What Is That Whistling Sound?

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Stop, Look, & Listen

May 04, 2011

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Compound Interest Addiction

Let us review a real estate investment over a very long period of time – 384 years. This length of time includes several complete business cycles of the Kondratiev type including booms, busts and depressions. It also shows the value of real estate in a country (the United States) that has not experienced the destructive force of war on its continental heartland. The Dutch bought Manhattan Island for 60 guilder (~$24) in approximately 1625. The 23 square mile (14,528 acre) island of Manhattan now has a recently assessed value of $189 Billion (not including buildings) A similar 14,000 acre parcel in Suffolk County, Massachusetts is currently for sale for $3,500,000. What is the return on investment for these two properties over the very long timeframe? Let us consider the Future value of a single deposit FV=PV(1+i)^n A Manhattan island investment over 384 years yields - 6.12% A similar investment in ocean front property in Suffolk County yields - 3.15% In the long term, in my experience...

Arizona To Propose Gold And Silver As Legal Tender This Week

Arizona Challenges the Fed’s Money Monopoly History shows that, if individuals have the freedom to choose what to use as money, they will likely opt for gold or silver. Of course, modern politicians and their Keynesian enablers despise the gold or silver standard . This is because linking a currency to a precious metal limits the ability of central banks to finance the growth of the welfare-warfare state via the inflation tax . This forces politicians to finance big government much more with direct means of taxation. Despite the hostility toward gold from modern politicians, gold played a role in US monetary policy for sixty years after the creation of the Federal Reserve. Then, in 1971, as concerns over the US government’s increasing deficits led many foreign governments to convert their holdings of US dollars to gold, President Nixon closed the gold window, creating America’s first purely fiat currency. America’s 46-year experiment in fiat currency has gone exa...

Japan's Central Bank Responsible For Most Of Stock Gains In 2016

BOJ increases its sway over Japan's financial markets The Bank of Japan, already notorious as the biggest holder of Japanese government bonds, has now earned the dubious title of the largest "whale" in the domestic equity market. The BOJ purchased 5.58 trillion yen in exchange-traded funds in fiscal 2016, an 86% leap from the previous fiscal year. The total puts the bank above corporations and international investors as the single biggest buyer of Japanese equities. Last July, the BOJ decided to double the annual purchases of ETFs tracking the Nikkei Stock Average, Topix and other indexes to 6 trillion yen. Each round of ETF purchases by the bank lifts the Nikkei average by about 30 points, according to estimates by Nomura Securities. That translates to the Nikkei average receiving an aggregate boost of roughly 1,700 points after the current ETF policy was adopted. The Nikkei average added 2,150 points in fiscal 2016, meaning the BOJ's purchasing progra...

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