Schlagwort-Archive: interest

The non interest earning gold

This is a very crude way to discuss. If you’d read Rothbard you will see he never talks about some fiat-currency but gold ounces and that even those earn their interest.
That it’s not so with current gold is simply because gold is calculated in whatever fiat-money you can think of.

And you do not lend Gold but “money” , as we know this money is not real money, but that’s another story

Still since 2001 gold has risen from around 300 USD/ounce to well over 1800 USD/ounce in 2011 that means the you need six times more money today to buy one ounce.
That are a little below 20% raise for now 10 years, and the last 3 years the raise has risen to 27%/year. So if you’d spend 1000 USD in 2001 in Gold you know could get back 6000 USD and well the inflation rate is quite a bit lower

On the other hand the interest yielding Euro money today yields 1.976 % for 10 years. In Germany we’d have to pay 0.4xx % taxes on it and inflation rate is near 2.5%. You’re loosing a percent every year.
If we just would calculate with double the interest for the past 10 years and you’d invest 1000 USD for 10 years you and without taxes you’d now have 1343 USD. Now talk about the “great” interests this money earns….

Because all central banks and politician try to devaluate their currencies one just can buy gold, sit back and watch. The madness will come to an end. Do you think you will fare better with fiat-money or Gold?
Well I for my part have decided that for me….

What do they think

I just will first start with 2 numbers

3 800 000 000 000

1 300 000 000 000

Now let’s see how this numbers are “related.” Let’s see
1 300 000 000 000 / 3 800 000 000 000 = 0.34211

or in per cent 34.211 %.

So what?

Well the US budget consists of 34.21% new debts.

Let me break it down for you.
You are earning 66 000 Dollar and you “spend” “100 000” Dollar.

The calculate the deficit will go down to 700 000 000 000 in 2014 (see

Let us assume a linea decrease over this 4 years so we’d have roughly 1.3 + 0.7 = 2.0 / 2 = 1.0
So overall 1 000 000 000 000 new debts over the next four years for every coming year.

The official debts of the US are nearing the 14 000 000 000 000. So we add another 4 / 14 = 28.6 % to this enourmous sum. And this are just the official figures.
Not included are every promise for retirement payments and probably a few thousand other “things.”

For just the 4 000 000 000 000 in the next 4 years the US will have to pay (assuming 5% interest) 200 000 000 000 a year. Just to get that “figure” right The German overall budget is
around 389 000 000 000. The overall interest to be paid will go up to 18 000 000 000 000 * 0.05 = 900 000 000 000

Let as assume that the budget will not grow (ha ha ha). So in 2014 the US has to pay 900 000 000 000 / 3 800 000 000 000 = 23.7 %

Nothing can grow forever and so they still face a new debts in 2014 than the end is near. It would mean the new debts of roughly 1 trillion is needed to just pay the interests. It’s absolutely impossible to bear. You can not us new debts to pay all debs for “long”. One still has to remember each year the interest raised around nearly a trillions. So something will happen. Past times show, inflation is the most likely outcome which let’s back to my My Predictions

Just see how others react on such debt avalanches: See that the is the world largest holder of governement bonds all over the world.
See some discussions about the implications at:

It’s worse than I could ever imagine. And it has started with “just” the 700 billions of Paulson…. I’ve always written against this kind of madness. But you know the deledefs know “better”….

A few calculations

Well our German politicians claim that the speculants are the reason for the turmoils around the EUR. Now let us see whether they may be right or wrong.

Let us assume the following situation interest rate at 10%, time-frame 1 year (to avoid compounded interest)
Now let us assume the probability on not getting back a credit is 10 % (which is extraordinarily high)

So if we spend 100 EUR today what will we have in one year.
– 100 + 110 * 0.9 = -1
This is well negative, and therfor one would not take that much of a risk
Now let’s take failure probability of 5% so the calculation is.
– 100 + 110 * 0.95 = 4.5

Well that sounds “reasonable” you get en expected return of 4.5.
When would you consiser spending the 100 whatever?
Well in case that you get “more” back.
Now let’s see what this means to bonds of Greece. The 10 % is currently a number which the Greece has to offer. So currently the markets think that Greece will not pay with around 10% probability.
Now what if the speculant thinks the likliness on failure is around 20%
When will he/she accept this rate?

– 100 + x * 0.8 = 5

So x has to be 118.75 or 18.75 % interest rate. Well Greece will not ever offer this much interest so there must be another way.
We know hat Greece will have to pay back 100 % of the value of a bond. So we can write:
– x + 100 * 0.8 = 5
-x = 5 – 100 * 0.8
x = 75
So the speculant is just willing to buy bonds if the course is that low.

You can see high risks inevitable ask for high interest and/or low prices. Now the figure changes unexpectetly.The speculants “hope” that the EU bails out the Greeks. Suddenly the
75 course is very tempting, because it’s high income with “low risk”. That’s what every speculant is dreaming of. So in fact while the other EU states
offer this credits to Greece the speculants do make a good surplus. Now is that a fault of speculants?

Who has enforced the governements to offer the credits? No one, so the politicans action to back up the Greeks will lead to a “victory of the speculants”. So it’s the other way round
it’s not the speculants will earn big while Greece fails, no it’s the speculants earn big because of “stupid” and very doubtful (legal) actions of the political leaders.

Now it’s getting really absurd. One would not buy any bonds from Greece, but the politcians say. Come on people please buy the bonds we have to help the Greeks.
So the politicans are asking the to help them back up their stupidity and raids. I can not say how distasteful that is.

The whole economic reasoning is lead ad absurdum. In fact defrauding is right, honesty is wrong. Laws are made to save the defrauders and enforce the costs of this action to the honest people.


from Greece is in free fall. Now it’s Junk-bond status. The interest has risen to above 10%.

Well Greeks the EUR is just “paper” money. So there’s always the “solutio” of hyperinflation.
Unfortunatly you are not alone with the EUR. So you are a bit more lucky this time, Politicians can’t get away
that easy as usual. Now start thinking. Wouldn’t it be good to get rid of your Politicans ans Buerocrats.
Just one quater is working for the governement so 75% are “not” working for the the governement.
How about getting this figure a bit higher. I guess 95% not working for governement should be more than sufficient…

I propose that after getting rid of them, you see that you get corruption in the governement banned. Let them earn their money,
don’t allow them to black-mail you any longer. See that you get rid of most of your military stuff also, and get back to
the ostracism. And revive.

If you follow your current “stuff”, well be prepared for really hard times