PMBug's Vault

Long form articles on various topics
Sounds crazy, right? Maybe it is. Maybe it isn't. I'll explain my thinking and you decide... Four Years of Structural Deficit Draining Vault Inventories Silver has been in a structural deficit for the last four years. Demand (mostly industrial, investment demand is fairly insignificant in comparison) has outpaced supply (mining and scrap recycling). This deficit has been running in the neighborhood of 180 to 200 million troy ounces per year. The structural deficit is draining the LBMA + COMEX of their vaulted stocks. The run rate for the remaining vaulted stock appears to be somewhere between 2-10 years depending upon what numbers you look at and what assumptions you make about mining production (fairly fixed - ramping up...
This article was written in response to @Casey Jones 's post in the crypto market discussion thread. I figured that my response might serve as a decent reference for folks and should not get buried in a many paged discussion. First, a couple of basic concepts:What is crypto? - When you buy crypto, you don't actually take possession of a physical (or digital/abstract for that matter) object. Crypto tokens are unique mathematical objects that exist on a blockchain. To own crypto is to own a wallet (address) that the blockchain has recorded as the owner of a collection of crypto tokens. You own the wallet (address). The wallet (address) owns the crypto. Securing the password to your wallet is how you safeguard your crypto.What is a...
Chatter about CBDCs has grown in the last few years. Central banks around the world are engaged in various projects to design, test and integrate CBDCs for future replacements of their national paper/coin currencies. In the absence of any compelling justifications, pundits proclaim CBDCs as a solution in search of a problem. However, CBDCs are being developed for important reasons. Central banks just can't openly tell the public about it. If the public really understood the issue, they would rebel. And they should rebel. Central banks are looking to CBDCs to effect a new world order with a medium that is a bastardization of money. The USA shot their wad with the weaponization of the SWIFT system in effecting economic sanctions...
The crypto industry recently held a Consensus 2023 industry event in Austin, Texas. It was a 3 day event featuring numerous panels/sessions with speakers/representatives from both crypto and non-crypto companies/industries as well as representatives from various government regulators. The event covered many topics including: efforts by large, mainstream companies like PepsiCo that are looking for opportunities in the crypto space a merger of traditional finance with blockchain governance plans by large banks to innovate in tokenizing traditional-financial assets Crypto isn't just the wild west purview of money launderers and dark web ne'er do wells. There is serious financial/corporate activity happening in the crypto world now...
In Crypto 101, I talked about the basic information you need to get started with buying some crypto and the type of wallet you want to keep it in. Hopefully, you have already taken the first step of opening an account with an exchange and/or acquiring a wallet. You have mastered the *how*. Now you might be pondering the *what*. What should I buy? There is an overwhelming choice in crypto tokens out there. What makes one better than another? I'll share how I see it. As always, your mileage may vary (YMMV). There are a few key characteristics and features that differentiate different decentralized crypto platforms. Understanding these differences helps you understand their unique selling point (USP) [if they have one!{*}]...
The Six Characteristics of Money We are roughly a century into the grand experiment with a central bank fiat monetary world order (half a century on a pure fiat system). For many people, pure fiat money is all that they have ever known. The lessons of history with respect to money have been ignored, but not forgotten. Over thousands of years of civilization, people have used many different mediums for money. The accumulated wisdom of those years are often distilled into these simple truths: https://www.dallasfed.org/~/media/documents/educate/everyday/money.pdf These functions and characteristics of money used to be well understood, but do not seem to be taught in schools any more. Fiat money has failed to fulfill it's...
Since the inception of the Federal Reserve System, our fractional reserve banking system has steadily degraded reserve ratio requirements until they finally just did away with them altogether and ushered in our brave new era of zero reserve banking. Banks are not tasked with maintaining any specific thresholds of reserves and now manage liquidity by buying and selling debt instruments as necessary. It works great - until it doesn't. As the Federal Reserve embarked on QE and lowered interest rates towards zero several years ago, banks loaded up their balance sheets with low interest bearing debt. When the Fed reversed course with QT and raising rates to combat inflation, many banks were caught with balance sheets full of upside down...
Gold As Unpegged Legal Tender We need to level the currency playing field to enforce a practical, market based boundary on irresponsible monetary and fiscal policy. Poor System Design Our Founding Fathers understood the problems with fiat money and monetary debasement. They attempted to prescribe guardrails in the Constitution to prevent these issues from plaguing the United States of America. Sound money lasted for a hundred years or so. But maintaining strict fiscal discipline is difficult. Eventually, our government removed it's sound money shackles and adopted a pure fiat currency to allow great flexibility with fiscal policy. The prudence with which that has been effected has deteriorated over the years to the point where...
I am a gold bug, a silver bug, a precious metals bug. I am also interested in the development of cryptocurrencies. I have dabbled with them mostly as an exercise in curiosity. There is still a lot that I do not know about crypto. However, I have sufficient experience to share a bit of what I've learned over the years. Sidelines of Regret Over a decade ago, @DoChenRollingBearing took an interest in learning about Bitcoin when it still very new. So new that figuring out how to acquire some was not straightforward. Bitcoin had a lot of vocal detractors back then - especially from locales inhabited by goldbugs. But DCRB was persistent and he got me to download and install a windows program that created and managed Bitcoin Wallets...
I have posited for years that our modern day monetary system is insane. Aside from the obvious problems with moral hazards, the inflation tax and oh so many bubbles, lately events have conspired to illuminate a glaring example of the immorality of the system. First, let's consider the devastating effects of inflation on the less than top 25% (percentile of wealth). Following the fiscal and monetary policy responses to the Covid 19 pandemic, we are currently experiencing a period of high global inflation. Central banks around the world have been reversing course from expanding balance sheets (QE) and Zero Interest Rate Policies (ZIRP) and are now contracting balance sheets (QT) and raising interest rates in efforts to fight inflation...
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