"I can't understand why people are frightened of new ideas. I'm frightened of old ones!"  
                                 -- John Cage    




August 1st, 2015

      "When do we get to exercise democracy and fire every factotum, apparatchik, toady and lackey in the state who has abused his/her authority?"  ~Charles Hugh Smith  

    "Under the tender care of the state, we now have uncompetitive, inefficient parastic cartels dominating higher education, national defense, healthcare insurance, pharmaceuticals and hospitals– to name but a few of the major industries that are now state-enforced cartels thanks to the heavy hand of the state (i.e. regulatory capture )."    This was obviously written by someone off his meds, right?  Charles Hugh Smith contends that "creative destruction" is thought to be just the thing to break up monopolies in the private sector, but has no application to government - which overwhelms us with bureaus and agencies which cost more than they're worth and do more harm than good.  

   Smith may not get far with his logic.  The voting majority inevitably chooses bigger government every time.  After all, what citizen in his right mind would vote for someone who promised to operate government within the means of taxpayers and stop borrowing from future generations to pay today's operating expenses?  CREATIVE DESTRUCTION

At last.  Congress edges closer to examining the dollar crisis.

   "The decision of Congressman Jeb Hensarling and the House Financial Services Committee to move the Centennial Monetary Commission Act to the floor marks an important moment in the dollar crisis. The measure would set up a commission to review the performance of the Federal Reserve as it begins its second century. The day before the committee acted — on a vote of 35 to 22 — the Trackgov.com Web site was reckoning the chances of passage at zero percent. That will now begin an upward adjustment." N.Y. Sun

   This significant item will not make a splash in the gossipy maintstream news, but it's heartening to think a Congressional Committee is becoming aware of the fact the U.S. dollar has lost 98 percent of its purchasing power since the Federal Reserve began operations just over a century ago.  A sleeves-rolled-up study commission would be a start.  And it might well put the subject into the storm of political debates that await us.  Imagine!  Major political candidates becoming aware that the dollar was a thing of measureable substance when the Fed went into operation.  Today the dollar is not even money by long established standards.  It is only a promise to pay. 

     Just as we were finishing deleting the junk from our emailbox this morning the phone rang.  First call of the day - - more junk.  A recorded voice begging money to help kids suffering from cancer.  The outfit calls us almost weekly and we hang up as soon as we recognize the voice.  

  It's not that we don't want to ease the pain of children's suffering.  It's that telephone ripoffs have become so prolific the public is being bilked of billions of dollars.  

  A few weeks ago we got the famous "call from your grandson" plea for money.  A young man, masking his voice behind a "terrible cold" claims to be a grandson who was innocently riding with a friend who ran a red light.  The vehicle was stopped and a search revealed drugs.  He's calling from jail, etc., etc.  Having several grandsons whose voices and accents somewhat resembled the caller we waded partway into the call before we realized a scam was underway.  

  Some aspects of life in the 21st century are more annoying than they seemed to be in the 20th.  Robocalls and email scams are only two culprits. 



   "You’ve probably read that there is a 'war on cash' being waged on various fronts around the world. What exactly does a 'war on cash' mean?

    "It means governments are limiting the use of cash and a variety of official-mouthpiece economists are calling for the outright abolition of cash. Authorities are both restricting the amount of cash that can be withdrawn from banks, and limiting what can be purchased with cash.

    "These limits are broadly called 'capital controls.'" WAR ON CASH.

<  Charles Hugh Smith makes several points here with which readers will disagree.  But if ANY of his suspicions are true it would pay the average Joe and Jane to to become familiar with them.  They are, after all, taking place in some far off lands, while here in the USA many folks on Main Street believe "it can't happen here."  

      But the problem with cash is the government can't keep track of how much of it you have.  It can easily enough monitor your accumulation of dollars in a bank, but the folding stuff in the sugar bowl is momentarily beyond its reach.  

       Also, when one uses cash for purchases the transaction is anonymous.  Marketers hate that.  

U.S. spends heavily on social programs.
Alan Greenspan is worried about it.

   "To me the discussion shouldn't even be on monetary policy it should be on how do we constrain this extraordinary rise in entitlements," says former Fed Chairman Alan Greenspan, calling the trend "extremely dangerous."

   Social expenditures in the U.S. were 19.2 percent of Gross Domestic Product last year, up from 15.5 percent in 2005, according to data from the Organization for Economic Cooperation and Development.  DANGEROUS

    Janet Yellen is supposed to be in the spotlight hinting that the Federal Reserve might raise interest rates in September. But the Fed Chief's comments are so shrouded in hint and innuendo that making bets on Fed policy seem quite risky at the moment.  In the meantime, a former Federal Reserve chairman stirs up some questions with his concern for Uncle Sam's heavy spending on social spending which eats up nearly 20 percent of GDP.  Anyone on the government dole should follow this. 

    Note to Social Security recipients....the inflation adjustment for next year will be set according to the  the price inflation rate a couple of months from now.  The dollar is showing a bit of strength in some sectors (deflation) which means the annual inflation rate may substantially under the Federal Reserve's goal when the adjustment is set. 

    Question:  What if the dollar gets even stronger and the price inflation rate falls into negative territory?  Will Social Security recipients suffer a CUT in their payments.  

    Huh? With 2016 being an election year .no politician in his/her right mind would ever suggest such a thing.

Columnist Katie Hopkins calls for ‘euthanasia vans’ as Britain has ‘far too many old people.' 
We "surplus old folks" in the U.S. need not worry about such talk...yet.  

“We just have far too many old people,”  says British columnist Katie Hopkins. “It’s ridiculous to be living in a country where we can put dogs to sleep but not people.”

“We need to accept that just because medical advances mean we can live longer, it’s not necessarily the right thing to do.”

Her solution to the problem? “Easy. Euthanasia vans – just like ice-cream vans – that would come to your home.”

“It would all be perfectly charming. They might even have a nice little tune they’d play. I mean this genuinely. I’m super-keen on euthanasia vans.”  Too Many Old People

  This young lady has resurrected a bit of a buzz about "what to do about the booming population of dependent elderly.  Her idea is reminiscent of the solution shown in the old movie "Soylent Green."  

   Fortunately, we-the-elderly in the U.S. have powerful lobby agencies like AARP looking out for our interests, not to mention considerable clout at the polls to insure the election of politicians who'll keep subsidies flowing as long as possible.

   But, just in case...it seems sensible to stay on good terms with one's direct descendants.  One of them may need to clear out a spare room for you when the public till is overwhelmed.  

 What's different about today's currency and yesterday's MONEY?
A remarkable devolution occurred in less than a century.  

    "Years ago gold and silver were money.  Physical coins were replaced with gold and silver certificates.  Those certificates were replaced with 'Notes' or debt of the U.S. government issued by the central bank.  Those notes have largely been replaced by more ephemeral digital debts in the form of credit card debt, debit accounts, checking accounts, short term debts (T-bills), longer term debt (such as 10 year notes) and derivatives of those debts.  The intrinsic value of those notes and debt instruments is minimal – they are accepted because they are accepted, UNTIL THEY AREN’T."  GARY CHRISTENSON  < Getting people to think about what currency will buy is a snap.  Easy as pie.  We are accosted by advertising almost every waking moment.  But getting average folks to understand how their currency morphed from actual MONEY into its present debt-based form of numbers in electronic devices and printed IOUs is nearly impossible.  That's because the subject is notoriously dull - until somebody like Gary Christenson explains it. 

    This is worth reading and sharing.  

"Sound of a dollar?"

     We heard a couple of "experts" on NPR a couple of years ago explain the "sound dollar" had to do with the sound a silver coin makes when it's tossed onto a hard, flat surface.  

   But we recall growing up to the phrase "sound as a dollar." We think the expression was introduced early in the 19th century but have never researched the matter.  It referred, of course, to the original U.S. dollar which contained 371.25 grains of silver.  

   It's true silver dollars made a wonderful clink when they jangled in pockets and also a distinctive sound when spun on a merchant's counter.  But the reference to "sound as a dollar" appeared to mean the U.S. dollar was reliable, honest, of trustworthy substance.  The soundness of a dollar was a good thing.

                                       (Eye catching sentence.)

   "Billionaire hedge fund managers have called on Puerto Rico to lay off teachers and close schools so that the island can pay them back the billions it owes."

   This is the way a left-leaning British newspaper, The Guardian,  puts it.  The implication is the filthy-rich creditors are demanding the debt-riddled Puerto Rican authorities fire teachers and close schools to pay their debt.  

   Here go again.  "Government borrows more money than it can possibly pay back and chooses to walk away from its obligation leaving the rich creditors holding the bag."  Nothing new here.  Publilius Cyrus said it ages ago - "All debt is paid, either by the borrower or the lender." 

   At this very moment lenders are pushing the government of Greece on terms of a third round of lending and the Greek citizenry is angry about the sacrifices they are called upon to make.  

   Debt is a useful tool if wisely used.  But if one gets into it over his head it almost always leads to unhappiness.   

Wall Streeter says "owning gold is like owning a Pet Rock!
"Yes it is," replies Peter Schiff. BUT!

   "First off, his comparison of gold to equities as an investment vehicle sets up a false dichotomy. Gold is not an investment. It is, as he says, nothing but a rock. But it is a rock that is extremely scarce, with highly desirable physical properties that have resulted in its being used as money for all of recorded human history. As a result, it should not be compared to stocks or real estate, but to other forms of money, such as any one of a number of fiat currencies now in circulation.

   "Ironically, in a world awash in fiat currencies that are created at an ever increasing pace, and whose value is solely derived from faith in the issuing state, gold is the only form of money whose value does not require a leap of faith." CURRENCIES RELY ON FAITH. 

      Ron Paul:  Peacenick
The feisty former Congressman is in the American minority favoring peace.

   "When we hear that the US just spent $X billion for drone missiles, we must immediately ask: 'instead of what?' In other words, what else could have been achieved if that $X billion had been spent by the individuals who earned the money rather than by some nameless bureaucrat serving a powerful special interest? It should be obvious which scenario would most benefit the economy." Swords into Plowshares < Ron Paul's new book is worth the $15.00 Amazon is asking, even if you believe heartily in converting more "plowshares" into swords."  At least consider his arguments.  They are beginning to sink in, despite the fact supporters of the status quo believe that might makes right and the U.S. must remain armed to teeth, at whatever expense to be able to conduct several wars all at once anywhere in the world.  

   It's really the old "guns and butter" issue.  As late as World War Two civilians had to make economic sacrifices so that dollars could be steered into making tanks, guns, and aircraft instead of automobiles and other consumer goods.  With the Korean Conflict, the Vietnam War, and subsequent military operations, fiat currency in abundance came into play and Washington could supply the wants of the military PLUS the wants of general society.  ("Guns AND butter.")  

   In the 1950's President Dwight Eisenhower warned of a danger from the growth of a military-industrial complex.  Dr. Paul is only underscoring the message by explaining in clear language that there is a limit to the amount of money citizens can pay to operate worldwide military operations without limiting their own individual welfare at home.  He's all for defending our own borders, but how much longer can we pay the bills for U.S. troops stationed in Japan, Korea, Germany, and dozens of other places? 

   The debate plods on.  

  Problem:  How to pay for the growing band of pensioners. 

   "My Coast Guard friends are retiring now," writes 41 year old Jared Dillian.  "You get to retire after 20 years of service, but some of them have been taking advantage of early retirement and are leaving the service as young as age 40.

    "Oh my God, what a deal: At age 40, you can bring home about $50K a year and then start a whole new career on the side!

    "In the old days, you could offer that deal because military folks would die at 47. Now they will live to 100.

    "Paying out benefits for 60 years to retired military personnel doesn’t sound like a great deal for the taxpayer."                                                      Longer Lives

   The cost to society of supporting the rapidly growing number of pensioners is very pricey. With people retiring in their 60s and living into their 80s and 90s the growing expense is like a Sword of Damocles edging lower and lower with each swing.  

    Young Jared Dillian writes about it in a piece published on economist John Mauldin's blog.  The subject, like our unpayable public debt and other bothersome subjects, is constantly pushed into the future.  Moreover, the elderly are a voting bloc politicians don't want to upset.  

    We are living longer!  Good for us.  We're running into shortfalls for pension funding.  Not so good.  

    "Pope Francis is like the typical foot soldier in any war. He has no idea what the war is all about.

    "He thinks he sees injustice – the fact that some people have more stuff than others. And he believes there is a solution: Governments need to do something!

   "We have searched the published reports; we can find no way to explain or understand the Pope’s pensées.

   "He believes wealth inequality is the result of greed and that it creates a kind of 'new colonialism,' whatever that is supposed to mean.

   "The rest is like so much random obiter dicta, slogans, and clichés – there’s no real meaning in them.

   "What is the harm in being poor? As long as you have a roof over your head, enough food to eat, and cable TV, you’re okay."  POPE FRANCIS AND ZOMBIES

   That last line will get Bill Bonner, the Rogue Economist, into a heap 'o trouble with readers who believe absolutely in the power (and obligation) of government to take from rich and give to the poor. Scathing protests must be making their way into his emailbox at this very moment.  

  We should demand a nationally televised debate between liberal economist Paul Krugman and Mr. Bonner.  Krugman can defend his anti-capitalist views while Bonner can argue the free-market point of view.         

    Commentator Pat Buchanan seems to agree with Bonner, and it must pain him to criticize the Pope for his anti-capitalist views.  He writes, "The pope used the phrase 'dung of the devil' [describing capitalism].  Is that not a good description of Karl Marx’s 'Communist Manifesto' and 'Das Kapital'? And is not satanic the precise word to describe the scores of millions of dead that 70 years of Marxist-socialist ideology produced?" The Pope and Capitalism The Pope and Capitalism.