"I have come to the conclusion that politics is too serious a matter to be left to politicians." ~Charles de Gaulle
July 23, 201
Wait! Don't rush away 'til you
consider a small point we're trying to make.
The above graph simply traces the plunge of purchasing power of the dollar from 1971 to 2009. In this relatively short period the U.S. dollar dropped to less than 20¢ in buying power. (Left scale)
In the same time span the amount of currency in circulation shot up from $50 billion to nearly $900 billion. (Right scale) It's now over a trillion dollars and the bulk of it circulates overseas.
In 1965 Congress declared that silver coin was no longer necessary, and
in 1971 President Nixon removed the last connection of gold to the U.S.
dollar. With precious metals out of the picture paper IOUs (Fed'l
Reserve notes) rolled off the presses in vast numbers.
Thanks to the widespread use of digital financial transfers via
computers the need of paper currency was seen as costly to circulate
and less necessary in transactions. The push toward a "Cashless
Society" was launched.
Has Donald Trump tweeted his opinion on cashlessness?
History broadly hints that fiat currency always leads to economic
disaster. The invention of digitized "money" does little more than make
it easier for Big Brother to keep tabs on our private expenditures, and
it, too, promises a disastrous outcome. Not to mention another loss of
We'd love to see mainstream media reserve a few minutes now and then to
examine this issue. It's doubtful they will. They're too busy
trying to dump Trump.
JOSEPH RAGO - R.I.P.
Joseph Rago failed to show up for work in the editorial offices of the Wall Street Journal and his boss notified security staff. Police officers went to his apartment and found him dead. No evidence of foul play was alleged but the coronor's autopsy report is not yet available.
At only 34 Rago had won a Pulitzer prize for his series of editorials on the Affordable Care Act. His peers and employers are said to have strongly admired his editorial skills, not to mention his extrordinary depth of knowledge in matters involving the organization and delivering of medical services and the complex structure of federal and private insurance schemes advertised as methods of taking the bite out of sharply rising medical expenses.
For a talented writer whose career was on the ascendency it's doubtful his death was suicide, although details of his private life aren't known. It has been suggested that his criticism of ObamaCare may have stirred up some powerful actors involved in the failing program. Could they have slipped something into his morning coffee? We must await the autopsy report to find out.
We hope "natural causes" is the result of the examination of his corpse. Nevertheless, we mourn the loss of this talented young editorialist. It's an exclamation mark for the adage "The good die young!"
It cost nearly $1.17 to buy one euro Friday. That's 5¢ more than only a few days ago. It means the dollar is weaker against the European currency,which will be a slap in the wallet if you're planning a trip there this summer. It also accounts for the sharp rise in the spot price of gold - which acts like a kind of barometer, falling when the dollar parity is strong and rising when it's weak.
Is now a good time to invest in gold?
Not necessarily. In fact, if INVESTMENT is one's objective...that
is, buy something that might rise in price and yield a nice
profit...we'd recommend gambling in stocks, bonds, real estate,
etc. In our view, owning some bits of gold is chiefly to preserve purchasing power, not "make
Consider this: If you had cheated Franklin Roosevelt and held
onto a $20 gold piece when he called America's gold into the Treasury
in 1933 you would find it contains the same number of grains of gold
today that it did then. More important, the gold would still buy
about the same quantity of
stuff in 2017 that it did in 1933.
Do the math. The mint price of gold in 1933 was $20.67 per troy ounce. The spot price of gold today is $1,255.00 per troy ounce. You would not have actually "made money" by holding gold all that time, but your gold would have maintained purchasing power far better than irredeemable paper currency.
graphic from DSHORT.com reinforces our contention the dollar is
only a shadow of what it was when the Federal Reserve System went into
operation in 1914. (Congress created it just before Christmas,
1913.) In its original form the Fed was supposed to be a buffer
to smooth out the booms and busts that periodically occurred in the
economy by pumping money into the economy in slow times and withdrawing
it during booms.
Congress later amended the Fed's function to require it to also pump in funds to insure as low an unemployment rate as possible. As the chart above shows this has sliced the purchasing power of the U.S. dollar to a nickel.
popular news media are agog about the GOP failure to fix the medical
insurance mess and spending enormous amounts of time and print space on
"Russiagate" it might be wise to spend a moment or two worrying
about the fate of the dollar. It's a long way from 5 cents to
zero but thousands of monetary units have vanished from the earth over
the centuries. It would be a terrible inconvenience if that were
to happen to the dollar. (Born 1792. Died ?)
chief Janet Yellen is not alarmed that price inflation is still below
the Fed's goal of 2 percent per annum. Low inflation or (spooky music
here) dreaded DEFLATION would be ruinous according to modern economists
because it would mean falling
prices. That would include wages,
which is the price employers pay to get people to work for them. It
would also make servicing debt more difficult, and would ruin the
millions who have speculated on price rises for their homes and other
David Stockman's Contra Corner has posted an interesting graphic showing the steady effect of price inflation between January of 2000 abd March of 2014. Oil and gasoline prices are lower today than in 2014 but health care costs and other prices reflect the steady effect of inflating..."low" as it is.
The bottom line: Since its founding in 1913 the Federal Reserve has overseen the demolishing of the U.S. dollar. The purchasing power has dropped to under a nickel in the more than a century the Fed has existed. Now it clearly favors destroying it altogether at the rate of 2 percent a year.
The demise of fiat currency is a subject worth more notice.
VISA steps up push against cash.
Starting in August VISA will award grants of $10,000.00 to small merchants who will adopt a "no cash" policy and upgrade their checkout machinery to accept all forms of electronic funds transfer. How many merchants will accept their offer is an unknown because many are willing to accept cash although fewer consumers than ever are using it in their daily transactions.
The motive is simple. VISA rakes in about 2 percent from digital transactions but collects nothing from cash transactions.
Recent data show that cash transactions still lead at some 32 percent, but by a shrinking margin. Debit cards are in seconed place, followed by credit cards. Electronic payments account for about 11 percent among consumers, while payment by checks is down to only 3 percent.
Is it time to abandon cash? Millions of consumers don't think so, but having to visit an ATM to fill one's wallet is time consuming and less attractive as the battle against cash heats up.
The world has been on a fiat currency standard since the summer of 1971. Now there's a serious movement afoot to curtail the production of paper bills and base metal coins. One merchant is quoted as saying he saves 23 hours a week by refusing cash and not having to count bills and coins, take them to the bank, etc.
But, we wonder what happens when computers are hacked or power is disrupted? It seems reasonable to have some backup with which to trade for necessities.