Posts Tagged ‘currency’
“Wall Street sells stocks and bonds, but what it really peddles is hope”*…
Over the last several decades retail investors had been eclipsed in the stock market by institutions (e.g., pension funds). But COVID and the economic environment that surrounded started a trend that is reversing that polarity. Retail investors now account for roughly 30% of daily US equity volume, according to Goldman Sachs. Their stock trading in May of this year ran 10% above the previous record, set during the January 2021 meme-stock frenzy, and June set another all time high.
Much of that growth has come from the individuals known as day traders.” And while for the last 18 months or so, institutional investors have been cautious, often underweight, under-levered and short of conviction, these active amateurs in the retail crowd did the opposite, buying the dips, riding momentum strategies, and adding leverage. Retail investors tend to follow the herd, as can be seen in the surge in popularity – and valuations – of meme stocks and artificial intelligence stocks in recent years.
While historical performance is no guarantee of future results, history is not encouraging. The most “generous” reputable study your correspondent could find suggested that roughly 20% of day traders were at least marginally profitable; the balance lost money. Other studies suggest that 95-97% of all day traders lose money.
But as Simone Foxman reports, money is not all that they lose…
Surging retail trading isn’t just transforming markets; it’s also highly correlated with demoralization in young men, according to a new study.
One-quarter of men aged 18-29 said they trade stocks daily, and almost two-thirds of them (64%) report feeling like failures, according to a study of 2,000 men published Wednesday by the Institute for Family Studies, a pro-marriage think tank. The findings were strikingly similar to outcomes among men who gamble: Of the 23% of young men who said they gambled daily, including on sports and events, 66% reported similar angst, according to survey, which asked the young men a variety of questions about their personal behaviors and outlooks. Daily fantasy sports and pornography use were similarly correlated to feelings of failure, the survey found.
The struggles of young men are generating growing alarm among academics, pundits and billionaires. They warn that men are lagging in education and employment, gambling with their financial health on sports or event betting platforms and facing mental health crises.
At the same time, the line between gambling and investing has been blurred. Stock volumes from retail investors have doubled over the past 15 years, and day traders have driven record options volume. Now platforms like Robinhood Markets Inc. and Interactive Brokers Group are trying to capitalize on interest from Gen Z by also offering event-betting alongside stock-trading.
Some research suggests young people have embraced risky financial behaviors to try to generate returns in a world where homeownership and other markers of financial success are out of reach. Eighty percent of Gen Z investors said they’d invested or considered investing in stocks, options, crypto or prediction markets because they feel financially behind and see these investments as better tools to meet their financial goals, according to a Northwestern Mutual study.
The IFS researchers hypothesized that day trading, gambling, playing fantasy sports and porn use — among other activities — may be both coping mechanisms for dejection, stress and loneliness and also exacerbate them. Young men who engaged in these activities less than daily were about half as likely to report feelings of demoralization.
Overall, 42% of survey respondents said the statement “all in all, I am inclined to think that I am a failure,” described them very or somewhat well. This feeling was particularly strong among men without college degrees and those who were neither employed nor in school.
A quarter of participants said they felt lonely all of the time, while 30% expressed feeling that way some of the time.
The study also found disillusionment with the American dream, even as young men fostered high hopes for the future. Seven in ten respondents said that success is more a matter of who you know than ability or hard work, but 84% still said they had ambitious plans for their futures.
Further to the passing reference to “event-betting” above, we should note that prediction markets, while smaller than retail investing (at least for now), are growing explosively. Like day-trading, prediction markets are pitched in the language of empowerment and democratization. The former involves stocks and bonds, while the latter sells “event contracts“; but they share the same user base, the same psychological architecture, and the same uncomfortable gap between how they are marketed and what they actually deliver… so seem likely to contribute to the issues unpacked above.
Risky business: “Some 64% of Young Men Day Trading Stocks Feel Like Failures” (or here) from @simonefoxman.bsky.social in @bloomberg.com.
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As we parse symptoms and diseases, we might recall that it was on this date in 1966 that the U.S. Treasury Department, citing a lack of demand, ceased production of the $2 bill, which had been around in various forms since 1862. The (redesigned) denomination, featuring a portrait of Thomas Jefferson, was reintroduced in 1976… though readers will be forgiven if they mistakenly thought that “the deuce” was still retired: so few are in circulation that they are rarely encountered.

“The bigger, the better”*…
Thea Applebaum Licht with a reminder that, when it comes to size, Texas has got nothing on California…
Between about 1905 and 1915, the United States entered a golden age of postcards. Cheaper and faster mail service, the advent of “divided back” cards (freeing the entire front for images), and improved commercial printing all drove a new mass market for collectible communication. It was at this same moment that a craze for “tall-tale” or “exaggeration” postcards reached its peak. By cutting, collaging, and re-photographing images, artists created out-of-proportion illusions. One of the most popular genres was agricultural goods of fantastic dimensions.
Nowhere were such postcards more popular than in the western states. There, in the heart of the tough business of agriculture, illustrations of folkloric American abundance were understandable favorites. Pride and place were tied up with the prodigious crops. Supersized fruits and vegetables were often accompanied by brief captions: “How We Do Things at Attica, Wis.”, “The Kind We Raise in Our State”, or “The Kind We Grow in Texas”. Photographers like William “Dad” H. Martin and Alfred Stanley Johnson Jr. captured farmers harvesting furniture-sized onions and stacking corn cobs like timber, fisherman reeling in leviathans, and children sharing canoe-like slices of watermelon.
In the series of exaggeration postcards [produced in the run-up to the postcard boom, then published during it] collected [here], it is California that takes center stage. Produced by the prolific San Francisco–based publisher Edward H. Mitchell, each card features a single rail car rolling through lush farmland. Aboard are gargantuan, luminous fruits and vegetables: dimpled navel oranges, a dusky bunch of grapes, and mottled walnuts. Placed end-to-end, the cards would make a colorful train crossing California’s fertile valleys. Unlike other, more action-packed “tall-tale” cards — filled with farmers, fisherman, and children for scale — Mitchell’s series is restrained. Sharply illuminated, the colossal cargo lean toward artwork rather than gag. “A Carload of Mammoth Apples”[here], green-yellow and gleaming, could have been plucked from Rene Magritte’s The Son of Man [here].
Fabulous fruit and vegetables: “Calicornication: Postcards of Giant Produce (1909),” from @publicdomainrev.bsky.social.
In other art-related news: (very) long-term readers might recall that, back in 2008, (R)D reported that London’s Daily Mail believed that it had tracked him down, and that he is Robin Gunningham. Now as Boing Boing reports:
Anyone reading Banksy’s Wikipedia article at any point since a famous Mail on Sunday exposé in 2008 would likely get the impression the secretive stenciler is probably Robin Gunningham or Robert Del Naja, artists who came from the Bristol Underground. Reuters, having conducted extensive research into their movements, finds both men present at critical moments, but only one at all of them: an arrest report from New York City puts Gunningham firmly in the frame, and recent public records from Ukraine put it beyond doubt.
We later unearthed previously undisclosed U.S. court records and police reports. These included a hand-written confession by the artist to a long-ago misdemeanor charge of disorderly conduct – a document that revealed, beyond dispute, Banksy’s true identity. … Reuters presented that man with its findings about his identity and detailed questions about his work and career. He didn’t reply. Banksy’s company, Pest Control, said the artist “has decided to say nothing.”
His long-time lawyer, Mark Stephens, wrote to Reuters that Banksy “does not accept that many of the details contained within your enquiry are correct.” He didn’t elaborate. Without confirming or denying Banksy’s identity, Stephens urged us not to publish this report, saying doing so would violate the artist’s privacy, interfere with his art and put him in danger.
Del Naja (better known for other work) evidently participates in painting the murals and is perhaps the stencil draftsman (Banksy: “he can actually draw”). Banksy’s former manager, Steve Lazarides, organized a legal name change for Gunningham after the Mail on Sunday item, which successfully ended records for Banksy’s movements under his birth name and stymied researchers—until Reuters figured out the new one by poring through Ukrainian public records on days Del Naja was there. Gunningham used the name David Jones, among the most common in the U.K. If it rings a bell, you might be thinking of another famous British artist was who obliged by his record company to find something more unique.
* common idiom
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As we live large, we might spare a thought for Isaac Newton; he died on this date (O.S.) in 1727. A polymath who was a key figure in the Scientific Revolution and the Enlightenment that followed, Newton was a mathematician, physicist, astronomer, alchemist, theologian, author, and inventor. He contributed to and refined the scientific method, and his work is considered the most influential in bringing forth modern science. His book Philosophiæ Naturalis Principia Mathematica (Mathematical Principles of Natural Philosophy), first published in 1687, achieved the first great unification in physics and established classical mechanics. He also made seminal contributions to optics, and shares credit with the German mathematician Gottfried Wilhelm Leibniz for formulating infinitesimal calculus. (Newton developed calculus a couple of years before Leibniz, but published a couple of years after.) Newton spent the last three decades of his life in London, serving as Warden (1696–1699) and Master (1699–1727) of the Royal Mint, a role in which he increased the trustworthiness/accuracy and security of British coinage in a way crucial to the rise of Great Britain as a commercial and colonial power.
Newton, of course, had a famous relationship with fruit:
Newton often told the story that he was inspired to formulate his theory of gravitation by watching the fall of an apple from a tree. The story is believed to have passed into popular knowledge after being related by Catherine Barton, Newton’s niece, to Voltaire. Voltaire then wrote in his Essay on Epic Poetry (1727), “Sir Isaac Newton walking in his gardens, had the first thought of his system of gravitation, upon seeing an apple falling from a tree.” – source
Newton’s apple is thought to have been the green skinned ‘Flower of Kent’ variety.

“Wealth does not consist in money or in gold and silver, but in what money purchases”*…
For millennia, simple forms of record-keeping have been used as ways to keep track of debt, to substitute for the contemporaneous conveyance of specie, or to accommodate the future settlement and netting of debts. In England, tally sticks were regularly used. From Paolo Zannoni, an excerpt from his book, Money and Promises, via Richard Vague and his invaluable Delancey Place…
A tally is usually a stick, or a bone, or a piece of ivory — some kind of artefact — that is used to record information. Palaeolithic tallies include the Lembombo bone, found in the Lembombo Mountains in southern Africa, reported to date from around 44,000 BC; the Ishango bone, which consists of the fibula of a baboon, from the Democratic Republic of the Congo (the former Belgian Congo), thought to be 20,000 years old; and the so-called Wolf bone, discovered in Czechoslovakia during excavations at Vestonice, Moravia, in the 1930s, and estimated to be around 30,000 years old. Marked with notches and symbols, these tallies are ancient recording devices, means of data storage and communication. Not merely artefacts, they are important historical documents.
In England, from around the twelfth century, and for over 600 years, tallies became important financial instruments, a key part of public finance and an answer to a perennial problem for money-lenders, merchants and those involved in commerce and trade: how to both facilitate and record the exchange of goods, services and commodities. Reading these English tallies, understanding their history and their changing use, provides us with an understanding not only of the nature of individual financial transactions during the late medieval and early modern period, but also of the development of banking practices in England and its relationship to the English state.
Usually made of willow or hazelwood, tallies were used to record the key information of a financial exchange. The name of the parties involved, the specific trade and the date were written on each side of a stick. Notches of different sizes — which stood for pounds, shillings, and pence — were also cut on both sides. Then the stick was split in two along its length, creating a unique jagged edge; only those two pieces could ever fit perfectly together again. When someone presented one side as proof of a transaction, the parties could check for the right fit.
The potential uses for such a simple tool are obvious.
To begin with: an example of the early use of tallies as a record of debt repayment. John D’Abernon was the Sheriff of Surrey. His portrait in brass, in Stoke D’Abernon Church, Cobham, shows him as a knight in full armour, wielding a broadsword.
When he died, D’Abernon left his title, possessions and debts to his son, also named John. In 1293, we know that John D’Abernon gave two pounds and ten shillings to the Exchequer to pay a fine on behalf of his father. How do we know? Because at the time of payment, the official tally cutter made a series of notches on a stick: two cuts for the two pounds and one smaller notch for the ten shillings. The stick was then split, with the longer end going to John, and the shorter end staying with the Exchequer. The following words were inscribed on both sides: ‘From John D’Abernon for his father’s fine’ and ‘XXI year of the King Edward’.
John could thus prove to anyone that he had paid the fine of his father — simple and convenient.
Tallies also enabled the functioning of the tax system in medieval England, which was a rather more complex affair. The process took months to complete. It worked roughly like this. Tax receivers collected
revenues from the King’s subjects at Easter. They then passed them on to the Exchequer, which completed an audit in late September or early October. At the time, the Exchequer had two branches: the Lower and the Higher. The Lower Exchequer received and disbursed the revenues. The Higher Exchequer audited the process. They used tallies to track who had paid whom. As soon as the Lower Exchequer received the revenues, the tally cutter recorded the payment on the tally and split the stick. The tax receiver — the debtor — got the longer part, called the ‘stock’. The Exchequer — the creditor — kept the short end of the stick, called the ‘foil’. And once a year, at Michaelmas, the Higher Exchequer audited the whole process by matching stocks and foils. The stock was the proof that the collector had not merely pocketed the tax revenues.Over time, both the use and appearance of the tallies began to change: in the early years, tallies were 3 to 5 inches long; later, they grew to be 1 to 2 feet long, and sometimes much longer. More money meant more notches; more notches, in turn, required longer sticks. One of the last issues of tallies made by the English Exchequer was in 1729, for £50,000: the tally is a whopping 8 feet, 5 inches long, visible proof of the growth of public spending, taxation and inflation.
As the appearance of the tallies changed, so too did their uses. Inside the Exchequer, they served as receipts for money paid by taxpayers. Outside the Exchequer, they began to be put to entirely different purposes.
The business of the Exchequer simply could not work without the tally sticks. They were essential for auditing and controlling public finances, which obviously made them excellent collateral for a loan.
The tally was not a mere generic promise to pay, but a strong, unique claim on the proceeds of the Exchequer’s revenue stream. It identified the cashflow and the individual in charge of paying; the creditor gave the stock to the indicated tax receiver to get coins from a specific revenue stream, and a lender was sure to get his coins sooner or later. The humble English tally stick was therefore ripe to become a veritable public debt security, not merely a receipt. They functioned just like paper public debt securities, except instead of being written on paper, the transactions were instantiated and inscribed on sticks.
To take an early example: Richard de la Pole was a merchant who traded wool, wine and corn with France and central Europe in the early 1300s. He had a reputation for using debts aggressively to grow his business, which appealed to King Edward III and his advisors, who thought they might be able to make use of his skills. So, they appointed him Royal Butler. The job of butler was to supply all sorts of goods — food, wine and arms — to the royal household and to the army. We know that in 1328 Richard bought some wine from the French. As a good businessman, as Royal Butler, did he pay for the wine in coins? He did not. Rather, in order to pay the bill, the Lower Exchequer cut eight tallies, which were addressed to the collectors of taxes for West Riding in Yorkshire, listing the tax revenues earmarked to settle the debt. The Lower Exchequer gave the foils — one half of all the eight tallies — to Richard, who handed them to the merchants who sold him the wine. The merchants then exchanged the tallies with coins from the taxes paid in West Riding, and finally, a few months later, the Higher Exchequer called upon the tax receivers to account for the shortfall of cash, whereupon they presented the eight foils, which had been first given to Richard, as proof of the payments made.
To be clear: unlike coins, tallies did not actually settle debt. By accepting a foil, a vendor was effectively agreeing to a delayed payment from the Exchequer; the tally was a kind of guarantee that they would get coins. For the state, meanwhile, the tally was a convenient way to borrow from its suppliers, or a form of what we would now call vendor financing — the citizens and merchants who sold goods and services for tallies were effectively financing the state, in much the same way as those who lent actual coins to the Exchequer…
How record-keeping became finance: “Tally Sticks for Money,” via @delanceyplace.
Having looked back, we’d do well to heed Jack Weatherford‘s admonition (in his 1997 book The History of Money):
As money grows in importance, a new struggle is beginning for the control of it in the coming century. We are likely to see a prolonged era of competition during which many kinds of money will appear, proliferate, and disappear in rapidly crashing waves. In the quest to control the new money, many contenders are struggling to become the primary money institution of the new era…
* Adam Smith
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As we contemplate currency, we might recall that it was on this date in 1888 that William Seward Burroughs of St. Louis, Missouri, received patents on four adding machine applications (No. 388,116-388,119), the first U.S. patents for a “Calculating-Machine” that the inventor would continue to improve and successfully market– largely to businesses and financial institutions. The American Arithmometer Corporation of St. Louis, later renamed The Burroughs Corporation, became– with IBM, Sperry, NCR, Honeywell, and others– a major force in the development of computers. Burroughs also gifted the world his grandson, Beat icon William S. Burroughs.

“A greenback, greenback dollar bill / Just a little piece of paper, coated with chlorophyll”*…
Americans are increasingly going cashless. Still, as Marcus Lu illustrates, there’s rather a lot of currency in circulation– almost $2.3 Trillion (of which about a third, an estimated $950 Billion [and here] is outside the U.S.)…
Every year, the U.S. Federal Reserve submits a print order for U.S. currency to the Treasury Department’s Bureau of Engraving and Printing (BEP). The BEP will then print billions of notes in various denominations, from $1 bills to $100 bills.
In this graphic, we’ve used the latest Federal Reserve data to visualize the approximate number of bills for each denomination globally, as of Dec. 31, 2022…
“Visualizing All of the U.S. Currency in Circulation” from @VisualCap.
* Ray Charles, “Greenbacks”
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As we concede that cash is still king, we might send penurious birthday greetings to Kenneth Rogoff; he was born on this date in 1953. An economist who teaches at Harvard and has served as the Chief Economist of the International Monetary Fund, he has been a vocal champion of austerity… thus in conflict with Nobel Laueate and former chief economist of the World Bank Joseph Stiglitz (and radically less consequentially, with your correspondent).
While Rogoff completed his education (at Princeton and MIT), he dropped out of high school at 16 to concentrate on chess (at which time he met Bobby Fischer, who was impressed by Rogoff’s “self-assured style and his knowing exactly what he wanted over the chessboard”). Two years later he returned to school but continued to play competitively. Indeed, In 2012 he drew a blitz game with the world’s highest rated player Magnus Carlsen.
“We hear all this talk about integrating the world economically, but there is an argument to be made for not integrating the world economically”*…
… and indeed, those arguments seem to be holding increasing sway. Tyler Cowan ponders the possible economic implications of a future in which global economic interdependence recedes– a future in which globe’s economies, freer of each other, don’t rise and fall with each other (as they largely have for decades) to the same extent…
Will we see less co-movement in global economic growth?
That is the question behind my latest Bloomberg column (soft pay wall). China is now, and looking forward, less of a common growth driver around the world. Oil price shocks may not be less important for humanitarian outcomes, but they matter less for many of the largest economies. America is now an oil exporter, and the EU just made some major adjustments in response to the Russia shock. More renewable energy is coming on-line, most of all solar.
The column closes with this:
In this new world, with these major common shocks neutered, a country’s prosperity will be more dependent on national policies than on global trends. Culture and social trust will matter more too, as will openness to innovation — and, as fertility rates remain low or decline, so will a country’s ability to handle immigration. A country that cannot repopulate itself with peaceful and productive immigrants is going to see its economy shrink in relative terms, and probably experience a lot of bumps on the way down.
At the same time, excuses for a lack of prosperity will be harder to come by. The world will not be deglobalized, but it will be somewhat de-risked.
Dare we hope that these new arrangements will produce better results than the old?
Or perhaps a more general rising tide was the only way many countries were going to make progress?
Marginal Revolution
Byrne Hobart reflects further…
When economies were tightly linked, growth in the US led to more demand for manufactured goods from China, which created more demand for raw materials from other parts of the developing world. But if that link is weaker, it’s entirely possible for there to be a boom in some places and a bust elsewhere. That probably increases the personal returns from global macro investing while decreasing its social return: when the world is closely-linked, there are massive positive externalities in predicting recessions, because there are so few places to hide. It’s comparatively less essential for the world to know that German is slowing down but growth in Indonesia is picking up, but it also means that macro questions are more tractable.
The Diff
* Arundhati Roy
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As we think tectonically, we might recall that it was on this date in 1865 that the U.S. first issued Gold Certificates.
Americans began to move out west in the first half of the 19th century. Banks started printing their own money to fund land purchases, and that quickly led to two problems: loose money-printing had a volatile effect on prices, and it became increasingly hard to tell what was counterfeit from what wasn’t.
To tackle these problems, the government decreed in the 1830s that it would only accept transactions in gold and silver. But of course, lugging metals around is nobody’s idea of fun. So in 1863, Congress paved the way for the first “gold certificates” to be printed two years later, in November 1865.
A gold certificate was, in effect, a form of paper currency backed by gold – although not entirely. The Treasury was allowed to issue $120 in gold certificates for every $100-worth of gold it held in its vaults…
MoneyWeek







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