What is The Federal Reserve Bank?

The Federal Reserve Bank – What is it Really?

Author:Tom Genot

The Federal Reserve is one of the largest problems facing America today. The one question many people ask is what does a Federal Government Bank have to do with our nation's problems? For starters it is Federal in name only.

[caption id="attachment_1100" align="aligncenter" width="500"] What is The Federal Reserve Bank?[/caption]

The Federal Reserve Bank is not part of the US Government. It is actually a privately owned corporation and international bank that was created by Congress in 1913. The passage of the 16th amendment was passed rather shadily, and according to some, illegally. Furthermore it was given the exclusive rights to 'print money' for the U.S. Government by Congress, during the Christmas break in 1913 when most of the representatives were on vacation.

Before the creation of the Federal Reserve the power and responsibility to print our nation's money was done by the Congress of the United States. Sadly since the time when the Federal Reserve was given the power to operate the printing press, the people of America have continually been charged interest on every dollar ever printed. This interest does not go to the Federal Government to benefit Government programs or pay down national debt. It goes directly to the 'cartel banking families' that own the Federal Reserve.

Furthermore the Federal Reserve is responsible for the continuous loss of purchasing power that the dollar has suffered for decades which was done by printing excess money. Since 1971 the US dollar has lost the backing of gold, now it's just created out of thin air. This excess money when added to the Americas money supply 'waters it down' making the total value of the currency weaker so you need more of it to buy something, this is called inflation. Here is the real kicker, the total sum of the United States national debt in all actuality, is the outstanding interest still owed to the Federal Reserve that the American people get stuck paying.

So what does the Federal Reserve do? Well their official roll other than money printing is also to provide a means that will control the amount of money that enters the economy. It is a fine balance that borders between an excess amount of currency creating inflation and not enough creating a recession. The Fed 'when acting responsibly' provides the counter balance to keep inflation and recession in check.

The Federal Reserve is a secretive collection of private banks that have Federal authority. They have no government control or oversight and are accountable to no one for their actions. They pretty much operate in secret keeping the money supply flowing steadily between the exceptionally rich, financial markets, banks and consumers. This is done while they react to both national and international political pressures. The Federal Reserve's meetings are always held in private where decisions are made without any outside input. These decisions ultimately and directly will affect the economic welfare of each person in the nation as a whole.

The Fed also incorporates other mechanisms or tools that can be put to use when necessary. One of the tools that will generate a great deal of attention has to do with the interest rates for banks in particular commercial banks. News of the Federal Reserve changing its interest rates always seems confusing even deceptive to many. However these rates will affect commercial banks which pay the Fed's rate to borrow money thus may or may not directly affect the consumer.

In summary America's biggest problem is actually the Federal Reserve itself. Our congress nearly 100 years ago sold America out by handing over great powers to the corrupt international banking elite, which in-turn have only compromised the well being of our entire economy. It is profit and power first that drive these 'international thieves'. The banking elite are an international group of bankers from several countries and none of them are from America. Therefore they have zero loyalty to American interests nor the American way of life. It is nationalism itself that hinders their business interests.

It was many years ago when one of our founding forefathers actually warned us about the dangers of private banks coming into power. But did we listen?

'If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.' - Thomas Jefferson

Apparently Not!

Tom Genot -

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About the Author

Informational news, books, articles and videos on investing in gold and silver and where the best places are to buy it. You will also find informational resources to educate you on alternate forms of investing and information on preparedness, for preparing and protecting you, your family and your assets from the pending economic crises and destruction of the US dollar. Author Tom Genot provides information and resources helpful to everyone. Insure you're prepared, while time is still on your side. Check us out at www.coinbullion.net.

What is The Difference Between Currency And True Money?

What is The Difference Between Currency And True Money?

Author:Tom Genot

Currency has been defined as a circulating medium of exchange, used as an intermediary in trade, so to avoid the use of a barter system. The benefits and usefulness of currencies include; being a unit of account, or standard measurement of value. Other key factors include; durability, divisibility, ease of transportation and being fungible, or capable of mutual substitution.

[caption id="attachment_1097" align="aligncenter" width="500"] What is The Difference Between Currency And True Money?[/caption]

True Money however, is defined as having all the attributes above, however with one major difference. Money is also a store of true value. Paper currency is actually designed to lose value while true money is designed both to hold and store value. Gold and silver meet these special requirements and have been true money for over 5,000 years, thus they will forever be in demand.

Fiat currency is not true or real money; it only has value because of government regulation or law. The word fiat is actually derived from the Latin word meaning ‘let it be done\'. Thus fiat money is actually established by government decrees. In America, no fiat currency has ever survived more that 40 years, since its start in America, during the days of the Continental Congress, before the Revolutionary War. America\'s current fiat system is the dollar system which started in 1971. It has now in-place over 41 years thus; now it\'s already overdue for failure.

Debasement of currencies is accomplished by nations. Through which, additional fiat money is created then added into the existing nation\'s money supply. Currency debasement is just another fancy word for money expansion. The end result of this expansion, through central bank efforts to debase currencies, always ends up with inflation. The more the paper currency is debased, the greater inflation upon the society becomes. This further drives up the real costs of goods and services, while lowering the purchasing power of the nation\'s currency in real-time.

How can an investor protect oneself from further monetary debasement and inflation? The answer is actually thousands of year\'s old, own gold and silver. Both these monetary metals protect your assets from currency de-basement and because they are real stores of value. They can also protect you from the collapse of currency regardless if it comes from inflation, deflation or the destruction of the paper currency itself, through hyperinflation.

Holding these two precious metals in physical form outside the banking systems of the world, allows you ultimate freedom and complete control. These precious metals also become the best possible insurance for asset protection or hedging that money could ever buy. The biggest reason is due to the unique characteristics these precious metals hold. Always allowing for them to consistently seek their true value, regardless of any economic conditions.

Tom Genot –

Article Source: http://www.articlesbase.com/banking-articles/what-is-the-difference-between-currency-and-true-money-6270459.html

About the Author

Informational news, books, articles and videos on investing in gold and silver and where the best places are to buy it. You will also find informational resources to educate you on alternate forms of investing and information on preparedness, for preparing and protecting you, your family and your assets from the pending economic crises and destruction of the US dollar. Author Tom Genot provides information and resources helpful to everyone. Insure you\'re prepared, while time is still on your side. Check us out at www.coinbullion.net.

What is Inflation and How Does It Affect You?

What is Inflation and How Does It Affect You?

By Dan Dulin

It seems reasonable that the value of a dollar today would stay the same as the value of a dollar tomorrow, but that's not the case. Money, in a modern economy, loses its value over time in a process called "inflation." With inflation, the amount of money under your mattress stays the same, but it buys less stuff with the passage of time. Time changes money.

[caption id="attachment_1000" align="aligncenter" width="500"] What is Inflation?[/caption]

Inflation is measured by the rising cost of goods and services in an economy. Inflation makes everything you buy more expensive, so the value of your money decreases. A dollar buys four apples today but only three apples tomorrow. A dollar is still a dollar, but in terms of what you get for your money, inflation ate one apple!

Inflation is created when a government adds more money to its economy than what's needed for that economy to function properly. There are a number of ways a government can do this, but the process is generally described as "printing money." When a government adds money to its economy, it typically does so to fund its own spending. This means the government needs more money than what it has received from its citizens in the form of taxes and has decided to make up the shortage by creating new money. This deliberate act creates inflation and decreases the value of all the money in that economy.

Inflation is a hidden government tax paid in the form of rising prices. It disproportionately affects the poor, working class, and people who save but don't invest wisely. To be rich, you must minimize the effects of inflation on your lifestyle and shelter your money from it. Given that inflation decreases the value of money over time, you must put your money to work earning a return greater than your country's real inflation rate. This figure would include the price changes of food and energy.

Example: If your money is in a bank savings account paying 3% interest per year and the real national inflation rate is 4.5% per year, your money is losing 1.5% of its buying power each year (3% interest rate minus the 4.5% inflation rate equals a 1.5% loss). If, instead, you invested your money at a 4.5% interest rate, you break even and your money retains its value. Breaking even on your investments isn't a path to riches. In this example, you could only hope to grow your money if you invested it at a rate higher than the 4.5% inflation rate.

Money is made or lost with time. Your money is working for you only if it's invested at a rate of return greater than the real inflation rate reported in your country during the same period of time your money was invested. Learn what the real inflation rate is in your country and invest accordingly.

There are three kinds of lies: lies, damned lies and statistics;...

Mark Twain (1835-1910)

Excerpts from the new book Be Rich: The Ten Financial Laws of Prosperity. You can get your FREE copy of this information packed book at http://www.BeRichBook.com

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What is Benjamin Graham's "Mr Market"?

What is Benjamin Graham's "Mr Market"?

By Preston G Pysh

Benjamin Graham explored the concept of the stock market and an investor's analysis decision through the use of an imaginary investor named Mr. Market. The basic principle underlying the theory is that a rational investor would base his opinion on the fundamental value associated with the stock rather than the view of fellow investors or the signals sent by the stock market. The view is based on the principle that an investor must act rationally at all times and the decision made must be based on the intrinsic value associated with the stock rather than the market fluctuations which might sometimes send out the wrong signals.

[caption id="attachment_931" align="aligncenter" width="500"] What is Benjamin Graham's "Mr Market"?[/caption]

So what exactly is the Mr. Market parable proposed by Benjamin Graham? The story goes something like this: you must assume that you own a small number of shares in a private business that resulted in a total cost of $1000. A close associate of yours, namely Mr. Market is quite interested in your stock holdings and on a daily basis he expresses his opinion regarding the value of the shares. He is more than willing to buy the shares on some occasions and on other he is willing to sell his share to you at a quoted price. The price estimated by Mr. Market is sometimes a reflection of the true value of shares based on business developments and future prospects. Conversely, sometimes his estimates are not justified and seem a bit over exaggerated. You are not under any obligation to listen to Mr. Market and his advice. He does not mind providing advice on a regular basis irrespective of your opinion and attitude.

So what exactly should a prudent investor do in the case of Mr. Market and his price estimates? Should a person be influenced by the price quotations and buy or sell the stock based on Mr. Market's estimates? Well this is only beneficial for an investor when Mr. Market quotes a price that is very high and therefore an investor sells the stock with the aim of making a huge profit. An investor is also likely to follow Mr. Market's advice when the price quoted is very low and therefore buying shares at a low price would result in a foreseeable profit when these are sold at a higher market price. However, these two extreme scenarios are the only occasion when an investor would be compelled to buy or sell stock. In all other circumstances a person is likely base his judgments on true facts and figures derived from a company's financial position and future outlook.

The Mr. Market in reality is none other than the stock market that daily shows a change in price of shares. An investor that owns stock in a listed stock exchange is likely to be faced with the dilemma of changing prices almost on a daily basis. Either the price can be used to make a profit such as selling when price is too high and buying when price is too low, or the market price can be left alone. An investor must realize the importance of his own judgment in making investor decisions. The signals emitted by the market might sometimes be misleading and this could indeed result in a loss to the investor.

How can the market price be misleading? Well the stock price is dependent on a number of factors and amongst them the greatest one is speculation. Speculation of investors can result in an extremely high price for example if the company is likely to acquire another company, the hype in the market could create a rise in stock price. However, this price is not an indication of future prospects of the company or the ability to generate profit. An investor that sells now simply due to high price might at present face a profit but in the long term could be at a loss as the opportunity cost of selling is the long stream of dividends that follow the investment in the future.

Conversely, a person may simply sell the stock if the prices has gone down in the view the decreasing prices have a signaling effect that things within the company are getting worse. However this is reality might not be true. The price could simply be decreasing because no dividends have been declared for the given year as the company is now implementing a reinvesting policy. Thus the decrease in price might send a wrong signal to the investor who could sell the shares and lose out on dividends and capital gains in the future.

The Mr. Market analysis theme is simple and effective. The market price results in fluctuations and an investor must not solely base his decision on the price fluctuations. A prudent investor must consider other facts before buying or selling stock and this includes the current operating position of the company and the future developments. An investor must ascertain the dividend income in the future as opposed to capital gains at present and then undertake a decision.

This does not mean that the market price is irrelevant. The market fluctuations must not be ignored by an investor as they provide a signal of the value of the investment. However the true significance of market price lies in the opportunity that it provides by depicting a price too high or too low, The market price is of great importance and profitability when it depicts an extremely high price as huge capital gains could be made from sales whereas an extremely low price could result in stock purchasing so that they could be sold at a higher price in future.

Benjamin Graham's Mr. Market has received wide appreciation from investors who have now come to realize that the market price is not always justified. An investor must not ignore the market price but consider it in conjunction with several other factors such as dividend yield, future stream of dividends, current operating position of the company and future profitability.

If you'd like to learn more about Mr. Market, be sure to follow this link. The link takes you to a 10 minute video that thoroughly describes Benjamin Graham's fictional character along with more information on how to invest like Warren Buffett.

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What is the FED (United States Federal Reserve)?

What is the FED (United States Federal Reserve)?

By Preston G Pysh

The Federal Reserve most popularly known as the FED is entrusted with the task of overlooking the United States economy. It is the national bank of USA and is recognized as one of the most dominant institutions across the globe. The FED is entrusted with the task of setting the monetary and fiscal policy of the world's super power, America, which impacts not only the local citizen but the global population. The FED was created in 1913 by the United States congress. Before the formation of FED, the USA had no formal institution that was entrusted the task of setting and regulating the monetary policy. The resultant impact was that the markets were volatile and the banking system was not regarded as robust by the public at large. FED was created with the aim of formation of an institution that was solely responsible for regulating the banking system of USA. The FED is an independent organization and does not require the president to ratify its decisions. Nonetheless, the congress is entrusted with the task of overseeing the workings of the organization on a periodic basis.

[caption id="attachment_929" align="aligncenter" width="512"] What is the FED (United States Federal Reserve)?[/caption]

Boards of Governors of the FED are based in Washington and are responsible for heading the organization. The BOD is headed by seven presidential members all of whom must serve a fourteen year period. The presidential members must be approved by the senate and can be required to serve another terms based on circumstances. The board is headed by a chairman (currently Ben Bernanke) who is initially appointed by the president of USA while the senate must approve the member. The chairman is required to serve a four year period and is assisted by a vice chairman.

The BOD is responsible for overseeing the work of twelve regional branches of the FED which are situated in the chief cities of USA. The Reserve Bank is entrusted with the basic workings of the FED and operates as the major system within the workings of the central bank. The banks are responsible for generating their own revenue from various sources. These include the services that they provide to other banks, the interest income from government securities, income from any foreign reserves and interest income on debt of depository organizations. The income generated from various sources is used to finance the daily working capital cycle whereas excess income is transmitted back to the U.S treasury. Lastly, all national banks operating within USA are referred as member banks and are a division of the FED. A couple of state-chartered banks are also referred as member banks.

Federal Open Market Committee (FOMC) is a part of the FED and is responsible for deriving the policy implemented by the FED. The chair of FOMC and the BOD are the same whereas the voting members consist of presidential candidates from BOD, four Reserve Bank presidents and Federal Reserve Bank president. These members are required to serve on a rotation basis pertaining to a one year time period. Reserve Bank presidents are required to participate in the policy making process irrespective of the fact that they are granted the voting rights or not. The FOMC has the final say in a number of significant matters including the monetary policy and specifically the interest rate.

The underlying theme of FED is to ensure economic growth, employment, low levels of inflation, stability of purchasing power parity and reasonable interest rates over a long term period. Simply put, the FED is responsible for ensuring stability and sustainable economic growth. The duties of FED are therefore widespread and are concerned with ensuring the smooth running of the economy.

The FED provides a number of services to banks in a similar manner as a bank might provide a service to a citizen. This is done so that the national payment process is efficient and secure. For example, transfer of money from one bank to another might be aided by the FED. The most important duty of the FED concerns serving the government of USA. The government of USA is the higher spending customer of FED. The FED is responsible for maintaining the checking account of the US treasury whereby the inflows and outflows of cash are regulated by the FED. Any inflows that arise due to tax revenues and outflows pertaining to government spending are passed through this account and the FED is responsible for handling them. The FED is also responsible for dealing with government securities whereby selling and buying transactions pertaining to bonds and treasury bills is conducted by the FED.

The FED is also responsible for issuance of currency in form of paper and coins. Although the US treasury is responsible for the production of cash, the FED is the institution that is responsible for allocating it to financial organizations. The FED duties also extend to checking the bills for damage and ensuring that bills that show signs of wear and tear are taken out of the cash cycle.

Another duty of the FED is to regulate and supervise the other banks operating within the USA economy. The other banks include the member banks, international banks, foreign transactions of these banks and banks that are USA based but operating abroad. The FED ensures that the banking policies are in line with customer's best interest and many laws and regulations have been enacted that ensure that the banking activities are bona fide to the public. The responsibilities of the Federal Reserve Bank extend to the investors as well whereby they are responsible for setting the limits on the debt that an investor can take. 
Last but not the least the FED is responsible for setting the monetary policy of the economy. This is one of the most important duties of the FED whereby the FED ensures that the interest rates and money supply result in positive economic growth and development. The three basic tools used by the FED include the open market operations, discount rate and reserve requirements; all of which are adjusted to reflect the current monetary policy devised.

If you would like to learn more about the Federal Reserve (FED), be sure to click on this link because it provides a great video lesson on how the FED works and how investors can use it to their advantage.

Also, if you would like to read a great resource on investing, be sure to check out this Warren Buffett book. It discusses subjects like interest rates and how the FED controls them.

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What is Deflation?

What is Deflation?

By Mark W. Medley

Currently we are still at the crossroads of beating the current economic recession, and one effect of this has been "deflation" in some sectors of our economies. What is deflation, and what are its actual effects?

[caption id="attachment_916" align="aligncenter" width="500"] What is Deflation?[/caption]

Our economies are all different, despite the fact that most Countries do follow the free market economic modal to some degree. After 2008, interest rates were lowered to encourage savers to spend, as the great recession kicked in, and one effect of this has been deflation in some sectors of all our economies.

Deflation in academic terms is the effect of goods and services decreasing in price, usually in a recession, but in the business world common when some new products naturally decrease in price over time eg. computers, and electronics.

When we think of deflation in modern terms, we think of Japan. As Japan in the early 1990's faced a sharp recession, and the nations banks offered zero percent interest rates. This encouraged savers to spend, whilst the struggling economy saw the basic price of many goods and services tumble- leaving cash rich consumers with more money power, but creditors with less wealth.

One example of deflation in many economies has been the erosion of property values, which have left many banks in a paradox. Several of these banking institutions have creditors who now owe more, than what their property was 'worth," when they first took out a loan on the property- the liquidity trap.

This negative effect of deflation is seen as one reason, Governments fear deflation as much as inflation, as it does lower prices and living costs, but at the same time punishes creditors who bought on the old price- who are still repaying the debt.

Deflation also effects a nations monetary policy, which cannot be stabilized, because of the liquidity trap. It also transfers the wealth from the borrowers and holders of deflated assets to those who have capital and currency assets. One reason in 2010, whilst many people are struggling with debts, the wealthiest proportion of people in several economies have grown richer.

Another negative cause of deflation is that it punishes those stuck in the liquidity trap, and forms a trickle up, rather than a trickle down effect on the wealth inside an economy. It leads to problems in the money supply, and also social problems inside more liberal economies. Greece today is one example of how, deflation on some prices eg. Businesses, and property- has started an "us and them" attitude towards the increasingly wealthy elite.

Depending on your financial status, there are those who welcome deflation, and others who are adversely affected by the instability it causes. Whilst many things get cheaper, so does the wealth gap in many countries, which creates economic instability, and a stagnant economy. One reason most economist agree combating deflation is as important as its ugly sister, inflation.

Discover how to survive and thrive in a changing economy

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What is an Austerity Package?

What is an Austerity Package?

By Mark W. Medley

To a majority of Europeans and in the future Japanese, a new buzzword has dominated the national news- austerity. Austerity measures are now a vital fact of life as many governments start tackling their national debts. What is an austerity package?

[caption id="attachment_912" align="aligncenter" width="500"] What is an Austerity Package?[/caption]

In economic terms, when any kind if government, whether it is a local, regional or national has to reduce its spending and perhaps raise its fees and taxes to pay back creditors. This is an austerity package.

Depending on the nature of the economy, and amount of debts the government has accumulated, each austerity package differs. However, the effects of cuts, does trickle down to the economy, and creates adverse effects.

Sharp austerity measures made by the current Greek government have led to violence on the streets, and bitterness within Greek society. In Ireland and Spain it has led to some demonstrations, but a silent acknowledgment that these measures had to be implemented.

The Five basic Ingredients of an Austerity Package can be:

1. Pay Cuts

Generally the civil service is first to be hit with an austerity package. Usually salaries are either cut or frozen, whilst departments cut or merged. In some cases staff are laid-off, or their working hours reduced. Recently in Greece, public servants and politicians has to accept a 10-15% cut in salaries. The new UK government has also cut pay to ministers by 5%, and stopped most civil servant bonuses.

2. Reduced Subsidies

Some countries subsidize transport, petrol costs and even new business start-ups. In the European Union most new business start-ups are subsidized, as well as some public transport, and sectors involved in agriculture. If these are cut or a subsidy is phased out, the effect could range from higher priced food to less new businesses.

3. Increased Taxes

In times of austerity, some taxes will have to naturally rise, whether it's a 'wealth tax" or an increased luxury goods tax. Some taxes are placed on alcohol sales or cigarettes, which often raise in price during times of austerity, even local rates on your home or business could rise.

4. Social Security

California recently announced it would evaluate its existing social security system, in order to save billions the state owes due to its massive deficit. Greece, the UK and Spain also are currently re-evaluating their current welfare systems.

In 2005, Germany cut its once generous social security system, creating a "means tested" work fare system- based in part on a community work model. The age of eligibility for a state pension has increased in many countries, whilst student and poverty- based programs are often cut.

5. The Sale of State Assets

Germany's example of sharp austerity measures in the mid-2000s, led to the sale of state buildings, and new rent-lease agreements with the new owners. This led to a reduction in state ownership, whilst releasing immediate funds to the government. Schools sometimes were sold, whilst services privatized or simply shelved.

6. Lay-offs

State Governments often trim or even close down departments to save money. In many of California's schools, teachers have been replaced by television sets, and schools once opened only four days a week. Theatres may close, whilst public transport is cut. State lay-offs add to unemployment queues,- which is one reason many economists argue that in a deep recession, the state should employ more people rather than cut jobs.

The effects of any austerity budget, depends on how far people are ready to accept it. In many societies- cutting state funded social safety nets are unpopular, and could have a destabilizing effect on society.

Much depends on how the government stimulates the economy, whilst implementing austerity measures, in the hope that a new economy will offset the consequences of any cut backs- either way 2010 is the year of austerity for many.

Discover how to survive and thrive in a changing economy

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What is a Distro?

What is a Distro?

By Mark W. Medley

Unlikely young entrepreneurs have created a new successful business modal, despite rising odds against the success of opening an untried business in 2010. A business that has low overheads, needs little financing and catches the feel good mood of the most price wary consumer- a Distro.

[caption id="attachment_910" align="aligncenter" width="500"] What is a Distro?[/caption]

A "Distro," attracts customers from all walks of life- especially fashion conscious customers under 24, who are more likely to be unemployed or short of available cash in our current recession. Following a simple, low cost business plan, which relies on good will rather than mass marketing.

Imagine a cafe owner facing the prospect of closing down their business because of a decline in customers, add a recently graduated designer, and an IT student looking for extra cash. All are facing a grim future unless something changes, and the change could be a Distro.

A cafe owner allows an unemployed designer to utilize a space in his cafe, and she sells her own designer T-Shirts and jeans- all created at home. In turn the cafe, and her designs are promoted on the web by an IT student on eBay, and social networking websites. As the cafe  re-invents itself to attract an increasing trade of customers, with free wi-fi, "trendy" music and a chill out atmosphere, to become a distro.

"Distros" are springing out everywhere, particularly in urban areas, where you can shop, meet friends, surf the net and even get your own designer t-shirts created. An idea brought on by the need to survive and thrive in an unsure economy, through cooperation, and creativeness.

Another important reason distros are doing well, is the simple fact they do not have huge set-up costs, which often lead to a loan. No real investment is needed- except the re-design or improvisation of the cafe, second hand machinery to create the clothes, and an old laptop linked to the net.

Despite the fact many retailers are still closing, distros are saving creative designers from an unemployment office, cafes from closing, and students from dropping out of college. All negative factors when governments are looking for new ways to trim costs, and would rather people initiative self-help schemes to help kick start their economies.

A distro could be a new innovative business of the future, as shopping turns into a more personal experience, benefiting people instead of brands, and at the same time creating new entrepreneurs- who are creating new sustainable businesses rather than facing the prospect of long term unemployment.

Discover how to Adjust to Change in an economic crisis, as we approach a new decade of global uncertainty.

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What is a Double Dipped Recession?

What is a Double Dipped Recession?

By Mark W. Medley

There are rumors and bigger rumors, but 2010 for many people involved in economics has been the year more experts are openly discussing the possibility of a double-dip recession. What is a double dip recession?

[caption id="attachment_907" align="aligncenter" width="500"] What is a Double Dipped Recession?[/caption]

Economists tend to call recessions by their shapes. There are V, W, L and U shaped recessions- a double-dip recession is a W shape. Those who are familiar with reading charts may understand its significance, but to the layman still puzzled by the terminology.

A double-dipped recession is:

An economy falls into recession, emerges from it for a short period of time then falls back into a recession again, forming a W shape on a chart- rather like a store that has less customers, then some return but a few months later, until the store starts seeing less customers again.

Double- dipped recessions are different as most economic recoveries traditionally are V-shaped- when economic growth falls, but then recovers sharply after a brief period of stagnation.

According to official statistics most countries are starting to recover, and are forming a V-shaped recession.

Past examples of a double-dipped recession

One example of a double-dipped recession was in the early 1980's in the United States. For a period of three months from April to June 1980, the economy shrank by an estimated 8% of GDP. Then it leveled out between January to March 1981, and later grow by an estimated 8.4%.

The Federal Reserve feared renewed inflation, raised interest rates, leading to a dip back into recession, then the economy grew again- partly because of supply-side economics but also increasing Government borrowing adding to the nation's deficit.

2010- A different type of W-shaped recession

However the early 1980's is different to most economies today. There was no mass banking crisis or mortgage crisis as in 2008, nor has the economy of the World been as global.

The double-dip recession many speak of today, could be much deeper than in the 1980's, and there are several significant reasons:

• Traditionally during a recession governments stimulate the economy, then after a period, the private sector take over. This has still not happened in many countries, where economic growth is still largely stimulated by government investment.


• The scale of government debt in 2010 is much higher than in 1980. In fact some experts state that the US alone owes over 93% of its GDP or a staggering 13 trillion dollars.


• Many businesses in the private sector are still struggling, some larger Corporations are heavily indebted after government bailouts. These businesses have to expand and invest in order to offset any drop in governmental assistance to the economy.

If the United States and some other countries like Japan, the UK and most nations in Southern Europe fall back into recession. Their Governments cannot borrow to stimulate their economies again. Private investors and companies have to fuel a recovery, rather than a Government.

This could mean a W-shaped recession could be much deeper than in the early nineteen eighties, and would have to be stimulated by the private sector. One reason most economists are looking at the growth and investment in the economy by this sector.

If the growth in private business and investment is less than, the investment needed to pull out of a stagnating economy. We could see the start of a double-dip or W-shaped recession. A recession some say could be deeper, and more prolonged than in many previous economic downturns.

Discover how to Adjust to Change and develop your own future.

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What is a Budget Deficit?

What is a Budget Deficit?

By Mark W. Medley

2010 is the year of the budget deficit, in Europe, the USA and other recession hit Countries around the World. But what actually is a budget deficit?

[caption id="attachment_903" align="aligncenter" width="500"] What is a Budget Deficit?[/caption]

When we spend more than we earn, we create a debt. Sometimes this debt can be small, as it actually is based on our assets- a house, land, or future earnings. Other times it can actually surpass the value of our assets, and force us into liquidation or voluntary bankruptcy.

This works the same way with Countries. For instance when a nation spends more than it earns, it creates a deficit. This deficit is actually debt, which often is financed through loans from International Banks or by issuing bonds. In worse case scenarios the IMF will jump in and loan to countries with high deficits.

In some cases Countries may have a high deficit but have assets that can be used to borrow on in order to develop. This is often the easiest way to pay for development, especially in resource-rich nations. Economists usually see this as a convenient way to finance development.

Nations with high deficits are comparable to individuals with high debts. They lack funds, because more of what they earn is used to pay off these debts. So they have to cut back, re-mortgage state assets or even sell off their natural resources. So comparable to individuals who have high debts- the spare television might be sold on eBay and living expenses are cutback.

Often we see charts showing a national deficit as a percentage. This percentage is calculated on the GDP (Gross National Product) of a Country, which is perceived to be based on what the nation produces. This sounds quite straightforward, but sometimes the actual GDP is based on the "market value" of what's produced in a country- which could be as diverse as the food it produces, to the gross value of civil law suit settlements.

If the perceived percentage is positive, then the Country in question is still producing more than it owes. But if the percentage is negative, it is currently producing less than it owes. In 2010 Ireland, the UK, Romania, Greece and Malta have the highest deficits in Europe. In the Americas, the USA has the highest deficit, whilst in Asia, Japan.

In most countries with a high deficit, the economy usually changes, as a Government at some point will need to face how to deal with this deficit. This is one reason 2010 can be called the "Year of the Deficit," as so many Countries face the prospect of rising debts in an ongoing recession.

Confused, fearful or simply looking for a better future? Learn how to survive and thrive in an economic crisis. build a future for you and your family

Do you like what Mark writes? He can write an article for you email Mark

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What is Biflation?

What is Biflation?

By Mark W. Medley

Many senior economists are starting to agree that the current economic conditions some countries face, differ to the traditional boom to bust to boom cycles- we had in the past. Biflation is the new buzzword for many of our 21st century economies. What does biflation mean?

[caption id="attachment_900" align="aligncenter" width="500"] What is Biflation?[/caption]

Biflation simply means the value of the things we own and produce are devalued, whilst the cost of the things we need are continuing to rise. Add in the mixture of rising energy prices in energy poor countries, and depleted confidence in nuclear energy. Then many countries could be in a biflation cycle.

In many parts of the world, housing has declined in value, whilst owing to a dependency on imported energy-the cost of food, and buying this energy has risen. There are also other factors that can create biflation.

Quantative easing (printing money) devalues a currency, and it also compounds a nations debt. Nations that are dependent on importing food and/or oil pay more, whilst the value of their currency naturally declines with these rising debts.

A higher debt creates the need for any government to raise funds to pay off their creditors. This usually is passed onto the taxpayer, in the form of increased taxation and reduced services. Once this cycle kicks in, unless salaries rise with these costs. People have less to spend on consumer goods, and the local economy could see a fall in the cost of housing.

In the much of the world, the majority of people working are seeing a decline in real salaries, as basic costs like electricity, fuel and food continue to rise. Cutting into the spending and borrowing power of many consumers who fueled the pre- crisis 2008 bubble economy.

This natural cycle of biflation (mixflation) creates a climate of reduced earnings, higher basic living costs and low wage employment growth. In a sense, many experts claim Greece, Ireland, Portugal and the United States of 2011-2012 mirrors this modal.

Many of these same economists, cite energy costs determining the immediate future of any nation in a biflation cycle. Rising energy prices naturally create rising power, and transport costs, leading to higher food costs. chocolate, soya beans and wheat prices already are at their highest since before the 2008 crisis began.

If this momentum continues to develop through this decade, the nations that export these valuable resources grow wealthier, whilst countries dependent on importing such resources like coal, oil, and even food continue to grow poorer.

Biflation, is a dangerous cycle which could be termed the "long road down" if it remains unbroken. Yet, solutions have to be found to stem this vicious trend, or biflation could become the buzzword of this decade.

Discover how you can survive and thrive during a period of economic change

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What is Rainwater Harvesting?

What is Rainwater Harvesting?

By Mark W. Medley

In an age of global warming and unpredictable weather patterns, many communities are suffering the cost of a water shortage- particularly in developing countries. This is why harvesting rainfall has become an alternative way for a family home to become water independent. What is harvesting rainwater?

[caption id="attachment_886" align="aligncenter" width="500"] What is Rainwater Harvesting?[/caption]

Water shortages are often man-made, for instance too many homes in areas where there has always been a lack of rainfall, creates a need to develop reservoirs or relocate excess water from another area of the country. This is costly, and in an era of austerity plus the gradual warming up of our planet- unaffordable.

A traditional method of guaranteeing a supply of water has been harvesting rainfall, and is thousands of years old. The ancient Egyptian, Mayan and Roman empires used this technique to manage the water supplies of their cities, and towns, through using drainage and catchment systems most of our modern cities use today. However one aspect of rainwater harvesting used thousands of years ago, is becoming a more effective alternative to investing in large scale water projects- home catchment.

Indonesia is home to over 225 million people, and is larger than Europe in size, except it is a nation of over 17,000 islands, surrounded by sea. Many of these islands are undeveloped, and depend on agriculture, and fishing for a living, whilst it is unaffordable to develop running water to all the homes. That's where a simple and modified ancient home rainfall harvesting program has had effective results.

One of these islands suffered for decades from a prolonged dry season, and a short four month rainy season. The rainwater from the wet season, if harvested could provide enough water for each household, and allow communities to become completely independent from 'importing" costly water from a nearby island.

Harvesting was simple, even crude compared to the modern techniques used to recycle water in today's urban centers. Homes were simply fitted with a simple bamboo pipe, that caught the rainfall from the roofs of each home, and it naturally flowed into storage units near each home. Once the rainwater was stored, a pipe would be connected to these storage tanks to taps inside the house. Today, communities on this island, have their own independent water supply, and are water rich, instead of dependent.

Recent reports by the World Future Society claim that by the year 2020, water could become as valuable as oil, because of the effects of an increasing world population, a decline in natural forests, and the unsustainable use of water in many of our countries. This trend is reversible, despite the lack of funds many governments have, and the continued growth of cities.

Reversing the possibility that homeowners may one day, need to ration or pay premium rates for the water they use, could be solved by every home using a water catchment pipe, and linking it to a communal or independent storage unit. Something our ancient ancestors knew and practiced thousands of years ago, and like the water independent residents of a remote Indonesian island, guarantee that we use what nature gives us, rather then waste a valuable resource such as rain water.

Discover how you can survive and thrive during a period of economic change

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What is a Reverse Auction?

What is a Reverse Auction And How is It Different from a Traditional Auction?

Author:Jim Anderson

There's a new fad that's changing how companies everywhere buy products and services from their vendors. It's called a 'Reverse Auction'.

[caption id="attachment_862" align="aligncenter" width="395"] What is a Reverse Auction?[/caption]

In a traditional auction, you know like the ones that you've seen on TV, somebody with something to sell stands in the front of the room and everyone who wants to buy the thing yells out a price that they are willing to pay. The price keeps going up until someone agrees to pay a price that nobody else in the room is willing to top.

A reverse auction works in a similar fashion, but it's just a little bit different. In a reverse auction, the company that you'd like to sell your product or service to stands in the front of the (virtual) room and you and all of your competitors get to yell out how much you'd charge them for what they are willing to buy. The company that is willing to go to the lowest price wins -- most of the time.

Reverse auctions are often conducted online. The company that is trying to purchase the product or service can purchase specialized software that allows them to run the reverse auction. On a given date, at a given time, each of the vendors who want to participate in the reverse auction will be instructed to log on to a web site. Once on the web site, the auction will start. The vendors will enter the price that they are willing to sell their product to the buyer for. They may also enter other parameters including delivery date, quantity, etc.

The software will evaluate each of the entered bids and each bid will be ranked against all of the other bids. Each of the vendors will be able to see where they stand in relation to all of the other bids that have been submitted. As each of the parameters that are part of a bid is changed, a vendor will see their ranking change relative to the other bidders. This process will continue until the price drops so low that no other vendor is willing to submit a bit with a lower price. At this point in time, the company that is running the reverse auction will declare that the auction is over and the company that submitted the lowest bid will have won.

Are you going to be ready when your best and biggest customer comes to you and tells you that that deal that you thought that you had locked up is now going to be awarded based on a reverse auction?

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About the Author

Click here to learn more about reverse auctions:
http://www.blueelephantconsulting.com/store/receipt/secrets-to-winning-reverse-auctions

I am pleased to present my latest negotiation training video:
'Reverse Auctions: Secrets To Winning'.  This new video contains
all of the information that a company or individual needs in order
to prepare for, participate in, and (hopefully) win the next
reverse auction that you are a part of.

Click here to learn more about reverse auctions:
http://www.blueelephantconsulting.com/store/receipt/secrets-to-winning-reverse-auctions

What is Affiliate Marketing?

What Is Affiliate Marketing?

By Choulian Havro

Affiliate Marketing Definition?

I'm an affiliate marketer. When I first started an internet business, I didn't have any product or service to sell, and I was totally in the dark for 3 months until I was introduced to affiliate marketing.

[caption id="attachment_72" align="aligncenter" width="300"] What Is Affiliate Marketing?[/caption]

You want to start an internet home based business and you don't have a product or service to sell. The easiest and cheapest way to start is be an Affiliate Marketer. I'm going to give you a brief but clear affiliate marketing definition, and you can decide if this is what you want to do.

Affiliate Marketing Guide

There are 3 parties involved - Advertisers A, Publishers (YOU) and Buyers.

Advertisers A (also called Merchant A) - the person or company that has a product (eBook, videos, equipment,... etc.) or service (coaching, membership,... etc.) to sell online.

Publishers- people like you who promote Advertisers' products or services.

Buyers- people who use search engine like Google to purchase products/services online.

Let's put these 3 parties together:

• You, the Publisher, register toAdvertiser A's internet marketing affiliate program (through ClickBank, Peerfly,... etc.), and receive a unique affiliate link (it's a code that leads Buyers from Publisher to Advertiser through "CLICK HERE" link.

 

• Advertiser A sells weight loss products and looks for Publishers to promote their product/service. They offer a commission of certain % to you when a sale is led by your website.

 

• Your job as an Affiliate (Publisher) is to promote Advertiser A's product online to attract Buyers to your website.

Affiliate Marketing Commissions:

• When a buyer, someone who is looking for a weight loss product, comes to your website, there would be places where you used "CLICK HERE" links (affiliate code) to direct the buyer to theAdvertiser A's main website.

 

• When the buyer makes a purchase, the affiliate code will info Advertiser A where the lead came from, and it will be credited to you. You will get the commission for leading the buyer to Advertiser A.

The process is simple. Affiliate Marketing is like being a broker (offline). You bring the customers in and get paid for your work. Instead of knocking on door to door or making cold calls, you just need to setup a website (one page of web page will do the job wonderfully). Bring traffic to your website, invite people to "CLICK HERE" and take them to where the produce/service site is.

3 Months ago when I decided to be an online affiliate, I signed up for a membership and learned to create a squeeze page (one page website), and one thing after another, I've become an affiliate marketer.

What I have learned I am more than happy to show you - FREE of charge. Go to http://www.howtobuild-websites.com and get 1 FREE eBook that will show you how to build a website in a few hours, and also, 26 FREE videos to show you how to make money online.

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What is IFRS?

What Is IFRS?

By Silvia Mahutova

So, what is IFRS? Why does everybody talk about it? Why do we need it? And who uses it?

IFRS is an acronym for International Financial Reporting Standards. It is a set of principles and regulations for reporting many different operations in the financial statements.

Very much like USA uses US GAAP, Canada uses its own Canadian GAAP, Great Britain applies UK GAAP etc., the whole world will use its global GAAP - IFRS.

[caption id="attachment_57" align="aligncenter" width="300"] What Is IFRS?[/caption]

Why do we need IFRS?

Today, everything on the globe comes closer than ever before. All things are harmonizing and people study how to behave globally.

And really, it is clear in each move you make - it is possible to purchase the same products in any location, you can find similar meals in "Jack in the box" anywhere in the world and it is also possible to fly wherever on earth within one day.

Accounting together with financial reporting is not any exception. That is where IFRS has its own position - it will act as a harmonized group of regulations with respect to financial reporting around the globe.

Do you know the primary benefit of IFRS?

Here, in the globalizing planet, the crucial idea is the ability to compare.

Picture yourself as the owner of multinational company who wants to examine economic outcomes of your organizations from various areas. But - every single area applies its own bookkeeping guidelines!

Let's say that revenues are reported on accrual basis in some area, and on cash basis in a different location. How can you know which of your organizations reaches nicer revenues when these results are incomparable?

Or possibly, you are a tiny investor acting in the stock market. Investors usually review financial reports of their potential shares prior to buying. How can you read all the documents when everybody reports differently?

You get the understanding. IFRS gives us harmonized guidelines for bookkeeping and presenting the financial information, so that everybody understands financial reports from any place in the world. And not only this - if some corporation tries to get abroad funding or enter the stock exchange, it should prepare its financial reports in line with IFRS.

What countries present their financial statements according to IFRS?

Currently, more than 120 countries follow IFRS, some of them entirely, a few of them partially. In ideal case, IFRS should be implemented globally by 2015.

In fact, undoubtedly one of the key participants in the worldwide economy, the USA continues to use their own US GAAP. Under this circumstance, US GAAP and IFRS will converge and also gradually reduce dissimilarities. The IFRS convergence process should have been completed until 2012.

But, FASB (setter of US GAAP) and IASB (setter of IFRS) slowed up the convergence progress and latest due date is approximately 2015. Additionally, SEC (Securities and Exchange Commission) should have decided with regards to inclusion of IFRS for U.S. companies by the end of 2011, but the decision has been postponed by several months.

You can find helpful information, examples and free e-book about IFRS at http://www.ifrsbox.com - a site dedicated to online IFRS training: helping accountants, chief financial officers, finance students and anyone interested in understanding IFRS and its application in their daily job.

Silvia Mahutova, FCCA

Silvia is a founder of http://www.ifrsbox.com - the site helping accountants, financial analysts, chief financial officers and other interested people to understand IFRS and gain deeper knowledge about it.

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