. It could be 144.000 Dollars per year. Do you believe to be rich? No, you aren’t.
So. Instead of moaning about job if I ‘ll be in your shoes I would try to realize profits through the markets.
Instead of focusing on “how to be rich”, you should focuse on learning something that make you independent.
If you prefer having a job in the White House, if you prefer working inMc Donald’s or something like that and you are happy with it then there are two option: the first one is that we are different, the second one is that you are plagiarized by the system.
If the answer is the first one, you will not discover how to be rich with me. We have different parameters.
If the answer is the second one then following the blog you could change your mind.
If you do not focus on how to be rich you’ll discover that making money with trading online is quite easy. Easy and silly.
If you consider a foolish trading you will be able to set two-three patterns and to exploit the price action to make profits.
You don’t need seven screens. You need the mind’s eye. You need to understand how the big players manipulate the market day after day.
Their moves are repetitious and ridicolous.
As they are playful people you need to adopt a foolish trading.
This is the latin cross on the Eur Usd, thirty minutes chart.
Now I’m profitable of fourty dollars. (AUD/CAD)
I don’t want to show you the entity of my profits but the regularity of profits.
If you focus on how to be rich you’ll be tempted to trading with money that you don’t have.
If you focus on how to be rich you’ll lose your head.
If you focus on charts your occasion will knock at the door. Maybe not soon. But before the end of the day it will arrive.
The latin cross is one of the pattern I adopt to trade.
If you combine it with the moving average it is quite difficult to fail.
There is the financial crisis, a lot of people do not find a job, but the markets are still here.
The market gives you a lot of opportunities.
Why don’t grab it?
Well.
You need to spend time for earning money. On the contrary you will be a slave of money.
Markets are a good starting point.
Therefore I’ll provide you few rules in order to understand how to be rich.
The first rule you need to keep in mind is what the stop loss order is.
Be aware, have plans.
Matt
JANUARY 10, 2014: USA and Canada unemployment rate
Many news can affect the currency price, one of these important news is the UNEMPLOYMENT RATE. Today the US and the Canadian unemployment rate will be announced. How does the unemployment rate affect the price? Even if it is generally view as a lagging indicator, the unemployment rate is a signal of the market trend. That’s because labor market conditions and consumer spending are strictly correlated. Decreasing unemployment can be translated into increasing consumptions and appreciation of the currency.
In any case remember: it’s the Forex Scam. Forecasting is silly. Burning the account is really easy. Every news is just a pretext for moving the price line.
Matt
JANUARY 9, 2014: ECB and BOE interest rates
Too many news for today, as always during the first days of the new year. The Bank of England (BOE)and the European Central Bank (ECB) will decide the short term interest rate. Currency exchanges regarding the GBP and the EUR can be affected.
Keep out during these news. Maybe the Puppet Master is waiting for your account.
Matt
General rules about the stop loss order
I hope you know what a stop loss order is.
I don’t want to be foul-mouthed again so if you want to know more about the stop loss order, please, click here.
As you already know, I only know one method for being a profitable trader. And it is using the stop loss order.
To be profitable isn’t a money matter as it isn’t a stop loss matter.
Trading with the stop loss order placed means to have plans.
You can live without plans too.
My bride for example doesn’t like plans.
This is the reason because for every journey she spends double.
But it’s not the place where to discuss about.
Well. You will not be a trader if you do not have plans.
Trading means discipline. Discipline means plans.
Planning your trading means planning the stop loss orders.
When you set up a strategy, for example with these chart patterns, you have to consider where to place your stop loss order.
For each strategy you use.
You can consider the difference between the different stop loss orders.
Someone want to understand the difference stop loss vs stop limit.
There isn’t a big difference.
A limit order needs to be beaten twice order to be caught.
A stop order need to be beaten once.
A limit order is usually a target or a countertrend entry.
A stop order is usually used with a trend entries. And for placing price stop losses.
If you wanna another stop loss order example you can click here.
Beware about the use of the stop loss.
The stop loss order is used by any profitable trader.It doesn’t matter if you trade stocks or currencies.
A stock stop loss order is the same of a Forex stop loss.
The concept is the same: planning.
Well. I hope you have read my stop loss definition.
I’m sure you are a clever trader and you prefer to avoid your broker traps.
Now let’s consider that with a small capital, a capital between 1-3 thousand Dollars, you can open an undercapitalized account.
Day after day you can get little profits.
And day after day you can increase these profits.
It’s not easy. But with an handsome coach like me you can do it. Click here to see my picture.
The stop loss order is your guardian angel. Before to enter in the market you need to know the level where to place the stop loss order.
I’ll provide you a general rule about the stop loss order. So, where to place the stop loss order? The rule is to place it some points far from the entry level: the distance between the entry level and the stop loss order should be short. Let’s consider the following chart.
Stop loss order and DT
The chart is about the GBP/USD currencies. It shows a double max. Well, a possible entry is more or less around the max. The stop loss order should be placed some points above the entry order. For example, if you enter at 1.6426, set the stop loss order at 1.6430 or at max at 1.6431. Only you have to decide the exact level where to place the stop loss order. Always remember: consider short distances between the entry level and the stop loss order. The chart shows another possible entry around the top of the reversal bar. Also in this case, remember the stop loss order. Set the stop loss near the entry level. Specifically, set the stop loss order under the min of the previous bar. As you can see, the distance is more or less 4 points.
In any case, it’s not important I told you how many points far to the entry price to set the stop loss order. You have only to keep in mind the following principle: look at the chart, look for a signal and before to enter figure out your future moves. Figure out the entry level, the stop loss order and the take profit. Stop loss orders should be short, take profits should be long. That’s the key. That’s the secret for being successful.
If your stop loss order is short then even if the stop loss order is triggered, your loss will be small. But if you are right and the price moves in the way you figure out, your profit will be big enough. Otherwise if you set long stop orders then if the stop loss order is triggered you will lose a lot of your capital.
Setting stop loss orders is a very easy affair. It is more difficult having effective rules (short stop loss orders, long take profits) and even more difficult to respect the rules.
As already said, you have always to set the stop loss order. That’s because stop loss orders protect your capital and your profits.
Some days ago I was looking at the charts. The 30 minutes EUR/USD graph pictured the following: the St. Peter’s cross.
Short stop loss order
The St. Peter’s cross: a signal for a possible profitable entry. As already explained I usually set the entry under the min of the St. Peter’s cross. In the operation I made some days ago I set the entry at the St. Peter’s cross closure level. The entry was at 1.3632. As you can see I set a really short stop loss order. The stop loss order I set was at 1.3634.
In general, the rule is to always use the stop loss order. I set the stop loss order according to the chart signals.
As you can note in the above image, I set the stop loss order above the max of the previous bar. You have always to set quite short stop loss orders.
Then according to the chart, the stop loss order can be more or less short. In other words you have to look at the chart to know the exact point where to set the stop loss order.
Rules about the stop loss order are few and easy to learn. It can be more difficult to respect these rules.
For example when your entry order is triggered and your stop loss order is set, if the price moves towards your stop loss order you could be tempted to move the stop loss order further away. That’s a big mistake.
It’s a way for increasing your losses while keeping constant your profits. If you are a very disciplined person it can be quite simple to you to respect rules. If you are not, read the 3 following simple rules about the stop loss order every day:
always set the stop loss order;
always set your stop loss order shorter than your first take profit;
set the stop loss order level according to the chart signals.
Are you curious to know the end of my trading combining the St. Peter’s cross entry with the stop loss order? The result is the following:
Profit using the stop loss order
If you trainee to following the rule I give you, you can make profitable trades.
Few important rules can help you to become a profitable trader.
This is an example.
So be aware, have plans.
Matt
