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Jubilee – Cancel Debt!

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There has been a lot of good economic news lately, at least compared to the very bad news of a few years ago.  But that doesn’t mean that there aren’t bad things worth keeping a close eye on – especially those that predict future action by the Federal Reserve.

The velocity of the US Dollar – the number of times per year that money turns over through the economy – continues to drop without an end in sight.  This is a worrying sign because it suggests that most of the economic growth we are seeing comes from money that is being more or less printed by the Fed.  It also suggests that there will be another round of quantitative easing, or even more money printed.  There has to be a better way – and this wouldn’t be Barataria if we didn’t take a stab at how.

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Gets Warmer From Here

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The Superbowl is behind us, as are the depths of Winter.  In many ways the year really starts now that January is behind us and the plans for the year are set.  As we have come to expect since the real depth of the latest downturn, January 2010, there is good news always tempered with not so great news.

Jobs are growing, yes, but the shock was the downturn in GDP growth in 4Q12 – a 0.1% annualized loss.  Most analysts who didn’t see this coming (your humble writer included) expect this was due to uncertainty in Washington, a result that sounds like a cheap excuse.  But it’s all we have given that there really is no reason to expect that things are continuing to slowly, ever so slowly, improve.

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Money is a Tool

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What is money?  Your answer may depend a lot on how much of it you have.  Ultimately, the main purpose of money is convenience.  A system of barter works pretty well when two people have things each other need – someone with chickens meets up with someone else who recently slaughtered their pig and both have bacon and eggs.  But if you can also exchange those eggs for money you can save it up to buy something different or bigger.

As we’ve concluded before, Adam Smith was right – money is a matter of belief.  Whether it’s gold, Euros, or Canadian Tire Money it’s worth whatever you believe it is worth.  Our own US Dollar is backed by the “Full faith and credit of the US Government”, which is scary if you think about it.

But money is more than convenience and faith – it’s what it takes to make things happen.  And that’s worth thinking about some more.

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Growth? Hai Domo!

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Are you ready for the next Ronald Reagan?  Not here, in Japan.  The new Prime Minister, Shinzo Abe, has been in office for less than a month and is already making a lot of waves with a bold new vision – spending  whatever it takes and a strong dose of saber-rattling nationalism.  It’s the latest – or really the first – plan to get Japan out of the two decade long doldrums and back onto the world stage.  Will it work?

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Keep it Going!

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The parties are over, and we got through the New Year and the Inaugural.  Everyone in Washington is back at work and ready to make great things happen.

Not so fast.  A lot has happened since the start of 2009, a convenient time to look back over the economy for a lot of reasons.  It was the start of Obama’s presidency, but more importantly it was when the financial collapse triggered by the fall of Lehman Brothers really hit the economy in general.  It was the start of final phase of this Depression.  So how are we doing?

It’s worth looking back if for no other reason than to make a few predictions – or at least know what to look for in 2013.  Let’s break it down.

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