While I was researching foreign exchange reserves of central banks, I found this page on the ECB’s website. Much to my surprise, the ECB has begun publishing figures on their allocated and unallocated gold reserves since August 2015: https://www.ecb.europa.eu/stats/external/reserves/html/index.en.html
Prankster in Chief speaking here. Each year, my thoughts drift away thinking of a funny prank for April Fool’s Day. So for this year’s edition, I was thinking about drawing a lot of attention. How can one make the national news and the international press? So for this year’s prank I was thinking of calling on a very large group of people to help out. People all around the world! Hang with me.
Continue reading “April Fool’s Day 2014: A Unique Opportunity”
The day before yesterday, local elections dominated the day in the Netherlands. Election night culminated rather unfortunately with a display of xenophobic rhetorics by the leader of the Freedom Party PVV, Geert Wilders. In the Hague, mister Wilders spoke to his supporters (video on the right), with whom he celebrated their re-election in the Hague; one of only two cities where his party campaigned. Mister Wilders victoriously proclaimed that three questions define the principles of his party. He asked his followers to answer three questions that clarify the principles of his party:
“The first question is. Do you want more or less European Union?”, to which the crowd chanted: “Less. Less. Less”. Wilders continued: “The second question is. Maybe even more important. Do you want more or less PvdA”? [*], to which the crowd responded in a similar fashion. And then he voiced the third question: “The third question is. And we may not say this because criminal complaints are filed against you. And maybe there are public prosecutors of D’66 [**] who prosecute you. However, the freedom of expression is a great good. We have said nothing what may not be said. We have said nothing that was not true. Thus I ask you. Do you want, in this city and in the Netherlands, more or less Moroccans? The crowd chanted: “Less. Less. Less.” Mister Wilders gloated, sensing that his choice of rhetorics had paid off, and welcomed the crowd’s more than enthusiastic response by adding: “we will arrange that”.
If you read the series of analyses by Dr. Jelle Zijlstra, one of the world’s most informed central bankers of his era (1967-1981), you have read a little over half a “modern book” on the historical backgrounds of the international monetary framework and the reasons for the Bretton Woods framework to collapse. My selection of translations portrays a great similarity to the extent that the essential point is repeated again and again and which is most eloquently described in Zijlstra’s autobiography of 1992: “Gold as the monetary cosmos’ sun”.
Here are my thoughts on why his analysis is highly relevant to today’s financial crisis.
In March, Dutch nationalized banking giant ABN Amro send its trading clients a letter explaining that they have changed the conditions for precious metals trading. In their letter , the bank explains that they will no longer deliver physical precious metals (gold, silver, platinum and palladium), that they administer prices slightly differently, and that they have found a new custodian. ABN Amro suggests that clients do not have to do anything, stating “we will administer and manage your precious metals holdings in the new manner”.
Of course clients do not have to do anything, but given the new conditions , this is hardly advisable or prudent. Investors with precious metals holdings with ABN Amro are potentially facing fatal risks.
Last night, I read the very unfortunate news about the suicide of 26-year old Aaron Swartz. Although I am not sure if I should bring this under people’s attention, I genuinely think Aaron’s story needs our reflection, silent or otherwise.
In case you have not heard about Aaron’s story, here’s a link to Harvard’s prof. Lessig reflecting on Aaron’s unfortunate decision to end his life.
Whenever I am in Amsterdam, I go to a bookstore and browse the second-hand shelves in the economics section. Recently I found two books by Dr. Jelle Zijlstra: “Dr. Jelle Zijlstra, Conversations and Writings” (1979, second edition) and “Per Slot Van Rekening” (1992, fifth edition). The latter title is a Dutch figure of speech that may be translated as “The Final Settlement.”
Jelle Zijlstra was a renowned Dutch economist and one of Holland’s finer statesmen. Early in his career in 1948, shortly after World War II, he became a professor, specializing in the velocity of money. By 1952 he was appointed minister of economic affairs, then Dutch treasurer from 1958 to 1963 and again from 1966 to 1967. During his last term as treasurer he led the Dutch Cabinet as prime minister as well until 1967, after which he became president of De Nederlandsche Bank (DNB). While president of the Dutch central bank he was appointed as the president of the Bank for International Settlements (BIS) as well, positions he held until his resignation in 1981.
A case of deflationary collapse or hyperinflation
Joseph Heller published his famous book “Catch-22” in 1961, describing American pilots during World War II. In this day and age of financial misery and economic havoc one could use Heller’s beautiful description of a catch-22 as an analogy. Central bankers everywhere face a classic catch-22. Bankers who are piloting our economies so to speak.
To me it is not so much of a question if they are facing a catch-22. It is one of how much Ben Bernanke, Jean-Claude Trichet, Mervyn King and all other central bankers are aware of it. Continue reading “A Catch 22”
On account of my article “Capitalism, Free Markets and Patents: Grounds for a Major Policy Revision“, I received a list of arguments that do not support my proposal.
I have decided to opt for a three part discussion of my earlier piece. In the first part I deal with simple economic theory. Its function is to summarize what is important to remember when any economic framework is discussed. This part focuses on market capitalism and what mechanisms are at hand. Its objective is to establish a clear view on economics and its terminology. It sheds light on the context of my proposal.
Part II discusses the arguments made for and against my proposal. This part discusses all the arguments made during an interesting conversation I had over the e-mail. It covers a wide range of key factors determining the added value of this proposal, as it covers the arguments against it. Upfront it is probably most fair to state that I stick to my proposal. Part II clarifies my position in much greater detail. If you were not convinced by the original article, I hope discussing the merits of these arguments will convince you to demand a major policy revision. My apologies upfront for the length of part II. Continue reading “Revisiting: “Capitalism, Free Markets and Patents: Grounds for a Major Policy Revision””
Capitalism has become a rather wide description of anything and everything what is considered to be part of economics. Economic science provides people a great variety of different views on market capitalism. This collection has made any use of the words of market capitalism and free markets open to interpretation.
Most important element of capitalism is commonly misunderstood. It is the concept of free markets. Before one is able to argue any economic policy it must undoubtedly become clear what someone has in mind when the words capitalism and free markets are used.
Science is dominated by discussions and it always comes down what definition is used. This part deals with defining important terminology. It is about how economists approach economic markets, and it questions how economic markets function. Are all markets the same? How are they interpreted as free? Continue reading “Part I – Arguing Any Economic Framework – What Is Market Capitalism About?”