Until the mid-19th century, the means of retribution for the stiffed creditor was debtor’s prison. If the creditor could not see the return of his capital, then at least he could temper the pain and humiliation by witnessing the incarceration of the defaulted debtor. In our age of monetary lunacy, it would seem that some of the world’s more dollar-dependent central bankers are quietly (or perhaps not-so-quietly), yearning for a similarly harsh ‘debaser’s prison’. Here I speculate about the peculiar world of the dollar-dependent central banker and consider the consequences of the dearth of entrepreneurial spirit in the money production business.

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Jim Rogers was interviewed on CNBC TV on Friday (9/9/11). He spoke about the Euro, his portfolio and monetary policies. Importantly, he mentioned that he ‘probably [owns] more US dollars than [he's] owned in many years, and certainly more than most other currencies’! See below for the videos and summary.

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The total size of the Fed’s balance sheet increased by just under $5 billion over the week ending 31/8/11. Here I present the usual charts of the Federal Reserve’s assets and liabilities.

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Since our last update on 31/8/11, the US Treasury’s cash balance has fallen and hovered around historically low levels. Moreover, the alchemistic lagged correlation between the US Treasury’s cash balance and the stock market (inverted) seems to have broken down over the past week. Here I present an update of the usual daily treasury statement charts.

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Marc Faber interviewed with Yahoo’s The Daily Ticker yesterday. He had some interesting thoughts on the nanny state and the usual investment allocation process. See below for the video and summary.

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After four months or so of trading in a tight range, it seems like the dollar is well and truly on the move! Of course, there is no guarantee that this will continue over the coming weeks and months, but nevertheless we think that it’s important to understand the ironic and paradoxical reasons for a strengthening dollar (against some of the other sinking currencies of the world). Rather than repeating what has been said here on greshams-law.com over the past few months, I thought I’d present a few articles that may be of interest now that the dollar is on the rise!

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While perusing the history books, one cannot help but encounter repeated governmental interventions in the monetary sphere. Back in 16th century England, the fetish of the monarch who meddled with money was the nasty cocktail of a vicious debasement with a stubborn maintenance of legal tender laws. Today’s manipulations are so wide-ranging that one can scarcely list them all with any ease. However, one notable means of denying economic reality today is the monetization of paper. Any sign of trouble in supposedly ‘socially key institutions’ is deemed to give rise to a hearty: ‘No problem, the central bank can buy it!’ Is it any surprise, then, that the most ‘socially key’ (hah!) of all ‘socially key institutions’ — governments — are seen to put virtually the entirety of their paper on their respective central bank balance sheets? Be this as it may, we must always recall the glimmer of hope in monetary affairs; the dealings among free men have always revealed folly (if only momentarily). Here I discuss the ‘mechanisms of reconciliation’ in currency markets and conclude the potential for a short position in the EURJPY currency pair.

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