iphone4casessite: Making Money System

Last night, we pointed out that as a part of their countdown to 10 billion app downloads, Apple actually revealed the top all-time app downloads for paid iPhone apps, free iPhone apps, paid iPad apps, and free iPad apps. The top results seemed pretty straightforward, with a few oddities here or there. And there may be a good reason for such oddities. The system appears pretty easy to game.

Well, technically, it’s probably not really “gaming” the system. At least not yet. It just appears that Apple is being a little sloppy in populating their lists. After speaking to a few top app developers, it seems that Apple is counting total download numbers in aggregate, regardless of if an app switched between being free and paid.

In other words, to boost yourself on the top paid app lists, all you would have to do is go free for all but one of the days, then switch to paid, and all those downloads would be counted towards your total as a paid app, it seems.

Obviously, free apps tend to be downloaded more than paid ones. So if you had a popular app and went free, then went back to paid, this could be a great way to jack your stats.

And several apps have done this switch from time to time (though we’re not saying they did it to jack their stats — they probably didn’t know that Apple would rank this way — instead it was just a nice offer to customers). Top apps like Traffic Rush and a few of the Tap Tap Revenge games are good examples of this.

One developer we spoke to, John Casasanta of TapTapTap, said that he found the numbers fishy because they’ve done multiple apps and Apple’s rankings don’t line up with their actual separated numbers. But if you take into account free and paid downloads for one app, things begin to align.

We’ve reached out to Apple about the issue, and will update if we hear back. In the meantime, be a bit wary of some of the top paid apps on that list — they may not be making as much money as it may seem given their position.

Products of the past…doomed…

Chinese President Hu Jintao: the US dollar-based monetary system is a “product of the past.”

He is right about that. And last week two major US credit agencies – Moody’s and Standard and Poor’s – underlined the point. They said America’s triple A credit rating would be lost if the nation continues to borrow so much money.

Amen to that, brother…

But how can the US borrow less?

Ben Bernanke says the US economy will probably grow between 3% and 4% this year.

Pretty good, huh? We can stop worrying, huh?

Wait a minute. We don’t know if the US economy will grow this year…and neither does Ben Bernanke. But even if it were to grow at 3% to 4%…would that mean we were enjoying a genuine recovery? Could the US dollar-based monetary system hold up after all? Could it surprise the Chinese and be a product of the future as well as of the past?

Let’s see how the present economic model works. You spend $10 trillion on bailouts and stimulus. This puts the whole country on course for bankruptcy…where the Chinese are telling you that your money is history…and the rating agencies are threatening to take you down a notch or two. But for your trouble you get, say, 4% growth.

Hmmmm…4% growth is equal to about $560 billion more GDP. But don’t look too closely. Much of this extra GDP is debt-fueled government boondoggling which adds nothing real to the nation’s wealth.

But in order to keep this “growth” going, you have to continue to run deficits – of about a trillion dollars a year. Hold on…what kind of business is Ben Bernanke running?

It costs more in deficit spending than you get in positive GDP growth.

Well, maybe you lose money every year…but you can make it up in the long run!

Hold on… The deficits are expected to run 5% to 10% of GDP for years. Maybe forever. If the growth rate is only in the 3%-4% range, it will mean that debt always outgrows growth. In fact, that is exactly what almost every economist projects.

Then, what’s the point? Well, maybe deficits can be cut…and the growth rate will pick up? Hey, anything is possible. And since we’re starting out in 2011 with a positive attitude…we’re ready to believe anything.

And maybe that’s what gold speculators were thinking on Friday. They sold gold – taking the price down $26 an ounce. Gold rises as confidence in the financial system falls. If gold is falling, it must mean the confidence in the Bernanke, Geithner team is increasing.

Based on the evidence so far, we’d have to take the other side of that bet. If Bernanke & Co. have any idea what they are doing it is not apparent from the public record. Even now, in the 5th year of the Great Correction, they still seem unable to see what is going on.

Bernanke:

“We got in trouble in the first place by making too many bad loans, right. So you’ve got to make good loans. We’ve got to have credit worthy borrowers.”

It may be that, in private, Bernanke has a clearer view of things. But we cannot tap his phone or channel his dreams. All we have to go on is what he says…and does. So far, he has said or done nothing that gives us confidence in the man.

He’s right: we got into trouble by making too many bad loans. But why did “we” do that? Because the Fed lent money too cheaply! It encouraged speculation and risk taking – especially by the banks, who must have known that they would be bailed out if they got into trouble.

And how could the Fed remedy the situation? Easy. It could raise rates – just as Paul Volcker did. It could put the squeeze on speculators. It could raise reserve requirements. It could allow the banks to go bust…send them a message they wouldn’t forget.

But what has Bernanke done? Just the opposite. He has rewarded the reckless speculators by buying up their bad bets (adding $1.7 trillion in trashy mortgage backed securities to the Fed’s core holdings). He has cut rates even more…bringing the effective rate down to zero for privileged borrowers. And he has created the illusion of “recovery” – by goosing up prices of stocks and commodities.

Bad policies. Bad in the short run. Worse in the long run.

Bill Bonner

for The Daily Reckoning

The US Deficit Recovery Program and Other Fallacies originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."

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Monday, January 24, 2011

Making Money System

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