I think crypto-currencies could be the new buffalo. Once, it was everything for our survival. We used it for food, for clothes, for everything. It was our economy. I think MazaCoin could serve the same purpose.
— 

Payu Harris, Head of the Lakota Nation, on MazaCoin, a new crypto-currency that has been adopted by a confederation of seven Native American tribes as their national currency.

In preparation, the nation has mined some 25 million MazaCoins to be utilized as a national reserve of sorts. A further 25 million are on standby for a Tribal Trust – a collective which will issue grants to tribe members or support local businesses. A handful have already agreed to start using the coin. 

The FBI has already allegedly contacted Harris to discuss the proposals to immerse themselves in the crypto-currency, apparently having reminded him that cryto-currencies are not considered legal tender in the US, currently. Harris has dismissed the warnings.

Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve’s inflationary policies. This represents a real, if hidden, tax imposed on the American people.

From the Great Depression, to the stagflation of the seventies, to the burst of the dotcom bubble last year, every economic downturn suffered by the country over the last 80 years can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial “boom” followed by a recession or depression when the Fed-created bubble bursts.

In conclusion, Mr. Speaker, I urge my colleagues to stand up for working Americans by putting an end to the manipulation of the money supply which erodes Americans’ standard of living, enlarges big government, and enriches well-connected elites, by cosponsoring my legislation to abolish the Federal Reserve.
—  Ron Paul, Sept 10, 2002

Bitcoin exchange shuts down after hack

Bitcoin bank Flexcoin is closing after it lost bitcoins worth about $600,000 to a hacker attack.

Flexcoin said in a message posted on its website Tuesday that all 896 bitcoins stored online were stolen on Sunday. The theft comes after a multi-million dollar hacking theft of the digital currency from Mt. Gox and increased scrutiny from federal regulators.

"As Flexcoin does not have the resources, assets, or otherwise to come back from this loss, we are closing our doors immediately," the company said in a statement.

Read more

(Photo: Jim Urquhart/Reuters)

It's all about US NFP today

A 150 pip move down for EURUSD took the pair below the narrow range from 1.43 t0 1.45 (give and take) we had had for the last 2 weeks. Technically it looks more like the move at the start of July than the one we had at the end of July.

The first one took us down from 1.46 all the way to 1.40 and while the pair then had a few hours drop all the way down to 1.3850, the sharp and speedy recovery up above 1.4030 again, almost made us conclude that 1.40 held at that time.

I see now reasons to change my 1.40 to 1.50 range which I have had as a medium term outlook for more than 5 months. Compared to early July there are two fundamental outlooks looking different now.

The first one is that the global economic slowdown is better documented today than two months ago and while that has increased risk aversion, it is in my view still the case that US is and will be worse hit by this slowdown than what is the case for Europe. I maintain that view despite worse than expected manufacturing indices in Europe and slightly better indices in the US as seen released  today. As such I see no reason for EURUSD to be hit by the global economic scenario.

The second one is that earlier this year the prospect for rate increases in Europe was significant and we also got short term rates set higher by the ECB. Now inflation seems to come down a bit in Europe and further rate increases are in my view out of the question for this year. Should inflation come further down, the prospect for rate cuts in Europe could definitively be on the agenda. Only when I see the clear prospect of lower short term rates in Europe, I will see this as an argument for lower EURUSD.

The fundamental changes over the last two months are not substantial enough to change my outlook that 1.40 will hold to the downside.

Technically – I see certain similarities to the move we had in the beginning of July and if repeated we could see a move further down from 1.4250 to 1.4000.

In the US all about jobs these days and today’s non-farm payroll figures are the major figure to follow every month. We get unemployment figures at the same time – but the interesting figure is how many new jobs were created last month.  The release is @ 12:30 GMT.

Estimates have been adjusted downwards lately and in a Bloomberg survey of yesterday, consensus for the NFP figure is now at 68 000. This is a bad figure – almost anyway you see it. The question  is – will it be worse or better than what is expected?

ADP figures released on Wednesday should give a clue to NFP – but traditionally it hasn’t. Divergence has been too big over too many months. I simply don’t look upon ADP as any indication for NFP anymore.

I pay more attention to the manufacturing indices from Richmond, Dallas and Philadelphia Fed which were bad earlier this month and while yesterday’s ISM gave grounds for certain optimism, I am worried that today’s NFP might be as low as 25-50 000.

Should NFP be far from consensus you always get substantial volatility for EURUSD. +/-100 pips might very well be the first reaction – and the reaction afterwards is depending on how far from consensus is the figure and which way.

I am tempted to make the following predictions for EURUSD – either way the figure comes out – and the argument goes along the following way:

  • Should the figure be better than consensus, US stock markets will react positively and EURUSD should react the same way. It doesn’t really make sense that USD should go weaker from better NFP – but as long as stocks reacts positively, then EURUSD tends to follow.
  • Should NFP  come out really bad and much worse than expectations, the likely first reaction is a dip for US stocks and a dip for EURUSD. On reflection – and I am here talking about a really bad figure – stock markets might turn around in the expectations that Bernanke and Fed will react quickly to the bad job situation and actually introduce a QE3. That would be bullish for US stocks and the same for EURUSD. So the worse the NFP will be, the more likely it is for QE3 to come and US stocks might pick up from that increased probability. That is after the first reaction, which likely is negative.
  • Should NFP come within a small range of consensus, I don’t know what the reactions in the stock market will be – nor do I see the direction for EURUSD from a “neutral” figure.

What else is on the agenda for today? Only European PPI @ 09:00 GMT, which is important enough but when falling on the same day as US NFP, the effect on any markets is likely going to be muted.

I intend to participate in the volatility play in connection with the release of NFP. Leading up to the figure I’m tempted by a small long EURUSD position.

Good Luck and be careful out there.

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Origins of different kinds of money

Dollar

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Used by: United States and territories, Canada, Australia, New Zealand, Namibia, Zimbabwe, Ecuador, Guyana, Suriname, Liberia, others

Origin: From daler (Low German) from German taler, a shortening of Joachimstaler, literally “coin from Joachimstal (Joachim’s Valley).”  Joachimstal is a valley in Bohemia where silver for coins was mined in the 16th century.  Now they mostly get uranium from there.

Euro

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Used by: Countries of the eurozone (17 of 28 European Union members)

Origin: Shortening of “Europe,” obviously.  This one won’t really have an interesting origin story unless the entire Earth adopts it and then becomes the dominant partner in some interplanetary alliance.

Pound

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Used by: United Kingdom and territories, Egypt, Lebanon, Sudan, South Sudan, Syria

Origin: From “pound of silver.”  Originally in Old English as the Saxon pound (pund) from Latin libra pondo.  The symbol £ is from a cursive form of lb (as in pounds of weight), which is from libra, since medieval accountants kept their records in Latin.  The Irish punt (before they switched to the euro) is also from “pound.”

Mark

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Used in: currently only in Bosnia and Herzegovina, but formerly in Germany, Estonia, Finland (as the markka), Poland (as the marka).  The picture is of an old German 5 mark note.

Origin: German Mark, cognate with Old English marc, a unit of weight equal to about eight ounces, probably from Old Norse mörk.  Related to the other sense of mark, as in an official mark placed on a weight of gold or silver, and later the coin valued at the same amount.

Krona (and variants)

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Used in: Sweden, Denmark (krone), Norway (krone), Iceland (króna), Faeroe Islands (króna), Czech Republic (koruna)

Origin: The Swedish word for “crown,” derived from the Latin corona, probably applied to money when the official mark placed on coins was that of a crown.

Rupee (and variants)

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Used in: India, Pakistan, Sri Lanka, Nepal, Mauritius, Seychelles, Maldives (rufiyaa), Indonesia (rupiah)

Origin: From Hindustani rūpiya (रूपिय), from Sanskrit rūpya (रूप्य), meaning “wrought silver,” originally “silver stamped with an image,” from rūpa (रूप), meaning “body” or “shape.”  Rūpa may have a Dravidian origin (cf. Tamil உருப்பு — uruppu, “body part”).  Weirdly, the Bengali/Assamese word for “rupee” is ṭākā/ṭôkā (also the name of the currency of Bangladesh), from the Sanskrit tanaka, which was a specific denomination of silver coins.

Dinar

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Used in: Algeria, Bahrain, Iraq, Jordan, Kuwait, Libya, Macedonia (denar), Serbia, Tunisia

Origin: From Arabic dīnār (دينار), a borrowing of Greek dēnárion (δηνάριον), itself from Latin dēnārius.  A dēnārius was a Roman coin worth ten asses (no, really), later revalued to four sestertii.

Real (and variants)

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Used in: Brazil, Qatar (riyal), Saudi Arabia (riyal), Iran (rial), Oman (rial), Yemen (rial), Cambodia (riel)

Origin: This got all over the place, from Latin America to the Middle East to Southeast Asia.  It comes from the Spanish real, meaning “royal” as in “royal coinage.”  It’s not used in any Spanish-speaking countries anymore.

Peso

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Used in: Mexico, Phillipines, Uruguay, Dominican Republic, Cuba, Colombia, Chile, Argentina

Origin: Spanish for “weight,” from Latin pensum (think “pendant”).

Yen/Yuan/Won

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Used in: China (yuan), Japan (yen), North and South Korea (won)

Origin: Literally means “round.”  China had traded silver in simple masses and weights before European traders arrived with round silver coins that they used the same way the Chinese used paper money.  All three words come from Chinese.

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