In case the fact that 76 percent of Americans oppose ditching the dollar bill in favor of a dollar coin wasn’t compelling enough, a new study that exposes the proposal’s supposed cost savings as mere myth should finally convince the super committee to abandon this clunker of a bill and focus on real spending cuts. According to the independent study performed by economic research firm John Dunham & Associates, the study finds that rather than saving money and helping the economy, a mandated switch from a dollar bill to a dollar coin would place a heavy economic burden on businesses of all sizes and types in the midst of an ongoing recession.

From Business Insider:

The group analyzed 29 different retail and service sectors in the U.S., finding that the annual cost of running business would balloon by $201 million and cause companies to shed at least 4,300 jobs.

The added costs come from adjustments such as adding new cash registers to hold the hefty coins, changing counting machines, purchasing larger safes and the costs incurred by banks, money transfer companies and financial firms, the study says.

“Changing to a coin would be a tax increase on retail and service firms of all sizes,” said John Dunham, president of John Dunham & Associates.

The debate is sure to continue on whether such a change and its potential to save the nation cash in the long-run is worth the initial hassle.

But it appears the public so far has spoken: More than 70 percent of consumers in a recent poll said they were against the proposal.

Supporters of the dollar coin, led by Arizona Rep. David Schweikert, cite a March 2011 GAO report as support for the contention that the switch would save money in the long run (over a 30-year period).  However, the study debunks that assumption as well, highlighting two key missing elements from the report:

(more…)

There’s a lot of chatter out there that the debt reduction “super committee” isn’t getting the results it should be, especially with the clock running out on their time to cut the requisite $1.5 trillion from the budget. However, I think we need to give credit where it’s due. The super committee has one truly Herculean accomplishment under its belt; it has managed to identify an issue that Americans of all political stripes – Republicans, Democrats, and Independents – all agree on.

The issue? It’s a proposal to ditch the dollar bill in favor of a new dollar coin being advanced by a pair of Congressmen from copper-producing states. The bill purports to save the taxpayers an estimated $5.5 billion…over 30 years. Even those miniscule cost savings were thoroughly debunked in a recent USA Today op-ed, which states that “[t]he GAO report itself admits that factors outside the scope of financial benefit to the government were not considered, including the impact on private businesses and banks, and the costs of transferring, distributing, storing, authenticating and managing dollar coins.”

Just when it seemed like this proposed legislation couldn’t make any less sense, recent polling shows that voters are nearly united against the idea of replacing a bill with a coin. A survey performed by Lincoln Park Strategies for Americans for George found that:

•76 percent of Americans oppose doing away with the dollar bill, with that number representing a fairly equal share of Republicans, Democrats and Independents and voters from all regions of the country.

•45 percent of Americans believe that phasing out the dollar bill will have a net negative effect on the economy, versus just 10 percent who believe it will have a positive effect.

•75 percent of Americans view the dollar coin as both unwanted and unnecessary. (more…)

From Reuters:

China warned the United States that it would damage relations, and American jobs, if it forces Beijing to let its currency rise under a law to be voted on in the U.S. Senate on Tuesday.

Vice Foreign Minister Cui Tiankai on Monday underlined Beijing’s opposition to the bill, saying it could trigger a trade war and hold back global economic recovery. He said that relations could also be hurt by U.S. arms sales to Taiwan.

(more…)

Gov. Rick Perry scorched the political pot on Tuesday with a red-hot rhetorical attack on Fed-head Ben Bernanke. When asked about the Fed reopening the monetary spigots, Perry said, “If this guy prints more money between now and the election, I don’t know what y’all would do to him in Iowa, but we — we would treat him pretty ugly down in Texas.”

And that wasn’t all. In a more controversial slam, Perry said, “Printing more money to play politics at this particular time in American history is almost treacherous — or treasonous — in my opinion.” (Italics mine.)

Pretty rough stuff. Very aggressive language. And undoubtedly way too strong. It was poorly received in the financial world.

No, Ben Bernanke is not a traitor. This is a policy dispute; it’s not a matter of patriotism. However, and this is an important however, the rest of Perry’s statement suggests that his analysis of Fed policy is right on target. In other words, wrong words, right analysis.

The Texas governor, who by some polls is the new Republican presidential frontrunner, went on to say, “We’ve already tried this. All it’s going to be doing is devaluing the dollar in your pocket. And we cannot afford that.”

Well, to me that is exactly right.

(more…)

There has been nothing more cowardly in my lifetime than the American government’s dysfunctional response to the economic imperialism of China. The Chinese have shown a unique political sophistication in co-opting the elites of big corporate America with crony business deals; and politically pacifying Congress with a willingness to fund their deficit spending. But with the common man’s concern rising, two accomplished academics, Peter Navarro and Greg Autry have just published: “Death By China”; a muckraker’s call to confront the dangers of America’s dance with the Chinese Dragon in the 21st Century.

The first chapter of the book is a grim expose on the dangers of Chinese food exports. The reader is taken for a stroll down the modern isles of America’s super markets; where Chinese imports increasingly dominated display shelves. Perhaps some nice seafood grown in the raging chemical stew of the Yangtze’s river would be an attractive offering for your family tonight. Don’t worry about the fish and shrimp dying from the world’s most bacteria infested waters; the Chinese simply pour massive amounts of banned antibiotics in the water to prevent that nasty dis-colorization of diseases. The same quality control mentality often holds for China’s market share dominance in such staples as white meat chicken, apple juice, garlic, canned pears, honey and a myriad of other basic foods.

Feeling a little woozy after considering how much mercury and other poisons you have already accumulated in your body from eating these imported treats: you learn that Chinese communist drug makers now produce 70% of the world’s penicillin, 50% of its aspirin, and 33% of its Tylenol you may have ingested. The Dragon’s drug makers have also captured much of the world market in antibiotics, enzymes, primary amino acids, and vitamins. China has even cornered the world market for vitamin C—with 90% of market share. Oh by the way; China now plays a dominant role in the production of vitamins A, B12, and E, besides many of the raw ingredients that go into multivitamins.

As the authors report: “These statistics should disturb all of us for one simple reason: Far too much of what China is flooding our grocery stores and drug emporia with is pure poison. That’s why Chinese foods and drugs always rank #1 of those flagged down at the border or recalled by both the U.S. Food and Drug Administration and the European Food Safety Authority.”

(more…)

The recent correction in the commodities markets may be providing Bernake, Geithner and their easy money acolytes with a sense of relief given the relentless run up in prices of raw materials since the announcement of QE back in 2008, but they should not sleep tight just yet.  As anyone in the markets will tell you, when any underlying commodity has a price move so vertical in its trajectory it’s bound to face a correction as the smart money, having gotten in for fundamental reasons much earlier along the trend line now wait for the panic buyers or the Johnny-come-lately’s to give the rally that last unsustainable spike to unload their longs and leave the suckers holding $40.00 silver in their purses.

So one must step back and take a long view.  Although it would appear that those of us who warn that inflation is not just a threat but very much a fact of life now were knee-jerk pontificators jumping on the commodities rally trend for political (read: Fed/Obama bashing) reasons, the analysis is quite sound.  Most important, it is methodical not emotional as price surges tend to make investors and analysts from time to time.

Here are some facts: even with the inevitable correction in commodities, as of this writing crude oil is 35% more expensive than it was a year ago…advancing with ups and downs along the way from as low as $17.50/bbl in November of 2001 to its current level of over $100/bbl or around a 19% annual appreciation in a decade since the Fed started giving away dollars.  In that same year silver is still up 93%   Wheat 84%. Cotton 100%  Coffee 55%. Cattle 10%, etc.  In that same decade the USD index against all currencies shed 40% of its value.  Gold is up 22% for the year.  More revealing, the most precious metal and most stable of exchange mechanisms is up an astonishing 450% since 2001. Put another way, whereas the dollar was worth 1/250^th of an ounce of gold in 2001, it is now only worth 1/1500^th.  Money can be printed with much more ease and speed than gold can be mined.

To understand why the Bernake’s and Geithner’s of the world view CPI through rose-tinted glasses we must remember who they are.  They are wonks who have spent their entire careers lecturing and/or fidgeting with economies without actively participating in them.  They are awash in data and are hardwired to extrapolate patterns from the past to predict the future.  But we have only had a non-gold fiat monetary system in place since 1971 which is hardly enough time to get a handle on repeating macro-economic cycles in such an ever changing and dynamic landscape.  And I want to offer something else.  From the late 1940s to the mid-1980s the United States was the dominant manufacturer in the world.  The reason?  Of our three main foreign competitors today, China, Japan and Germany, one was mired for much of the third quarter of the 20^th Century in a disastrous experiment with Maoist communism while the latter two’s urban centers had been reduced to utter wasteland as their reward for launching the most devastating war in human history.  Indeed, all of Europe was digging out of the wreckage of their mass-fratricide, including a bankrupted Great Britain…once the supreme power of the world.

(more…)

Fed head Ben Bernanke, at his first-ever news conference on Wednesday, slammed the door shut on any new QE3 pump-priming. The $600 billion QE2 program to purchase bonds will end on target at the end of June, and that will be that. Mr. Bernanke also suggested that the Fed’s “extended period” for the near-zero federal funds target rate could end in a couple of meetings. Perhaps these announcements suggest a bit-less-easy monetary policy. Perhaps.

But Mr. Bernanke had no defense of the sinking dollar, or the inflation it brings, or the drop in middle-class living standards it causes. So it’s little surprise that gold prices surged $24 to $1,526 during the Fed chairman’s press conference. Silver jumped sharply as well. The markets clearly don’t see any King Dollar shift by the Fed.

Mr. Bernanke just doesn’t get that inflation-sensitive market-price indicators — like rising gold, oil, and commodity indexes, and the falling dollar exchange rate — are trying to signal higher future inflation. Instead of listening to markets, he is determined to fight them. This is a losing battle. Instead of a market-price rule (anchored by gold) we have some sort of Bernanke fine-tuning rule. It’s not working.

(more…)

Time was when countries believed in strong currencies — strength measured not in the rhetoric of bearded wise men but of bank vaults flush with gold coin.

Venezuelan tyrant Hugo Chavez recently announced that he would be devaluing his currency on New Year’s day.  As the Wall Street Journal reported:

News of the devaluation came just after the central bank said the Venezuelan economy contracted 1.9% in 2010, the second consecutive year of declining output in the oil-rich nation after a 3.3% decline in 2009.

Both pieces of news suggest Mr. Chávez is having an increasingly difficult time balancing his populist policies with economic reality, according to economists. His government’s widespread nationalizations of private industry have sapped economic growth, while public spending has sparked inflation that the government has tried to contain by measures such as price controls.

There are a couple of striking aspects to this news.  First, in the above excerpt one could easily replace Mr. Chávez’s name with Mr. Obama’s.  Nationalizations or de facto nationalizations cripple an economy by replacing functional markets driven by the people with dysfunctional economies driven by central planners and have a secondary effect of chilling entrepreneurship, and thus competition, innovation and capital formation that drive economic growth.

Constantly imposing costs implicit and explicit on the private sector (i.e. those who must survive by providing a product demanded by consumers in quantities, of qualities and for prices willingly paid by these consumers), including the cost of propping up failed businesses and inflating asset prices, disincentivizes people from partaking in mutually beneficial commercial activity.

(more…)

Anthony Weiner honed his political craft working for New York Senator Charles Schumer, and it shows in his recent attack on Glenn Beck and his sponsor Goldline.

Weiner and his comrades’ views are well reflected when he says in his Goldline Report:

…during troubling economic times it seems there is always someone ready to take advantage of the situation and profit from people’s fears.

In the past there is always the “product” that is either the next big thing (the dot com boom) or the investment that will never go down in price (the housing market), and in the past much of the media has failed in its duty to conduct due diligence, but never before have they worked so hand in hand to cheat consumers.  Commentators like Glenn Beck who are shilling for Goldline are either the worst financial advisors around or knowingly lying to their loyal viewers.

Goldline’s high pressure sales tactics and fear mongering about big government as well as their ability to hire sales staff and spokespeople who misrepresent their roles are case studies in why entities like the SEC and FTC are necessary.

Of course, it is the unscrupulous businessmen and their shills in the media who are preying on people’s fears to make a buck.  Guess what Mr. Weiner? It is because people like you are running our nation that is precisely why people are turning to gold, and precisely why places like Goldline can charge a premium.

You see, the reverse is true when it comes to your argument that because of the sales representatives at Goldline who “misrepresent their roles,” the SEC and FTC are necessary entities.  We need gold and thus gold salesmen because agencies like the SEC and FTC, along with you and your colleagues in Congress and over at the Fed help sanction and blow the very bubbles that you speak to and debase our currency, stealthily taxing us and leading us on a path to monetary and fiscal collapse.  It is because of your “consumer protections,” that consumers are made unsafe.  It is because of your regulations that we have distorted markets and the moral hazard that encourages imprudent risk-taking.

(more…)