Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Currency

Venezuela’s Bonds Selling at Massive Discounts for Fear of Default

This article appeared online at TheNewAmerican.com on Thursday, June 8, 2017:

When it was learned that Goldman Sachs had purchased $2.8 billion of Venezuela’s bonds for just $865 million — a 69-percent discount — the firm received criticism from opponents of Venezuela President Nicolas Maduro (shown). The critics claimed that by buying them, even at such a fire sale price, Goldman allowed Maduro to pay some critical bills that kept his corrupt Marxist regime afloat for a little while longer.

Now comes word that Maduro has resorted to desperation financing — what the Wall Street Journal calls “unorthodox” — by issuing bonds to one of its state-owned banks, which then

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Media Ignores Ongoing Socialist Disaster Unfolding in Venezuela

This article appeared online at TheNewAmerican.com on Wednesday, May 31, 2017: 

Media Research Center (MRC), the conservative media watchdog whose stated mission is to “prove through sound scientific research, that liberal bias in the media does exist,” reported on Tuesday more evidence that the media is now guilty of publishing “no news,” at least when the subject is the ongoing meltdown taking place in Venezuela.

Readers of these pages are well-informed about that meltdown:

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U.S. Trade Gap With China Narrowed in January and February

This article appeared online at TheNewAmerican.com on Thursday, April 6, 2017:

Xi Jinping 习近平

Xi Jinping, the Chinese communist dictator

When the Wall Street Journal reported that, according to the U.S. Department of Commerce, America’s “trade gap” shrank in January and February, it intoned that while this was allegedly good news, over the last 10 years it’s been bad news: the trade gap “remains far higher than a decade ago.” The Journal called it a “mixed trade outlook” that bodes ill for the upcoming talks between U.S. President Donald Trump and China’s communist leader, Xi Jinping.

Josh Mitchell, writing for the Journal, tried to explain why this was bad:

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Venezuela’s Marxist Dictator Orders Arrest of Bakers Making Croissants

This article appeared online at TheNewAmerican.com on Friday, March 17, 2017:

Português: Brasília - O chanceler da Venezuela...

Four bakers trying to make ends meet were arrested earlier this week in Caracas, the capital of Venezuela, a country that was once one of South America’s premier economic powerhouses. Venezuela’s ruler, Nicolas Maduro, mandated that 90 percent of scarce flour be turned into bread, which must be sold at a loss, rather than higher-priced sweet bread, ham-filled croissants, pastries, and cakes.Two bakers apparently broke this law, and two used out-of-date wheat for brownies. At least one baker will have his bakery taken over by the government for 90 days. The bakers, operating under Maduro’s mandates that they use government-imported wheat for flour to bake bread and sell it below their costs, were on survival mode, as are most of the people living in Venezuela’s socialist paradise.

Maduro, rather than to take the justified blame for the economic malaise that his socialist policies have caused, has dreamed up all manner of straw men to blame for the country’s woes, starting with

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Intel’s Announcement of New Arizona Plant Negates Trade Deficit Concerns

This article appeared online at TheNewAmerican.com on Wednesday, February 8, 2017:

US-DeptOfCommerce-Seal

Brian Krzanich, head of Intel, probably didn’t know he was making the case for free trade, despite the fact that trade deficits happen, when he announced from the White House on Wednesday morning his company’s plans to build a new plant in Chandler, Arizona. In a microcosm, his announcement perfectly expressed just how free trade between nations and their citizens generally benefits everyone. Krzanich said his company was planning to build a $7 billion microchip plant in Chandler that would directly employ 3,000 people with “high-paying jobs,” and generate a total of 10,000 jobs when support services for those new jobs are factored in.

Krzanich said that most of Intel’s customers are overseas. Last year Intel’s gross revenues exceeded $10 billion, so, doing the math, it’s likely that Intel will sell $6 to 8 billion worth of chips to foreigners. That creates a trade “surplus” for the United States of between $6 and $8 billion. That will offset some of the trade “deficit” just announced by the Commerce Department the day before, of about $500 billion, an announcement that was met with much wringing of hands and gnashing of teeth by economists claiming that that deficit put the United States at some type of unfair disadvantage to the rest of the world.

However, in the real world, trade deficits are not necessarily bad. When someone buys an automobile or a t-shirt or a cellphone, the money they spend winds up as revenues for manufacturers located overseas. Then those manufacturers have excess American dollars that are now available for investment. Many of those dollars get cycled back to the United States, either by buying U.S. goods and services, or U.S. treasuries, or real estate or businesses, which then generate more products to sell overseas.

In 2016, Americans bought from foreign countries $171 billion worth of automobiles, engines and auto parts, $94 billion worth of clothing, $80 billion of crude and refined oil products, $73 billion of cellphones and other household goods, $58 billion of pharmaceutical drugs, with the balance made up of telecommunications equipment, toys, games, sporting goods, televisions, and video games.

In return foreigners — individuals, companies and governments — bought from the United States $65 billion worth of civilian aircraft and engines, $86 billion on travel to the United States, $78 billion on “intellectual property rights” (mostly leases or patents that foreign companies pay to American companies), $70 billion on financial services, with the rest made up of soybeans, chemicals, and newsprint.

The difference is $502 billion. Americans spent $502 billion more abroad than foreigners bought from us. Is that a problem?

Not for companies such as Intel. Its highly regarded technology, in the form of microchips that outperform its competitors, is in great demand worldwide. Foreign companies will use some of those American dollars that Americans spent to buy them. Intel, for its part, will invest billions in new plants and in hiring new people, paying them good salaries, in order to supply that foreign demand. Intel certainly hopes that foreigners will continue to buy them in massive quantities so that it can continue to expand, build, and hire, and so forth.

As Dan Griswold, writing for Cato, put it: No one would do business with anyone else unless both were better off afterwards:

Nations do not trade with each other: people do. America’s trade deficit with the rest of the world is only the sum of the individual choices made by American citizens. Those choices, to buy an import or to sell an export, only take place if both parties to the transaction believe it will make them better off.

In this way, the “balance of trade,” is always positive.

However, Griswold is likely putting too kind a face on trade deficits, per se, for while free trade seems universally beneficial, the use of fiat money — money not backed by a valuable asset such as gold — in the process of trading could lead to hyperinflation in a country, causing widespread devastation. Whether one calls that a trade problem or a currency problem, it is still a problem inherent in trade, maybe especially for the United States. See the article “So I’m Told Trade Deficits Are Good.”

In general, though, if politicians made it even easier for companies here and abroad to do business, then everyone would be even better off, and concerns about trade “wars” and “tariffs” and “mercantilism” would fade back into the woodwork where they belong.

Venezuela’s Dictator Fires Head of Central Bank; Inflation at 1,600 Percent

This article appeared online at TheNewAmerican.com on Monday, January 23, 2017:

Nicolas Maduro

Venezuela’s Marxist dictator, Nicolas Maduro (shown), fired the head of his country’s central bank on Friday. Without fanfare or any public statement from either Maduro or his banker, Nelson Merentes, the firing is the latest move by the president to place the blame for the collapse of his country anywhere but where it belongs: on his socialist policies.

For months The New American has tracked the retrogression of a country which was once one of the leading economies in South America to a banana republic where people are starving, sick people are dying for lack of care, and a black market has replaced a once-thriving free economy. Last June, the New York Times was finally forced to admit the cause:

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Venezuela: Some Lessons Must be Learned Over and Over Again

This article was published by The McAlvany Intelligence Advisor on Monday, January 23, 2017:

George Santayana most famously said: “Those who cannot learn from history are doomed to repeat it.” But he wasn’t the only one. Aldous Huxley put it this way: “That men do not learn very much the lessons of history is the most important of all the lessons of history.” Said Samuel Taylor Coleridge: “If men could learn from history, what lessons it might teach us! But passion and party blind our eyes, and the light which experience gives us is a lantern on the stern which shines only on the waves behind.”

There’s a lesson being taught to the hapless and now helpless citizens (shown above) of Venezuela. It’s a lesson so often taught but not learned that one may, with great confidence, predict the final outcome.

On Friday Venezuela’s Marxist dictator, Nicolas Maduro, fired his banker,

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Civilization’s Thin Veneer

This article was published by The McAlvany Intelligence Advisor on Wednesday, December 14, 2016:  

The dictionary defines civilization as “an ideal state of human culture characterized by a complete absence of barbarism and non-rational behavior.” Rich Galen thinks a better definition is living in a “constant state of positive assumptions.”

Many of those assumptions are coming into question, with many more already proven to be false. One of them is that pension plans are safe, that promises made will be kept, and that the assumptions underlying those plans regarding rates of return on invested assets are reasonable and that they virtually guarantee predictable results.

Those positive assumptions vanished last summer in Athens when

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Venezuelan Currency Lost Half Its Value in November

This article appeared online at TheNewAmerican.com on Monday, November 28, 2016:  

Português: Brasília - O chanceler da Venezuela...

Nicolas Maduro

Bloomberg reported last Thursday that Venezuela’s currency — the bolívar fuerte or “strong bolivar” — has lost 45 percent of its purchasing power so far this month, with six days to go. The underlying cause was put simply by Professor Milton Friedman, a member of the “Chicago School” of economic free market thinking and winner in 1976 of the Nobel Memorial Prize in Economic Sciences: “Inflation is always and everywhere a monetary phenomenon … and can be produced only by a more rapid increase in the quantity of money than in output.”

On the other hand, Venezuela’s president, Nicolas Maduro,

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Multi-nationals Are Leaving Venezuela, Selling Out at Fire Sale Prices

This article appeared online at TheNewAmerican.com on Wednesday, November 16, 2016:  

Over the last year, General Motors, Ford Motor Company, auto parts maker Dana, Clorox, Kimberly-Clark, Bridgestone Tire, and Liberty Mutual have either sold out their Venezuelan interests at huge losses, have given their factories and properties away for free, or are planning to. Those who used to work for them are now working in another profession: as bachaqueros. This is slang for “giant ants,” used as a pejorative to describe street vendors offering their wares in the black market.

General Mills sold its operations at half the assessed value, while Dana was lucky

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Trump’s First Challenge: the Iranian Nuclear Deal

This article appeared online at TheNewAmerican.com on Friday, November 11, 2016:  

On Wednesday Iran’s Foreign Minister Javad Zarif warned Donald Trump to keep his hands off the nuclear deal he and Secretary of State John Kerry made last year:

Every U.S. president has to understand the realities of today’s world. The most important thing is that the future U.S president sticks to agreements.

Whether Trump agrees with Zarif, or not, will likely be among the very first decisions he’ll be forced to make in January. During his campaign Trump repeatedly called the Iran nuclear deal “the worst deal ever negotiated,” a “disaster,” and said that it could lead to a “nuclear holocaust.” In March he told the American Israel Public Affairs Committee, “My number one priority is to dismantle the disastrous deal with Iran.”

Iran is making Trump’s decision easy.

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Venezuela’s Collapse: Horror Beyond Belief

This article appeared online at TheNewAmerican.com on Tuesday, October 18, 2016:  

The Coat of arms of Venezuela

When Matt O’Brien updated his previous article on the slow-motion collapse of Venezuela on Monday for the Washington Post, he reviewed the symptoms achingly familiar to those following the events: the collapse of oil prices; the incompetence of the cronies running the state-owned oil company (former Marxist Hugo Chávez replaced the workers who knew what they were doing with political cronies who didn’t); the inflation of the currency followed as night follows day, with price controls to mask the resulting inflation; inflation, as measured by the black market’s pricing of the Venezuelan bolivar, causing the bolivar to lose more than 90 percent of its value in just two years; the empty supermarket shelves; the oppression by police of those standing in long lines to purchase whatever might be left in those stores; and on and on. As O’Brien lamented:

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Venezuelan Exodus Accelerates

This article appeared online at TheNewAmerican.com on Wednesday, August 24, 2016:  

Prison 015

Since early July an estimated 300,000 Venezuelans have crossed the border into Colombia seeking to purchase basic necessities. Some decided to stay.

Eduardo (not his real name) used to make $18 a month as a systems engineer in Venezuela, but that wasn’t enough to feed his family. With inflation reducing the purchasing power of the Bolivar Fuerte by half nearly every month, he fled to Bogota to stay with a friend. Eduardo told the Financial Times: “At least I can find food here. Back in Venezuela we all lacked anything to eat. I’d rather stay here doing whatever [I can], rather than heading back while [Venezuela’s Marxist President Nicolas] Maduro and his cronies are there.”

An accountant who crossed the border into Colombia told the Times that he is going to stay even if “I have to stand at a corner all day selling arepas [a cheap food made from corn meal].”

Families of those who are staying in Colombia are hoping they will receive funds from the border-crossers in order to stay alive. Otherwise, they are likely to starve.

Most of those who can afford to leave the country have already left. The problems in Venezuela started with the takeover of the government by Marxist Hugo Chavez in 1999: First to feel the crunch were many of the 20,000 oil men that Chavez fired from their positions at the state-owned oil company. (Chavez replaced them with incompetent political cronies.) Then businessmen left the country to escape the currency controls imposed by Chavez. They were followed by students who saw the handwriting on the wall. In the last 17 years, an estimated 1.8 million Venezuelans have left the Chavez/Maduro socialist paradise.

Tebie Gonzalez and Ramiro Ramirez cashed out their emergency savings account in order to buy life’s essentials in Colombia in July. They returned home only to face the existential question: What happens when those staples — food and medicines — run out? What will they do?

Daya Silva, a native of Caracas, used a vacation in Buenos Aires to find a job. She found work and returned to Venezuela briefly, carrying a suitcase full of much-needed items for her friends and family: drugs to treat high blood pressure, essential kitchen supplies, and paper goods. But what happens to her friends and family when these run out?

The vast majority of Venezuelans are today facing the same question. Although the number of Venezuelans requesting refugee status has jumped from 127 in 2000 to 10,300 last year, according to the UN, that is a tiny fraction of the 30 million people remaining in the country. With unemployment at 17 percent (government figures are no longer available), with between 76 and 80 percent of the population living in poverty (again, no government numbers are available so these are estimates from independent sources), and with inflation destroying what’s left of the purchasing power of the local currency (inflation is expected to exceed 2,000 percent next year) the average Venezuelan has almost run out of options.

Relocating to nearby Colombia is an option, but Guyana, which borders Venezuela on the east, is having its own set of problems and is deporting Venezuelans back home as fast as they arrive. Brazil, on the south border, is no mecca either, with its own economy being wrecked by socialist policies.

In short, the average Venezuelan lives in a prison forged by the socialism imposed by Chavez and Maduro. The country more and more resembles a concentration camp where the guards are deliberately starving the inmates.

A Bald-faced Daylight Robbery in Massachusetts

This article was published by The McAlvany Intelligence Advisor on Wednesday, August 24, 2016:  

One has to give Massachusetts Governor Charlie Baker credit: he has devised a plan to punish ride-sharing newcomers, save the state’s failing taxi cartel, and fund much-needed “infrastructure improvements,” all with free money: a new tax on ride-sharing customers that won’t be paid by either the driver or his customers. Instead, it will be levied on those evil newcomers – Uber, Lyft, and the like – who dared to innovate and take business away from the existing cartel.

Here’s how it works:

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A Lesson in Free Market Economics – from Venezuela?

This article was published by The McAlvany Intelligence Advisor on Monday, August 15, 2016:  

Over the weekend, some 54,000 Venezuelan citizens living near the country’s border with Colombia poured over the Simon Bolivar Bridge so they could buy toilet paper, cosmetics, vitamins, and tires. Many brought empty suitcases, others brought packets of the nearly worthless Venezuelan bolivar currency, still others brought gold earrings, necklaces, and other personal valuables to exchange in local pawn shops for Colombian currency so they could spend it.

They were there to buy. And the merchants were ready to sell. As they exited the bridge on foot (cars won’t be allowed for at least another month) they were greeted with friendly Colombians

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Oil Price Rise Only Temporary; Could Drop Back to Low $20s

This article appeared online at TheNewAmerican.com on Wednesday, August 10, 2016:  

On November 17, gas prices had dropped to $1.9...

In light of record supplies of gasoline and crude oil, why are prices rising? After hitting a low of $26 a barrel in January, crude oil topped $52 a barrel in early June, only to drop below $40 a barrel last week. The recent rise back above $40 is a head fake, according to oil analyst Stephen Schork, editor of the daily subscription Schork Report. The recent bounce forced massive short covering by traders convinced oil was headed back down to the $20s and had nothing to do with the fundamentals.

The fundamentals, according to Schork, are bearish for oil (and gasoline) prices, and not likely to change any time soon. Even the Energy Information Administration (EIA), the government’s watchdog agency in charge of predicting the future, has been forced to

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Production Freeze Main Topic at OPEC Late September Meeting

This article appeared online at TheNewAmerican.com on Monday, August 8, 2016: 

OPEC’s current president, Qatar’s energy minister Mohammed bin Saleh Al Sada (shown at center, above), announced Monday that the oil cartel will hold “informal” side meetings at the International Energy Forum in Algeria in late September. Not surprisingly, the topic will once again be “cooperation” among the disparate and increasingly desperate members to restrict production in efforts to force oil prices higher.

Al Sada, who holds a Ph.D. from England’s University of Manchester’s Institute of Science and Technology, asserted,

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A Tipping Point in Texas? It’s Building Its Texas Bullion Depository Bank

This article was published by The McAlvany Intelligence Advisor on Friday, May 6, 2016:  

Description: Newspaper clipping USA, Woodrow W...

Description: Newspaper clipping USA, Woodrow Wilson signs creation of the Federal Reserve. Source: Date: 24 December 1913 (Photo credit: Wikipedia)

A modest bill, getting little press and clothed in innocuous terms, could spell the end of the Federal Reserve’s monopoly on its “federal reserve note” currency. When Texas Governor Greg Abbot signed it into law almost a year ago, he said:

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Texas Contracts to Build Nation’s First State Gold Bullion Depository

This article appeared online at TheNewAmerican.com on Thursday, May 5, 2016:  

The Texas Comptroller’s Office has begun to receive bids from private contractors interested in building the country’s first state gold storage facility, the Texas Bullion Depository (TBD). When Texas Governor Greg Abbott signed into law the bill providing for it last July, he said it was all about saving fees being paid to store the state’s gold in New York banks:

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What Happens After Venezuela Destroys its Currency?

This article appeared online at TheNewAmerican.com on Friday, April 29, 2016:  

English: THE KREMLIN, MOSCOW. At a joint press...

Hugo Chavez and Vladimir Putin

Venezuela is unable to pay its currency printers. Those printers have been flying in planeloads of currency in the middle of the night, landing at airports where it is offloaded onto trucks to be dispersed to banks throughout the country. In other words, Venezuela doesn’t have the money to pay for its money.

The destruction of the currency, the bolivar fuerte (“strong bolivar”), has been documented at The New American and elsewhere. When oil prices dropped, so did revenues to fund the various socialist welfare schemes put in place by the communist Hugo Chávez and continued by his protégé, Nicolás Maduro, at Chavez’s passing in March 2013. Instead of reining in those unaffordable programs, socialist economists instead decided to print their way out of the crisis.

The results were predictable, and catastrophic.

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.