From Riches to Rags
Chance of Gold
A thing to fear
What Fools, We
| December 15-16, 2018
Soul of America
can the world get back to a sound system with sound real growth
that is not based on money printing and debt?
That's a doozy of
a question that's on the minds of an increasing number of people who
are beginning to sweat the international bickering over trade.
The Swiss goldbug, Egon von Greyerz, has consistently been pushing the Sound
Money Solution for a long
time. It's hard to resist his logic.
"Once an economic cycle has peaked, the country continues to spend
money it doesn’t have and deficits are created. This becomes a vicious
circle, more deficits lead to more money printing which in turn
increases the deficits. At that point the country abandons the gold
backing of the currency in order to print more money and this
eventually leads to the collapse of the country’s economy.
This cycle has happened throughout history and we are seeing the
perfect example of this cycle since 1971." VON
Greyerz refers to August 15th, 1971, when President Richard Nixon
closed the gold window to foreign trade partners. That mean't they
could no longer turn in their U.S. dollar notes for gold. The dollar
became an irredeemable fiat currency.
This Swiss commentator either understands the dangers of the present
debt-based economic system or he's all wet and we're wasting our time
studying his arguments. Since our own lifetime savings are wasting away
at a rapid rate due to steady inflation we tend to worry about it and
Believe it was a mistake to abandon the money mandate of the U.S.
Following the destruction of the gold standard by the First
World War and the related wild inflations, the monetary stages have
- The gold exchange standard of the 1920s, meant to restore
stability but ending with “the bust of the global credit bubble” of the
- 1930s disorders leading to the stabilization efforts of
the Bretton Woods agreement of 1944. This system collapsed in 1971.
- Pure fiat currencies with floating exchange rates among
them. This period featured the Great Inflation of the 1970s, but also
monetarist doctrines, most notably in Germany and also temporarily in
the U.S. It ended most spectacularly with “the bubble and bust in
Japan” in 1989.
- Then out of the monetarist retreat, was born…a new
stabilization experiment—the targeting of perpetual inflation at 2%,
- the current theory. Since the Fed first formally adopted
this idea in 2012 we have had a spectacular global asset price
inflation—will it end with a bang or a whimper?
The above scenario
is from author Brendan Brown, a critic of perpetual inflation...the
prevailing fashion among central banks.
late economist Milton Friedman of the so-called Chicago School thought
an inflation rate of +2 percent per year was tolerable. The theory
wasn't promoted in exactly those terms. The Chicago School endorsed the
notion of expanding the money supply by some 2 percent per year.
scheme of increasing the supply of currency by a small percentage each
year has ruined the old-fashioned idea of "saving for a rainy
Remember the days when a young couple started a college savings plan
for an infant soon after he or she was born? Who, today, can even guess
what the buying power of a dollar will be 18 years from now? For
that matter, what's the point of saving when the money earns a mere
0.05 percent when the annual inflation rate is a fraction over 2
In the inflationary age, which began in the 1940s, saving money has
been increasing difficult because inflation eats at its purchasing
power each year. (There have only been two years since 1945 when
price deflation occurred!)
The story is told of Professor Friedman and others gathered at a dining
table at which also sat a sound money promoter. ("Gold bug.") He
offered to exchange an old $20.00 U.S. gold coin for a $20 Federal
Reserve Note. The professor handed over a twenty-dollar note and then
watched in alarm as the bill was torn into shreds. He saw it as a
wanton waste despite the fact that he had exchanged a mere legal tender
IOU for a gold coin then worth more than $600.00.
Professor Friedman is better remembered as the originator of the
classic reminder "There is no such
thing as a free lunch." Present generations either do not know
the adage or don't understand its meaning.
Wait! We thought U.S. democracy was the best in the world!
"Among the reasons democracy is in discredit
and retreat worldwide is
that its exemplar and champion, the USA, is beginning to resemble
France’s Third Republic in its last days before World War II.
Now comes a veteran
analyst with a different view. (?)
"Also, democracy no longer has the field
largely to itself as to how to
create a prosperous and powerful nation-state." DEMOCRACY
LOSING THE WORLD.
Buchanan is not blind to President Trump's many character flaws, nor is
he unaware that the popular news media are hellbent to spend the next
two years pointing them out and moving as many people as possible to
their view that Trump ought to serve time in jail for his
Buchanan's main point is the USA
brand of democracy has sunk into an unenviable mire. It reminds
us that this nation was established as a representative REPUBLIC and
has sadly morphed into the destructive habits of a democracy.
History is strewn with stories of failed democracies. It's a
shame our general media are working so hard to insure our demise by
promoting the democratic government framework which always ends in
chaos when the people vote themselves "free money" out of the
public treasury. ~JW
'Tis the Season to be
The national debt is closing in on $22 trillion, with
over $1 trillion a year currently being added for the American taxpayer.
Corporate debt is at historic highs not seen since
2008, with S&P Global reporting over
$6.3 trillion in total debts and the largest companies holding only
$2.1 trillion in cash as a hedge.
U.S. household debt currently stands at around $13.3
trillion, which is $618 billion higher than the last peak back in 2008,
during the credit crisis.
U.S. credit card debt surpassed $1 trillion for the
first time in 2018, the highest single year amount since 2007 (once
again, we see that debt levels are spiking beyond the lines crossed
just before the crash of 2008). CORE
recent shudders on Wall Street have caught the attention of many
economics commentators who worry that something is wrong with our
present "powerhouse economy." That something, in our view, is
used to think that "they" (the financial experts knew what they were
doing, but now we're not so sure. We've learned to live on the cuff and
the old idea of living within one's means has flown out the window.
Andy Jackson was the last U.S. president to pay off the federal debt
and today going into the hole at an annual rate of nearly a trillion
dollars is considered more or less the norm.
A wise old South Caroliona banker named Col. Wylie Jones
once advised a young would-be borrower, "It's easy to run into debt,
but if you get out you do so at a walk."
advice is as good today as it was in the early 20th century when it was
THE GRINCH AND
CHRISTMAS IN WALL STREET.
Grinch may have decided that monkeying with Wall Street was the best
way to ruin Christmas. The swoon in stock prices was continuing
near noontime today, although they got a bit of a breather late
Thursday when the Fed Chairman hinted that "maybe" the central bank
would pause in its plan to continue to inch up interest rates in 2019.
unemployment numbers came in a tad under expectations, but the official
unemployment rate remains at 3.7 percent. That's about as low as
it has been in a half century. Why, then, is the stock market
being so spastic?
Gamblers in the financial markets are on edge about the prospects for
2019. Evidence is beginning to build concerning the ability of
the once mighty dollar to weather the strains of being the world's
go-to currency. The federal government is having to go into the
hole to the tune of nearly a trillion dollars a year to sustain its
huge obligation to remain King of the Hill. How long, we wonder,
before some hothead says "I know. Let's hold war to clear up this
currently going through a period of
hyperinflation; IMF economists predict that the country's inflation
rate will exceed 1,000,000% this year.
An annual inflation
rate of a million percent?
Guardian newspaper of Britain reports on the shocking downward spiral
in Venezuela. As one observer said "It's like watching a building
collapsing and not being able to do anything about it."
It's the classic result of a socialist
government printing irredeemable currency and presuming to direct the
affairs of its citizenry. The result is airport escalators that
don't work, toilets that don't flush, and hoards of people picking
through dumpsters looking for scraps of food. The Venezuelan
crisis is giving socialism a well-deserved black eye. VENEZUELAN
World gasoline prices, quoted in U.S.
Bear in mind the prices above are shown in U.S. dollars. It may
look like gas at the pump in Venezuela is a huge bargain, but laying
hands on twelve U.S. cents in Venezuela is not an easy task given the
collapse of the country's own currency.
* * * * * * *
* * * *
2019 SOCIAL SECURITY INCREASE
Social Security recipients will receive a cost-of-living
raise. It'll boost the average Social Security check by about $39 per
month. This increase will run to nearly $29 billion for all of
2019. (That's $1 million X 29,000 - - a considerable sum.)
The Social Security Administration is now predicting it's in a
fiscally sound position until 2034. It should be remembered that in
1983 the SSA expected the system to remain solvent until 2058. Wha'happened?
There is not room in the present frantic news schedule for
consideration of the long range finances of Social Security, Medicare,
Medicade, SNAP and other support that pours from the government
cornucopia, but there will be an eruption of interest as the overload
of dependents sink the Ship of State to the gunwales and everyone
starts looking for lifeboats.
"The media in
America has become like the European Union: an enemy of the people,
unelected and answering to no one."
after night on television, hysterical women and irrational men call for
civil unrest against the Trump machine. The democratic result of 2016
has to be reversed, is the message. And yet Trump has succeeded until
now: The Islamic State is on the run, the economy is booming,
unemployment is at an all-time low, new and better deals have been
signed with Mexico, Canada, and South Korea, even the little rocket man
has calmed down and is playing nice." OUTRAGE
* * * * * * * * * * * * *
General Motors said
recently it plans to effectively halt production at a number of plants
the U.S. and Canada next year and cut more than 14,000 jobs in a
massive restructuring that will cost up to $3.8 billion.
the United Auto Workers vowed to
use "every legal, contractual and collective bargaining avenue" to
fight the changes.
Canadian Prime Minister Justin Trudeau also criticized the automaker's
Trump tweeted Tuesday, "If GM
doesn't want to keep their jobs in the United States, they should pay
back the $11.2 billion bailout that was funded by the American
President Trump doesn't appear
to understand the dynamics of this move by General Motors. GM
sees sales of certain vehicles are drying up so it makes a
rational decision to quit producing something consumers don't
What are they to do? Keep making cars consumers will not
Now comes the question, "Why did taxpayers bail out GM to the tune of
$11.2 dollars in the recession ten years ago?" Because when
really large companies founder the government will to go into hock to
bail them out, sending the bill to future taxpayers. Hardly a
hallmark of free market capitalism.
On this topic Trump is playing the politician not the canny
The Chicken Littles come out to bray.
Howard Kuntzler waves the caution
"China, Euroland, and the USA can’t possibly meet their tangled
obligations, and are running out of tricks for rigging, gaming, and
jacking the bond markets, where all those promises are vested. It boils
down to a whole lot of people not getting paid, one way or the other —
and it’s really bad for business.
"Given his chimerical
personality, [President Trump] may try to put on an FDR mask — perhaps
even sit in a wheelchair — and try a few grand-scale policy tricks to
escape the vortex. But the net effect will surely be to make matters
worse — for instance, if he can hector the Federal Reserve to buy every
bond that isn’t nailed to some deadly derivative booby-trap. But then
he’ll only succeed in crashing the dollar. Remember, there are two main ways
you can go broke: You can run out of money; or you can have plenty of
worthless money." Holiday
Pat Buchanan remarked in a recent column, "Freedom of the
press does not mean guaranteed immunity of the press from the same kind
of abuse the press directs at the president." (The
Soul of America)
watched with interest a video clip in which a TV
network tried to "prove" that the White House has doctored the
altercation between CNN's Jim Acosta and a girl from the White House
staff who was trying to retrieve a microphone he would not give
up. She claimed Acosta had brushed against her bare arm in an
uncomfortable way and the news purveyors tried to prove
that he did not.
verbal altercation between Acosta and President Trump
is classic, rude, New York style street fighting. It's the style that
sometimes leads to fisticuffs. High decibel tough talk seldom leads to
any useful conclusion. It does little more than add fuel to the
divisivness that has split America into two angry political camps.
Now that the Midterm Elections are over look for the
animosity between left and right to increase to even higher levels of
foolishness and rudeness.
A trip through U.S.
history will reveal that divisiveness
within the general population is nothing new. Reduced to its basics
it's usually the 'have-nots' versus the 'rich.' Politics is
mostly a perpetual contest trying to control the distrubution of
wealth. The party that proposes ways for the a large segment of the
population to live out of the pockets of other people is the one that's
victorious on election day.
Reichard White has come up with a lengthy discussion of
the popular approach to democracy as opposed to the political framework
the Founders built in the late 18th century....a republic. To this day
we still pledge allegiance the the flag of the REPUBLIC for which it
stands. We are also reminded of Ben Franklin's quip when asked
what sort of government the 1787 convention created. "A
REPUBLIC...if you can keep it," said he.
Does it matter the United States has morphed from a
republic to a democracy? REPUBLIC