Note the historical parallel to contemporary Chinese and Middle Eastern dominance of US assets and currencies and their recycling of dollars back into the US dominated global economy….

An excellent history of the workings of global central banking, seen through the economic history of Japan. The Asian financial crisis, Long Term Capital Management and the recent Euro debt crises are also explored and together brought into contemplation….highly recommended



Too much Finance?

Posted: October 8, 2018 in Economics
Tags: ,

A worthwhile article found recently in the Independent

In the UK, the vast sums of money being created as banking, fund managers and other financial businesses boomed has created a brain drain that pulled people from other industries

Against perceived wisdom, this research under-covered here is a direct throwback to the free marketers who believe industrial policy should never be directed in any way by non market forces, and that deregulation should be embraced. If true, there are real consequences to following through with this logic……

An exploration of our pervasive culture of consumption.

I noted the following well made points illustrated in this piece;

• The materialist dream is not practically possible for all humanity, therefore this will always necessitate leaving large parts of the world behind, keeping them poor and chasing an impossible reality. This level of inequality is inbuilt, and intentional. It is the modus operandi of consumerism

• Violence and warfare are integral aspects of this cult. In order to secure power, competitive advantage and gain access to markets for supply and demand components, an active military is fundamental

• When attempting to find linkage between different facts and truths in order to uncover the greater truths, one part of this documentary was particularly appealing. View from 34:16;

“Wasteful inefficiency, broken social system, toxic pollution, drug addiction, perpetual violence, misery….”

MoneyWeek always does a good job in joining together different strands of the reality surrounding debt and putting it all into perspective.

This piece is another example of such work, I found the following points worth noting;

• The effect cheap debt has on corporate behaviour, which in turn translates into market moves/signals

• Statistics in the shape of national debt being measured against GDP which is not entirely genuine due to the whole economy not being ‘owned’ by government . However this leads me to ponder that although government debt is initated by the State, it is all tax paying citizens that will ultimately bear its burden, hence comparing it to GDP does equate to it being the nations debt, but of course not all GDP belongs to all citizens

• How much debt is responsible for living standards. This is particularly worth contemplating, many look at material wealth and standards of living as a barometer for social advancement however if this is heavily influenced by credit and in some cases unaffordable credit, is it simply an illusion? Another house of cards, which others are vying endlessly to win a share of?

Please find enclosed a copy of Benedikt Koehler’s text on the application of market based principles extensively throughout out the early and later eras of Islam.

I hope to write more about this enlightening piece in a later post, but meanwhile, please do download a copy and read all about the history you never knew

Early Islam and the Birth of Capitalism – Benedikt Koehler

Also view the following presentation delivered in the City of London at the Legatum Institute, which includes a Q&A

The profound concept of what value is and what value society should try to attain is explored in this worthy documentary.

I would like to highlight a number of the take home messages which I found to be praiseworthy and challenging of conventional wisdom;

  • ‘Not all profits are created equal’ implying certain gains could potentially be more worthy than others, the simple metric that something is profitable should not be an absolutist criterion. Profit should be based on sustainability not success
  • The components of the Value Chain should be continually assessed not for whether they are profitable but for what real value they provide the wider society, what positive aspects do they contribute?
  • Price, a key market signal, does not reflect the true cost to society or the environment, therefore how ‘profitable’ are certain activities
  • Our environment governs our behaviour therefore is there is any such thing as free choice, do we even have the freedom to make a choice?
  • The rewards we have currently have in a market economy incentivise us to make potentially harmful choices, not the beneficial choices
  • Contrast the theory that markets allows us to allocate resources adequately with the knowledge that this allocation may be to detrimental activities
  • Some say society at large has never been more prosperous nor peaceful, but the point of how fractured it is bears contemplating
  • The final scene where the following advice was given had much resonance with me, ‘…it’s time. Serve’ This could also be interpreted as in order to serve (society/the natural world order, and therefore establish justice to ourselves and others) we must SUBMIT…the basis of the concept of Islam

Seeing is believing, in some cases. When the scale of certain matters is so extraordinary it helps to visualise its relative proportionality.

This is the purpose of the following site, please view this page showing what makes up the entire global Money supply and where it is invested….

The following points strike me about these fascinating illustrations;

  • As far as verifiable facts and accepted knowledge are concerned, some of the points given are true. Yet, these two ‘facts’ which I am aware of seem to suggest that not everything is shown on this site subject to the information not being in the public domain.

Consider the largest companies, all US giants, which are all listed/publicly traded  and therefore the value can be determined via reference to an active market. Yet currently global investors are anticipating the listing of the Arab state-owned oil behemoth of Saudi Aramco, which is expected to eclipse all other company valuations, being estimated as a $2 Trillion company, such a corporation is not featured because it is not publically traded – are there other non public entities that are similar, not mentioned, giving a distorted, inaccurate picture of reality? This fact can only be true when looking at public domain based knowledge.

  • On a similar note, the wealth given of the richest individuals does not mention the extraordinary level of wealth known to be in the hands of certain family members of the Rothschild’s, for example. Some have reckoned this to be in the region of trillions of dollars…but again, this is not publicly known information
  • Physical notes and coins are estimated to be 8% of total money stock….slightly higher than other estimates I have read which are closer to 3%
  • The global Gold supply is estimated at approximately over $7 trillion, which compares favourably with the estimated value of global currency held in notes and coins…therefore physical money can almost entirely be backed by Gold, however the issue is more to do with a broader definition is money which is shown later in the graphic as approximately $90 trillion, yet this is dwarfed by the amount of global debt in the world – over $200 trillion
  • Almost 50% of residential asset values are associated with only 16% of the global population, all in Europe and USA.
  • “No one really knows the exact size of the market” in reference to the size of the derivative markets.
  • The quote by Warren Buffet is remarkably telling…someone known to invest in a very traditional way – get to know the company and buy equity in it – pretty much stays away from large investments in derivatives, although as a hedging mechanism, he may well use them perhaps?
  • Finally, it is an interesting link which is referenced by Jeff Greene, that derivatives are in existence due to debt, and presumably the hedging thereof, although this hasn’t stopped them from being highly traded for speculation and profit methinks…something to explore further