MUST WATCH: Modern Monetary System Explained

I cannot recommend this video highly enough. It is extremely powerful as it explains step-by-step the machinations of the modern monetary system. Mike Maloney is absolutely spot on about this: the system impoverishes the working class every single day. This is why the majority of the working class in South Africa will become poorer and poorer with time, and their anger and resentment toward the ‘wealthy’ and ‘capitalists’ and ‘whites’ will grow as well. In a day, the video has already received nearly 400,000 views (and counting).

Continue reading

Here Comes the Water Price Crisis

News today is that the Department of Water Affairs has said it must borrow an additional R380 billion to reach the R700 billion it needs to meet the country’s demand for water over the next decade.

I won’t go into much detail of the problems facing this sector, as I’ve done so on many occasions before.

April 20, 2010: The Water Crisis Cometh

This is a long-term negative trend and once the severity of overconsumption and underinvestment, and capital depletion breaks in the media, the Eskom crisis will look like a picnic.

The dam wall is already starting to crack.  The other day a leaked memo by a South African public official alluded to water prices needing to rise by 18 times.  That would make our estimates look rather tame and would unleash a political firestorm.

South Africa, welcome to the days of higher water prices and more economical water usage.

February 21, 2012. Water Crisis Bubbling Under the Surface.

A water crisis is bubbling just under the surface in South Africa. The government has not maintained –  never mind expanded – the capacity of other State Owned Enterprises such as Transnet, Portnet, Eskom, or the road network to deal with growing demand, and here’s more evidence the water catchment, purification, or distribution utilities have not been managed any better.

Municipal water tariffs are well below a level that would allow the state to maintain and reinvest in water infrastructure. Also,  prices are too low to ration demand for water. There is massive excess demand owing to the relatively low public water prices.

Water tariffs have not kept up with other commodity price increases in recent years. This is set to change in the coming decade or two. Expect a massive reallocation of capital into water catchment, purification, and distribution infrastructure in coming years.

March 15, 2012. Water Prices Are Too Low.

Whichever route this takes, the government will be extracting huge sums of money from the private sector to get their hands on the resources to patch the failing water infrastructure.

March 16. Have Another Glass of Crisis.

The government is going to suck massive amounts of resources from the private sector to pay for the mess it has created after a good 17 year party since the ANC took over. This is going to be a water price crisis, not so much a water shortage crisis. There is a mismatch of supply and demand because water prices are set too low by the government. The increase of water prices is going to be dramatic to make up for this. This has major implications for household spending and corporate factor prices. A big re-allocation of resources is on its way. Be ready for it.

Anyone who is familiar with the teachings of Ludwig von Mises and Murray Rothbard on the problems of socialism should not be surprised by the current water crisis. It was very predictable.

Regarding Ethiopia’s Investment Environment

You thought the South African government was bad about blocking foreign investment in SA. The Ethiopian government blocks foreign investment in the following sectors (according to US state department):

  • banking,
  • insurance, and
  • financial services.
  • broadcasting;
  • air transport services;
  • travel agency services,
  • forwarding and shipping agencies;
  • retail trade and brokerage;
  • wholesale trade (excluding supply of petroleum and its by-products as well as wholesale by foreign investors of their locally-produced products);
  • most import trade;
  • export trade of raw coffee, chat, oilseeds, pulses, hides, and skins bought from the market; live sheep, goats and cattle not raised or fattened by the investor;
  • construction companies excluding those designated as grade 1;
  • tanning of hides and skins up to crust level;
  • hotels (excluding star-designated hotels);
  • restaurants and bars (excluding international and specialized restaurants);
  • trade auxiliary and ticket selling services;
  • transport services;
  • bakery products and pastries for the domestic market;
  • grinding mills;
  • hair salons;
  • clothing workshops (except garment factories);
  • building and vehicle maintenance;
  • saw milling and timber production;
  • custom clearance services;
  • museums, theaters and cinema hall operations;
  • and printing industries.

The state also owns all the land in the country, private citizens can only lease land for 99 years from the state. Therefore land can’t be used as collateral for loans.

And we wonder why a place like Ethiopia is so poor?

Do Public Schools Prepare You For Life In A Sweatshop?

Could it be that the public educational system, by jamming students into a confined room, and seating them all facing in one direction in a grid-like seat formation for some eight hours a day like this:

Is meant to create a person that is accustomed to working in conditions such as this:

Not very different, is it?

People generally hate the concept of sweatshops and have a lot to say about major global companies having their products manufactured in sweatshops in the “developing world”, but have nothing to say about kids jammed into a classroom against their will for up to eight hours a day, which obliterates the chance of ever creating a youth of independent and creative thinkers entering the work force.

Food for thought.

PS. I could write a lot more about this, but like that guy in the image above looking at the camera, I also have a desk with a workload that resembles a traditional sweatshop, so maybe next time. What you can do instead though is to read James Altucher’s articles “Unschool Yourself,” and “8 Alternatives to College.” He’s given this a lot of thought and his views are, as always, very interesting and insightful.