Email from: Stephen Williamson
Sent: Wednesday, 18 September 2013 2:02 PM
Subject: Thanks for the chat, Tim :-)
Hi Tim, Hi everyone
Yes, thanks for the chat Tim. Here’s that page below, tracking inflation, firstly in Britain, next in the US (in comparison with Australia). I’ve shared this page before, I’ve made a few adjustments recently. Appreciate all/any comments
But now with seven billion people in the world, and with all the many, many wealthy ones worldwide who are storing the $16 trillion in US Treasury notes and bonds as the basis of their current wealth, we are truly in uncharted territory at present.
Numerous prophecies and recommendations, but it’s not simple stopping a juggernaut like this, regardless of the experts.
Blessings all :-) Steve
Extract from Forbes on Sep 20th: From QE1- Nov2008 through QE3- Sep2012 as of now the Federal Reserve has increased its balance sheet from $900 billion to * $3.7 trillion today. Here is a primer on the mechanics. The Fed currently purchases $40 billion in mortgage backed securities (private debt) and $45 billion in treasuries (govt bonds) each month. The Fed has no excess money or reserves … so they simply fire up the printing presses and print out of thin air $85 billion of new money each and every month. This is money that goes directly into the money supply. Nobody knows the ultimate denouement of money printing on this scale.
* Ended Oct2014 at $4½ trillion
But lower interest rates and increased inflation in "more hospitable yield environments" are inevitable.
Click here for the history of money, silver and gold, in scripture.
Click here for more info on today's banks.
Click here for Adam Creighton's recent reappraisal of Keynesian economics
where d=denarius or pence or cents, s=shilling (12 pence), £=Libra-pondo (240 pence).
30AD (time of Christ) 1d per day (i.e. one penny for working in a vineyard). It contained about 4 grams of silver and a Libra-pondo (240 drachma or 1/60th of a talent) in Israel was thus just under one kilogram.
By 250 AD, this level of silver had dropped to zero. In 312 AD, Constantine issued a new gold coin, the solidus, and shifted the Roman capital to Constantinople (now Istanbul) in the east, with merchants being forbidden to use these coins outside the kingdom.
East of the Roman Empire was the Persian Empire, where silver coinage was in abundance from trade with Rome, Arabia, China and India. These were drachma coins, later called dirhams, still with 3½ to 4 grams of silver, and issued from their capital at Ctesiphon, (near ancient Babylon and close to modern day Baghdad). Click here for a brief two-page history of the world (with hyperlinks) as the Muslim caliphates took power.
And with the collapse of silver coinage in the west, numerous trade agreements vanished. Invasions by Goths, Vandals, Huns, Lombards and Vikings followed, capturing slaves which they traded for Eastern silver. But at the same time, decentralised government, manorialism and monasteries sprang up everywhere.
790 AD King Offa of Mercia in England joins forces with Charlemagne in France. With a silver mint having been established at Dorestad on the Rhine with access to a significant quantity of silver, the penny (pfennig) was reintroduced at a set weight of just under 1½ grams of silver. The standard £ Libra-pondo (later known in England as the Tower-weight or Tower-pound) of 240 pennies contained about 350 grams or exactly 12 "tower" ounces in silver. The tower system was referenced to a standard prototype found in the Tower of London.
See this page for a family timeline of daily wages from 1261 - 1780.
1261 Tuppence or 2 silver pennies per day. Halfpennies and farthings are also now in production with a proportional level of silver. Note that with the prices for goods on the continent requiring less silver, the level of silver in the penny at times could be reduced to as low as 1.3 grams, though any reduction produced considerable complaints. English coins were much envied in Europe for their weight and good metal content, with English halfpennies being copied on the continent.
For further background to what was happening over there, click here for the gold florin, issued originally from Florence in 1252.
1351 Threepence or 3 silver pennies per day.
1401 Fourpence per day. In 1412, the level of silver in the penny is reduced to about 1.0 gram.
1541 6½d (Sixpence ha’penny) per day, the rise of Protestantism opposed to the Holy Roman Empire, in 1568-1648 the
1583 8½d (Eightpence ha’penny) per day. Halfpennies and farthings now become copper in content, and legal tender up to the value of sixpence.
1640 10d (Tenpence) per day
1780 18d (One shilling and sixpence) per day — inflation starts to take off. What with the French seven year war 1756-1763, their revolution in 1789 and the rise of Napoleon, again there is considerable instability, a shortage of labour and silver, with paper money having to be printed to pay government wages and expenses. When pennies do end up getting reminted, their content is now all copper and the basic silver coin becomes the threepence.
1865 Three shillings and ninepence per day click here was the wage for a common labourer in London working a 10 hour day and a six day week.
This period also saw the rise of income tax as a taxation measure. Prior to this, invading a neighbouring country, bribes, extortion, customs duties, sales taxes on certain goods (e.g. alcoholic beverages) and property taxes (based on, say, number of windows) were the main sources of income for governments. Click on each country to see some of its income tax background.
America Britain France Germany Italy Russia Japan India China Australia
With Australian federation in 1901, each state enacted "early closing time" legislation for shops and factories that set working hours at a maximum of 8 hours per day. Then in 1930, the 6 day week became a 5½ day (44 hour) week, in 1948 a 5 day (40 hour) week.
In 1907, the Commonwealth of Australia established the "basic minimum wage" at two pounds and two shillings (42 shillings) per week for unskilled full-time workers, 21 years and older.
In 1910, the Australian pound note and shilling was pegged to the UK currency. £1 contained 7.32 grams of fine gold and 1 shilling contained about 6 grams of sterling silver. After 1914, Britain had to abandon its gold standard. During the 1929 Depression, the peg between our currencies was dropped temporarily, then in 1931 it was reapplied at 80% of the value of the UK currency.
The US dollar contained about 24 grams of silver, and in 1931 £1 UK was valued at about $US5.00, £1 AU was valued at $US4.00. In 1940, the UK currency devalued against the US to about 80% of its value, and again in 1949 to about 70% of that value. The Australian currency followed suit and so in 1949, £1 AU was worth $US2.24. Ten shillings, the basis of our coming dollar in 1966, was worth $US1.12. Since that time we have either been fixed or floating, in line with the US dollar. Click here for a graph.
Click here for a second graph, showing the US dollar against the Swiss Franc since WW2. The Franc's stability in relation to gold valued it at 19 US cents after WW1 and at 23 US cents after WW2.
Now in 2019 it is just above par with the US dollar.
|Australia Basic Wage||US Govt Debt|
|1907 Seven shillings per day||$1 billion|
|1920 15 shillings per day with widespread inflation following the First World War.|
Paper money (i.e. a promise backed by 80 tonnes in gold reserves) had become all the rage following the Australian Notes Act of 1910 enabling banknotes issued via Australian Govt Treasury and cancelling those more fallible banknotes of individual banks.
|$25 billion, through the enormous expenditure of First World War and the setting up of the League of Nations|
Drops to $16 billion in 1930
then rapidly increases under Roosevelt's "New Deal"
|1950 £2 per day with considerable inflation following the Second World War.||$260 billion as US sets up United Nations, provides help to West Germany, South Korea, other economies worldwide|
|1960 £3 per day with inflation over 10 years measuring 150%||$300 billion|
In 1966, the AU dollar was launched, worth 10 shillings.
In 1971, President Nixon cancelled the fixed US dollar to gold exchange rate (since 1934 at US$35 per ounce).
Click here for our experience in Australia with Gough Whitlam's "seat of the pants" government Dec 1972 - May 1974 - Nov 1975.
|Australia Basic Wage||US Govt Debt|
|1970 $8.48 per day ||$400 billion|
|1980 $25.90 per day accelerating through "stagflation" to 305%||$1 trillion|
|1990 $34.27 per day decelerating (under Bob Hawke and Paul Keating's union policies) to 132%||$3 trillion|
|2000 $80.08 per day accelerating through union demands to 234%||$6 trillion|
|2010 $108.77 per day decelerating again to 135%||$10 trillion|
|2019 Currently $143.84 per day using our basic adult wage of $719.20 per week, arguably the highest in the world, plus 9½% compulsory superannuation.||$19 (going on 20) trillion|
Click here for minimum wage rises 1966 to 2008.
So in 2019, $143.84 (say 14,384c) per day which is 205 times the seven shillings daily wage of 1907. A fair increase in inflation over these 111 years. At that 205 fold rate of increase, and accelerating another 44 times as this was the acceleration factor over the 4.67 increase that occurred between 1780 and 1907, by 2130 we could all be earning over $1 million per day.
Not bad .
Yes, at these times, may we keep our eye on the Lord. Let our eye be single, having "dove's eyes".
Below are two lists based on the IMF List in 2016 of debtor and creditor nations by Net international investment position
What it does is take the net position: Total external assets (owned in other countries) of every individual, company, and government institution, then subtracts the total external liabilities.
1. The 26 creditor nations listed in US$ are
* Included in separate report
Totalling $ trillion
2. The 23 debtor nations listed in US$ are
* Included in separate report
Totalling $ trillion
Regarding Australia in third position, ever since we were first settled we’ve relied on other countries to invest in us, to help us get going. And our public service has always been somewhat top heavy.
See the chart below for how much we are individually and corporately in debt to "managed funds" (in Australia as well as overseas).
And at the end of the day, as the scripture says, each one of us has to bear his own load, whether as individuals, company directors or politicians. Ahh the Lord knows.
Now the following email has had its figures adjusted to reflect some of the latest stats.
Note its use of the word "currency" is as follows:
1. M0 (including MB): Banknotes and coins in pockets and in bank vaults and in ATMs, plus the exchange settlement / banking reserves in gold and government bonds that have been deposited by individual banks in their Reserve Bank. According to these links this is a small amount relatively speaking, in Australia it's about $90 billion, in the US it's about $4 trillion.
2. M1: Easily accessible cheque and savings bank deposits. In Australia it's about $325 billion, in the US about $3 trillion.
3. M2 and M3: Long term deposits via managed funds in banks and money markets, a much larger figure. In Australia it's about $1,760 billion — while the US Federal Reserve no longer reports. The figures below are estimates only.
On July 20, 2013 3:42 PM, "Stephen Williamson" wrote:
Subject: Where's all the money :-)
With computers, we’re certainly a long way from the gold / silver standard the world used for thousands of years. Again, appreciate any feedback.
Much of this is based on each country's net investment position, and a list by Allianz of currency/stock/bonds owned by each country's residents - America currently showing €42 trillion. At $1.36 to the euro, this converts to about $57 trillion.
|Country||Residents and institutions in the black||Residents and institutions in the red (excluding central govt)||Central Govt|
|US||$57 trillion||$43 trillion||$16 trillion in red|
|Japan||$19 trillion||$4 trillion||$12 trillion in red|
|China||$12 trillion (includes central bank)||$9½ trillion||$3 trillion in black|
|UK||$8 trillion||$6 trillion||$2 trillion in red|
|Germany||$7 trillion||$3 trillion||$3 trillion in red|
From: chris Turner
Sent: Sunday, July 21, 2013 11:47 AM
how would the us and uk gold reserves affect these figures?
Click here for a history of the world's gold reserves by country over the past 170 years.
From: Stephen Williamson
Sent: Sunday, July 21, 2013 6:14 PM
I didn’t take account of it. The US records theirs as 8,000 tonnes at a book value of $35 an ounce, about $9 or $10 billion dollars, but that’s very theoretical, its true market value may be closer to $350 billion if they were to exchange any of it. But still it’s a lot less than $1 trillion.
It is more than any other one country, but apparently they haven’t touched it for ages. So it’s very minimal.
Now, with regard to the foreign exchange reserve assets held by each country’s banks, it’s a pretty small amount, a total of about **7 trillion dollars all up worldwide, 65% are now held simply in US dollar paper, 25% in euro paper, and the last 10% in that IMF animal which the Chinese like, a basket of currencies which the IMF call “special drawing rights” (and some UK pounds, Japanese yen, and only a very tiny amount in gold, yes, and other precious metals).
**Though in June 2014, this figure was increased/corrected to almost 12 trillion dollars.
Some further thoughts.
Hmm, so ok, back in 1944, the UK didn’t have much, but the US gold reserves and the Bretton Woods political agreement certainly gave the US government back then a massive leading edge:
Firstly in taking charge of winning the war, and
Secondly in assisting countries like Japan, South Korea, Germany, etc to recover.
And also helping Israel become a nation. Simply by printing the paper to underwrite the loans, and also in providing military help to help the governments rebuild their economies.
Of course it meant the US Govt was going massively into debt, from about $16 billion in 1930 to about $250 billion by 1950.
Mostly everyone else was happy to let them do it, though Mr Stalin in particular wasn’t too pleased at the edge it gave the US politically. And numerous Islamic countries got very cranky, as Israel, as a political entity, didn’t align with that worldview recorded in the Koran. Very emotionally upsetting for many of their leaders and preachers.
And a lot of US people weren’t too pleased either, at how their generosity was being repaid, both in the press, and in numerous new wars. So, of course, since 1971, when the US decided to stop allowing foreign governments to exchange US paper dollar reserves any further at that cheap price of $35 an ounce, a price that was by then far, far too low from the market’s point of view, yes, I think the rules have changed enormously.
So, to sum up, yes, gold reserves look good on paper, having a lot, back in 1971 when countries everywhere acknowledged that gold standard, (and were happy to make a profit at the US’s expense), but according to that article above, it would indicate that gold holdings now have historical significance only.
Interestingly, it’s been dropping heaps in price just recently, there’s a lot of worried people out there wanting to put their money somewhere else.
From: chris Turner
Sent: Monday, July 22, 2013 7:26 PM
For thought...The 2 major governmental assets are 1/tax's and 2/ crown land. I am not sure if the nations books include these amount.(I think not ).more food for thought
From: Stephen Williamson
Sent: Monday, July 22, 2013 9:19 PM
Subject: Re: Where's all the money :-) and future tax income and crown land
Yes you’re right, neither are included, I did think about it a fair bit, but of course it’s present day value could be argued about “ad infinitum” :-). And there’s also all that private physical land and buildings and non-monetary assets that are owned outright by people in each country. But of course that generally ends up costing money. Part of our responsibilities before the Lord, hey :-)
But coming back to your point about the government, with the US government printing bonds as freely as they are at present, I thought they were useful figures, currently they’ve printed $16 trillion in US bonds, and they’re currently printing $85 billion in extra money every month, calling it “quantitative easing”. So I guess that’s based on that potential future income.
Interestingly, there was an article in today’s Business page of the Australian showing China’s credit outstanding as having gone right up to 180% of their GDP of $9 trillion, i.e. it’s over $16 trillion, but then there’s mounting concern at its asset quality.
A substantial portion, it is thought, just keeps getting rolled over rather than repaid, so I suppose the value becomes gradually meaningless, i.e. it’s a book value only. And of course, that’s what you get in a “closed shop” economy.
Yes, the “liquid” currency, stocks and bonds in the “in the black” column, are objective figures. Before the Lord, they’re a different form of responsibility in some ways.
Addendum: In a report in March 2015, 20 months later, national corporate debt levels in China rose to more than 250 per cent of GDP at the end of June 2014. Twenty to twenty-five trillion dollars is now invested by state-owned banks in "underused roads, airports that are practically empty, newly built 'ghost cities' that are wholly abandoned, and enough empty units and townhouses to cater for the expected increase in urbanisation for the next 20 years at least."
In a June 2016 report, total debt in China was estimated as thirty-five trillion dollars, borrowed both within China and from overseas, with an excessive increase in the number of “zombie” companies in recent years.
From: chris Turner
Sent: Monday, July 22, 2013 9:31 PM
Enjoyed this report.I am a believer in diligently knowing the state of your flocks as proverbs declares.I am also learning to improve my skills in sustainably managing debt and income.
From: Stephen Williamson
Sent: Monday, July 22, 2013 10:09 PM
Subject: Thanks bro
Appreciate the encouragement ;-) Steve
Stephen Williamson Computing Services Pty Ltd
** End of article