The Bitgold Debit Card Criticism

Mish Shedlock is one of the best financial observers, of an Austrian econ bent, and a claim to fame for sussing out how credit behaves like money and the distinction between currency inflation and credit (mal-credit) inflation. He's contributed fine work.

But none of us has the whole picture, and Mish has a blind spot for gold.  He come up with an actual solution (more or less) to a theoretical problem.

The problem is failure to maintain gold as money, as though gold were fundamental to day to day business.  It is not.  Gold is only necessary for liquidating relationships.  All other commerce can, and must, operate on credit, but only bene-credit, never mal-credit.  Under Copernicus' (and later Gresham) the bad drives out the good,   Mish has a solution to a problem that does not exist.

I explain below what the buyout of GoldMoney by BitGold means, but first let's start with a look at details of the announcement of the first ever debit card backed by gold in real time.

• First Transactional Gold Account – Gold can be used in payments in addition to savings.

• First Gold Merchant Platform – Process Credit/Debit Cards and earn gold!

• First "Real" Gold Card

• BitGold is an online bank account that is backed by gold as opposed to currency

• Gold can be redeemed in as little as 10 gram increments (approximately $370 at today's price)

• Publicly Traded, Audited by PwC, Insured, Backed by Strong Investors

Unlike other cards that sell gold at a premium then issue a debit card, BitGold is a gold-based settlement system in real time. It is also the first gold-based card of any kind available in the US.

Careful Mish, Toronto is where many a dream comes to tears, and this is Toronto based.

But to the point, we need credit, bene-credit, to recover, along with a massive price correction in real estate and equities.  People extending usury-free credit all along the production and consumption line is necessary and sufficient to the task.  A key feature in bene-credit commerce is people facing people. That is missing in the bitgold debit card.

Watch out, Mish.

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The Destruction of French Restarateurism

I am surprised at widespread reports of how bad food is in French restaurants in Paris, something my daughter studying there confirms.  Eric Margolis addresses this, and if you read the whole article, you'll see he notes Italian restaurants are the place to go.

Mitterrand imposed a 35-hour workweek on France that remains to this day, damaging France’s economy.  Restaurants could no longer keep one shift for lunch and dinner.  A full second shift was needed – something that many small restaurants and cafes simply could not afford.
At the same time, formation of the European Common Market led to ingredients coming from ever further away: tomatoes from Spain or Turkey, vegetables from Eastern Europe.  This means food lost its freshness and nutritional quality.  Previously, restaurateurs knew the farmers who supplied their produce and meats.  No longer.

Independently, my daughter patronizes only Italian restaurants in Paris, but I think Margolis misses one important point, the Italian restaurants are run by family, not employees, thus beating the system.

If you want to survive the coming fights of entitlement vs short rations, the start a business, better a family business.


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Passion and the Glove Box Market

I am not sure even to what this report refers, but reading the outline it occurred to me anyone starting up their own business would naturally do a similar study on their own (and not spend the $2600 for the report), and the details eventually gathered would require that passion/joy matrix with which I introduce my seminars. These reports omit one very important, indeed the most important bit of info if starting up a business, and item I start with... see if you spot what is missing.  To wit:

With 170 tables and figures to support the worldwide glove box market analysis, this research provides key statistics on the state of the industry and is a valuable source of guidance and direction for companies and individuals interested in the market.
The 14 companies of glove box market profiled in this 2015-2020 research report include MBraun, VAC, Labconco, Extract, Korea Kiyon, Miwass, Sigma-Aldrich, Yamato, UBIQ, Mikrouna, Nanda, Etelux, DECO and Dellix. Order a copy of the global glove box market 2015-2020 forecasts report athttp://www.reportsnreports.com/Purchase.aspx?name=402869 .
2010-2015 data and information for glove box production by regions (US, EU, China, Japan etc.) and their production price, cost, gross production value analysis, supply and import-export consumption is covered in this report. Glove box product specifications, manufacturing process and cost structure analysis is provided for the businesses already into the glove box market and/or planning a market entry strategy. 2015-2020 forecasts information and data is given for glove box capacity production overview, production market share analysis, sales overview, supply sales and shortage, import export consumption as well as capacity production cost price production value gross margin.
Partial list of data tables and figure provided in this glove box market research for 2015 with forecasts to 2020 includes:
Figure Glove Box product picture 2
Table Glove Box Classification and Application 3
Figure Glove Box Industry Chain Structure 4
Figure Glove Box International Development History 5
Figure 2014 Global Major Manufacturers Glove Box Production Market Share 6
Figure 2014 Global Major Countries Glove Box Production Market Share 7
Figure 2015-2020 Global Glove Box Capacity Production(Unit) and Growth Rate 8
Figure Glove Box China Market Development History 9
Figure 2014 China Major Manufacturers Glove Box Production Market Share 10
Figure 2014 China Key Regions Glove Box Production Market Share 11
Figure 2015-2020 China Glove Box Capacity Production(Unit) and Growth Rate 11
Figure Glove Box International and China Capacity Market Comparison 12
Figure Glove Box International and China Production Market Comparison 12
Table 2014 Global and China Key Manufacturers Glove Box Product Line Capacity 13
Table 2014 Manufacturing Base (Factory) Global Regional Distribution 13
Table 2014 Global and China Key Manufacturers Glove Box R&D Status and Technology Sources List 14
Table 2014 Global and China Key Manufacturers Glove Box Raw Materials Sources List 15
Table 2010-2015 Glove Box Production (Unit) by Regions 16
Figure 2010 Global Glove Box Production market share by regions 16
Figure 2011 Global Glove Box Production market share by regions 17
Figure 2012 Global Glove Box Production market share by regions 17
Figure 2013 Global Glove Box Production market share by regions 18
Figure 2014 Global Glove Box Production market share by regions 18
Figure 2014 Glove Box Price by key Manufacturers 19

Zero info on buyers.  If you are going into an industry, to start you do not need much if any of the above info, you do need customers.  Here again this rather important element is overlooked.  I start with customers because they are the most important thing in business, and as above, often overlooked (or more commonly, assumed). Nonetheless, in time you should have all of this info.  You'd only create one report starting out, but within a year or two you'd have all of these done, on your own.

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Making Trade Shows Pay

I very much like this report by an Australian company for its observations from its research, which tracks my experience and research....

 B2B sales are all about strong relationships, which are only built offline. 
Everyone has experienced the feeling of having made great progress while at the event, however a month later nothing has resulted from the show and most contacts have been forgotten.
Trade Shows are incredibly expensive once the “hidden” costs are factored in, particularly staff time.
... most businesses did not use effective marketing around the show to build long term relationships with potential clients. Instead, those who followed up relied on the old ‘spray and pray’ - scan cards and start sending sales EDMs.
The changes in just 2 years were dramatic. The giant stands with expensive fitouts and lots of free stuff were gone. Also noticeably absent were tacky promotional women (see below).
Passers by are a diverse group: Exhibitors; students; people selling to you; competitors; show organisers; collectors of free food, booze and promotional items; etc.
Maybe 10% are prospects - you need to focus your expensive and scarce time on them.
And have something valuable to send out - remember they don’t need another brochure! 

My replies to these are, yes, customers are made in person, not online.  Trade shows are exciting and fun and they give the felling of great success, but it is very easy to come home empty handed and stay that way.  You have to be disciplined about the show. You must create customers before you ever go to the show.  trade shows are expensive if you do all the pointless stuff those who do not show up again do.  Otherwise, they can be quite economical, if you stick to what is necessary and sufficient.  I think I am one of the rare people who knows what that it at a trade show. Those passers-by need ot be worked and qualified, if they did not come to buy from you, get rid of them.  "I came here to sell wine, why are you here?" This can be done nicely, but it should not take you more than ten seconds to be selling or have gotten rid of the lookie-lou. Right, you hand everyone your LCL MOQ FOB, the most valuable thing you have to offer.  It is the only thing a buyer wants form you anyway.

Relationships start with good conversations and these start with good questions. Trade shows should be about researching and connecting – Converse first, Convert later. 

I am not so sure I like the degree to which the report recommends using LinkedIn to mediate your customer acquisition, viewing LinkedIn as a lead generator.  We do not want leads, we want the name of the decision maker at a given company that needs to be buying from us, so we may approach that person directly by name for a sale.  That is a big difference.  One of my past participants and created an quick video of an excellent use of LinkedIn.

One section to highlight in the report is something frankly I had not thought of...  ask what they know about you...  the reason I had not thought about it is because we are new and not afraid for prospects to know it, we cite its advantages.  But there is something to be said for the intriguing implication they should know about us.  Anyway, I'll be reflecting on these questions:

And now, to ask them about your business...
● What do you know about our company and the markets we serve?
● Do you currently use services like ours? Do you think it’s likely you will in future? What’s blocking companies like yours from using [our services]?
● What’s do you see as the downside to [our services]?
● What’s a positive of [our services]?
● Who in your company is best to speak to about how we might work together? 

Not enough booth-sharing going on, and I much agree with both of these conclusions.

(1) Complementary companies: a big example is mega stands such as Salesforce.com. In 2013 there were at least six companies who were ‘partners’, each of which added a variety of value and tools to their powerful CRM offering. Essentially they were complementary companies who have Salesforce’s customers before or after they do.
This strategy is a powerful one for all exhibitors, particularly in the rapidly changing ICT world. Also, for SMEs, it is a great way to get a larger, more impactful booth on a limited budget. Plus it ensures your booth is better manned throughout the show which is often a challenge for smaller companies and startups.
(2) Companies from a particular country or region, which group together to keep the cost affordable. These are often sponsored by governments such as Germany, India and regions in China.
We believe this strategy is less effective at major shows when the exhibitors are grouped together by what service they provide. So having a diverse range of unrelated suppliers in one location makes you harder to find and the overall stand perhaps confusing. 

Now, salesforce.com is cited as having a shared booth, but it is even more important for small biz to be sharing booths.  As an aside, the report excoriates saleforce.com in other ways.  I like the criticism of salesforce.com, a company that is a pure mal-credit grown false economy wonder.  I expect that to take a massive hit in the next downturn.

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Oct 1 EMV Credit Card Switch - More Deflation Evidence

For the last 40 years, the banks could book the profits and socialize the losses of credit card fraud for the simple reason the credit was mal-credit, that is it cost them nothing.  Since they made the credit out of thin air, they actually lost nothing to fraud.  The banks simply kept creating more credit to cover their losses, and prices went up to pass the losses onto the consumer.  How much fraud occurred meant nothing to the banks, we consumers would ultimately cover it with higher prices when next we shopped.

We now have hyperinflation in mal-credit where those who qualify for credit either don't want it or use bene-credit, and those who do not qualify, overrated borrowers like students, home and car buyers and corporations are snapping it up for those purposes.  (Home buyers are a special case, they are secondary, with real incomes but based on the false economy, in any case paying waaaay to much.)

So knowing full well a bust is coming, and no longer able to pass on the losses through mal-credit inflation, the banks have come up with a change that suits them in a delflationary economy;

Credit card fraud is the merchants problem, not the banks, unless you upgrade to new technology:

Right now, if you process a fraudulent card, the card issuer absorbs the cost, whether it be Bank of America, Chase, Capital One, etc. After the “liability shift” hits, if someone pays with a fraudulent chip card and you haven’t upgraded to an EMV reader yet, the liability falls on you. The card issuer is off the hook.

Of course the switch is voluntary, so who cares?  Well, voluntary for now, as always (but recall the new risk).  But wait, 

Moreover, U.S. banks and card companies will not issue personal identification numbers (PINs) with the new credit cards, an additional security measure that would render stolen or lost cards virtually useless when making in-person purchases at a retail outlet. Instead, they will stick with the present system of requiring signatures.

So we are going to a system, and putting in that real cost to retailers, and mal-credit funded to bankers for a system that does not work?  Sounds about right...

The liability issue has engendered anger on the part of some retailers, but it has also provided an incentive for compliance with the new standards.
"When banks and card companies are only concerned about shifting the liability to the retailer, you have to comply first," Brooks Brothers Chief Executive Officer Claudio Del Vecchio said. "And then think of solutions that will fix your problems."

As to small business,

Anne Manion, owner of the women's clothing and accessories boutique Girl Hour said she doesn't think small businesses are as exposed to data breaches as large retailers are, but she is still thinking about reaching out to her bank about upgrading terminals at two of her stores.
"The cost implications are important and I'm going to wait and see if by the end of the year there is a way to rent these terminals instead of buying them," she said. Manion already pays a $500 fee every month for the two card terminals she now has.

I've had a merchant account with Wells Fargo for over a decade associated with my online business, feeding the beast.  Today I stop accepting credit cards, you can create a PO, have me bill you, or mail me a check.  In a year I'll report the resulting differences

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Business Masters Thesis or Phd Dissertation Topic Suggestion

Let's go back to Stockman's graph:



Again, he red line is the production of USA as a nation, the output of the means of production, since 1981.  You may click on it to make it larger.

Now the nature of what we produced has certainly changed since 1981, we now produce much more in services and far less by manufacturing.  In any event, the blue line represents the claims on the productive capacity of the USA.  In my earlier post I note there is no way the assets themselves can ever satisfy the claims.  The coming bust will to some degree adjust the claims, and politicians will pick winners and losers, as usual.

People desiring topics upon which to write masters theses and phd dissertations ought to consider a few possibilities:

1. To what degree did the mal-credit introduced in the 1970s lead to malinvestment and misallocation resulting in what changes in the red line asset allocation?

2.  To what degree did the tax-avoidance Roth IRA and other retirement plans that require investment funds be dragooned into an extremely narrow range of assets help blow up the bubble the blue line represents?

3.  How much of the space between the blue line and the red line might have funded small business expansion absent mal-credit and dragoon investment options?

4. A scary thought, but how much is the nominal obligations of the welfare/warfare state is in addition to the claims represented by the blue line on the red line?  For all claims of any sort relating to USA as a country are against the red line, ultimately.

We currently borrow 1/2 of what we spend to keep this going, demonstrating clearly the red line cannot support even the tax burden of the nation.  What cannot continue will eventually stop.

What starting up your own business does is makes YOUR blue line even lower than your red line as you extend credit to customers, and legally escape the confiscations coming while simple sidestepping the fight of all those claims on those dwindling assets.

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The Trade Development Junket

Here is how it works...

JEFFERSON CITY, Mo. (AP) — Jesse Stricker was wowed from the moment he stepped off an airplane in Milan, Italy. A limousine was waiting to carry him to a luxury hotel. Then it was on to a formal restaurant, where Stricker found himself seated at a table with Missouri Gov. Jay Nixon, sipping fine wine and sampling fabulous food.

And how does this gain a small business orders?  And the cost?

So far, that hasn't offset Stricker's costs for the trip, not even when reduced by the public subsidies he received. Of his $11,500 in costs, more than $3,600 was reimbursed by a Missouri Department of Economic Development program that aids small businesses, and Intek got nearly $4,900 from a federally funded grant program for businesses with declining sales or employment.

So taxpayers are footing the bill for limosine grade vacations, and bearding politicians along for the ride. And the result?

Stricker struck no immediate deals in Italy or Spain. But one German company agreed to buy nearly $1,500 of infrared heaters, leaving Stricker hopeful of more sales in the future.

Well, no wonder Intek has declining sales or employment, as this gig requires!  (Wait... what if a company has declining employment due to growth through automation?)

Why would anyone go to a trade show before having customers?  Enticed by limosine vacations and being part of a governor's posse?  And end up still paying too much for too little.  This is why I teach how to get business first, then go on an organic, productive trade show trip.

The  tax laws which already make such trips tax-exempt (or paid in pre-tax dollars) are necessary and sufficient to the task of business development.  It's a siren that kills countless small business, get a "deal" on costs, but the costs are too much for ineffective.

How many overseas exporters do you think hang out with politicians?

No, you want to develop business, you go where your buyers are, when they are there.  Doing so costs very little, and certainly needs no taxpayer bailout.  It is terrible we do it for Boeing, and terrible we do it for tiny Intek.  Time to be rid of this welfare program.

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The Free Market in Dope

Legalization of course does not a free market make, but in the measure things are deregulated, you get more better cheaper faster.  Even dope.

Here's more from the note:
Since last June, the average price of an 1/8th ounce of recreational cannabis has dropped from $50-$70 to $30-$45 currently; an ounce now sells for between $250 and $300 on average compared to $300-$400 last year. More competition and expansion of grow facilities contributed to this price decline, but it is also a natural result for any maturing industry as dispensaries try to find the market’s equilibrium price.
Even with the declining prices, sales are still exceeding those of last year for recreational marijuana.

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The Greeks On Trade

If we studied Greek in school again, we'd learn some wonderful things...

the Greek verb katallasso  meaning "toexchange", "to admit in the community" and "to change from enemy into friend.”

Indeed, trade changes enemies to friends.

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