Last month in an article entitled What Is Fiat Currency? we told you that "Fiat currency is a term that is used to describe a currency which is created by “fiat” or “arbitrary order or decree” of the government." This month we would like to talk a little about the significance of Fiat currency. ~ Tim McMahon, editor. Fiat Currency Currency that is declared by a government to be a legal tender is referred to as a ‘Fiat Currency’. This type of currency owes its value strictly to the government’s acceptance of it for paying taxes and requiring its acceptance for "all debts public and private". It is not backed by reserves or any physical commodity and is defined as nonconvertible paper money … [Read more...]
The Effects of Quantitative Easing
Quantitative Easing Effects- You have probably heard that the massive inflation of the money supply through Quantitative Easing is going to result in hyperinflation or at least massive inflation. But so far that hasn't happened. As a matter of fact since the end of QE2 in June of 2011 inflation rates have fallen from 3.63% in July 2011 to 1.41% in July 2012. How is that possible? The first reason is that the FED is playing a game with the banks. The FED loans money to the Banks at nearly Zero percent interest the Banks turn around and loan the money to the Government at 3% interest to finance the deficit. This gives the banks plenty of profit to shore up their sagging balance sheets. But … [Read more...]
The Biggest Commodity: The College Degree and Academic Inflation
The College Degree When we hear the term "valuable commodity" we might think about oil or gold. Yes, these are undoubtedly commodities (though their value has fluctuated over time), but many other less concrete objects are also considered commodities in our society today. A commodity is defined as "A raw material or primary agricultural product that can be bought and sold, such as copper or coffee." But the second definition is "a useful or valuable thing, such as water or time". Based on the second definition, one of the most valued commodities available in modern society is a college degree. While it may sound odd to refer to a diploma as a commodity, there's no denying that a college … [Read more...]
Should I Invest in Inflation Indexed Bonds?
The question of "Should You Invest in Inflation Indexed Bonds?" depends on your personal situation and the current inflationary environment. If you want to have a low risk investment that will keep up with inflation you might consider investing in inflation indexed bonds. Inflation Indexed Bonds When Inflation Rates are High, you might be worried about what's going to happen to your savings. Inflation series bonds are one option to consider. These unique investments have the ability to fight inflation and protect your savings from total devastation. Types of Inflation Indexed Bonds There are two different types of inflation indexed bonds issued by the U.S. Treasury one is called the … [Read more...]
What are T-Bills?
T-Bills Definition: Treasury bills (aka. T-Bills) are short-term debt obligations that are backed by the US government and which have less than a year’s maturity. They are sold in $1000 denominations and purchases can go up to 5 million. Commonly, T-bills come with 4-week (1 month), 13-week (3 month) or 26-week (six month) maturities. The issuing of T-bills is done by a competitive bidding process where the bids are placed on “discounts from par” which means that unlike in the case of conventional bonds with fixed interest rates, here, it is the bond appreciation that gives the holder his returns. For example, if you buy a T-bill with a 13-week maturity at $9,950. What happens here … [Read more...]
What You Need to Know About the Federal Reserve System
The Federal Reserve System If you saw the HBO movie “Too Big to Fail,” you may have the notion that the Federal Reserve System, commonly known as The Fed, deals with high level banking issues that have worldwide implications. And you would be right. But The Fed also regulates banking functions that affect individual Americans, ranging from regulating debit card overdraft fees and limiting gift card fees to issuing U.S. Treasury savings bonds. History of the Federal Reserve The Founding Fathers were cautious about establishing a central bank, thinking that it would encourage irresponsible borrowing by the government. As a result, America functioned without a central bank throughout the … [Read more...]
Beginners Guide to Gold Investing
Gold Investing 101- Precious metals, particularly gold, are a very common investment opportunity in our modern world. Gold has become extremely popular both as a hedge against inflation and currency devaluation and as a primary investment with historically solid returns over time. Many small-time or new investors are eager to invest in gold; however, the high prices and multitude of investment options can be overwhelming. Buying gold physically in the form of bullion or coins, trading for gold in the foreign exchange markets, or trading a variety of gold related stocks or mutual funds are all viable methods to invest in gold. Some of these methods can seem downright frightening for the new … [Read more...]
30 Year Fixed Rate Mortgages, Nope Not at 3.25%!
Fixed Rate Mortgages So is it true 30 year fixed rate mortgages are at 3.25%? Well that depends on how you look at. The answer is yes if you willing to invest discount points to purchase your interest rate down, so long as your financial profile is completely flawless. Otherwise for the 99.9% us, 30 year mortgages are trailing between 3.5% to 4.25%. That's been the reality of the mortgage bond market over the last few weeks since the 30 year fixed rate mortgage hit an all-time record of 3.53% on July 19, 2012. 30 year mortgage rates you see on television and the internet are not the best barometer of where rates truly are... Here's why: the bond market is moving all day long in … [Read more...]
Aussie Costs of Spending, Living and Credit
Aussie Credit Card Reforms The recent credit card reforms, enforced starting July 1, have stirred up quite the debate on the matter, with analysts and experts rushing to argue whether or not the reforms are actually beneficial for the end-user. However, the habits, debts and expenditure afforded by that very end-user are causing an extended discussion of their own. Where does the truth lie? Is Australia really sinking under credit card debt? Are the new reforms going to spell a slow, yet certain and agonizing death for plastic? Or is the state of the nation’s money far more positive than we imagine—and simply suffering at the hands of global recession-induced cries of panic? … [Read more...]
Recruiters Cost Cutting Strategies
Australian Job Market According to a recent report published by News.com.au, the Australian job market, albeit relatively secure for the time being, does have its sore spots. There are numerous types of employment, which, due to the altering economic landscape and shifts caused by the global recession, globalization and the spread of outsourcing and offshoring, are simply not safe anymore. Read on to learn what those unsafe job sectors are, to figure out what recruiters are looking for, in these trying times and to find out about possible strategies employed by companies which are recruiting on a tight budget. Travel. Travel has come to be regarded as a luxury, during a time when the … [Read more...]
