Twittering to Death
Posterity's Debt To Me
Coping with Deflation
FDR & History
Lead us not
What Fools, We Mortals
My Immigrant Relative
The Eloquent Pogo
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A personal note. . .
We have paid the rent on this
wee corner of the internet through May of 2017. Age and bad eyesight
might put us out of business before then. But keeping it relatively
up to date, particularly with items and commentary on the terrible mess
governments have made of trying to become too big for their britches by taking on
un-payable debt and creating a phony form of "money",
demands that we spend a bit of each day keeping tabs on economic
trends. It's a self-assigned occupation.
The primary goal is to
keep us out of the poor house. History is filled with major monetary
screw-ups and we want to be in as safe a position as possible with our
modest resources when the next currency calamity occurs. Our hope is
a reader or two might find encouragement to look into the situation on
We and the Missus
faced a minister and said "I do" in August of 1948. As far
as we can tell that puts us in a marriage longevity category reached by
barely one percent of married couples. This does not entitle us to
any award or even any particular recognition, although we aim to throw a
really big party if we can keep the momentum going two more years to claim 70 years as wife and husband.
brief commentary about that long-ago year when we paid the top rate in
FICA taxes....$54.00 per year. First class stamps were 3¢ each and a loaf of bread set us back 14¢.
Several years ago essayist Frank Chodorov described his financial
circumstances when he married in 1909. His salary was $18.00 per week
"and my wife managed to pay all the household bills and save a few
dollars every week from this salary. But, then, as she has reminded me no
end of times, steak was 18¢ a pound in those days. And I myself can
remember making my midday meal on a mug of beer and a liberal 'free lunch'
sandwich for a nickel."
Imagine paying a nickel for a mug of beer and a sandwich! One buck could
buy lunch for twenty days!
Thirty-nine years after Chodorov and his lady tied the knot my bride and I
set up housekeeping. Inflation, generated by two world wars, had taken its
toll. The year was 1948 and the price of bread had risen to 14¢ a loaf.
The Consumer Price Index was 7.1%, having dropped from double digits the
year before, and a housing shortage had driven the price of an average
home to the $12,000.00 to $13,000.00 range. Whereas a new car could be
purchased for $600.00 before World War II the price had leaped to
$1,200.00 or more by 1948. We settled for a tiny rental apartment and a 9
year old Ford.
My annual salary was $3,900.00. Quite comfortable in the era of the 3¢
first class stamp and 60¢ admission to a first-run movie. I paid the
maximum Social Security tax, $54.00 per year. A television was out of the
question that year. Besides, WBZ-TV in Boston had just started telecasting
in 1948 and the picture was somewhat "snowy" in our town, forty
miles away. Only 10% of American homes had TVs in 1948, but by 1950 we
were able to buy a used Motorola table-model TV and observe the medium in
its black and white infancy.
In the last sixty-eight years we have seen the buying power of the dollar
of 1948 drop to under a dime. I find myself constantly dividing today's
prices by ten to compare them, roughly, with prices in the year of our
marriage. By that measure the 5¢ cup of restaurant coffee of 1948 should
be about 50¢ today. It isn't. It's more. An average sized new car should
be selling for around $13,000.00, but it's not. Dealers will say today's
vehicles are so far advanced over cars of the late 1940s that there is no
way of comparing prices. But I recall a new 1948 car as being a fine
machine that could be maintained quite cheaply. It's true they didn't have
built-in entertainment centers and climate control of the sort available
today, but they were comfortable and sturdily built. I'd rather be in a
collision in a 1948 sedan than one of the miniature SUVs on the streets
In the early days of our marriage we could take a child to see a family
doctor knowing the office visit would cost $4.00. In today's dollars a
routine office consultation should be $40.00, but. . .
This raises the question of where the dollar is headed. What will the
young couple being married this year experience on, say, their Golden
Anniversary? Will bread be $40.00 a loaf then? It may not matter if the
average salary is $7,500.00 a week or more. But with money assuming newer,
smaller dimensions as it threads its way through the maze of inflation,
how can one rationally plan for the future? It's like trying to draw plans
for a building without knowing how many inches there will be in a foot
when construction begins.
Sixty-eight years into our marriage finds my wife and me still fretting
about our financial safety. Every dollar we have is dwindling in
purchasing power. We have been swindled. And when we search for the
swindler the clues lead us directly to the political leadership in
Washington. Many people say conniving banks are the real culprits, but it
is the U.S. Congress that has authorized decades of monetary inflation
with its never-ending deficits and constant expansion of costly central
government. It gave its money management authority to the Federal Reserve
and said, "Do what it takes to keep unemployment low."
A reader may say, "Ah, but you and your bride are so much better off
today than you were when you married in 1948. Technology has provided all
kinds wonderful aids. Medical advances are prolonging life. A vast array
of good choices await you at the grocery store, and WalMart offers an
abundance of things from all over the world."
It's true we no longer hang the wash on the outdoor clothesline. It is
also true that advances in medicine are prolonging life, but where is the
advantage of a long life if it only allows the tentacles of Alzheimer's or
dementia more time to establish a foothold? And how much better off are we
by paying high prices for utilities? Our income does not increase at
anything approaching the rate of inflation. And today's $4.00 loaf of
bread doesn't taste any better than the one we bought for 14¢ in 1948.
I think society made a mistake accepting the government's inflation
swindle, but it was hard to resist. Early in the process it created the
illusion of wealth. Salaries crept up through the years, sometimes in
advance of price rises. Often, not. But we also observed confusion
occurring when we were taught we could "borrow ourselves
Upon beginning our long life journey together in 1948 neither of us could
imagine what life would be like in the distant 21st century. That was the
stuff of science fiction novels. We had a vague feeling that the future
would be pleasant and happy, and that the World of Tomorrow exhibit we saw
at the 1939 World's Fair was probably a reasonable prediction of things to
come. In fact, technology was producing new things all the time. Only two
weeks after our return from our honeymoon CBS introduced the LP record.
Suddenly 78RPM discs began to look antique. Also, the tape recorder was
winning a race with wire recorders, and the entertainment world was
buzzing about the exciting new medium - television. As vaudeville stars
rushed into radio in the late 1920s and '30s, radio stars of the late
1940s began casting an eye toward television.
Science delivered on the promise of technology in our lives, but the
Washington money swindle kept us in a never-ending race to stay abreast of
constant price increases. "A dollar just doesn't go as far as it used
to," we'd often hear. Our entire married life has been spent in the
Age of Inflation and there was not much we could do about it.
So, today we tell jokes about our 1948 $75.00 per week income. "So
much money," I'd brag, "my wife didn't have to take a job."
But our first child arrived a year later and she had plenty to do.
Under a system of honest money $75.00 would still be a meaningful amount
of money. It's a pity we let inflation all but destroy the value of the
dollar. What in the devil were we thinking?
John Wrisley, August -
2016. (An update of a piece written in 2008)
The Royal Bank of Scotland
has become the first bank in the U.K. to
impose a negative interest rate on depositors.
The enthusiasm for negative interest rates is spreading
. Should we in the U.S. be concerned?
"Experts are warning that the latest
move by RBS would 'set alarm bells ringing' among small businesses
and ordinary customers. The stage is set for a glorious and long
overdue old-fashioned bank run if the BOE ventures to push rates into
negative territory." NEGATIVE RATES
Would you pay your bank a fee to hold your money? This is a far
cry from the old system in which you put spare cash into a bank
account and received some annual compensation from the bank for doing
so. Remember the oldtimers who used to speak of the
"miracle of interest compounding?" No one mentions
that any more.
Today a simple checking account might pay some tiny interest rate
(less than 1 percent, annually) if one maintains a
substantial minimum balance. Otherwise there are plenty of
charges for a variety of services, including overdraft
With the specter of negative interest rates entering the picture the day
may come when banks will be falling all over themselves competing to offer
the lowest charges to accept your deposits. Coupled with the push
for a "cashless society" what are consumers going to
Tough call. If too many people rush to take cash out of their bank
accounts, on the grounds it's cheaper to keep it in a shoe box at the back
of the closet, the supply of paper currency would quickly run out.
And there's the downside of possible theft. A shoebox full of cash
may not cost anything to hold, but the danger of it being heisted is
So, what'll it be? The loss of purchasing power through negative
interest rates on funds deposited in a bank, or the shoebox or mattress at
At the moment the Royal Bank of Scotland is imposing negative interest
rates chiefly on balances held by smaller businesses. When it
spreads to ALL deposit accounts there may be an uproar....except in
Scandinavian countries where people embrace the concept of cashlessness
Innocents and Money
Mark Twain meets the Portuguese reis.
(We composed this a
year ago to demonstrate to a friend how gold money retains purchasing
power over long periods of time. He didn't get it.)
Mark Twain’s “Innocents
Abroad” is the fascinating journal of his travels with a party of
seventy-six wandering Europe and the Middle East in 1867. Upon arriving in
Portugal one Mr. Blucher was so glad to be on solid land once more that he
invited nine of the party to dinner at the town’s principal hotel. They
enjoyed a fine meal, good wine, and cigars all around—but when the bill
arrived Mr. Blucher nearly had apoplexy.
“Landlord,” he said, “this is a swindle. I’ll
never, never stand it. Here’s a hundred and fifty dollars, Sir, and it’s
all you’ll get. I’ll swim in blood before I pay a cent more!”
What disturbed Mr. Blucher was the magnitude of
the charges. For ten dinners the price was 6,000 reis. A charge of 2,500
reis was posted for cigars, and 13,000 for wine. What Mr. Blucher did not
know was the exchange rate of Portuguese reis for U.S. dollars. The
proprietor sought someone on the premises to help him translate the
numbers to U.S. money.
The dinner charge of 6,000 reis was $6.00. The
cigar bill totaled $2.50. Eleven bottles of wine came to $13.20 for a
grand total of $21.70 for the celebratory dinner for ten.
The bill could have been paid with a U.S. $20.00
gold coin, plus a silver dollar, a silver half-dollar, and two silver
dimes. Those coins today would be worth roughly $1,100.00 in terms of
their metallic content.
Could a party of ten today find full-course
dinners in a nice restaurant for about $110.00 each? Very likely.
This anecdote from 148 years ago underscores gold’s
store-of-value attribute, conveying purchasing power over long periods of
(Written: August - 2015)
about your conflicting signals!
the good old days financial giants such as J.P. Morgan understood the role
of money. In their view gold was money while paper notes, bonds,
etc., were merely IOUs...promises to pay at some future date. In
fact, Mr. Morgan is on the record saying "Gold is money. Nothing
clearly meant that paper IOUs were a promise of money payment but could
not simultaneously BE money.
When Morgan made the comment the U.S. mint price per troy ounce of gold
was $20.67. When the U.S. stopped redeeming its notes in gold held
by foreign trading partners the
mint price was $42.22. Today the market price is a little more than
$1.300.00. This represents a terrific drop in the purchasing power
of the paper dollar. (Note: Most "dollars" do not
exist in paper form. They reside as electronic digits in the bowels
Comes now this question: Should one invest in gold today in the hope
its price will soar?
A boatload of emails lately advises us that we're missing out on big profit
if we don't buy gold now before the price goes up to $5,000.00 or
$10,000.00 or some other lofty figure.
It's true that one can make a profit by exchanging paper money for gold at
a lower price and selling the gold for paper when and if the price rises. But
since the price of gold almost always soars on the wings of paper dollar
price inflation, how does one make an actual "killing" when
the dollars received in the future sale won't buy nearly what they would
when the gold was bought?
Our conclusion is we will not see $5,000.00 gold unless price inflation
rises sharply. Gold is a first rate barometer when it comes to
measuring expectations concerning currency inflation. At the moment,
however, the Federal Reserve can't even get the inflation rate up to its
goal of 2 percent on an annual basis.
So, we're with ol' J.P. on this one. Gold is money because it serves
the classic function of money....it is 1/ It is a store of value,
2/ a standard of measure, (a troy ounce is always 400 grains), 3/ it is a
medium of exchange recognized everywhere in the world.
As sought-after as paper money is it can't offer the attributes of money
the Founding Fathers had in mind when they drew up the U.S.
Constitution. Today's fiat currency fails miserably in
conveying purchasing power over long periods of time. For example,
since leaving the remains of the gold standard in 1971 the U.S. dollar of
that time has declined to a purchasing power of 18¢.
When it reaches zero it will be nice to hold some real
"DON'T CALL US WITH YOUR
OPINION." ~` NPR
Publicly funded National Public Radio has announced
that it will be closing its comments sections in a bid to
“move the conversation to social media,” following the lead of
many left-wing news sites in doing so. In a blog post by NPR public
editor Elizabeth Jensen, she said that although the decision is
“sure to upset a loyal core of its audience,” the company would
now prefer to “let social media pick up the slack.” Scott
Montgomery, the managing editor for NPR digital news cited the
reason for the move as the company’s need to engage more in social
media. NPR Doesn't want YOUR opinion.
National Public Radio
(NPR) ought to provide political coverage in an unbiased way, but it
can't. Its staff is composed of people whose opinion lean left
despite the fact that its funding comes chiefly from taxpayers and
donors of all political stripes. Whether non-leftist donors
will respond as generously as usual to the plea for money in the
next "beg-athon" remains to be seen.
1971 the purchasing power of the dollar has sunk to 18¢.
new money substitute, which we’ve lived with for 45 years, is a
fraud. A dollar in 1971 is worth about 17 cents today. In other
words, it has lost roughly 80% of its buying power. Had you been
counting on it to preserve the value of your work from the
previous decade, it robbed you of everything from 1960 to 1968.
The phony dollar has misled an entire generation into spending
money it didn’t really have… doubling or tripling its
debt-to-earnings ratio, and shifting more and more of its real
wealth to the least productive people – the Parasitocracy." Zero
The world is agog with election year politics at the
moment so this excellent article will probably get little notice.
It's an excellent piece that explains how the rich get richer
and you don't. It all has to do with the devilish problem of
irredeemable fiat currency, that totally unworkable measuring
stick of financial transactions over time. As it points out
- the dollar of 1971 now has purchasing power of about 18-cents.