What is money. Part 1 - Creation of commodity trading.

June 29, 2010
Where do we begin? Well I learned from the movie "The Sound of Music"  that the very beginning is a very good place to start. So let's go back to the beginning of money.

Before the idea of money, people relied on gift economics, or a barter system. Under these economies people produced different goods and services and essentially traded stuff for stuff. As you can imagine, this kind of system would have it's difficulties. If sally bakes bread and John raises cows, then how do they determine how many loafs of bread equal a cow? What if the 2 people live far apart...it could be difficult to transport the goods back and forth between the 2 parties. What if Sally doesn't want a cow, but John wants some bread? How do they come to a trade? This problem is calle dthe "double coincidence of wants." The only way John can get bread from Sally is if he can give something that Sally wants. He may have to trade a cow for something else (which John doesn't really need or want) just in order to trade that other item to Sally for the bread. This trade is called "indirect exchange."

Eventually people came up with the idea of having some kind of item that people would universally accept as method of payment. The item had to be

  •  difficult to reproduce or counterfeit,
  • scarce in supply
  • easily transportable
  • and non perishable
 There are records of many different civilizations using all kinds of things for trade. Some examples include amber, ivory, jade, leather, nails, rice, salt, vodka and sea shells. This was the creation of commodity trading. 

Do you know what the next major advent in money was? Many might guess gold coins, but something else significant took place even before coins. BANKS! Stay tuned for how banks help define our world of money as we know it.


History in US monetary system

June 29, 2010
Something I've been studying a lot the past 6 months is the US monetary system. I think it is such an interesting topic to explore because it is primarily responsible for our views of what money is. Yes you and I might live in Canada (or any other country for that matter) but like it or not the US monetary system controls many (probably all) of the worlds financial markets.

People don`t have a clue what money is. Most people know that it is a currency that allows us to buy and sell stuff. We k...
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Canada to get national security regulator?

May 25, 2010
Did you know that Canada is weird when it comes to security regulations? Well it is. Canada is the only G8 country who doesn't  have a national security regulator. To understand what I mean, take a look at the USA: they've got the Security and Exchange Commission (SEC). Canada has by contrast the Canadian Securities Administrators (CSA) except the CSA doesn't have any real power. They're kind of just a volunteer board of people from all the separate jurisdiction regulators. The true regulatio...
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I'm back.

May 25, 2010
So I'm going to try this blog thing again. I don't plan on posting everyday, but hopefully a couple of times a week.
Thanks Doug for challenging me on this.
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Bank of Canada holds overnight lending rate at 1/4%

January 19, 2010
Today the Bank of Canada announced that they will hold the overnight lending rate at 0.25%. Their press release describes a positive outlook for economic recovery, even better than their October review, however they say the economy is still dependent on monetary and fiscal stimulus. Interest rates will stay low for another term. The next interest rate review date is April 20th.

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Two alternatives to investing in mutual funds

January 5, 2010
I generally have a negative view of investing in mutual funds. When I was a mutual fund dealer with one of Canada's top financial institutions, I remember the feeling I had when trying to sell people mutual funds. I would go through the typical "know your client" questions to get an idea of an individual's investment objectives and risk tolerance but when it came down to picking the specific funds it felt like a roll of the dice. The task was always to make a the best informed decision on whi...
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Monetary Thought for 2010

January 4, 2010

 Well 2010 is now here. As those who have been following thus far would have noticed, I took a break during the Christmas holidays, but we're back at for the new year.
I hope everyone had a wonderful holiday season with friends and family. I am excited about the year ahead, and the growth that can be realized. I hope you will join with me and make 2010 the best year ever.

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Canadian Mortgage Lending Tightening Up?

December 22, 2009
Finance Minister Jim Flaherty said yesterday that he is concerned about Canadians going into deep debt during this time of low interest rates, and when interest rates go up, families would have a hard time managing the debt loads. His idea would impose larger down payment requirements on home purchases (from the now low 5% minimum) and possibly shortening the maximum length of amortization down from the current 35 years.

I think that this would be a good move by the Conservative Government bec...

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Canada's Debt Clock

December 21, 2009
I thought this was really interesting: Canada's Debt Clock

It is interesting to watch the debt clock tick upwards, and at quite an alarming rate I might add. Remember more debt = more printed money = decreased purchasing power for the dollar = inflation = people with cash lose and people with hard assets win.

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Robert Kiyosaki says: "Don't save money...save commodities"

December 18, 2009
I think Robert Kiyosaki is awesome. For those unfamiliar with him, he is a world best selling author, who teaches financial thoughts and ideas, and is generally big on increasing your "financial intelligence." I like Robert so much because he does a great job at explaining complex economic/money matters in everyday simple terms. 

In his most recent online update he describes 6 ways to take advantage of all the US Federal Reserve bailout money, which he calls "hot money." One of the suggestions...

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