Creating new words for theft

  • RBA gets wordy
  • Market update
  • Employment data is a lie
  • Creating new words for theft

One thing I love about modern economists is their need to graph everything.

It’s as if you, mere human, are too stupid to understand what they’re telling you. So these data hounds get some underpaid intern to turn a bunch of numbers into a picture. That way you can understand what these supreme economic beings are telling you.

Look, don’t get me wrong, I love charts and graphs as much as the next person. Not everything needs to be turned into a visual, though.

Like this.

As the long weekend for the east coast of Australia ended, someone at Bloomberg decided they could create a bar chart from the number of words from each of the governors of the Reserve Bank of Australia:



chart image

Source: Bloomberg
Click to enlarge


According to this chart, our current governor of the Reserve Bank of Australia, Philip Lowe is a ‘good talker’ says Bloomberg, writing:

Nine months into his tenure, Lowe has continued to show he’s a good talker — in terms of both quality and quantity. He’s given nine public speeches, compared with predecessor Glenn Stevens’ four in the same period, and added up to 200 more words to the bank’s monthly policy statements that can sometimes move the currency with the insertion of just a few letters.

It could be that Lowe feels the need to offer more detail to the market in these uncertain times. Or perhaps, with rates being on hold for 10 straight months and headline inflation back in the central bank’s target range, he’s had a bit more time on his hands to pontificate and even wade into areas such as tax and government spending.

Bloomberg then clarifies that Lowe is nowhere near as wordy as either Janet Yellen or the Bank of England’s governor Mark Carney, with each making 10 speeches since September last year.

However, our current governor is getting up there with his ability to talk to the market.

I’m see this differently. Don’t think for a second it means we have a chatty governor on our hands.

Chances are the central bank realise they have painted themselves into a corner. They have record low interest rates, and the RBA can’t win by increasing or decreasing rates. If the RBA cut, there’s a chance that’ll flow into the already inflated housing market. If they raise, there’s the chances it will reduce inflation and spending, and maybe push the Aussie dollar too far over the 75 US cent mark for the long term.

Instead, the RBA are left with what market commentators like to call ‘guidance’. That is, talking to the market.

Blunt monetary policy tools such as interest rates can’t be used anymore. Now the central bank must talk to the market, and explain to the market over and over again what it’s going to do.

And why not? That seems to be what central bankers do these days. Janet Yellen, governor of the US Federal Reserve Bank, regularly gives the market ‘guidance’. That’s why the two Fed rate increases this year, in March and June, didn’t spook the market. Because the Fed has spent the three months prior to each rate hike warning the market the ‘surprise’ change was about to happen.

Aussie central banks are now taking their plays from our American cousins.

Now, let’s see how the markets are looking…

Markets

Overnight, the Dow Jones Industrial Average was up 46.09 points, or 0.22%. 

The S&P 500 dropped 2.43 points, or a 0.10%. 

In Europe, the Euro Stoxx 50 was down 10.72 points, or 0.30%. Meanwhile, the FTSE 100 dropped 0.35%, and Germany’s DAX index  was up 0.32%. 

In Asian markets, Japan’s Nikkei 225 is down 60.35 points, or 0.30%. China’s CSI 300 dropped 0.44%. 

In Australia, the S&P/ASX 200 is lower by 65.30 points, or 1.127%. 

On the commodities markets, West Texas Intermediate crude oil is US$44.69 per barrel. Brent crude is US$47.03 per barrel. 

Gold is trading for US$1,264.73 (AU$1,661.10) per troy ounce. Silver is US$16.99 (AU$22.32) per troy ounce. 

The Aussie dollar is worth 76.16 cents. 

Aussie dollar soars on good jobs data!

Hoorah! Employment is running at full steam ahead. At least, that was the impression I got from headlines like ‘Aussie dollar soars on good jobs data’ landing in my inbox before lunchtime today. Apparently, the Aussie unemployment rate dropped to 5.5% for May.

Comsec chief economist Craig James then said this would take a rate cut from the RBA off the table for now, but wouldn’t be in a rush to lift rates though. He then added, ‘It’s hard to see the doomsayers finding too many negatives in the latest jobs report. Even the underutilisation rate fell sharply in the latest quarter.’

Ahem, this doomsayer says ‘challenge accepted’, Mr James.

I don’t buy into ‘official’ statistics. First of all, how the jobs data is calculated is laughable.

If you do some digging, you’ll find that the information the RBA relies on tells a different story from privately sourced data.

For those interested in ‘shadow statistics’, Roy Morgan have the Australian unemployment rate at a much higher 9.%. And their unemployment data increased in May. Unlike official government data which fell from 5.7% to 5.5%.

The Australian Bureau of Statistics (ABS) has a very different way of calculating unemployment to Roy Morgan. ABS consider anyone that has worked for one hour or more for payment as employed.

In addition, they reckon that if you worked in a family business without pay, you’re employed. Regardless of whether you’re on the books as an employee or not.

Oh, and to keep the unemployment stats nice and low, the ABS says if you are not actively looking for work (such as applying for job advertisements or registered with Centrelink), you are still not considered unemployed. 

That’s what political influence will do to data. Cut it up and massage it into a more palatable shape.

Roy Morgan, on the other hand, has an old school approach to calculating employment data. If anyone who is not employed in either full time or part time work, but looking for paid employment, Roy Morgan consider them unemployed. 

Roy Morgan, unlike the ABS, doesn’t change their methodology to suit a government agenda. They don’t seasonally adjust their data to present smoothed out figures to bureaucrats.

Admittedly Roy Morgan use a much smaller sample size than ABS. But I personally consider the Roy Morgan data to be a more accurate measure of who’s working and who’s not.

Shortly after the data hit inboxes, the Aussie dollar climbed 0.3 cents. That might not sound like much, but that’s a significant jump in currency markets. A stronger Aussie dollar on the back of jobs growth suggests to the market, that perhaps the broader economy really is OK.

Everything’s rosy? Not for a second. Employment data is just another manipulated statistic.

Monetary Instruments

Remember that time the US decided personal gold holdings were illegal? Way back in 1934, Executive Order 6102 became law. And suddenly any personal gold holdings were a crime. People were forced to hand over any gold or silver bullion, and redeem it for US dollars.

People say it will never happen again. That we’re smarter. We’d see any executive order as outright theft this time.

And yes, we would see a similar executive order as theft. But like us, the politicians got a little smarter along the way.

Introducing Bill S. 1241. 80 years from now, maybe the mainstream will call this what it really is. And that’s yet another confiscation of private wealth.

Our friends over in the US congress are currently changing the rules to what the US government can confiscate from the people. And they are doing this by capitalising on widespread fear and hatred. But they’ve given it a much friendlier name.

They’ve called the bill ‘Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017’.

I mean, who doesn’t want to combat terrorism? Of course the people aren’t going to kick up a stink about anything that allegedly protects them.

You’re not going to hand over your money if it’s for exactly what they said it would be. But if the government tells you it’s about ‘terrorism’ and other bad stuff, well then, shut up and take my money…

The US government pretends yet again, that the heist is about keeping the bad people from getting access to your money.

The gold heist of 1934 has been transformed into the modern era. This time, it’s an all-out wealth confiscation if the government finds you to be doing the wrong thing. The thing is, anyone could be caught out doing the wrong thing. Let me show you what I mean.

One of the new introductions is ‘Civil Asset Forfeiture’. This little clause is a doozy. It allows for the government to take whatever they want from you. Without any trial. Basically, someone more powerful than you just needs to be convinced that your assets have been accumulated as a results of money laundering or another financial crime.

The Bill S. 1241 even goes as far as to allow the government to take not just the assets you didn’t declare…but your entire financial worth. It even includes any assets you may hold in a bank or non bank safety deposit box on US soil as well.

Poof! That’s it. You’ve been branded a terrorist, and just like that, your asset are gone. Well, at least they’re gone from your control.

Hang on, I’m not done. The Bill wants to up the minimum jail time from five years to 10. This is starting to sound an awful lot like coercion to me…

But wait! There’s more!

In addition — as a government loves to do — they’ve expanded what a ‘finance crime’ means.

Apparently, if you fail to complete a form stating you are transporting more than US$10,000 of ‘monetary instruments’, you’ve committed a financial crime.

Hmmm.

There’s a new term. Monetary instruments isn’t one I’ve heard before. These a reason for that.

The US government aren’t willing to call cryptocurrencies ‘money’. However, by using a vague term like monetary instruments, products like Bitcoin that are a medium of exchange can now be neatly wrapped up in this bill.

Ahhh. The land of the free, right? Only American politicians would create new terms to define money, after they have lost all control of their own monetary system.

More to the point, this immediately makes everyone that owns bitcoins a criminal. Think about it. Your bitcoins — or any crypto currency for that matter — are always portable. It’s part of the cloud. Therefore, wherever you are, so is your crypto money.

Are you going to fill out of a form every time you travel access the United States and tell people how many bitcoins you have on you? I sure as heck wouldn’t. And that refusal to declare my ‘monetary instruments’ automatically makes a me a criminal if this bill goes through.

This new bill shouldn’t deter you from buying any cryptocurrency. What it should do, is confirm that you need to have some of your assets outside the monetary system. Because the US government is leading the way in rewriting the legislation around money, in the guise of fighting terrorism. 

I’d rather be a criminal then tell them my worth.

See you in the slammer.

Kind regards,
Shae Russell