While attending school, I learnt many things, some were enjoyable, some not. Some were useful, some were not. However, the absence of any education about money is scandalous, and I believe deliberate. The truth is far to shocking to let the masses understand.
For this reason, we would like to share a few ideas that may be of use getting children - even teenagers - involved. As previously mentioned children do understand value, and we hope the following will not only teach them about money, it could help with division, multiplication, and connect imperial measurements to modern, metrical equivalents.
For example, the humble penny is at threat of extinction. Its value has been debased so much, that rarely do we carry it. At best we may start a coin collection by throwing them in a jar. At worst we give them away by declining change from purchases.
If one out of one hundred people that work in London everyday declined a penny in change for a snack or cup of coffee, it would account for roughly £1,000 per day, and over a five day working week one quarter of a million pounds every year handed away.
When did we lose sight of “a penny saved is a penny earned”. Or, what about, “make every penny count”?
The next time you have the chance, ask your children/ grandchildren which of these they would rather have: £1,000,000 today or a Penny doubled every day for thirty one days.
The answer is quite staggering, after twenty days your penny doubled is still only worth a paltry £5,242. There after the magic of compounding becomes apparent and by day thirty-one exactly £10,737,418.40 has accrued. One million today or nearly eleven million in thirty one days?
This simple lesson in the magic of compounding also instils patience in not giving up before the final payout. It imparts reflection and calculation before committing an answer by not jumping to emotional conclusions with only partial data.
The metal with a PhD in economics.
As we previously wrote, we believe it is possible that copper could be the basis of any future, commodity based monetary system. The “Red” metal has history as money that is as long and as significant as that of the legendary yellow metal itself.
When buying gold in fractions of an ounce, we divide the Troy ounce value into twenty Pennyweights, abbreviated to “Dwt”. For trading purposes, gold is priced in Troy ounce equivalent to 31.1034768 grams, or twenty penny weights.
Literally, each Pennyweight is equal to twenty four Grains, with the Troy Grain being a single seed of barley. One pennyweight is also equal to 1/240 of a troy pound, 1/20 of a troy ounce and approximately 1.555 grams. And as such, setting aside Volume, they will all be equal to bag 5,769 barley seeds.
Monetarily, this is a very important lesson in that every single measure of money is tangible in its value.
One British penny was equal to 1/20th a troy ounce of silver. Today’s silver price is roughly £14 per ounce, which should make the value of a modern penny worth about seventy pence. Of course, it is not anywhere near that.
A Victorian penny, weighs almost seven penny weights of pure copper. Copper is priced at around £5,300 per tonne, making a Victorian penny worth around twenty five pence in melt value.
Further extrapolating, under the traditional ratio of gold and silver created by Sir Isaac Newton- 16 ounces of silver would buy one ounce of gold – that would give our humble penny nearly three pound sterling, four Euro, or five dollars of purchasing power. Wouldn’t that be nice?
So the next time you have the chance, and you see a penny. Pick it up. A penny saved, really is a penny earned, and who knows it could double in your hands!
Risk
There are two types of risk: Systemic risk and Unique risk. Systemic risk could be described as flaws in the system that can be predicted, corrected, lowered even eliminated. Unique risk is the Black Swan event that is totally unpredictable, kind of like an aeroplane falling on your head.
If you listen to the propaganda put out via the TV and newspapers you would not be mistaken in believing the so-called credit crisis was a unique, Black Swan event entirely unpredictable. I doubt that you would have been reading if you believe that, but it is astounding how wilfully ignorant those in charge were, are and will continue to be of the risk.
Testifying before congress in March 2007 Chairman of the Federal Reserve board Ben Bernanke, the man charge of rebuilding our monetary system said this: "At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained. Congress- Joint Economic Committee.
A few months later, in May 2007 Bernanke said: “Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will liiely be limited”.
This is the guy still in his job and tasked with fixing a mess he did not even recognize as it unfolded on his very own desk!
We believe, along with many others, that this crisis is not a unique event, one that was totally unpredictable. We are convinced the so-called Credit Crisis is a Systemic event that has long been known of, and planned for. A system transformation which was the inevitable culmination of systemic risk.
It mostly began in 1998, but can be traced back to the warnings of Henry Hazlitt in 1948 in his book;“From Bretton Woods to World Inflation”.
The collapse of Long Term Capital Management, a hedge fund that was declared “to big to fail” by Alan Greenspan, was bailed out to the tune of five thousand million dollars in 1998. A few years later, the tech bubble burst and again risk was deferred with ultra low interest rates, leading to bad investment decisions prompted by cheap money.
Economists euphemistically call this risk, Moral Hazard. In plain terms it is constantly buying your child a new car every time he destroys one. Once the child realises no matter what he does, a new car is forth coning there is no incentive to take care.
Every day, we measure, quantify, lower and eliminate risk. It is not too difficult to look beyond the horizon for potential risks. By knowing, and being aware of those risks today we are able to prepare and possibly prevent them tomorrow.
