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Inflation is vicious to fiat money users.

by tonytran2015 (Melbourne, Australia)

#inflation, #fiat money, #taxation by stealth, #indexation, #cost of living

Inflation is vicious to the citizens who have to accept fiat currency from their ruling government. It is half terrible as having to use money with some useby dates. Only governments like inflation.



1. Inflation.

Figure 1: Fiat money are paid to government employees. All citizens have to pay their taxes with that fiat money.

It is convenient to begin the discussion with my previous posting entittled Your Fiat Money, part 2 (reference [1]). It is easily seen that the government can choose to pay its employees X units of its fiat currency C1 and require the whole population to pay it all taxes amounting to X units of that currency. The fiat money C1 will find its own value in the population depending on how goverment employees interact with the whole population of the country. 


Alternatively, the government can choose to pay its employees Y units of another fiat currency C2 and require the whole population to pay it all taxes amounting to Y units of currency C2. Again the fiat money will find its own value in the population.


As other things are equal, we must have

X*C1 = Y*C2

and the value of a fiat currency is inversely proportional to the amount issued by the government to its employees.


Consequently, if all other things are unchanged but the government increases both the payment to its employees and the tax to be collected by 3% every year then its currency is worth only 100/(100+3) its former value one year ago. This is called an inflation at a rate of 3% per year.


2. Inflation is a rent on fiat money.

After selling his stock, a trader has cash (which is fiat money), he will have to use his cash to buy new stock. If he holds on with the cash for one year, he can buy only (100-3)% of what he could have bought immediately. This works as if he is renting the cash from the government at a cost of 3% a year.


The long standing wisdom is not renting anything you don’t really need and people should not keep cash longer than it is absolute necessery.

Any government will love inflation. It is its best next thing to issueing money with expiry dates and un-redeemable government bonds, vouchers (Old scams but still can be practiced against illiterate populations) 


3. High inflation may feed on itself.

When high inflation occurs people may try to increases prices in anticipation, causing even more severe inflation. 

People may then even try to avoid using any fiat money at all and they may choose their own alternative bartering medium such as food (rice grains or flour) or commodities (gold or silver) instead of the readily available but steadily depreciatng fiat money.(see [4,5,6,7] for bartering techniques).

When inflation is too high, the ruling government may lose its grips on the economy and chaos may follow (as in Germany prior to 1933).


4. Inflation reduces actual interests on government debentures/treasury bonds.

Inflation is to be substracted from the interest rate given by any government debenture/treasury bond.

The inflation rate is hard to obtain but it must be taken into account when buying government debentures.

Unless the after tax return from a government debenture/treasury bond is higher than inflation, the bond holders may actually LOSE money on their bonds.

The interest rate given on Government Debenture/Treasury Bond is determined at the time of sale while actual inflation is made after that time. A government can easily wipe out its debts to bond holders by producing very high inflation.



5. Inflation rips off members of pension plans.

The loss caused by inflation on cash based holdings (rents on cash) also applies to long term storage of values such as saving for retirements.

Unless inflation has been taken into account, most perceived benefits of pension plans can be only just mirages given to uninformed plan members. To have any real benefit after tax and INFLATION, plan members usually need cash contributions/injections by the government and if they don’t obtain them there will arise the problem of unfunded liabilities. 

In most cases, the contributed funds of any pension plan cannot earn any net income AFTER tax and INFLATION. If there is no cash contribution/injection by government, plan members would be MUCH better off using their contributions to buy gold and save the gold for their own retirements.

The imminent run (insolvency) of pension plans are only the tip of the iceberg.(see reference [8]).


6. Inflation produces a stealthy wealth tax.

Inflation actually produces stealthy, disguised taxes on your properties.


When you change your house, as you have to move to a new location for new jobs, the value of that succession of similar houses keep on increasing due to inflation. Governments can classify the increases as “incomes” and impose taxes on them. Some governments have already done that. This type of FALSE incomes may also be extended to include your other possessions such as cars, jewelleries, housegold goods and gold holding. 

These taxes on FALSE incomes are actually taxes on your possessions such as your houses and the tax rate depends on inflation. Your legislative representatives will not bother to make yearly oversight of it and the governments easily get away with it.


The federal authority may have encroached on the rights of member states if it makes property taxes! So the federal authority has to do it under the guise of income tax on false incomes produced by inflation.


7. Inflation causes un-synchronized price increases.

Inflation causes uneven, unsynchronized price increases due to different flow on times for different types of goods. This allows the government to put weighting factors on individual types of consumer goods. The weighting factors let the government artificially select them to manipulate the yearly statistics on the Cost of living to lessen its obligation to pay pensioners their entitled upkeeps.


8. Inflation forces people to borrow


Inflation forces people to borrow with any purchase plan stretching over many years.  A buyer would lose to inflation on his cash accumulation/saving if he wants to remain debt free and save up the whole amount for the purchase. House purchases are typical examples where buyers are forced to borrow.


9. Inflation gives government unfair advantages in charging taxes on citizens.

When you made a huge loss and claimed a carried forward loss to offset against possible future gain in calculating income tax, the loss is NOT indexed by inflation! So a loss of $1000 by a future trader in 2010 can only offset against a gain of $1000 in 2017! (Although $1000 in 2017 is worth much less than in 2010)



10. All governments love inflation 

A government loves inflation for the following reasons:

1. Inflation is a rent on its fiat money.

2. It can define False incomes and tax its citizens on the false incomes.

3. It can muddle statistics on Cost of living and the government can fool the world with its manipulated figures on the growths in GDP, GNI.

4. It allows government to gain unfair advantages over its tax payers when calculating their taxable incomes.


So the claims that Inflation is prefered to deflation by governments should be read with care. Unfortunately, the statement has been told often enough and for long enough so that a number of tax payers have started to believe in it without questioning. (A lie told once remains a lie but a lie told a thousand times becomes the truth, by J. Goebbels [9].)


References:

[1]. Your fiat money (Part 2), posted January 12, 2017.

[2]. Your fiat money, posted January 9, 2017.

[3]. Why does the Federal Reserve aim for 2 percent inflation over time?, Board of Governors of the Federal Reserve System,https://www.federalreserve.gov/faqs/economy_14400.htm, updated January 26, 2015, accessed 03 Mar 2017.

 [4]. Neha Sharma and Shalu Yadav, The Indian village that has returned to bartering, BBC News Services,http://www.bbc.com/news/world-asia-india-38180075, 5 December 2016.

 

[5]. Patrick Bodenham, Will Spain’s coal belt survive through online barter?, BBC News Services,http://www.bbc.com/news/world-europe-38731808, 2 February 2017.

 

[6]. James Melik, Haggling and bartering gain appeal, BBC News Services,http://news.bbc.co.uk/2/hi/business/7883050.stm, 12 February 2009.

 

[7]. Mark Lowen, Greece bartering system popular in Volos, BBC News Services,http://www.bbc.com/news/world-europe-17680904, 12 April 2012.

[8]. Dallas police fire pension board ends run, bank stops 154m withdrawals.

http://www.dallasnews.com/news/dallas-city-hall/2016/12/08/dallas-police-fire-pension-board-ends-run-bank-stops-154m-withdrawals

[9]. Joseph Goebbels quotes, azquotes.com, http://www.azquotes.com/author/5626-Joseph_Goebbels.

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Air-grown mung bean sprouts for food.

by tonytran2015 (Melbourne, Australia).

#mung bean #sprout #food #no cooking #growing #in air #air grown #no substrate #nuclear shelter #nuclear disaster #stored food

The benefit of growing sprouts in ONLY AIR is that there is no substrate to be contaminated after all sprouts have been collected and there is no substrate waste with horrible rotting smell. It also allows the consumption of mung beans as food without cooking. It requires only drinkable water but uses no fuel.

Growing sprouts in ONLY AIR is also suitable for preparing bean sprouts when sheltering in bunkers after nuclear disaster (to avoid consuming hot released, fast decaying radioactive alkaline Cesium and alkaline earth Strontium nuclei).

1. Growing beans into sprouts.

When beans grow into sprouts, they convert the highly compact stored energy and materials into small plants to continue the propagation of their genes.

The beans need a triggering signal before it enter into this process. In nature, a wrong starting time may mean extinction for the beans. The triggering happens in nature with beans falling into flood water or very wet soggy ground at the end of a rainy the season. After that the sprouts need drier soil to breath and grow. The sprouts will try to grab a substrate with their hairy roots and will grow vertically.

It is easier for human to consume sprouts than to consume the highly compact mung beans. This is the reason for growing sprouts from beans for consumption.

An additional benefit of eating sprouts from stored beans is the sprouts have plenty of Calcium and Potassium, which can supply the requirements of our bodies if we have to wait in nuclear shelters for the short term radioactive Cesium and Strontium nuclei to decay in the outside environment after a nuclear disaster. Mung beans are thus useful grains for short term food after nuclear disasters.

(According to Wikipedia, 100g of beans contain

Calcium 132 mg

Iron 6.74 mg

Magnesium 189 mg

Manganese 1.035 mg

Phosphorus 367 mg

Potassium 1246 mg

Zinc 2.68 mg).

2. Materials.

1a. Mung beans (uncooked and in good condition).

 

 


mung_beans.jpg

Figure: Good mung beans for making sprouts.

Remember that mung beans will increase in volume and in weight when they become sprouts and only a very small initial volume of beans will grow into a cupful of sprouts.

1b. Two identical clear plastic drink cups with their corresponding hemispherical dome lids.

Figure: A clear plastic cup with hemispherical dome lid for growing sprouts.

3. Making the container for growing mung beans.

Make about 10 perforation holes on the bottom of one cup, enlarge them so that a fully filled cup of water can drip out of these holes in less than 10 seconds.

The second cup is to be fitted onto the outside of the first cup to control the flow of water through the perforations. To stop water from leaving the inner cup the second cup is slipped tightly on its outside. To drain water from the inside cup, the outside cup gradually loosened to let water drip into it from the inner cup, the outside cup is then emptied.

4. Soaking mung beans.

To make sprouts from mung beans, the beans must be first soaked in water until germination. The steps are in the following:

Place 3 layers of beans on the bottom of the inner cup.

Fill water until water surface is 1cm higher than the top layer of beans.

Fit the hemispherical lid on the cup (optional, to prevent spilling if the cup is knocked from its position).

The cup is left standing like that for about 12 hours to soak the beans until they germinate with a 2mm sprout on most of the beans.

Timing is NOW STARTED.

5. Growing sprouts from germinating beans.

Fill the inner cup with water to full capacity. The beans and sprout should be able to move freely in this water.

Loosen the outer cup to gradually and completely drain water from the inner cup.

Empty the outside cup and slip it back onto the inner cup.

Tumble (and also roll) the covered double layered cup to spread germinating beans on the side of the cup,

Lay the cup on a horizontal surface, with the rim resting about 10mm higher than the bottom.

Let the cup rest like that for 12 hour then repeat all the above steps of this section.

Sprouts can be seen growing bigger in each 12 hour period.

6. Results

Figure: A horizontal cup is almost full of sprouts after 30 hours (Top view of horizontal cup.). The cup is double layered, it is made up from a perforated one and another non-perforated one fitting tightly outside it.


Figure: Air-grown bean sprouts are ready for consumption after 30 hours. The double layered cup is standing upright without its lid.


After 30 hours, the horizontal cup is about 3/4-full with sprouts. It should be hold upright and filled with water for well grown sprouts to float to the top for the first harvesting. (Grown sprouts have lower specific gravity than beans and newly grown sprouts).

The cup containing unharvested beans and sprouts is then put through all steps of section 5 twice for another 24 hours. After that the horizontal cup is about 3/4-full with sprouts. It should be hold upright and filled with water for well grown sprouts to float to the top for the second harvesting.

The cup containing unharvested beans and sprouts is then put through all steps of section 5 twice for another 24 hours. After that the horizontal cup is about 3/4-full with sprouts. It should be hold upright and filled with water for well grown sprouts to float to the top for the third and also final harvesting.

All beans will grow into sprouts if the container have been effectively drained and tumbled (not rolled). Without tumbling, some beans may stick to the side of the cup and may remain under water for too long and may rot, creating horrible smell. Rolling is not effective in preventing rot of beans.

References:

[1]. tonytran2015,  Mung Beans as grains for self-reliance, survivaltricks, https://survivaltricks.wordpress.com/2017/02/09/mung-beans-as-grains-for-self-reliance/, February 9, 2017.

[2]. Mung bean, wikipedia, https://en.wikipedia.org/wiki/Mung_bean, accessed Mar 06, 2017.

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Air-grown mung bean sprouts for food.

by tonytran2015 (Melbourne, Australia).

#mung bean #sprout #food #no cooking #growing #in air #air grown #no substrate #nuclear shelter #nuclear disaster #stored food

The benefit of this method of growing sprouts in ONLY AIR is that there is no substrate to be contaminated after all sprouts have been collected there is no substrate waste with horrible rotting smell. This method allows the consumption of mung beans as food without cooking. It requires only drinkable water but uses no fuel.

The method is also suitable for preparing bean sprouts in nuclear shelter bunkers (to avoid consuming hot released, fast decaying radioactive alkaline Cesium and alkaline earth Strontium nuclei) if there is plenty of clean water supply. It uses no fuel.

1. Growing beans into sprouts.

When beans grow into sprouts, they convert the highly compact stored energy and materials into small plants to continue the propagation of their genes.

The beans need a triggering signal before it enter into this process. In nature, a wrong starting time may mean extinction for the beans. The triggering happens in nature with beans falling into flood water or very wet soggy ground at the end of a rainy the season. After that the sprouts need drier soil to breath and grow. The sprouts will try to grab a substrate with their hairy roots and will grow vertically.

It is easier for human to consume sprouts than to consume the highly compact mung beans. This is the reason for growing sprouts from beans for consumption.

An additional benefit of eating sprouts from stored beans is the sprouts have plenty of Calcium and Potassium, which can supply the requirements of our bodies if we have to wait in nuclear shelters for the short term radioactive Cesium and Strontium nuclei to decay in the outside environment after a nuclear disaster. Mung beans are thus useful grains for short term food after nuclear disasters.

(According to Wikipedia, 100g of beans contain

Calcium 132 mg
Iron 6.74 mg
Magnesium 189 mg
Manganese 1.035 mg
Phosphorus 367 mg
Potassium 1246 mg
Zinc 2.68 mg).

2. Materials.

1a. Mung beans (uncooked and in good condition).


mung_beans.jpg

Figure: Good mung beans.

Remember that mung beans will increase in volume and in weight when they become sprouts and only a very small initial volume of beans will grow into a cupful of sprouts.

1b. Two identical clear plastic drink cups with their corresponding hemispherical dome lids.

Figure: A clear plastic cup with its fitting hemispherical dome lid for growing sprouts.

3. Making the container for growing mung beans.

Make about 10 perforation holes on the bottom of one cup, enlarge them so that a fully filled cup of water can drip out of these holes in less than 10 seconds.

The second cup is to be fitted onto the outside of the first cup to control the flow of water through the perforations. To stop water from leaving the inner cup the second cup is slipped tightly on its outside. To drain water from the inside cup, the outside cup gradually loosened to let water drip into it from the inner cup, the outside cup is then emptied.

4. Soaking mung beans.

To make sprouts from mung beans, the beans must be first soaked in water until germination. The steps are in the following:

Place 3 layers of beans on the bottom of the inner cup.

Fill water until water surface is 1cm higher than the top layer of beans.

Fit the hemispherical lid on the cup (optional, to prevent spilling if the cup is knocked from its position).

The cup is left standing like that for about 12 hours to soak the beans until they germinate with a 2mm sprout on most of the beans.

Timing is NOW STARTED.

5. Growing sprouts from germinating beans.

Fill the inner cup with water to full capacity. The beans and sprout should be able to move freely in this water.

Loosen the outer cup to gradually and completely drain water from the inner cup.

Empty the outside cup and slip it back onto the inner cup.

Tumble (and also roll) the covered double layered cup to spread germinating beans on the side of the cup,

Lay the cup on a horizontal surface, with the rim resting about 10mm higher than the bottom.

Let the cup rest like that for 12 hour then repeat all the above steps of this section.

Sprouts can be seen growing bigger in each 12 hour period.

6. Results

Figure: Bean sprouts have grown inside the horizontal cup and the cup is almost full of sprouts after 30 hours (Top view of horizontal cup.). The cup is double layered, it is made up from a perforated one and another non-perforated one fitting tightly outside it.

Figure: Air-grown bean sprouts are ready for consumption. The double layered cup is standing upright without its lid.

After 30 hours, the horizontal cup is about 3/4-full with sprouts. It should be hold upright and filled with water for well grown sprouts to float to the top for the first harvesting. (Grown sprouts have lower specific gravity than beans and newly grown sprouts).

The cup containing unharvested beans and sprouts is then put through all steps of section 5 twice for another 24 hours. After that the horizontal cup is about 3/4-full with sprouts. It should be hold upright and filled with water for well grown sprouts to float to the top for the second harvesting.

The cup containing unharvested beans and sprouts is then put through all steps of section 5 twice for another 24 hours. After that the horizontal cup is about 3/4-full with sprouts. It should be hold upright and filled with water for well grown sprouts to float to the top for the third and also final harvesting.

All beans will grow into sprouts if the container have been effectively drained and tumbled (not rolled). Without tumbling, some beans may stick to the side of the cup and may remain under water for too long and may rot, creating horrible smell. Rolling is not effective in preventing rot of beans.

References:

[1]. tonytran2015,  Mung Beans as grains for self-reliance, survivaltricks, https://survivaltricks.wordpress.com/2017/02/09/mung-beans-as-grains-for-self-reliance/, February 9, 2017.

[2]. Mung bean, wikipedia, https://en.wikipedia.org/wiki/Mung_bean, accessed Mar 06, 2017.

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QE may be just another scam to steal national wealth.

by tonytran2015 (Melbourne, Australia)

#treasury bonds #QE #quantitative #easing #scam #stealth

Figure: Fiat money relies on the payments to government employees with it and the power to collect it back as taxes on the population.
It has been a US policy of borrowing from bankers through Treasury bonds (the method is given in section 1). USA have thus been designed to be in a perpetual state of indebtedness to bond holder bankers. Quantitative Easing is an even more outrageous extension of that monopoly. This posting shows why.

1. Borrowing from the population.

(as previously posted in ref. [2], sect. 7)

We note that the US government regularly issues and has been using its own Fiat money. When the government wants to borrow X units of its fiat money from its citizens, it may have to conduct an “auction”.

It may offer to all of its people to give the government any each of their spare $90 now to receive $100 in 1 year time.

Too many of its citizens may accept the offer and the total amount of their money may far exceed the requirement of the government. If that is the case, it may next say No, not $90 anymore, but $91. The amount may goes up again until the acceptance has only about X units, the amount it requires.

Anti-corruption requires that the bidding process be public and transparent.

This is the idea of Treasury Bonds, or Government Debentures.

If the final auction price is $97 of current money for $100 of money in 1 year time then the Treasury Bond rate is (100-97)/97 or 3.1%.

It is a sad fact that currently Treasury bonds are only sold to a handful of bankers, the ordinary people have no access to the “auctions” of Treasury bonds. The treasury rate may thus be manipulated by some coalition of bankers to suit their agendas.

It has been US government practice to always keep the US in debt with Treasury bonds. It would be alright if the debts are to ordinary US citizen. However the debts are to only a handful of bankers. There has been no plan to ever free the US from debts to bankers.

2. US government could have and SHOULD borrow from ordinary citizen.

The establishments always defend their actions by saying that the auctions of treasury bonds involve billions of dollars and the parcels (chunks) cannot be practically made small for ordinary citizens. The argument may be valid prior to WW2 but became invalid after that time.

With the development of techniques for share sales on the Share Markets, the selling of IPO’s (Initial Public Offerings) worth of billions of dollars are common: People can buy shares in initial float of new companies worth of billions of dollars. Why cannot the Treasury organize IPO’s of Treasury Bonds ? The operating mechanism can be made exactly the same as for IPO’s of new companies. The share markets can easily handle Treasury Bond IPO’s.

Ordinary Americans should stand up and demand IPO’s for Treasury bonds, to take away the monopoly by bankers on Treasury bonds.

It has been US government practice to always keep the US in debt with Treasury bonds. It would be alright if the debts are to ordinary US citizen. However the debts are to only a handful of bankers. The indebtedness to a handful of bankers may threaten the democracy of the US and the bankers now has extended that monopoly into another scheme for skimming national wealth called Quantitative Easing.

3. Quantitative Easing.

Quantitative easing is an even more outrageous extension of the monopoly of bankers on Treasury bonds.

When the government wants to have more money circulated in the economy of the population, it can buy gold from the population so that the population keeps the money and the government keeps the gold for future resale. Beside gold the government can also buy infrastructures or services from the population.

But instead of doing that the US government carried out QE (Quantitative Easing) (see reference [7], [8]). This is what the government does in a QE (continuing with the example at the end of section 1):

The government now buy back the Treasury Bond at a price of nearly $100 from bankers a bond it has previously sold for $97.

So the government has sold to the bankers some treasury bond for $97 and bought back at nearly $100. The government lost money for nothing. That why US debt has ballooned up after Quantitative Easing. See reference [6] for the new level of debt.

The injection of money should have been done by government buying gold, infrastructures (including hiring people to build or maintain infrastructures) or services from the population.

 

Notes:

1. Reference [4] stated that “A central bank enacts quantitative easing by purchasing—without reference to the interest rate—a set quantity of bonds or other financial assets on financial markets from private financial institutions. .. QE does directly increase the broad money supply even without further bank lending.”

2. Since inflation has been targeted by the government to be 2% (see reference [5]), buying a 1 year bond at $100 is just buying $98 worth of good to be delivered after 1 year time. So paying $100 to buy back a 1 year bond of $100 is just giving away $2, and bankers will be happy to take that $2.

4. Conclusions.

Having PRIVATE Federal Reserve Banks, limiting sales of Treasury bonds to ONLY bankers, practicing obfuscated Quantitative Easing all look like plans to defraud Americans of their wealth and permanently enslave them with ever increasing debts to bankers.

 

References:

[1]. Your fiat money (Part 2), posted January 12, 2017.

[2]. Your fiat money, posted January 9, 2017.

[3]. Quantitative Easing, Investopedia, http://www.investopedia.com/terms/q/quantitative-easing.asp, accessed 1st Mar 2017.

[4]. Quantitative easing, Wikipedia, https://en.wikipedia.org/wiki/Quantitative_easing, updated on 02 March 2017, accessed 03 Mar 2017.

[5]. Why does the Federal Reserve aim for 2 percent inflation over time?, Board of Governors of the Federal Reserve System, https://www.federalreserve.gov/faqs/economy_14400.htm, updated January 26, 2015, accessed 03 Mar 2017.

[6]. kchild2013, US national debt soars by $100 billion. . . in just 8 hours, sentinelblog, https://sentinelblog.com/2017/01/05/us-national-debt-soars-by-100-billion-in-just-8-hours/, January 5, 2017

[7]. sdbast, Ripped-off Britons: Osborne finally admits BofE’s QE payouts gifted min £600bn to the wealthy, worth half the national debt: https://t.co/WNp9Kw7XVb, sdbast.wordpress.com, https://sdbast.wordpress.com/2016/12/18/ripped-off-britons-osborne-finally-admits-bofes-qe-payouts-gifted-min-600bn-to-the-wealthy-worth-half-the-national-debt-httpst-cownp9kw7xvb/, Dec 18, 2016.

[8]. peoples trust toronto, Bank Of Japan Said To Start Preparing For Losses On Its “Huge” Debt Holdings Once QE Ends, https://peoplestrusttoronto.wordpress.com/2016/05/20/bank-of-japan-said-to-start-preparing-for-losses-on-its-huge-debt-holdings-once-qe-ends/, 2016 May 20.

 

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Cashless bartering for survival

by tonytran2015 (Melbourne, Australia).

#cashless, #bartering, #survival

After the collapse of an issuing government of some fiat money, or even after a government’s sudden demonetization or confiscation of its own fiat money the population is left with only bartering for their own survival.

1. Choice of universal exchange medium

As the existing fiat cash has no authority to accept it as a tax payment (such as right after that government is toppled by an occupation force or by a revolution), it may become just a worthless piece of money (see references [2],[3],[4],[5]).

People can do direct bartering of their locally produced goods and needed items or they can do better with indirect (double) bartering using an intermediary bartering medium. For examples on bartering medium, they can use five lemons or five oranges or two chicken eggs rather than one dollar, a spark plug to rather than 2 dollars etc…Bartering items are to be valued close to their former cash prices. For the long run, people have to adopt some “universal” trading medium (to replace the former currency) for their daily or weekly exchange (trading).

People should choose some medium with intrinsic values and with the following characteristics for their bartering:

1a. Usefulness to everyone,

1b. Being durable, not perishable, easy to maintain,

1c. Being neither dangerous nor illegal,

1d. Can be naturally consumed by the owner over time if trading is slow,

1e. Sub-divisibility into any suitable amount is an additional optional advantage.

 

Examples:

a. Rice (food grains that can be kept for up to 10 years) had been used as an exchange medium in Vietnam during World War 2, as French issued, Japanese issued or Vietnamese issued currencies all have uncertain backing by their respective, competing issuing authorities. Various grains and flours are used in their respective regions.

b. Salt (only in ancient time), peppers, fuel, bicycle spare parts, clothing fabrics had been used in some countries in time of embargo, time of uncertainty and in ancient time. These goods (except bicycle parts) have also been the trading goods on the trans-national Silk road.

c. Clothing fabric, silver and gold had been used in some countries in ancient time.

d1. Lighters, matches, cooking items, hygiene items, essential workshop tools (hammers, nails, piers), books and pencils had become desirable bartering goods in poor countries during WW2.

d2. Solar cells, of solar rechargeable batteries, radios, walkie talkies and phones may be desirable in modern time.

e. Decorated painted vases, live stocks (chicken, rabbits, boars, sheep, buffalo) have also been used as short distance trading stocks. (You need to check local laws regarding transportation and owning of live stock or wild life stock.).

f. Liquid fuels are valuable but they are highly flammable and are not suitable for bartering over long distances. Fire wood and coal may be kept in your house as handy bartering stocks.

 

2. Traders to keep no money!

Trading stocks of traders are to be bartered or sold and immediately changed into new type of stocks. The longer a trader hangs on with some uncertain money the more he may lose through sudden demonetization or inflation.

Remember that money owners (or rather renters?) always pay a RENT ON the MONEY in their custody, the rent is at least equal to the inflation/depreciation of that money. Why should someone rent something he doesn’t need?

3. Trading by bank transfers will carry prohibitive costs!

The move to outlaw cash is actually a herding of people into the control of the banks. The (crooked ?) banks will charge people for:

3a. Annual fees for having an account with them (about $20AUD unless …!)

3b. Inquiries on their current balances ($0.60AUD for each printed stub).

3c. Unknowing withdrawal of more than available from the balance (penalty of about $10 for going into “overdraft”).

3d. For accepting bounced checks ISSUED BY THOSE SAME CROOKED BANKS through their untrustworthy check writers (or are they the actors of the banks?). Banks charge about $30AUD to $60AUD for each bounced (baiting?) check issued by their own actors!

3e. A bank check (with no chance of being bounced) issued by a bank will cost a fee of $7AUD each.

3f. Bank transfer fees of about $2AUD for each completed smooth transaction.

3g. Fees for damage to your cards caused by their faulty machines.

3h. Fees for objections to phantom fees and balance loss through scams.

3i. Threat of account closure through none of your faults.

By now, we all should be aware of the creeping demands by bankers!

4. Conclusion:

Think ahead and be prepared !

References:

[1]. Preparing for cashless trading.

[2]. , posted on December 1, 2016

[3]. India’s cash crisis explained, BBC, http://www.bbc.com/news/world-asia-india-37983834

[4]. Venezuela follows Indias footsteps in demonetization scheme, econotimes.com, http://www.econotimes.com/Venezuela-follows-Indias-footsteps-in-demonetization-scheme-445257

[5]. India rupee ban: Ex-PM Manmohan Singh rubbishes Modi crackdown, BBC News Services, http://www.bbc.com/news/world-asia-india-38088177, 24 November 2016.

[6]. Neha Sharma and Shalu Yadav, The Indian village that has returned to bartering, BBC News Services, http://www.bbc.com/news/world-asia-india-38180075, 5 December 2016.

[7]. Patrick Bodenham, Will Spain’s coal belt survive through online barter?, BBC News Services, http://www.bbc.com/news/world-europe-38731808, 2 February 2017.

[8]. James Melik, Haggling and bartering gain appeal, BBC News Services, http://news.bbc.co.uk/2/hi/business/7883050.stm, 12 February 2009.

[9]. Mark Lowen, Greece bartering system popular in Volos, BBC News Services, http://www.bbc.com/news/world-europe-17680904, 12 April 2012.

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Good approximation to solar declination by a watch face

by tonytran2015 (Melbourne, Australia).

#solar declination, #watch face, #multi-dial watch face, #Solar navigation, #find North, #time, #survival.

The value of solar declination is needed for accurate determination of North direction and time using a divider or a watch (references [1], [2]). Good approximation to solar declination is required by the methods to produce accurate results in cold temperate zone and arctic zone. The required value of solar declination can be simply obtained using only a watch face or even the drawing of a watch face on the ground.

1. Method

solar-declination-by-a-watch-face

Figure: Determining solar declination using a watch face. (The lines SOLAR DECLINATION Its rough estimate is required for Fine Alignment of the watch are to be ignored.)

Draw the dial of an upside-down watch face as a small sub-dial of a watch face (on its 3 o’clock side) as in the figure. The radius of the sub-dial should be close to the length of 4 minutes markings on the rim of the main dial.

The four numbers 6, 9, 12, 3 on the rim of the upside-down sub-dial correspond to 21/6, 23/9, 21/12, 21/3 respectively. They are the dates on the calendar. Your current date gives a point on the rim of this sub-dial.

Project the point of your current date horizontally onto the rim of the main dial. The angle from the direction of 3 o’clock to that of a main long hand pointing to the projected point is equal to the angle of solar declination.

The angles from the Northern and Southern Celestial poles to the Sun are just the angles from the 12 o’clock and 6 o’clock directions respectively to that of the above main long hand.

2. Applications to survival situations

Most multi-dial watches and chronograph watches already have sub-dials made with the sub-dial radius being close to 4 minute length on the rim of the main dial. This method can be conveniently applied to any such watches having their sub-dials on either the 3 o’clock or 9 o’clock side.

When having no actual watch face, you can draw a watch dial and a sub-dial on the ground to determine solar declination.

Accurate value of solar declination improves the accuracy of the determination of North direction using a divider or a watch (references [1], [2]) when the Sun has low altitude in the cold temperate and arctic zones.

References:

[1]. tonytran2015, Finding directions and time using the Sun and a divider., Additional survival tricks, survivaltricks.wordpress.com, https://survivaltricks.wordpress.com/2015/05/06/finding-directions-and-time-using-the-sun-and-a-dividing-compass/, posted on May 6, 2015.

[2]. tonytran2015,  Finding accurate directions using a watch,  Additional survival tricks, survivaltricks.wordpress.com, https://survivaltricks.wordpress.com/2015/05/19/finding-accurate-directions-using-a-watch/, posted on May 19, 2015.

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Mung Beans as grains for self-reliance.

by tonytran2015 (Melbourne Australia).

#Mung bean, #sprout, #dietary fiber, #nutrition, #sweet dish, #constipation, #self-reliance #crop #rotation.

Nutrition requires a variety of food. For emergency you can eat rice to supply your body with carbohydrate for energy but you also need other food to satisfy the complex nutrition requirements of your body. After rice, mung beans are a versatile type of grains to be kept for prolonged emergency and self-reliance.

1. Advantage of mung beans.

Mung beans are the seeds of the plant species (Vigna radiata) of the family legume of plants. The mung bean plants originated from Thailand more than 2000 years ago (reference [1]). As a legume, each mung bean plant has nodules in its roots containing the symbiotic bacteria rhizobia which fix nitrogen from the atmosphere to enrich, fertilize the soil with natural nitrates. The mung bean plants are therefore a essential crop in crop rotation for growing and restoring self-reliant, self-sustaining gardens (using no chemical fertilizers) after disasters.

The beans are of 5mm size and each bean weighs about 0.070g. They can be used as food in many different ways: They can be boiled to make watery sweet dessert or pasty dessert. They can also be made to germinate to produce new plants to restore the garden or to produce sprouts (before they become small plants) to be eaten as food.

2. Selecting good mung beans.

Figure 1: Mung beans of 5mm size.

The beans are of 5mm size and each bean weighs about 0.070g. Select beans with rounded shape and no wrinkle, no mold, no discoloration on the skin, like in the picture.

3. Storage.

3a. Mung beans are dense and 5kg of mung beans can be stored in a small volume.

3b. Mung beans are easy to store. Storage temperature can be from very cold to up to 35 degree C.

They can be stored in jars placed dry ventilated places. As with any other foods, humidity should be avoided to prevent the growth of mold on them.

It is common for Asian families to keep about 2 kg of them in store for gradual normal consumption in food preparation.

3. Cooking beans for food.

Mung beans can be boiled to make a (watery to thick pasty) dessert food. However this requires long simmering and requires MORE FUEL than cooking rice.

Watery sweet:

The beans are first soaked in clean, warm water for about 6 hours for their green covers to loosen, peel off and be shed. Soaking is carried out in a flat, shallow ceramic or glass container with no more than 3 layers of beans on the bottom and no more than 12mm (half an inch) of water above the top layer of beans. Water should be refreshed every 6hr to remove all secretions from the beans which may inhibit the functioning of neighbour beans. Only a thin layer of water is permitted so that oxygen in the air can diffuse down to the beans to reactivate their inactive cells to make the beans germinate and transform the stored nutrients into a softer form. With this transformation, the beans are softer and it would take shorter time to boil them. Soaking should be discontinued when many beans have tiny (2mm) shoots growing out of them. Further soaking after this time would make the dish less tasty.

The beans are then boiled in much larger amount of simmering water (for about 10 minutes) until the green covering layer of each bean is shed and the two yellow halves inside are softened. Sweetener (cane sugar or palm sugar) is then added and mixture is thoroughly stirred for even mixing. The watery mixture is served and eaten as a sweet dessert drink in South Vietnam.

Thick pasty sweet:

Split mung beans are used in this dish. The split beans are first soaked in clean warm water for about 24 hours for their green covers to loosen, peel off and be shed. Soaking is carried out in a flat, shallow ceramic or glass container with no more than 3 layers of beans on the bottom and no more than 12mm (half an inch) of water above the top layer of beans. Water should be refreshed every 6hr to remove all secretions from the beans which may inhibit the functioning of neighbour beans. Only a thin layer of water is permitted so that oxygen in the air can diffuse down to the beans to reactivate their inactive cells to make the beans germinate and transform the stored nutrients into a softer form. With this transformation, the beans are softer and it would take shorter time to boil them.

The green covering layer is then complete removed and only the yellow half seeds are retained. The yellow halves are then boiled in a minimal amount of simmering water until they are softened. Sweetener (cane sugar or palm sugar) is then added and mixture is thoroughly stirred for even mixing. The thick yellow pasty mixture is served and eaten as a sweet dessert dish in South Vietnam. Boiled coconut milk  may also be added as a thin top layer of the mixture.

 

3. Making mung beans germinate naturally.

 

Figure 1: Germination of mung beans after 7 days 2 hours in my tiny green house.

My tiny green house:

I used two thickness of washed, clean disposable hand cloth stretched on the top of a disposable plastic drink cup to make a moist base sheet for the beans to germinate. The base sheet was given 5 tea spoons of water twice daily. Another identical cup with a small cut was placed upside down on top of this cup to control the atmosphere around the beans.

The germination into small plants:

Each bean is made up of two halves covered in a thin green skin. The two halves of each bean supply stored materials and energy for the growing of a sprout that will develop into a small mung bean seedling. The sprout grows in length to about 5mm and the two halves of the bean separate (4 days). The sprouts grow longer, until they are about 20mm, then they develop many tiny side roots and this make them look fuzzy. At that time there are two tiny leaves growing from between the two halves of the bean. After the leaves have grown to about double the size of the original bean, the green skin is shed to fall down to the ground (7 days). The two halves of the bean is gradually consumed for the growth of the seedling.

The sprouts are considered tasty when they are about to shed the green cover.

If making plants for the gardens, healthy seedlings should be selected and planted on the ground after they have green leaves and before the nutrient in their half seeds are exhausted.

An average seedling weighs 0.50g and an average bean weighs 0.070g. The mung bean sprouts are considered most tasty when they are 50mm long. In such condition each sprout weighs about 0.35g.

 

4. Using mung bean sprouts as food.

bean_sprouts_dishFigure 1: Mung Bean Sprouts served as a (crunchy) vegetable dish.

The advantage of using this food is that mung bean sprouts can be made from mung beans in any needed quantity in about 2 days (see below). Mung bean sprouts are crunchy, they have high fiber contents. This fiber content makes up the bulk for food under digestion and help prevent constipation caused by the compaction of undigested food residues. However DO NOT EAT sprouts which have become BLUE.

Mung bean sprouts also have good nutritional value. The total weight of sprouts has

16% of it in dietary fiber ,

23% in protein ,

and the rest in carbohydrate. Sprouts also have magnesium, iron, calcium (reference [1]).

Eating sprouts provide the body with easily digested fibrous food with much nutrition and enzymes. The food also prevents constipation . Eating sprouts also SAVE a lot of cooking FUEL compared to eating boiled mung beans.

With the recurring shortage of vegetable in EU (reference [4]), bean sprouts may gradually gain popularity as as a source of dietary fiber to supplement lettuce.

5. Accelerated growing of sprouts without chemicals.

Mung bean sprouts can be grown for food within 2 days, rather than 7 days, following the method of acceleration given in reference [3]:

5a. The beans are soaked in water for about 8hr or more until small white sprouts can be seen growing out from the green beans.

5b. The germinating beans are then wrapped in a thick wet cloth for another period of 24 hours, they then becomes bean sprouts which are ready for use in food.

References:

[1]. https://en.wikipedia.org/wiki/Mung_bean

[2]. Dr. Josh Axe, Mung Beans Nutrition & Its Big Benefits!, draxe.com, https://draxe.com/mung-beans-nutrition/, accessed 03 Feb 2017.

[3]. Swasthi, How to make sprouts at home, Swasthi’s recipes, http://indianhealthyrecipes.com/mung-bean-sprouts-sprout-mung-beans/, Oct 7, 2016

[4]. Iceberg lettuces and broccoli rationed as vegetable crisis hits supermarkets, BBC News Services, http://www.bbc.com/news/uk-38851097, 3 February 2017.

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Federal Reserve Bank charges unnecessary fees to Americans.

by tonytran2015 (Melbourne, Australia).

#fiat money, #private #Federal Reserve Banks, #unnecessary fees, #questionable fees, #questionable dividends, #new money.

Americans keep paying unnecessary fees to private bankers through Federal Reserve Bank.
Every year billion dollars of undeserved fees (or interests) have been paid to private bankers through the Federal Reserve Bank. This Federal Reserve Bank is actually a private bank, not a wholly owned branch of the US Government. There is no ground for using a private FRB and pay it billions of dollars every year.

1. USA need no one to back their newly printed dollars.

fiatmoneyc60.jpg

Figure: Fiat money relies only on the taxation power of its issuing government for its backing.

The said payment cannot be said for supporting (underwriting) the issuing of new US dollar notes. Indeed, the government of USA is a money sovereign. It can print as much fiat money as it likes (and bear the consequences). Its fiat money has value to Americans because Americans have to use it to pay taxes to their federal and states governments.

(See references [1] and [2] for simple explanation.)

2. It is wrong for the Federal Reserve Banks to give interests on the fractional deposits of constituent banks.

There are 2 objections to paying such interests. They are:

2a. The deposits by the contributing constituent, private banks of the Federal Reserve Bank are part of their own effort to make themselves appear more liquid. They cannot demand any interest from the government on their deposits, just like airlines cannot demand government compensation on the costs of carrying their statutory reserve fuel on each flight.

2b. If everyone has to bear a near zero or negative interest, why are those constituent private banks exceptional ? They received 12 billion dollars in interest for the year 2016.

3. The government can sell and could have easily sold bonds to ordinary citizens.

With the advent of telecommunication based, low cost stockbroking, the government can sell and could have easily sold bonds to ordinary citizens just like companies selling IPO. Why has not the government done that rather than dealing only with the fat bankers ?

4. The private Federal Reserve Bank has no right to charge that much.

How much had the FRB constituent banks deposited to earn that 12 billions in interest for the year 2016? Is such interest of the same rate offered to most Americans when they buy into government bonds?

5. Past presidents have tried to undo the burden but two got assassinated.

Presidents Abraham Lincoln, Thomas Jefferson and John F.Kennedy had seen the unfairness of private bankers charging interests to the country and had tried to unshackle the burden on the country. Lincoln and Kennedy had been assassinated while Jefferson survived the assassination attempt. It is currently costing $40 per year per person for the US to keep using the private Federal Reserve Bank.

President Trump may do something about it if Americans protest loudly about it.

6. Americans should demand United States Notes.

Rather than accepting the FRB Notes lying down, Americans should demand United States Notes (each with a red seal) issued directly by the Treasury just like those issued under Kennedy’s administration. Those notes had nothing to do with the FRB and America can save on the so called “interest” charged by FRB on any new money issued by US government and backed by its own taxation system.

Using the dollar notes with red seals (such as Five dollar with Red Seal Notes in series 1953 A through C, see picture in reference [6]) will save Americans $40 per head each year.

References:

[1]. Your fiat money, https://survivaltricks.wordpress.com/2017/01/09/your-fiat-money/

[2]. Your fiat money (Part 2), https://survivaltricks.wordpress.com/2017/01/12/your-fiat-money-part-2/

[3]. The-thirty-families-made-plans-for-a-future-without-you, theMicky.org, http://mikeyy.org/2017/01/30/the-thirty-families-made-plans-for-a-future-without-you/, originally by horse237, https://vidrebel.wordpress.com/2017/01/30/the-thirty-families-made-plans-for-a-future-without-you/

[4]. Stack Jones, The Banking Swindle-The History of Banking Fraud,  criminalbankingmonopoly.wordpress.com, https://criminalbankingmonopoly.wordpress.com/2014/02/20/history-of-banking/#comments, accessed Jan 2nd, 2017.

[5]. Federal Reserve System, wikipedia, https://en.wikipedia.org/wiki/Federal_Reserve_System, accessed Jan 2nd, 2017.

[6]. Five Dollar Bill Red Seal Series 1953 US Currency, Natural Web Solutions Inc.(US), https://www.collectons.com/shop/item/58107/Five-Dollar-Bill-Red-Seal-Series-1953-US-Currency#imgs58107

[7]. Us issues, Central banks alchemists of finance part iii-reblogging, http://us-issues.com/2017/04/05/central-banks-alchemists-of-finance-part-iii/, 03 April 2017

[8]. Dale B. Halling,  History of Central Banks in the United States, thesavvystreet.com, http://www.thesavvystreet.com, accessed 03 April 2017. 

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A satirical guide to signs of an impending crash for small investors

by tonytran2015 (Melbourne, Australia).

#crash share market, #investment, #market crash, #share market, #signs of crash.

As a small investor (or gambler ?) you can also pick up the warning signs of an impending share crash.

To possess that ability a small investor has to have a realistic knowledge on how some listed companies crash and on how such crash can generate a market wide crash. This posting is my a short guide to picking the signals.

1. The operation of a company listed on a share market.

Let us be simple about it.

A company on a share market is just a business, a money making machine. Its value depends on its anticipated income and its trade name plus net tangible asset backing (liquidated values).

A company listed on the share market has to bear the extra burden of extravagant salaries and bonus to directors, showmen, corporate executives (who all seem NOT KNOWING the business which they are overpaid for), external advisers, external consultants (to advise, with absolutely NO liability, the directors and executives!), snake oil salesmen (to sell to clients what they don’t need and can barely afford).

When you buy shares in that company, you are entitled to share a percentage of the profit and loss of that business (or show?).

Essentially, directors, executives, external advisors, external consultants (see reference [1] for some type of consultancy no one needs) are playing a game of passing the buck by separating duties of care and liabilities. The show is set up to PREVENT share holders like you SUING any of them.

You have been WARNED!

2. Long con by Pump and Dump Operators.

Vested interests always want to inflate the values of companies for their higher salary, bonus, commissions, fees and stamp duties.

They will pump and dump shares in the company. The (typically six years plus) long con of pumping is hard to detect (a lie told for long enough will be believed). It makes people believe in the (hyped up) “long term growth” of the company. (See reference [2] for a typical pumping of share prices from in 2011 to 2017).

New shares will be issued at “premium” to the nominal value of the shares. The money collected is then used to pay for expenses to keep the company going until another new share issues (but not for paying dividends to existing share owners) !

The last buyers (believing that there would be bigger fools) buy in at many times the worth of the company. When the eventual dumping comes they would lose all their hard earned money.

After each share crash there is no actual change in the production capacity of the company. Only its ownership, clients, suppliers and bankers change. The crash in the bigger market and the recession in the even bigger economy only comes due to the actions of those people.

Australian government also encourages (since about the year 2000) the Long Pump Con with its Income Tax policy (loss of franking credit on put options): If you invest in shares, you can claim your part of the income tax of that company (currently at a flat rate of about 30%) as your personal tax already paid by the company on your behalf; it is called income tax franking credit from your dividend. However if you also bet that the price of those shares will fall you will lose all that tax credit. On the other hand if you bet that the price of those share will rise, you can keep all your dividend franking credits!
It is understandable as the government collects more stamp duties on share transfers when share prices have been pumped up.

3. Causes of a crash of a single company

crystalcompanyc70.jpg

Figure: List of single sufficient causes for a company crash. Any single cause in this list can cause a company to go bankrupt.

a/- Its banker does not want to be its easy going, friendly banker anymore. (The bank knows more than you do about the imminent cash flow of the company).

b/- Its clients can buy cheaper elsewhere.

c/- Its suppliers have switched to new clients (with no cash flow problem) who pay more promptly after each delivery.

d/- The company has run out of new subscribers for its new share issues (which is a substantial source of income providing for its yearly expenses).

e/- If the company cannot pay its debt installments and expenses on any due date, it is required by laws to be liquidated.

4. Events in a company crash.

a/- Directors resign as they want to wash their hands more than 6 months ahead of the official liquidation. Why should they risk being investigated while there are extravagant pays for other shows elsewhere?

b/- Share holders realize that they have bought only thin air hyped up company shares and they all want to sell to the next fools or to anyone else to stop their own bleeding.

c/- The share market suspends the trading of that company’s shares and may even de-list it to bury the embarrassment.

d/- The last batch of share holders practically lose all their money: EVERY HYPE HAS TO END.

5. Traditional signs pointing to a market crash.

Figure: Signs of crash for share markets.  You cannot expect any crystal ball to change its colour to warn you of an imminent share market crash but you can notice yourself the signs prior to such a crash.

The share market is where people buy and sell shares in (market) listed companies. People buy and sell according to their perception of the sustainability of the finance conditions in the country of the companies.

The finance conditions stand on top of one another to build a tower to the sky ! It only needs the agitation of some big investors to make the tower tumble causing a market wide crash.

Prior to a share market crash there are few signs as given in the following:

a/- There is an increase in the Price/Earning ratios of companies (Investors hope for bigger fools) while their operation is not profitably expanding and their Net Tangible Assets remain nearly unchanged. Before buying you have to work out the number of years to get back your capital if there is no bigger fool.

The P/E ratio should be inverted to give you a comparison to the interest rate of government bonds which has little chance of being wiped out.

b/- There is an increase in merger and acquisition activities with the illusion that bigger is better for profits (An admission that many companies are not well managed. The lives of companies are stretched on the hope that they can reduce their overhead or get better under new managements !).

c/- There are a lot of initial public offers (IPO’s) of new companies (on the share markets) with unclear, questionable earning capabilities (Institutions want to benefit from people’s greed !).

People buy on hope into any company to be in the herd. The whole market goes up much faster than the national GDP and GNI.

According to reference [2],  “S&P 500 stock index edged up… market capitalization of the companies in the index exceeds $20 trillion. That’s 106% of US GDP, for just 500 companies!” .

d/- There are a lot of margin lending (by banks to investors who bet that short term market dips are very unlikely but if any dip does come they usually lose their investment/bet and usually most of their savings).

Any temporary dip will force Margin Lenders to sell shares of Margin Borrowers resulting in an amplification of the temporary small dip into a longer lasting and more serious dip which may force out even more Margin Borrowers and the market index keeps on falling.

Currently the ratio of margin lending to capitalization of the Australian market is only about 1%. If the same also holds true for other markets then margin lending cannot cause much damage in the current condition.

(Note added on 1 April 2017: On Feb 2017, margin loans on shares reached 0.528trillions [6, 7] while capitalization of S&P 500 shares reached 20trillion [10]. Margin loans in US thus stand at nearly 2.5% in Feb 2017).
e/- Short-term interest rates are much higher than long term ones for Reserve Bank loans and Treasury Notes (People run out of real wealth making ideas for the long term and can only play the short term games of passing the buck with borrowed money in existing unsustainable structure).

f/- Uneven development of different sectors of the economy resulting in unsustainable economic condition (for example a construction boom in areas with no jobs, no roads, no people to pay for the newly built buildings leading to heavy debts by builders caused by production of unwanted goods).

g/- Everyone talks and seems to know everything about investment on the share markets (People knows that passing the buck makes much more money than doing real manufacturing/servicing. Herd mentality is obviously in action here, see also reference [10]).

6. Events in a market crash.

Greed and fear and herd mentality cause a market wide crash.

When fear overcomes greed, they all want to sell out at the same time, at any cost to cut loss.

The gamblers, the uniformed investors, the loose bankers, creditors all lose their money.  The market will usually be suspended immediately by a computer after any deep loss.

The patient investors may pick up good investment during crashes. The time window for a big dip is only about 10 minute wide and you must be a regular client of some friendly stoke brokers or possess a reliable internet trading software to have your order processed in that hectic time. I have seen my friends doing it.

Then everyone still not burnt will want to invest in real estate instead only for some of them to get burnt again in that ensuing property (new type of) bubble!

7. Avoiding getting burnt

a/- Remember that no one wants to sell a money making machine. If it is sold to you for cheap, there must be some problems.

b/- Use your money to pay out all your debts, their interest payment is usually HIGHER than any after tax return on any listed company investment.

c/- If you still have spare money, set up your own business or investment property. You will know the “true and fair” value of your business. You can hire and fire. Your voice can be heard. You also avoid paying extravagant salaries to directors and snake oil salesmen. With this type of experience, you may begin to make judgement on the values of listed companies.

d/- Don’t invest in any company whose activities you cannot fully understand. If you cannot understand their way of making money then probably they CANNOT make money. Don’t think that extravagantly paid directors will solve the impossible problems for such a company.

e/- Only gamble on the share market with what you can afford to lose. There are always new types of traps invented to catch you.

f/- If you cannot sleep at night with an investment then you cannot afford to lose: Cut the loss and get out.

Being alert to the signs may help you getting burnt. It has certainly helped me and my friends.

References (added 29 Apr2017) :

[1]. Ex-HBOS banker ‘sold his soul for swag’, bbc new, http://www.bbc.com/news/business-38842723, 2 February 2017.

[2].  Wolf Richter, S&P 500 Earnings Stuck at 2011 Levels, Stocks up 87% Since, Straight Line Logic , https://straightlinelogic.com/2017/02/19/sp-500-earnings-stuck-at-2011-levels-stocks-up-87-since-by-wolf-richter/

[3]. Barry Ritholtz, Excessive CEO Pay for Dumb Luck, bloomberg.com, https://www.bloomberg.com/view/articles/2017-03-06/excessive-ceo-pay-for-dumb-luck, accessed 07 Mar 2017.

[4]. Colin Twiggs, CEO pay is rigged | Barry Ritholz, Gold Stocks & Forex, https://wordpress.com/read/feeds/289142/posts/1366147221, 07 Mar 2017.

[5]. tonytran2015, Bankers given outrageous incomes by their boards, https://survivaltricks.wordpress.com/2016/12/22/bankers-given-outrageous-incomes-by-their-boards/, posted on December 22, 2016.

[6]. Mish Mishtalk, Margin debts hit record high-coinciding with extreme-consumer confidence, mishtalk.com,

http://mishtalk.com/2017/03/30/margin-debt-hits-record-high-coinciding-with-extreme-consumer-confidence-analysts-say-dont-worry/, 30 March 2017.

[7]. stock-markets-sit-blithely-on-a-powerful-time-bomb, sentinel blog,

http://sentinelblog.com/2017/04/22/stock-markets-sit-blithely-on-a-powerful-time-bomb/, accessed 22 April 2017.

[8]. https://lplresearch.com/2017/04/07/margin-debt-worry-or-overblown-anxiety/

[9]. Yashaswini Swamynathan, Reuters, The S&P 500 is worth $20 trillion for the first time, business insider, http://www.businessinsider.com/sp-500-market-cap-crosses-20-trillion-for-the-first-time-2017-2, Feb 13, 2017.

[10]. The last time this happened the market crashed, sentinelblog.com, https://sentinelblog.com/2017/04/22/the-last-time-this-happened-the-market-crashed/

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