(Caveat Emptor)

News and opinion from all over the political universe. 

Much of it to be taken with several grains of salt.

July 12th, 2020

MAIL:  The Editor

There are plenty of U.S. coins.  They're just not circulating.
    Our neighborhood Walgreens pharmacy encourages customers to use charge or debit cards instead of cash.....owing to the "coin shortage." 
     A negative about using cash is, of course, the belief that can carry the coronavirus.  For as long as we can remember germs of all kinds have been suspected of riding on paper money.  Cash is still legal tender and seems to cidrculate okay - at least for small transactions.

       But - what about COINS?  It's true the U.S. mint cut back on minting new coins in 2019 but reports this week indicate that rivers of new 2020 coins are on their way and the so-called "shortage" should come to a halt soon.  The fact is, there are plenty of coins "out there," escept they're stored in large bottles and other containers.  People bring them home but they don't carry them out in the morning.  We never see anyone in the checkout line opening a change purse so they can hand over precise change at checkout.  If the banks would pay a small premium for the return of coins there would be coins a-plenty. 

      U.S. coins, by the way, are legally distinctly different critters than paper Federal Reserve Notes.  The notes are paper IOUs printed in bulk by the Bureau of Engraving and Printing.  Each one is signed by the Treasurer of the United States and the Secretary of the Treasuring.  Coins, on the other hand, are NOT IOUs.   They are tokens of minor intrinsic value. - mostly copper and nickel - and their metallic content does not  meet their face value.

           The army post is named for Pres. Andy Jackson and Jackson's position in history has been besmirched. It's located in Columbia, SC whose own name may be in question because it reflects the name of Christopher Columbus who is denounced for a ill handling of natives in 1492.

       If Jackson is to be treated as a disgrace and his statues and other images removed from view, there ought to be some consideration given to stripping his image from the $20 Federal Reserve Note.  There has already been a movement to replace him with Harriet Tubman but that has been put on the back burner for the time being by the Treasury Department.  So circulating paper notes will feature all male images for a while longer. 

       We also note there's a call in South Carolina's capital city for the removal of the late Senator Strom Thurmond's name from a University of South Carolina sports center because of racial views he once held.  There's a statue of him south of the capital building that probably will have to be dismantled.  And a large lake on South Carolina's southern border, a major federal building in Columbia, etc., etc. 

       No one has yet come up with a dollar figure for what all this history re-write will cost taxpayers. 

The Inflation-adjusted spot price of gold.
Even financial media can't figure it out.
    The Wall Street Journal informs us yesterday that the spot price of gold is very nearly at the level it was in August, 2011.  The Journal forgot to accomodate the effect of price inflation over the last nine years.  There was an accumlated price inflation rate in that period of 14 percent and today's inflation-adjusted price must be $2,156.57 per troy ounce to equal the high of 2011.  It is nowhere near that level. 

      Calculating price inflation when comparing prices over time can be a pain in the neck.  Most of us fail to do it.  For example, we put a little money into a bank savings account and are grateful to get a small return on the money.  But by the time adjusting for even a low annual rate of inflation is done it may be evident we barely broke even or possilbly lost a little purchasing power on the money.

       We have all lived most of our lives under the shadow of monetary inflation.  We have grown used to the idea it is something that "just happens."  This is not so.  It's a man-made phenomenon by relying entirely on fiat currency.  No inflationary period has not eventually stopped.  Ususually with much pain.

Food For Thought in Trying Times
     "The great big secret behind all [this] is not that capitalism failed; it’s that the capital in capitalism isn’t really there anymore, at least not in the amounts that mere appearances like stock valuations suggest. We squandered it, and now our institutions are straining mightily to pretend that 'printing' money is the same as capital. (It’s just more debt.) Note, the stock markets are up this morning at the open! Go figure…."   ~Howard Kunztler
The rest of the world is watching the United States economy collapse with a mix of glee and angst. Despite the illusion of stability shown by prices in the stock market at the moment, the fact is the economy has entered its 12th recession since 1948 and contains the potential to sink into an old fashioned depression. In fact, the Washington numbers crunchers have predicted it may take some ten years before the economy climbs back to resembling anything close to what we assumed we had in January, 2020.

   The apple cart was upset by the near shutdown of the economy in an effort to fight the Coronavirus. Now, the U.S. has been tripped up by riots triggered by the death of George Floyd of Minneapolis. The cops were called because of an allegation he was attempting to pass a phony piece of paper money. An altercation occurred and a cop killed him by kneeling on his neck. Said officer has been charged with murder. Justifiable anger over the incident resulted in mass protests which have turned into riots in several cities - some as far away as New Zealand. 
     We have the uneasy feeling that the summer of 2020 will go into the historical record as an important inflection point in the struggle to maintain a sustainable level of civilization. We wish the popular public media would stop fomenting violence by displaying so much of it, over and over, and set aside a little time for solid debate among rational intellectuals who grasp the big picture:  Establishing peaceful cooperation among individuals who desire to achieve, to the best of their ability, the  pursuit of happiness and property.

    Non-violent protesting is not illegal, of course. Breaking shopkeepers' windows and doors and stealing their merchandize is totally unlawful. We wonder why this basic fact is not instilled in the minds of the tots in the early years of their school training.

"Old coins vaccinated me against trusting politicians long before I grew my first scruffy beard. I began collecting coins when I was eight years old in 1965, the year President Lyndon Johnson began eliminating all the silver in new dimes, quarters, and half dollars. LBJ swore that there would be no profit in 'hoarding' earlier coins 'for the value of their silver content.'

   "Wrong, dude: silver coins are now worth roughly fifteen times their face value."  METAL MONEY vs. PAPER CURRENCY

This is a must read for anyone just discovering the vast differences in common coins prior to 1965 and those of today.  Also, a stunner for anyone who has some old silver certificates and actually believes the government backs them with anything of intrinsic value.
          Our own epiphany about common coins came in 1937 when we received a birthday gift of a slightly worn 1837 one cent coin.  It was about the size of a quarter-dollar. 
         " Huh?" we wondered.  Why was that?  So we went about finding out. 


Potiphar Gride

     My grandfather was two when A.G. Bell invented the telephone. He was married and father of two children before he finally had one installed. It was one of those "candlestick" types with the receiver hanging from a cradle on the side. 

      I can't recall ever being allowed to use the telephone when I was a little shaver living with my grandparents. Although I did discover that one could play with the dialing mechanism without causing harm PROVIDED the earpiece wasn't lifted from the cradle.  

     Most incoming calls seemed to involve trouble. "Oh, dear. Mrs. Smith is in a bad way. They took her to the hospital this morning. It doesn't look good."

     "What? The Evans had to call a doctor to look at little Edna? Oh, my Lord, I hope the neighborhood children don't catch whatever it is. At two-dollars a visit who can afford to call the doctor very often?"

    Sometimes my grandmother would sit and chat with a friend if she had some spare time, which didn't seem to be very often.  I was always relieved to hear her laugh. That didn't happen very often, either. Those were the bleak years of the early 1930s and things were not going very well for our clan. 

   What would grandmother think about telephone traffic in the 21st century? We think she'd be shocked and angry at the way con artists and peddlers of all descriptions presume the private telephone is their gateway into people's pocketbooks.  

   "Do not hang up!" barked a harsh male voice after I answered my home phone recently. As I was about to hang up he said "Congratulations! Your home has been selected. . . ." I hung up. I'll never know for what my home was selected. 

   Twenty minutes prior to that call it was a perky pollster who told me I was a Republic voter whose opinion is vital to the GOP. Would I kindly stay on the line for an important poll?  Alas, I could not and apologetically terminated the conversation. It seems wimpy, doesn't it, to handle telephone pests with some level of courtesy but that's a habit I picked up somewhere back in the Dark Ages. 

   Incidentally, why am I on the GOP call list? For the record, I am not a Democrat nor a Republican. I have been ardently independent since Barry Goldwater lost his run for president.  .   

   But - back to the telephone. My day is filled with calls from  females whose automated message has something to do with credit card(s). I never stay on the line long enough to find out what it's about. I could be missing a fantastic deal. (!)

   "Crime rates in your neighborhood are up," announces a stern voiced caller. It's a pitch for an expensive home alarm system. His script is carefully written and I really hate to cut him short, but I have my security bases covered.  

   "We're installing new windows in your area, and...."  Sorry. Not in the market for windows.  

   And the coin dealer in Texas. "Hey, there! What's the weather over in South Carolina?" I tell him how awful it is and add that he needs to take my name off his call list. I'm not buying anything. Never do. But he keeps trying.  

   As for the cell phone. . .I never have it on except to make a rare call. That instrument is totally for MY convenience and I have no interest in listening to commercial pitches on it.  

   As for email spam - WELL!  The spam catcher snags about 120 of them per day in the email account.  Sometimes there's a legitimate email in the bunch and I feel obligated to glance at the list before deleting the daily spam.   What a waste of time.   

   Speaking of time. . .where do people find time to incessantly fiddle with iPhones and other portable doodads designed to keep them constantly in touch with others similarly inclined? Their constant busyness prevents them from sitting quietly now and then to just THINK. ~P.G.

The U.S. is officially in economic recession. Again.
How do we get out of this pickle?
   Painfully, probably.  Some worrywarts are predicting a heavy burst of money inflation.  Others see a deflationary depression on the horizon.  A few think a long period of stagflation is in the cards. 

     In the past, deflation has featured a booming bond market, a collapsing stock market, falling gold and  commodity prices, a collapsing real estate market and a stronger dollar.  Inflation, on the other hand, has featured a boom in stock prices, a collapsing bond market, booms in gold prices and real estate,and  a seriously weakened dollar.

     Presently we have a  mixed bag.  COMMERCIAL real estate is in a slough. Residential realty values are are spotty.  Despite the flood of money inflation by the Fed'l Reserve several disturbing features of economic deflation still beckons, chiefly influenced by a mountain of unpayable debt.   The mixed signals stagflation - and uncertain springboard from which to build a thriving economy. 

     What will the political effect be in November?  Hard to tell.  Looks a bit iffy for the presidential incumbent because the condition of an economy at election time is a strong influence, as President Herbert Hoover discovered in 1932. 

        The mechanics of fiat currency is little understood by the liberal left and their rush down the road to socialism , although widely accepted by voters, has no historical affirmation as an approach to general prosperity. 

        So, how does one navigate all this?  We recommend contrarianism.  Keep an eye on what government is doing and do the opposite.  When government is taking on mountains of unpayable debt, do the opposite.  Hunker down and pay off debt.

What?  A U.S. coin shortage?
Fed'l Reserve chairman says they're working on it. 
    Actually, there isn't a "coin shortage." Tons of coins are stored in jars, boxes, and buttles in homes across the United States. The Fed and banks can coax them out of cupboards and closets by offering to count and roll them at no charge. It might also be a good time to dump the lowly cent and nickel which cost more to mint than their face value. 

    Hint: Hoarding one cent coins dated earlier than 1982 is sensible because they were made of mostly copper. Since October 1982, the cent has been made of mostly cheap zinc coated with a thin veneer of copper. It's sensible to be cognizant of the metallic value of nickel, as well. But hoarding dimes and quarter-dollars is not very practical. They are presently made of copper coated with a thin veneer of nickel to make them resemble the 90 percent silver coins which they replaced in the mid 1960s. Their metal value comes nowhere near their face value. 

    Still, coins have an actual intrinsic value while paper notes do not. Peope may instinctively know that. They are chunks of metal of nominal market melt value. Paper currency are merely IOUs but are declared legal tender while representing debt. Coins are different critters. They aren't IOUs.  They have dimension, weight, and resist rust. However, they are not made of the metals mandated by the U.S. Constitution.

Cowrie Shells Don't Grow on Trees.

   If you lived in China some 3,000 years ago you may have heard some ancient tales of a time when people had to exchange goods and services directly for goods and services.  There was no money to serve as a medium to make exchanges more convenient. 

   What a pain barter must have been!  A sandal maker in want of baked goods would have to search for a baker who was in need of new sandals.  

   However, since the introduction of cowrie shell money in China hundreds of years earlier commerce was greatly improved.  The footwear maker could trade his products for a bag of cowries and take some of them to the baker when he was ready for a snack.  The baker, in turn, could use his cowrie accumulation to buy supplies, pay employees, and so on. 

   Cowries were money in parts of Asia and Africa for centuries.  Had they been as plentiful as leaves on trees or pebbles on beaches they would never have got to first base in the role of hand-to-hand currency.  Luckily, they were abundant enough to keep the purchasing power of an individual shell quite low, but rare enough to avoid price inflation.  Today a smallish cowrie shell is worth about 10¢ in U.S. currency.    

   They were beautiful, durable,  widely recognized as valuable, and difficult to counterfeit.  Craftsmen could see no point in trying to make fake cowries. 

   Shells were a big deal in the money function in other parts of the world, too.  In northeastern America natives painstakingly fashioned cylindrical beads from Quahog and Whelk shells.  "Wampum" it was called and strings of wampum were money not only for natives but European settlers, too, when the colonies were young.  

   Cattle and other animals have served the money function.  The peculiar great stones of Yap island are money.  Lead musket balls have served the function, and even one-inch cubes of indigo were used in trade in upcountry South Carolina when customary currency was in short supply.

    Metal got the starring role as money.  Iron had a fling in ancient times.  Copper, silver, and gold manufactured into coins by trusted mints won the day.  Gold was the rarest, hence the most valuable.  Coined money was not only the most popular medium for exchanges, but also was consistent in purity and weight - particularly if the mint was widely known for its honesty.  Moreover, silver and gold coin developed a splendid track record for preserving purchasing power over long periods of time.  

    We don't think of media of exchange having value any more.  Three generations ago a shoemaker would exchange his newly made footwear for money whose metal value was equal to the product.  He may have accepted actual coins for the transaction, or paper currency directly redeemable in silver or gold coins.  

    Nearly a century of corruption of the U.S. money system has drastically changed the scene.  On the surface the scenario may seem similar.  The shoe store sells foreign-made footwear to a customer in exchange for paper currency that reflects debt of the U.S. government to the banks.  Each piece of paper currency clearly states it's a NOTE (by definition evidence of debt) and this IOU is signed by the Treasurer of the United States, and the Secretary of the Treasury.  The note is not redeemable at any bank except in limited amounts of zinc, copper, and nickel coins.  Its only value to the holder is that it can be passed along to someone else for goods and services, who - in turn - must pass it along to someone else, etc., etc.

   The debt is never satisfied!  The ever-depreciating IOU will continue to circulate until it eventually depreciates to zero. 

    The Federal Reserve System is the mechanism through which the money system established by the U.S. Constitution was destroyed.  Congress should dispense with its services. If it doesn't and the dollar is wiped out we can always return to cowrie shells or wampum.  Even gold and silver!