Here are the latest news items and commentary on current economics news, market trends, stocks, investing opportunities, and the precious metals markets. We also cover hedges, derivatives, and obscura. Most of these items are from the “tangibles heavy” contrarian perspective of SurvivalBlog’s Founder and Senior Editor, JWR. Today, we look at four inflated currencies headed for the ash heap of history. (See the Forex section.)
Precious and Base Metals:
U.S. Mint Bullion Coin Shortage Continues During Pandemic
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William Luther at the Cato Institute: Where Have All the Coins Gone?
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Interview: Gold FAQs: Prices, Privacy, Taxes, Portfolio, & Storage — Andy Schectman
Economy & Finance:
From a liberal think tank: Chart Book: Tracking the Post-Great Recession Economy
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At Zero Hedge: The “Too Big To Fail” Banks Are Getting Ready For Their Worst Quarter Since The Financial Crisis
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At Wolf Street: Unemployment Claims Hit New Record: 32.9 Million State & Federal. Week 16 of U.S. Labor Market Collapse
Commodities:
Jerry Gulke: Will Weather Set the Next Trend?
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OilPrice News reports: The U.S. Is Determined To Dominate Global Natural Gas Markets
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Equities:
At Seeking Alpha: The QQQ ETF May Be Ready For Sharp And Sudden Drop
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Forex:
At TechZim: The 7 maybe 8 forms of money in Zimbabwe as at June 2020. A snippet;
“Zimbabwe has already been declared a kingdom of funny money. Our monetary history proves this tag very accurate. Local currency is all in this class. The sad thing is that a good chunk of what we are calling funny money was once real money (USD) but it was swapped out with this nonsense we are calling a local currency by the government.”
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Iran’s Rial Hits New Historic Low Against US Dollar, Other Currencies. The article begins:
“The Iranian currency rial fell to new lows against the U.S. dollar in trading on Sunday at Tehran’s exchange market, going above the 220,000 rial to the dollar mark.
The battered currency was trading above 210,000 a day earlier and the Sunday, July 5 drop was almost 8,000 rials. The euro traded at 247,950.
Iranian officials describe the recent steep fall of the rial as temporary and ascribe it to ‘psychological operations against Iran to trigger unreal concerns’ among the people and traders.
However, the rial has fallen 3,000-fold since the establishment of the Islamic Republic in 1979, when the dollar was equal to just 70 rials.
An economy growing too slowly for decades coupled with international and U.S. sanctions in the past decade and misguided fiscal policies have hurt rial’s value, which has dropped 24-fold just in the last ten years.”
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As inflation jumps, Turkey faces the prospect of another currency crisis. Here is an excerpt:
“Turkey’s lira this week slipped to its weakest level since hitting a record low in early May after inflation for the month of June was reported at 12.6%, a figure that topped economists’ expectations. With rapidly shrinking foreign reserves to prop up the currency, inflation and currency devaluation are showing no signs of a turnaround, analysts say.
The lira is still “overvalued” right now even despite its current weakness, Can Selcuki, managing director of Istanbul Economics Research, told CNBC this week, citing rising inflation and the government’s dearth of reserves. June’s inflation figure was up from 11.4% in May, and the highest since August of 2019, rising steadily from 8.6% last October.”
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Venezuela Inflation Rises to 19.5% in June: Congress. A pericope:
“Venezuelan consumer prices rose 19.5% in June compared with the prior month, data from the opposition-controlled National Assembly showed on Wednesday, as surging inflation contributes to rising poverty in the once-prosperous OPEC nation.
The number was higher than the 15.3% rate in May, due largely to a further depreciation of the country’s beleaguered bolivar currency…”
Tangibles Investing:
This came to us by way of Whatfnger.com: Smaller US cities becoming real estate hotspots amid COVID-19 crisis
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Trump administration announces 25 percent tariff on $1.3B in French handbags, cosmetics, other goods.
Provisos:
SurvivalBlog and its Editors are not paid investment counselors or advisers. Please see our Provisos page for our detailed disclaimers.
News Tips:
Please send your economics and investing news tips to JWR. (Either via e-mail of via our Contact form.) These are often especially relevant because they come from folks who closely watch specific markets. If you spot any news that would be of interest to SurvivalBlog readers, then please send it in. News items from local news outlets that are missed by the news wire services are especially appreciated. And it need not be only about commodities and precious metals. Thanks!
Who makes coins and who prints paper? Answer that and maybe a reason for the coin shortage has a reason.
The above article by William Luther had pretty good explanations for this question and answers a few others.
I found it to be a very good read.
Tom’s recommendation does make for a good read. Tom is referring to the “William Luther at the Cato Institute: Where Have All the Coins Gone?” link.
One solution proposed would entail having ‘private businesses’ employed as makers of USA coinage.
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Another easy solution would be to just >pay people a small premium above monetary value for depositing the coins back into the banking system.
From an article printed in 2018. = A penny cost 2.6 cents to produce. The figure coinage production varies per year and also by domination. [coinnet(dot)com
5/24/2019]
If my arithmetic is right, it costed the US Government $206 to provide $100 worth of pennies for circulation. [1,000 pennies]
The US Government has a potential savings of >up to $106 for a 1,000 pennies, when acquiring $100 worth of pennies secured away in piggy banks.
It seems Coinstar has a fee of about 12% for turning coins into a Coinstar machine.
……… Instead of charging a fee. the US Government could say, ‘Use Coinstar and turn in your pennies ~ we’ll give you 12% interest instantly on the amount you turn into the machine.
The person turning in $100 (1,000) pennies would receive back $112.72 instantly.
The US Government would pay the 12% fee also, to Coinstar.
If my arithmetic is right the US Government would end up paying $125.44 for $100 worth of pennies (1,000) in 2018.
……… If my arthmetic is correct, there is a real money savings of $79.56 to place 1,000 pennies back into circulation in 2018.
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Is my math correct? Am I over estimating the financial responsibility of our elected politicians?
As a political comment: President Trump says the US Government is the largest buyer of pharmaceuticals. … He wonders why the US Government is paying >full retail for all the medical drugs it buys for people?
The obvious answer: The Washington DC swamp is deep with Tax Payer money, and Money borrowed on the Credit of the US Government.
…….. Politicians receive payoffs [campaign donations and votes] for spending Tax Payer money. [Not saving money]
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Was my arithmetic correct, or was there a fatal flaw? … Doesn’t seem possible for the US to pay a fee for all the coins in piggy banks, and actually save money; rather than ‘make’ new coins?
[And, yes! I seriously doubt if I have an original idea!]
At 2.5 cents per penny, that would be $260 for $100 in pennies. Otherwise your math appears to be correct. So even if the FedGov gave 12% to the holder of pennies and 12% to CoinStar, that still saves the FedGov over $100 per $100 in pennies.
“Am I over estimating the financial responsibility of our elected politicians?”
The answer, of course is, YES, you are.
As an aside, my bank actually pleaded with me to turn in my stash of coins, just roll them up. So did a small grocery store I frequent. I suspect many grocery stores would be happy to take rolled coins at this point.
OOPS! I meant 2.6 cents per penny. My bad.
Thank you Charles K. for the arithmetic correction. +A good analysis of the Washington DC Swamp too, which must be correct.
‘The only excuse I can offer about my calculations is my FAT arthritic fingers, and the onset of a ‘Sleepy Joe’ brain.
………… ‘Sometimes’ lately, I feel as confused as I was in Grade School, when everyone was asked to divide a circle into thirds. … Though, I still remember the name of the kid willing to stand in front of the class, and draw the solution on the Blackboard using chalk. [It took him a couple of tries at it, though]
Is it possible that the “coin shortage” is presented by the larger financial entities as a slight mean to encouraging no cash at all? Many younger people, like some of my children, rarely carry cash of any kind and rely solely on debit cards for transactions.
Yes, exactly what you said. It’s all part of the push to eliminate paper currency (e.g. free exchange of money!) in favor of a 100% digital scrip that can be monitored, tracked, and controlled!
They will use the virus vaccine to attempt to implement a chip tracking system in order to access both shopping and currency. It’s coming people, if we don’t fight this here and now, the powers that be WILL get the upper hand over us and we (peeps like you and me) will be excluded from the new world order.
Say something wrong on faceplant? Your account gets locked.
Twat the wrong political statement? Your account gets locked.
Don’t get the vaccine booster shot? Your account gets locked.
Miss your tax payment… You get the idea. CONTROL. It’s ALL about control.
Exactly
Another thought to go with the above comments. The U.S. federal government tolerates zero competition. They won’t let private companies make coins because they want all the control and all the power and so what if it costs us peasants so much money. That’s inconsequential to bureaucrats.
Unelected bureaucrats, at that. 🙁
The Chart Book article on The Post-Great Recession Economy is pure BS. They show economic expansion starting in 2009. That was Obama’s first year of his first term and I remember quite well that the economy remained in the dumps for 8 long years with him touting 1% economic growth as the new normal and approx. 9% unemployment as a good thing. The economy did not really start to come back until Trump got it going again by giving the people hope and encouragement rather than mouthing platitudes as Barry did. It appears that the definition of think tank is a rather loose one.
From the Cato article: “They probably would not produce a dollar coin, more than a billion of which currently sit unwanted in government vaults; and… they might not produce the nickel — which also loses money —either.”
This all shows how much control lobbyists have over Congress. As the article points out, in 2019 the government lost $69.7 million dollars making pennies, which are totally useless clutter and common sense dictates need to be abandoned. The article wrongly concludes that private mints would not produce dollar coins. The US is the only country which is idiotic enough to print both a paper dollar and a dollar coin. Of course there will be billions of dollar coins sitting in vaults. People don’t like making changes and are going to stick with the old ways. I there were any common sense, the guv would get rid of dollar bills which, like the penny, are not worth printing since they have such a short life span while a dollar coin lasts for decades. Every other country has seen the wisdom of doing this. Americans would complain at first but once you get used to it, they’re a great way to go. And why the heck are half dollars produced? The public has never accepted and used the Kennedy half. I bought gas with 40 of them recently and the young cashier had no idea what to make of them. The article also wrongly concludes that private mints would not produce nickels. They would, they would just change to a cheaper metal as governments have done throughout history. The US before the Civil War produced a 3¢ silver coin. When that became a losing proposition, they switched to a 3¢ nickel coin, which are known as “three cent nickels,” and amusing term for collectors. When it became obvious that the public wasn’t accepting a 3¢ coin in general, they got smart and quit producing them. Ditto with the 2¢ coin.
It’s also interesting to note that back when coins were real money (silver) the general public didn’t care who minted them, the value was in the silver and gold. Private mints not only flourished, but even foreign gold and silver coins circulated here at one time.
Everything else in the article was spot on.
Rant over. Have a great day.
With relentless inflation over the course of decades, the only way to keep clad coinage viable is to knock a zero off the dollar. All paper currency would have to be exchanged, but anyone holding coinage would see an overnight windfall. (Coins would NOT be replaced.) A 10-for-1 currency exchange would cause a huge economic boom. This is because psychologically, everything would seem less expensive — even though wages and savings accounts would be adjusted. Just imagine the impact of seeing gas at 21 cents a gallon, milk at 30 cents a gallon, and hamburgers at 20 cents apiece.
Why, in your opinion, do you think so many people accepted the move to clad coinage in the 60’s? I have wondered this many times, and I’m just curious to hear your thoughts on it.
I don’t mean to speak for JWR, but you have a much higher opinion of the average person than I do.. Said otherwise, most folks ain’t bright enough to know what was done to them.
K in Tenn,
Oh no, I completely agree with you, I know that is one of the reasons. At the same time, there had to have been a portion of the population who knew what was happening, but you never really hear about that.
Joe,
That’s kind of what I figured. I wasn’t born then, so it is interesting to hear other perspectives. I completely agree with you about being on the road to being like Zimbabwe. Almost nobody wants to listen when I try to tell them that, they just can’t see the writing on the wall.
The answer to your question is that we were never asked for our input. It was simply the federal government dictating policy with complete disregard for the people’s wishes. Much the same as removing us from the gold and silver standard so they can print untold amounts of fiat currency. Now due to technology, we find our dollar debased by the creation of digital money by the trillions. This can only end badly for we commoners. Zimbabwe here we come.
Hey JWR, at those prices it would be worth picking up pennies off the street when you see them like we did when we were kids. 🙂
You mean you don’t pick up pennies? I still do. It’s all good. 🙂
I might be slow sometimes, but I don’t understand how lopping a zero off of the currency would change anything. The whole problem is caused by a) having fiat currency backed by nothing, b) the Federal Reserve (super-mega banks) inflating 1-2% per year, and c) deficit spending by the Federal government. Will devaluing the dollar by 90% change any of those facts ? I am not trying to debate you, I merely do not understand how your solution would accomplish anything. Can you provide a link where I can read more about your plan ? Thanks.
It’s a lot easier to push a wheelbarrow full of paper currency than to push one filled with coins.
The government is looking out for you. Doesn’t want you to sprain your back –especially with a $50 Trillion shortfall in funding for Medicare promises.
The recent report on coin shortage should clue everyone in to the fact that our goobermint, above all else as has recently been shown through any and all of its actions, is most definitely NOT your friend. Our gov proves on a daily basis that it’s main goal is perpetuation of gov by gov and for gov.
It is noting more than control and power over the masses. No matter how flowery and compassionate they appear in real life and from all the talking heads of the boob tube. They have one thing they are intent on. Control over every aspect of your life. DO NOT succumb to the promises of a virus free monetary system and removal of cash from our monetary system. It’s all a bald faced lie!
Let’s just say for example we do end up in a digital monetary system. What happens when the electricity quits? Like it does every single winter somewhere in the country for up to possibly 2-months, maybe longer, through no ones fault. Whaddahya gonna do then goomer?
The Founders got it mostly right. Trust in that!
If we had a nickel every time zero hedge screamed gloom n doom we wouldn’t have a coin shortage