Losers from digital currency game, extraordinary income, financial instruments and scam

Every generation needs a revolution - an entrepreneurial revolution

I had a batchmate who used to work in a multilateral banking institutions who  was rumored to have lost her shirt playing the digital currency game.   She was supposed to have parlayed  P500K up to P10M, but eventually losing all.   Now she is rumored to be borrowing money and or inducing others to invest in such currency.  This is not the first case of somebody losing money just like in a casino to such a venture.

I have always maintained that I will invest only in a business I fully understand.  Thus No no for me are:

     1.  stock market and its derivatives

     2.  derivatives

     3.  hedge funds

     4.  digital currency

     5.  Fx

Only geniuses like Warren Buffett (and they are not too many of them) can digest and absorb vast amounts data.  And George Soros too.  We mortals are bound to fail. in these ventures.

   1.  A judge got his placements from us worth P500K to invest in stock market.  Six months after I met

        him and said he lost the whole amount in six months

   2.  The neighbor of daughter at a condo  (they own a factory)  lost P300K in digital currency.   

If it is too good to be true, then it is .  

Beware too of extra ordinary income.   Familiar with KAPA scam, etc where many people lost zillions.  Nothing ever happened with the investigation

An investor, an entrepreneur has got to know his/her limitation.  (Make my day)

Stages in Monetary history - why civiization collapse

Every generation needs a revolution - an entrepreneurial revolution

These were the steps enumerated:  (Swinging from quantity and quality)

1.  The country has a solid monetary system in gold and silver

2.  The country takes on more expenditure

3.   The country funds a massive military

4.   The military is used and expenditures  expands  (Not true for US it sells armaments to the word)

5.  The country debases the currency with deficit spending

6.  The population senses the worthlessness of the currency

7   People shift to gold and silver;  a great transfer of wealth from those hoding on to fiat currency to those

     holding gold  

Our country is in 5, beginning with Duterte.  However, it is hoped that we are not printing more money..  But borrowing more

But in 2022, our base currency increasing from mere P1.8 trillion to P2.0 trillion 

https://tradingeconomics.com/philippines/money-supply-m0  P200 billion increase

Philippine Gold Reserves -  down to 157.00 tonnes from 197.00 Do we have enough gold

Philippines gold reserves

Its $64.7 million x 157.00 tonnes = $ 10,157.9 billion x 54  =  P548,526.66 billion he gold reserves went down by 40 tons x $64.7  =  $2,588 billion x 54 = P139,752 billion

Roughly 547,526  /2,000,000 = 27% of total base currency.  This does not include loans to bank which is P9.3 trillion

So total currency is $11 trillion (P9.3 + 2)     Gold reserve vs total currency is 2.5% how thin.   When the currency system collapses

Money vs currency - money is a store of value, not necessarily paper money

Every generation needs a revolution - an entrepreneurial revolution

Mike Maloney's post on currency vs money is enlightening

1.  There is inflation - rise in prices not because  of unknown forces causing increase in cost of inputs.  There is inflation because of rise in money supply, something beyond the control of producers (farmers, contractors, manufacturers)  The  goods absorb like a sponge the increase in money supply by way of higher prices.

2  Increase in money supply comes and initiated by the central bank of federal reserve system  through various ways:

      1.  Printing of more paper currency

      2.  Pump priming, stimulus checks, ayuda

      3.  Quantitative easing -  purchase by Central Banks of debt instruments from banks

      4   Lowering of bank reserves -  more money is made available for lending (which accounts for more than 90% of money created in the economy)

      5.  Lower tax rates tax exemptions

While this is seen as pro masses, this increases money supply in circulation  Inflation is the inevitable  aftermath.

3.  Money is a store of value which remains constant inspite of  passage of time  Currency which has no basis for value eventually ends up being zero  Even crypto has failed  in this aspect as there is no real stuff of value to peg its prices on

4.   The store of values can be in:

     1  Precious metals like gold and silver

     2  Real estate 

     3  Commodities which are in constant use:   toothpaste, other well preserved foodstuff, soap

         (all the stuff of survivalist)   Andrew Tobias was right in saying that household stuff are the stocks  that you need to buy

     4.  Your own education, especially financial literacy

5.  Inflation, or more currency in circulation means the value of your nest egg, your savings can be taken away  without your consent.   It is thievery at highest level

     This post is doubtful as to whether insurance, ctd, stocks are real store of values.  This post stayed  away from a well known educational plan, which eventually closed shop

     I am wondering why a US citizen is in a hurry to sell his inherited real property in the Philippines

Inflation - debasement of currency and fall of empires and civilization

Every generation needs a revolution - an entrepreneurial revolution

Fall of Empires - Rome and US

This post is going beyond the scope of the page - entrepreneurship   But it is wise to watch this video and learn from this.  Paraphrasing Churchill, we say that going deep into history makes us fully understand and much more so the future   We gain more insight into the currency management, money and credit and how they affect local business.   Even the military, and strong local and central govts.

The Roman empire

This Maloney compares the Roman empire and the current US situation.  There are parallels and we must be aware of the perils we are facing so that we can avoid the mistakes of the  past civiization that has collapsed  What must we do as individuals and entrepreneurs to avoid the doom and steer clear of the challenges posed by the debased monetary policy

1.  Rome started with stable monetary policy, stable currency that was backed by pure gold

2. But the Punic wars (war with Hannibal) and massive military structure all over the empire and massive infrastructure  caused the central govt (the Republic) caused to engage in deficit spending

3.  This led to the debasement of the currency, like removal of edges of the coin, melting them and minting new coins or simply inflating the value of the coins

4.  To appease the masses, the top brass of Rome, the emperors led in Circus and Bread programs.   Circus - the  regular spectacle at the coliseum featuring gladiators and the Bread - a welfare program where about 20% of the population get wheat ration daily.   Where did Rome get the money for these

5.  This lead to strong govt  to collect taxes, made the central govt corrupt - due to cronyism.  To curry favors from the emperor and the senate   

6   Led to the strong influence of the military over the govt

These led to disorder chaos and eventual falll of the Roman empire  It was not the war with Vandals that  brought that Rome, the monetary system did and imploded the empire

Similarity with the US

1.  The US started on a similar footing with Rome with stable currency/money in the beginning

 The US Constitution prescribed only Gold and silver as the  legal tender in the settlement of debt

  and other obigations

    

  

• Clause 1 Proscribed Powers

• No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

Because of this the  US dollar became merely a certificate of deposit of gold or silver   The US dollar or silver can be redeemed through the US dollar

2.  US has to engage in deficit spending due to its involvement in two World Wars

3.  In 1944, just as the world war II was coming to an end, there was this Bretton Woods agreement that led to abandoning of the gold standard (perhaps to speed up war recovery through printing of loca currency and deficit spending by countries) and instead making the dollar the  world currency pegged 

(reserve) pegged at $35 dollars per ounce.  This led to the establishment of the IMF and IBRD

Bretton Woods agreement

So how then the value of currency determined - by comparing the value of currency against a basket of currrency that keeps fluctuating on a daily basis

4  Due to the deficit and massive spending due to Vietnam war Nixon on August 15, 19711 declared at least temporarily that redemption convertibility of US dollar to gold was to be no longer allowed.  And strict price control  for 90 days.  It is to be noted that inflation or price of goods going up is not the product of manipulation by traders who are just out to make a living but because of wrong monetary policy and is merely a result of debasement of currency brought about by lack of a gold standard, and/or rise in money supply.  Nixon is not only famous for Watergate scandal and or Vietnam war, but for the disruption/debasement of the US monetary system

Nixon ends convertibility of dollar, impose price controls