"As long as we have growth and prosperity who cares what figures are in the computers?" ~Popular Fallacy.  

Curmudgeon's Archive.

  A good word for      Deflation
   Reythia gets it wrong.
    Swapping Skiff for Krugerrands
    Bailout Blues
    The Party Fades
    God and Public Schools
    Commitment to Posterity

    Money Magic
   Twittering to Death
   Posterity's Debt

   Honest Money
   Coping with Deflation

   Heavenly Sex

   FDR & History
Chicken Little Convention  
Lead us not into temptation
   My Obituary
   Ac-cent-tchu-ate the Positive
   What Fools, We WeMortals

   Unvarnished Truth
   End-of-everything Blues
   My Immigrant Relative
   The Eloquent Pogo
Nesta's Complaint
   Hucksterism Gone Wild
   Unmanageable Religion


Columbia  Weather













































































































May 29th, 2015

U.S. economy contracts in first quarter; dollar hits corporate profits

   "The government on Friday slashed its gross domestic product estimate to show it shrinking at a 0.7 percent annual rate instead of the 0.2 percent growth pace it estimated last month. There was also a modest downward revision to consumer spending."

    This Reuters News dispatch confirms the economic slump.  The GDP dipped into negative territory in the first quarter of the year instead of the fractional increase first reported.  The fact that consumer spending has been revised downward is a cautionary indicator, too.  

     There will be calls for more federal economic stimulus.  There will be plenty of calls for consumers to get out there and spend more money they don't have on things they don't need.  If the consumers play the waiting game and hold off on house upgrades, new cars, costly vacation trips and so on the 2008 recession will return to finish its work.  

      With the possible exception of Sen. Rand Paul there are no presidential candidates in either the GOP or Democrat camps who appear to know what must be done to begin repairs to the economic muddle.  Carly Fiorina might, but her message hasn't circulated.  

"Too much stimulatin' goin' on," as former Sen. Fritz Hollings might put it.
Dr. Krugman would say "More, more, more!" 
Krugman would be wrong. 

   Actually, we have no idea where Senator Hollings would stand today on the confusing issue of whether or not the federal government should keep attempting to revive the sluggish economy by continuing to borrow at the rate of a million dollars a minute. The liberal theory has always been that the government is obliged to pour money into an ailing economy to achieve healthy growth.  But at this point it's much like giving a dead body a blood transfusion.  

   David Stockman notices that popular financial news media often argue against austerity and in favor of more government financial stimulus. He trots out lots of charts that demonstrate that going into the stratosphere of debt isn't working. AUSTERITY HOWLERS 


   Here's one of the graphs in Stockman's article. It shows the 55 year climb of federal government payments for social programs. The shaded vertical bars represent recessions.

   With present public debt approaching $20 trillion the obvioous question is, "When does the transfer scheme stop working?" 

   "The Constitution is in a musty drawer somewhere; not even the Supreme Court justices can find it," opines the Daily Reckoning's founder, Bill Bonner.

  When one hears a couple inclined toward homosexuality declare "We have a Constitutional right to marry" or anti-execution advocates say the Constitution prohibits the state from terminating even people convicted of the most heinous murders on the grounds it's "cruel and unusual punishment," it's clear that no one is paying much attention to what the Constitution actually says.  Moreover, some of the amendments to the founding document would set the legislators of the late 18th century spinning in their graves.  

  But Bonner's point is this:   

   "The U.S. government used to be limited. That was the point of the Constitution – to restrict the feds’ power.

   "Much of the restraint was financial. States were forbidden from making anything but gold and silver legal 'tender.'

   "But there was restraint when it came to foreign wars, too. Congress was supposed to bear the sole power not only to put troops in the field, but also to raise the money to pay for them..

  "The new money, along with a sans souci attitude toward debt, changed everything. Now, the feds can get away with anything – including murder – if they put the right spin on it."  Next Big Crash

   Bonner is an aging Baby Boomer who blames his own generation for a great deal of the muddle in which the world finds itself.  He claims his expectation of an economic implosion is actually optimistic because it will help clear the confusion and murkiness the debt-money system has caused and possibly bring us back to a more affordable level of government, accompanied by reliance on sound money.  

   We overheard a report on NPR this morning concerning Hillary Clinton's visit to our town yesterday.  Our expectation was confirmed.  No mention was made of GOP candidate Carly Fiorina's visit Wednesday.  

   Last evening the local CBS TV station carried an enthusiastically favorable report on the Clinton appearance.  The station was either unaware or did not have the people power to cover the simultaneous appearance of Carly Fiorina, also running for nomination to president by the opposing party...GOP.  

   To its credit, the local daily paper found space for a report of Fiorina's remarks.

Greecing the Skids

   Money troubles in far away Greece don't raise many eyebrows down on Main Street, America, but this fiscal cliff-hanger holds plenty of drama.  

  Greece must cough up another $329 million next week as an installment on its International Monetary Fund loan.  But Prime Minster Tsipras says "Our creditors' insistence on greater austerity is subtle and steadfast. Our government cannot and will not accept a cure that has proven itself over five long years to be worse than the disease."

  HOWEVER, Greece's Finance Minister is less strident and is assuring the world that every effort is being made to work things out and he hopes that the June obligation to the IMF will be met.  

  Meanwhile, there's much grumbling among Greek citizens.  Some are having second thoughts about Tsipras, et al. 

   Even though you may hold the title to your GM car, GM owns the computer code that makes it run.  

    ITEM: "GM has joined with John Deere in asking the government to confirm that you literally cannot own your car because of the software in its engine.

    "Like Deere, GM wants to stop the Copyright Office from granting an exemption to the Digital Millennium Copyright Act that would allow you to jailbreak the code in your car's engine so that you can take it to a non-GM mechanic for service, or fix it yourself. By controlling who can service your car, GM can force you to buy only official, expensive parts, protecting its bottom line." Can You Ever Own Your Car?

 < Think about this for a second.  GM and Deere are asking the government to order you NOT to repair your own automobile even if you have the skill yourself or choose to have the work done by a repair person outside the manufacturer's control. 

      If this question rises to test its Constitutionality it'll be a humdinger!  It's one thing for GM and Deere to say "We'll cancel your warranty if you hack your engine's computer code," but quite another to deny you a right to service your own vehicle as you see fit.  

Who In Their Right Mind Would Want A Cashless Society?
 A helpful friend does some research on the question.  

   The question of a "cashless society" surfaces from time to time.  We recall hearing the argument in the inflationary 1970s.  

    The subject is back in the financial pages again and some experts believe that "this time it will gain traction" - the chief reason being cash (paper and coin) is such a small fraction of the money supply to begin with it won't take much to get rid of it altogether. 

     Our own prejudice leads us to believe there will always be a need for hand-to-hand currency, particularly with the fragile fiat currency system approaching its death throes. A friend dug up a like-minded view from more than three years ago.  The brief comment was written by Martin Brinkman and is posted here

      Roughly 7 percent of U.S. money is in the form of actual cash.  Some banks won't even accept cash as payment on car loans, mortgages, and credit card obligations.  A few have told their safe deposit box customers they must not keep cash and gold bullion in their boxes.  

     Many people still pay routine bills by paper check but these are often quickly converted to electronic digits which are sent to the bank for immediate payment.  Packets of canceled checks are not sent to bank customers any more.  The trend is, indeed, to digital transfer of currency.

     Getting rid of coin and currency altogether is not likely to happen.  The anonymity of paying in cash still has broad appeal, not only to criminals and denizens of the underground economy, but to law abiding citizens who don't want computer records made of their every purchase.  The person with a fondness for whiskey may not his frequent visits to the liquor store easily traceable by curious authorities or nosey hackers.  

     The present debate might lead to a useful result - - a full-blown examination of the question "WHAT is a dollar, and does the U.S. Constitution have any bearing on the matter?"  

More speculation on cashlessness.
Some of the commentators are playing fast and loose with monetary history.
(But guessing correctly about the future is important to one's finances.)

      "Inflation causes a flight from cash.  Deflation (or a liquidity crisis) causes a rush into cash and slows the velocity of money.  It doesn’t matter how much cash the Fed drops from helicopters or how many versions of QE they come up with if the cash is saved or debt is paid down the velocity of money will not increase.  But what if they charge us to hold cash?  What if they charge negative interest rates on savings accounts?  What if they charged -20%?  People would just remove their cash from the banks.  But what if there were no cash?  Now all saved wealth would be “taxed” and saving would be discouraged.  Even worse, what if VISA, MC, AMEX, Discover, Union, etc, all decided to raise their rates even more?  What if debit cards charged 5% to process charges? The major credit card companies already charge 1.5 to 4% to process charges even if you pay on time.  Of course the merchant pays the fees but those fees are added to what you have to pay.  Many merchants will give a 2% discount if you pay cash to avoid the credit card charges they must presently pay.  One of the reasons that fees are kept low is the unstated threat to just use cash if they become too expensive (they already are pretty pricey and siphon off great wealth).  But what if there is no cash?  What then? The War on Cash

   Commentator Larry LaBorde pens a thought-provoking piece on the gossip du jour...that is, the prospect of a cashless society.  However, he launches into a thumbnail history of the monetary system in the U.S. and, in his effort to be brief, plays a bit loose with some of the details. 

 The U.S. Constitution is quite clear on the money question. Sadly, the nation has drifted away from the directive to Congress about money.  It's time for the people to reactivate the founding document and also do something about the monumental debt we have piled up in recent years.  (See chart below.)