"Ninety percent of the people I come into contact with are opposed to new wars. So the question is this: If so few people want war why do we keep getting so many of them?"  ~Ron Paul

Curmudgeon's   Archive.

Cancel That Funeral
Who Supports Whom?
One Foot in the Grave
Magical Money  

Posterity's Debt To Me
The Battle for Honest Money
From Riches to Rags
Fiddler's Broken Wrist
Jack-lantern Wealth
Chance of Gold Confiscation

Poobahs of Positivism

Blood In the Streets
America Descending
Just Plain Stealing  ?
A thing to fear
Heavenly Sex
What Fools, We Mortals
Unvarnished Truth
Hucksterism Gone Wild
Religious Violence


December 17, 2017
   "The world of 1917 had technologies that we know well: electricity, telephones, phonographs, roll-film cameras, automobiles, airplanes, movies, and air conditioning. There were electrical household tools: stoves, washing machines, toasters, refrigerators, and vacuum cleaners.

    "So far, 1917 sounds like today. The improvements technologically have been cumulative.

    "What about politics? The Progressive movement was in control of both political parties. That had become clear in the election of 1912, when all three presidential candidates were openly Progressives. In 1913, the United States ratified the federal income tax and the direct election of Senators. In December of that year, the government created the Federal Reserve System. The United States was still on a gold coin standard, but Europe had abandoned it shortly after the war began in August 1914. The world had begun to enter into a new era: the era of fiat money." 

           While lots of commentators are guessing what the future will bring, Gary North takes the safer route.  He looks back at the past century.  Surely there are useful lessons to be learned.

   Crypto-currencies are enjoying a boom as people rush to invest their dollars  in this high tech "money".  Logic and reason dictate that if there is a rush to bail out of cryptos back into dollars the exit door will become jammed. 

   Canada's central bank governor, Stephen Poloz, is the latest government critic to sound a warning:

    "Buying these things means buying risk, which makes it closer to gambling than investing."

     Bitcoin fans push back by saying government officials are naturally opposed to the electronic currency because it can trade outside the banking system. 

      And then there are we skeptics who notice cryptocurrency does not meet the ancient ancient definition of good money.....1/ A reliable store of purchasing power (value) over time....2/ a widely accepted medium of exchange....and 3/ a unit of measure like miles, pounds, ounces, quarts, etc.

      (The U.S. dollar doesn't meet the soundness test, either.  It is only a medium of exchange whose future value cannot be predicted.)
   Our paternal grandmother was born before the telephone came into broad use. When her household finally got one it was sometimes referred to as "The Devil's trumpet" by senior citizens of the time. Upsetting news often arrived via telephone.

     The antique phones long ago gave way to modernity and an entire industry sprang up to interrupt people's lives with unwanted sales messages and scams. Particularly annoying are the callers with thick foreign accents asking if your back hurts.  (As a rule, our does not.) The hook appears to be one's age.  If you are old enough for Medicare the back-brace peddlers assume you'd love to receive a "free" backbrace. We don't stay on the line long enough to get details.

     Then there's the perky young lady promising to straighten out our credit card problems, or offer an unbelievable vacation at some luxurious resort. We've even had our share of "Grandpa, I need help. I've been arrested and need money."  One con artist pretended to be a law enforecement officer telling us we were in violation of a court order to show up for jury duty. A fine would be imposed.

     In the old days when salesmen went door to door an uninventing sign could be posted on one's door.  Today there is almost no defense against the incessant robo-calls and other unwanted telephonic interruptions. We signed up for the "No Call List" some time ago but it seems not to be in operation. 

     The wonderful electronic communications age has a downside. The Devil's Trumpet is one of them. 

In Mark Twain's day there was no radio or television.  The chief source of general news and opinion was the daily and weekly newspaper.  Most communities had at least one paper.  Some had two.  Big cities may have supported a half-dozen newspaper publishers.

                       "If you don't read the newspaper you are uninformed.  If you do read the newspaper you are misinformed."  ~Mark Twain

      We daresay Mr. Twain would extend his criticism to the electronic news media were he alive today. 

       Our talented 'toonist nephew in Montana sketched this illustration, citing only one topic with which mainstream media are strangling themselves:

  "The establishment or ‘legacy’ media are going to the dogs. Lately we’ve seen even more of their breathless ‘blockbuster’ news events blowing up in their faces, but it doesn’t seem to deter them from continuing to release fake news. Despite their history and money, the big dog ‘mainstream’ media are losing readers, viewers, trust, professionalism and credibility. Their historical dominance is rapidly ending thanks to truth tellers who can be found on the Internet.

   "The lefty media have been relentless in their biased attacks on President Trump. They were shocked by his election because they had grown used to brainwashing the masses. Hillary promptly blamed the Russians for Trump’s victory and claimed ‘collusion.’

     "The rabid lefty media have been determined to prove the alleged ‘conspiracy’ ever since, but all they’ve come up with is empty bombast. They’re like a dog who chases its own tail but can never catch it…because the Russian collusion story is not factual.

      "I recommend 'The True Story of Fake News,' by Mark Dice. It offers an excellent explanation and summation of fake news occurring in the legacy media as well as social media."  ~Ben Garrison

   "Americans need to get honest about their spending. If you’re charging purchases that you cannot afford to pay off right away, or if you are living above your means, it’s time to rein it in. Only then can you start to address your growing debt. "        ~Brittany Jones-Cooper

We  posted this Tuesday in the hope it may inspire someone to ignore the ads offering "quick loans" to people wanting to buy gifts for friends and loved ones for Christmas.  Christmas-on-the-cuff can add to financial grief later in the New Year - - and beyond.  Yes, we have a bit of Ebeneezer Scrooge in us, but long years of Christmasses taught us the folly of buying things with money one does not yet have. 

      This general rule ought to apply to the federal government, but it doesn't.  We notice the budget deficit last month was greater than the deficit of November, 2016.  We've been told for generations that the government will one day balance its budget.  But Congress is so used to spending money it doesn't have that the prospects of ever balancing a budget are very dim.  It  will also have to haul in more money than it spends to begin the painful process of paying down the public debt. That's quite unlikely. 

        Where is the debt train headed?  We don't know, but if history is a guide it may run off the trestle into a calamity.  Erecting a tower of debt that must be paid by posterity strikes us as a mean-spirited thing to do, particulary since it promises a sharply lower standard of living for future generations.  We pray they don't catch on to what's happening until we have passed from this world.

  More than fifty years ago we noticed prices were spiralling upward. Our modest income was not keeping up. What the hell was going on?

  We  did some serious homework and discovered that rising prices weren't "inflation."  Pumping new currency into the economic system at a faster rate than the production of goods and services was the culprit. In other words, rising prices were mainly the result of inflating the money supply. 

  Price inflation soared in the 1970s. Federal Reserve chairman Arthur Burns was puzzled. We had the good fortune to interview several respected economists on the subjecct, including Dr. Henry Hazlitt, whose book "Economics in One Lesson" remains in print to this day. 

  Hazlitt explained very clearly why price inflation occurred due to the loose policies of Congress and the Federal Reserve. The light-bulb went off in our mind. Of course! When the Fed creates dollars out of thin air with which to monetize government debt, Congress gets to spend the money first. By the time the additional dollars trickle into the general economy their buying power diminishes. It resembles yet another tax on the "little guy."

   Since 2008 the Fed has pumped an additional $4.5 trillion into the economy through its various stimulus programs, such as Quantatative Easing, and is cautiously trying to gently raise interest rates to thwart runaway inflation. The Fed has always seen a slow rate of inflation as a good thing.  Two percent, annually, or so. Double-digit inflation, or higher, would be catastrophic.

   Zero inflation would be the ideal. People could deposit funds in banks at modest interest rates and see their savings actually grow.
    Now comes Jeff Thomas, writing on the International Man blog:

     "In the 100-plus years since the creation of the Federal Reserve, the Fed has steadily inflated the US dollar. Over time, this has resulted in the dollar being devalued by over 97%.

     "The dollar is now virtually played out in value and is due for disposal. In order to continue to 'tax' the American people through inflation, a reset is needed, with a new currency, which can then also be steadily devalued through inflation.

     "Once the above process is understood, it’s understandable if the individual feels that his government, along with the Fed, has been robbing him all his life. He’s right—it has."

     It has taken more than a century for the once mighty U.S. dollar to lose most of its buying power. It may be too late to throw it a lifeline before it reaches zero. But it's time to recognize what's happening and do something about it. 

     Hello-o-o-o. . .



       Katrina Nicholas at Bloomberg News writes:

It's anyone's guess when or why bitcoin fever will break, but at a time when the bosses of major brokerages are warning darkly of 'a catastrophe in the cryptocurrency market.'  It's not impossible to imagine a disorderly retreat. If that happens, many of the fiat-money brigade who've pumped up the value of digital currencies will switch quickly from bitcoin, to cash, to their perceived safe haven of gold. More sober investors also tend to cling to the metal in moments of panic such as Brexit and the election of Donald Trump.

       "Gold may be a barbarous relic -- but relics are rarely more attractive to investors than when they're trembling before the power of the market's gods. Don't count it out just yet."

        We agree with Ms. Nicholas that bitcoin and other cryptocurrencies have assumed the appearance of a massive bubble.  We don't think she understands what will happen when the sudden bitcoin "millionaires" try to cash in their winnings. Imagine the chaos when a mob of bitcoin owners rush to the exit.  Nicholas says they will convert to cash and likely put some of their winnings into the "safe haven of gold."

         How can anyone "convert to cash" when no one will pay what you think your asset is worth?  It reminds us, somewhat, of the long-ago crash of Tulipmania in the Nethlands.  People who  paid enormous amounts for prized tulip bulbs one day discovered the market had disappeared.   Tulips bulbs  lost their allure as an investment.    

          Fortunately, not many people are selling their houses and cars and plunking the proceeds into cryptocurrencies. 

     "If you look at the foundations of fiat currencies, you find loose sand, not bedrock. Massive mountains of phantom wealth have been created by central-bank inflated bubbles, bubbles based not on actual expansion of net income earned from producing goods and services, but on financialization, the pyramiding of debt and leverage on a small base of real assets." 
    Dec. 11 - Zero Hedge

     Bitcoin and other cryptocurrencies are kicking up a storm of interest among people seeking an alternative to the modern fiat currency which serves as legal tender. 

       Zero Hedge scores important point when it says that the creation of a flood of debt-based dollars has led to "massive mountains of phantom wealth."   Not only does the mysterious  bitcoin appear to be in a serious bubble mode, but the dollar - in which marketplace prices are set - also exhibits the characteristics of a bubble.  Consider;  The Federal Reserve has goosed the economy with $4.5 trillion in the last ten years.  This sum was created from thin air, and it  is AIR that energizes financial bubbles. 

      One of two things will happen.  The inflating of the supply of money will lead to a serious acceleration of price inflation, or the bubbles will burst and the "What is money?" debate will race to the top of the news cycles.

       Honest money holds value over long periods of time.  (Fiat currency does not.)