Authored by Frank Shostak via The Mises Institute,

Why does the dollar bill in one's pocket have value? The value of money is established, according to some experts, because the government in power says so. For some commentators the value of money is on account of social convention. What this implies is that money has value because it is accepted. 

And why is it accepted? …because it is accepted! Obviously this is not a good explanation of why money has value.

The Difference between Money and Other Goods

Let us try another approach. Demand for a good arises from its perceived benefit. For instance, people demand food because of the nourishment it offers them. Likewise, people demand money not for direct use in consumption, but in order to exchange it for other goods and services. Money is not useful in itself, but because it has an exchange value—it is exchangeable in terms of other goods and services. Money is demanded, because it offers the benefit of its purchasing power, i.e., its price.

Consequently, for something to be accepted as money it must have a preexisting purchasing power, a price. So how does a thing that the government proclaims will become the medium of exchange acquire such purchasing power, a price?

We know that the law of supply and demand explains the price of a good. It would appear that the same law should explain the price of money. However, there is a problem with this way of thinking, since the demand for money arises because money has purchasing power, i.e., because money has a price. Yet if the demand for money depends on its preexistenting price, i.e., its purchasing power, how can this price be explained by demand?

We are seemingly caught here in a circular trap, for the purchasing power of money is explained by the demand for money while the demand for money is explained by its purchasing power. This circularity seems to provide credence to the view that the acceptance of money is the result of government decree and social convention.

Mises Explains How the Value of Money Is Established

In his

Authored by Wolf Richter via WolfStreet.com,

All kinds of weird records are being broken. But it’s scheduled to expire, and then what?

The New York Fed released a doozie of a household credit report. It summarized what individual lenders have been reporting about their own practices: If you can’t make the payments on your mortgage, auto loan, credit card debt, or student loan, just ask for a deferral or forbearance, and you won’t have to make the payments, and the loan won’t count as delinquent if it wasn’t delinquent before. And even if it was delinquent before, you can “cure” a delinquency by getting the loan deferred and modified. No payment, no problem.

Nearly all student loans go into forbearance, delinquencies plunge.

Student loan borrowers were automatically rolled into forbearance under the CARES Act, and even though many students had stopped making payments, delinquency rates plunged because the Department of Education had decided to report as “current” all those loans that are in forbearance, even if they were delinquent. Yup, according to New York Fed data, the delinquency rate of student loan borrowers, though many had stopped making payments, plunged from 10.75% in Q1, to 6.97% in Q2, the lowest since 2007:

Student loan forbearance is available until September 30, and interest is waived until then, instead of being added to the loan. In a blog post, the New York Fed said that 88% of the student-loan borrowers, including private-loan borrowers and  Federal Family Education Loan borrowers, had a “scheduled payment of $0,” meaning that at least 88% of the student loans were in some form of forbearance. Until September 30. And then what?

Delinquent loans are “cured” without catch-up payments.

And because delinquencies in student loans, auto loans, credit card debt, and mortgages are being “cured” by putting the loans in deferral programs and modifying the delinquent loans, they become “current” loans even though no catch-up payments have been made.

Still, about 32 million people are claiming unemployment insurance. A much smaller employment shock during the Financial Crisis caused the percentage of delinquent loan balances to soar, and the percentage of “current”

The COVID-19 pandemic has caused an unprecedented monetary and fiscal expansion globally. As BofA Chief Investment Strategist Michael Hartnett put it, "The monetary and the fiscal stimulus in terms of the announcements thus far, it comes to $20 trillion, $8 trillion of monetary stimulus and $12 trillion of fiscal stimulus. And that number is a little over 20% of global GDP. So it's just astonishing and breathtaking and you have to sort of pinch yourself sometimes to sort of realize that it's actually happening."

Yet the expansion has been anything but uniform: while the Federal Reserve balance sheet expanded by nearly $3 trillion from March to May (14% of GDP), the balance sheet of China's PBOC actually contracted by almost RMB 1 trillion from January to June. At the same time, a PBOC official stated in a recent press conference that monetary policy support in H1 was equivalent to RMB9 trillion (9% of GDP).

This begs the question: why didn’t the PBOC balance sheet expand during the recent easing cycle? How have various easing measures by the PBOC impacted its balance sheet? And how much room does the PBOC have to grow its balance sheet? In a recent note addressing these questions and more, Goldman provided the answers in a Q&A format.

Why didn’t the PBOC balance sheet expand during the recent easing cycle?

Investors are all too familiar with how the Fed’s action in response to COVID-19 outbreak has affected its balance sheet. With policy rate cut to zero, the Fed implemented "Unlimited QE" by adding Treasuries and MBS on the asset side of its balance sheet financed by reserve creation on the liability side (Exhibit 1). The pattern was similar to QE1 in 2008 during the GFC followed by QE2 in 2010 and QE3 in 2012.

However, the easing mechanism is quite different for the PBOC. Unlike the US, China has been gradually transitioning from a quantity-based monetary policy framework to a price-based one. Quantity-based instruments such as RRR cuts still feature prominently in the central bank’s toolset. When the PBOC cuts RRR, the immediate effect is a reclassification of required reserve to excess reserve with no net impact on central bank

Authored by Thomas Lifson via AmericanThinker.com,

When two powerful Democrats suddenly reject the position of the teachers unions and support the position argued by President Trump, we know that something’s up. 

Andrew Cuomo’s and Chuck Schumer’s abrupt switch of position to support reopening schools in New York leaves a lot of blue state Democrats exposed to intensified criticism for keeping their own schools closed.  I see five possible reasons that could explain this dramatic switch.

One

Let’s start trying to account for the change in position by taking Senator Schumer’s press conference explanation at face value.

“What is one of the biggest problems facing us in the next month? As the Speaker mentioned, schools. Opening up the schools safely. If you don’t open up the schools, you’re going to hurt the economy significantly because lots of people can’t go to work.”

Other blue state Democrats like California’s Gavin Newsom and Michigan’s Gretchen Whitmer have continued to behave in ways that inflict maximum economic damage in their states, suggesting that they expect President Trump to be blamed by voters for a slow or negative economic recovery, even at the cost of immiserating their own constituents.

Maybe both New Yorkers are scared that New York’s decline has reached the point that their own political futures are imperiled. After all, Cuomo just begged wealthy New York City residents return to the city from their refuges in the Hamptons, Hudson Valley or even out of state, offering to buy them a drink or cook dinner for them as a lure to pay the extra municipal income tax liability they would face.  

With its crime rates soaring and its major lifestyle appeal for the wealthy – restaurants, theatres, high end shopping, museums, and society gatherings – unavailable, New York City could easily lose the top one percent of its taxpayers, the people who cough up half of its revenues. Should that happen, a truly dystopian future could rapidly eventuate. Vacant apartment buildings and hotels seized for nonpayment of taxes or purchased on the cheap and used for dormitories for the homeless. Schools and municipal services

Authored by Trevor Thomas via AmericanThinker.com,

Even Fox News declared,

"A 7-year-old old boy from Savannah, Ga., with no underlying conditions, became the youngest victim to die from the coronavirus …"  (Emphasis mine.)  

Even my local radio station — repeating the deception every 30 minutes for hours on end — which, among other conservative programming, carries The Rush Limbaugh Show, helped perpetuate this latest example of Wuhan virus "fear porn."

The AP — whose stories are often widely distributed in the media — did more accurately report that the boy died "with COVID-19."  However, the AP went on to say,

"The boy had no other chronic health conditions, according to data released by the state[.] … The boy's death comes amid nationwide debate about the risks that children face in getting infected or spreading the coronavirus, particularly as the school year begins."

The implication is that schools should not reopen, fall sports should not be played, and America must remain in shutdown mode.  If not for our own sakes, we must do it "for the children!"  As is often the case with so many things when it comes to the Wuhan virus and the drive-by media, few things could be farther from the truth.

As of late Friday evening, except for one Savannah TV station — whose more accurate account I first found via Facebook — I could find no drive-by media telling the whole story on this tragic episode.  

WTOC reporter Cyreia Sandlin provides some crucial details on the seven-year-old's death that the vast majority of the media have so far ignored:

So it seems that the boy died not "from COVID-19," but rather as the result of a seizure and a fall in the shower.  It seems that, prior to his death, the child had zero Wuhan virus symptoms, and that after he was pronounced dead, "a rapid test showed evidence of COVID-19 positivity."

I don't know about you, but I've followed the news and the science on this virus as closely as most anyone, and I have yet to hear

As we reported last night, the US surpassed 5 million confirmed cases (according to data compiled by Johns Hopkins) on Saturday evening (East Coast Time).

The US reported 56,070 cases Saturday, a 1.1% increase over the prior day. Total deaths have reached 162,441, the data show.

As we reported last night, Brazil also passed two critical milestones: it has now confirmed 2 million cases, and more than 100,000 deaths.

Though the numbers have rebounded a bit over the past week, on average, the daily numbers across the US have declined from a recent peak, as the outbreak in the Sun Belt outpaced the outbreak in New York. As the number of new cases in Fla. and Texas and California and Arizona has declined, some northeastern states, like New Jersey and Rhode Island, have seen a slight uptick in recent weeks (which inspired NJ, NY & Conn to add RI to the mandatory quarantine iist).

Globally, the number of confirmed cases is nearing 19.75 million.

Over in the EU, as governments sign more deals with major pharmaceutical companies to guarantee supplies of a vaccine that hasn't even been proven safe and effective yet, EU Commissioner for Health and Food Safety Stella Kyriakides told Germany's Handelsblatt in an interview that while a vaccine won’t immediately solve all the world's problems, it will allow a step-by-step return to normality, the newspaper cited Kyriakides as saying.

In contrast, in the US, Dr. Fauci, who has repeatedly reassured Congress (and the American pubic) that a vaccine would be available by the end of the year, admitted yesterday that we really don't know how effective the vaccine will be: he says it may be only "50% to 60% effective."

As Australia's second-most-populous state, Victoria (the home of its second-largest city, Melbourne) continues to struggle with the country's largest outbreak yet, neighboring New Zealand has just confirmed its 100th straight day without even a single coronavirus transmission.

New Zealand on

In what is a perfect display of the efficiency of governments in dealing with the coronavirus outbreak, a Virginia rape suspect who was released from jail due to Covid concerns turned right around and killed the woman who accused him as soon as he was let out. 

Ibrahim E. Bouaichi shot and killed his accuser in late July after he was released from jail on April 9, according to Fox News.

He was indicted last year on charges including rape, strangulation and abduction. His accuser, Karla Elizabeth Dominguez Gonzalez, had testified against him in court in December of last year.

Bouaichi was jailed in Alexandria, VA without bond until the pandemic hit, at which point his lawyers argued for his release until trial due to the virus "endangering" inmates. He was released by Circuit Court Judge Nolan Dawkins on $25,000 bond as a result. 

The conditions of his release were that he only leave his home to meet with his lawyers or pretrial services officials. Now, he's accused of killing Gonzalez on July 29. 

On Tuesday of last week, police made it known they were looking for Bouaichi, who they described as "armed and dangerous". On Wednesday, officials said he was spotted and pursued in Prince George's County where he crashed his vehicle and reportedly shot himself. On Thursday, he was listed in "grave condition". 

Bouaichi’s attorneys commented they were “certainly saddened by the tragedy both families have suffered here” and "were looking forward to trial. Unfortunately, the pandemic continued the trial date by several months and we didn’t get the chance to put forth our case.”

Judge Dawkins retired from the bench in June and didn't respond to requests for comment. 

Authored byZhang Yujie via The Epoch Times,

A run on the Bank of Huludao in China’s Liaoning Province began on Monday, Aug. 3, a day after the bank announced on its official website that its former president, Wang Xueling, is under investigation on suspicion of serious violations of the Communist Party’s law and discipline.

The stage for a bank run may have been set when the bank’s 2019 annual report showed the total profit and net profit in 2019 fell 57.86% and 59.40% year-on-year, respectively.

Starting with a run on the Bank of Gansu in western China in April, bank runs have popped up in geographically dispersed points across the country, including in Hebei and Shanxi provinces, suggesting that this bank run on Bank of Huludao in the northeastern Liaoning Province is not an isolated instance.

On July 29, the 10th largest shareholder of the bank, ASEM Industry & Trade, put its 65 million shares of the bank equity up for auction. The company was listed as a dishonest entity subject to enforcement twice last year. Also, the bank’s 2nd largest shareholder, Shenyang Dajun Ceramic Industry Co., Ltd. was an entity subject to enforcement both in 2017 and 2018.

Bank President’s Exile and Return

The Bank of Huludao, previously known as Huludao commercial bank, was founded in 2001, with a registered capital of 2 billion 5 million yuan (approximately $288.8 million). It is a regional share-holding commercial bank located in Huludao, Liaoning Province. In 2006, the China Banking Regulatory Commission exposed the Huludao bank bond case.

On Aug. 1, 2007, the Liaoning banking regulatory bureau made a decision on the case. Wang Xueling, the governor of the Bank of Huludao, was directly responsible for the misappropriation of treasury bond funds.

Wang was dismissed from office 14 years ago. However, he returned to the bank in August 2017, when he was appointed president by the board of directors, which was approved by the regulatory authority.

As of the end of 2019, the bank’s net profit was cut by nearly 60 percent and was believed to be attributed by the bank’s non-performing loan ratio rose