"The most common way people give up their power is by thinking they don't have any."  ~Alice Walker

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May 30, 2016

Who will clean up the Vietnam War Memorial in Venice, CA?

        "On this Memorial Day one of the questions is who will clean up the Vietnam wall at Venice, California. It was defaced the other day.  An officer of the Venice Chamber of Commerce called it a 'desecration.' The question is: who will clean it up?

        "Maybe Jane Fonda will volunteer. The movie star supposedly regrets that, when she went to visit the North Vietnamese while our GIs were still in combat and some of them were being held as prisoners of war, she allowed herself to be photographed on an enemy anti-aircraft gun. She relates the story on her official Web site, where she called it one thing 'that I will regret to my dying day.'

        "Helping to restore the defaced Vietnam veterans memorial might help Miss Fonda feel better about herself ó and the veterans, too. Maybe she could get Bill Clinton to pitch in. He spent the war dodging the draft and, at one point, even fetched up in Moscow. He defeated a war hero, Bob Kerrey, in the 1992 Democratic primary in Georgia. But heís never quite put paid the question of his default during the war."    NEW YORK SUN

     Two of our offspring are on the Social Security rolls.  Three others are advancing in that direction as fast as the calendar will take them.  They are all Baby Boomers.   It's likely they and  their cohorts will put a strain on the already fraying system of caring for the fast growing population of senior citizens.  Think of it!  The first wave of Baby Boomers turns SEVENTY this year.   

      How many of them piled up enough assets to sustain themselves until they expire?  Especially in the era of creeping inflation.  Those who can't pay their way to their last breath must rely on subsidies.  As their numbers grow so does the strain on public financial resources. 

       When the Social Security system was established there were lots of workers paying low FICA taxes to support a relatively small population of elderly people.  Today's workers are paying heavy FICA taxes to support a rapidly expanding number of seniors.  The impact of the Baby Boomers will soon be felt and the world will have another demographic crisis on its hands. 

        What's the solution?  This is one of those "third rail issues" which politicians don't like to discuss. 

         Happily, today's workers are still relatively content to shoulder the bills for caring for the elderly.  By 2020 (the beginning of the 3rd decade of the 21st century) the burden of warehousing the dependent elderly will thrust its way into the headlines,  thanks to the  rapid Baby Boomer entry into retirement.

          Heads up!

   "Mexicans occasionally ask, 'If Americans donít want drugs, why do they buy them?' The market for drugs exists in the first place because Americans very much want drugs: high-school students want them, often middle-schoolers, college kids, high-dollar lawyers, Congressmen on the Hill doing lines of coke at parties, liberals, conservatives, libertarians, the residue of the Sixties. Washington doesnít want Americans to have their drugs. It is Americaís problem."   Writing from Mexico, the curmudgeonly Fred Reed on Trump's Mexican View.

     Writing from his homestead in the U.S. P.J. O'Rourke reviews a book published 35 years ago:

        "I have a teenage daughter whose continual response to the problems of life is to say Ė or rather, to whine Ė 'Thatís not fair!'

         "One day, Iíd had too much and snapped. I told her, 'Youíre cute. Thatís not fair. Your family is pretty well-off. Thatís not fair. You were born in the United States of America. THATíS not fair. Honey, youíd better get down on your knees and pray to God that things donít start getting Ďfairí for you!' " 

*  *  *  *  * 

American households are $12.25 trillion in debt.
Not to worrty. Interest rates are low.

   We bought our first automobile in 1946.  It was a well used 1929 Chevrolet coupe costing $75.00.  It took several months to save enough to buy that old car, but that's the way the used car business worked in those days. In 1947 we upgraded to a 1934 Chevrolet sedan.  It had a built-in heater which we considered quite a luxury in the cold of a New England winter.

   Today one buys a car and pays later.  In fact, almost anyone can drive off the car lot in a new or "pre-owned" vehicle with a little or nothing down and a promise to make payments for a period of four or more years. No wonder it's so hard to find a place to park!

   A seldom considered liability of borrowing is its effect on the future.  If you have a debt of, say, $50,000.00 for cars, a boat, appliances, and what not, that means $50,000.00 (plus interest) of future income is committed and will hobble future choices.  This applies to individuals, governments, and businesses which are accustomed to running on heavy debt.

   Ben Franklin's long ago advice comes to mind.  "Pay what you owe and you'll know what you own."  


But so are most Americans!

 Official data put the U.S. Treasury ownership of gold at 8,133.5 metric tons.  That's #1 of all nations on the globe! The percent of foreign reserves: 74.9 percent With the largest holding in the world, the U.S. lays claim to nearly as much gold as the next three countries combined. It also has one of the highest gold allocations as a percentage of its foreign reserves, second only to Tajikistan, where the metal accounts for more than 88 percent. Donald Trump made headlines recently, claiming ďwe do not have the gold,Ē but from what we know, the majority of U.S. gold is held at Fort Knox in Kentucky, with the remainder held at the Philadelphia Mint, Denver Mint, San Francisco Assay Office and West Point Bullion Depository. The U.S. Gold  < To tell the truth, "chrysophobe" may not be the right label for Trump.  He didn't say he had no use for gold - he merely says he didn't think the government actually has all the gold it claims.  We hear the gold-is-gone-from-Fort Knox argument all the time.  Maybe somebody outta take a peek into the vault before the November election?
    A chrysophobe, by the way, is a hater of gold. 

      Speaking of Trump.  Don called Tuesday.  Yup.  Phone rang and J. Donald Trump launched right into his pitch.

          It was rude of us, but we hung up on him.  We'd hang up on Hillary Clinton, too, but she hasn't called us yet. 

          In fact, we hang up on more than fifty percent of incoming telephone calls because they are either political propaganda, commercial sales pitches, or urgent requests for charitable contributions.  We get the feeling that we're paying for a telephone service merely as a convenience for hucksters. Advertising hype has reached a  fever pitch.  It's successful, tough.  Average Americans are said to be deeply in hock from buying more stuff than they can afford.

           Over the next five months Americans will be clobbered with a barrage of political advertising.  News/enteretainment media have already pushed Trump and Clinto into the final race for the White House even though neither has officially been nominated by the Republican and Democratic parties.  "Presumptive candidates" they're called.  And the country seems to be almost evenly divided about them. 

           Junk phone calls are only a bit more irritating than junk emails.  We waste several minutes a day deleting an overload of email sales pitches. 

            But the trend to such time wasting is not new.  The late Neil Postman brought it up years ago in his book "Entertaining Ourselves to Death."   We watch friends and strangers hunched over their iPhones by the hour as if their existence depended on their being connected at all times to everything that is happening. 

             The technological age has strong attributes, but if it oversupplies us with entertainment and hype it leaves us little time to think.  Quiet reflection and contemplation are becoming lost arts. 

   "Most wealth today is in digital form recorded on hard drives and transferred through routers and servers in dispersed locations. What if those servers were hacked and your electronic wealth were erased? Where would you go to get it back?"

Jim Rickards has become quite famous by teasing listteners and readers with question like this.  A typical response is "Don't worry about it.  The Federal Deposit Insurance Corporation will cover any losses to your digital currency stash."  However, the FDIC has anough cash on hand to cover only a fraction of bank deposits.  When that money runs dry the FDIC can tap into the U.S. Treasury for as much as needed.  Of course, the Treasury Department would not have sufficient resources on hand to meet unusually heavy losses and would be forced to toss the ball to the Federal Reserve which can create U.S. currency with a few taps on computer keyboards and by ordering up additional skidloads of paper currency at the Bureau of Engraving and Printing. 

It's a vexing situation that appears to have no solid solution.  Anyone suggesting a return to a sound money policy will be laughed off the stage.  But, after 45 years of experimenting with debt-based currency we detect a muttering of unhappiness among voters.  They seem anxious to put political leaders into office who'll make some dramatic changes to the way government business is done.  Including, possibly, a few baby steps toward a return to the old system of honest money.

  We were working in the television news business in the late 1970s when the fear of price inflation was running high.  A university journalism intern earnestly observed, "Look.  If poor people are struggling to put food on the table and a roof over their heads why doesn't the government just print more money and give it to them?"

    She was a bright young woman and later went on to a career in the news business.  But she did not understand that wealth can't be created out of thin air by anybody - - including the wizards in Washington, D.C.

     PROMISES of wealth can be printed by the skidload, or created on  gigantic computer hard drives.  In fact, printed U.S. currency in circulation today are merely slips of high-grade watermarked paper declaring that the United States owes the Federal Reserve the amount that appears on the note.  (A note, by definition, is an IOU.)

     The bulk of U.S. dollars aren't printed slips of paper at all.  They are invisibly recorded as 1s and 0s in computers.  Let's hope the banks can stay ahead of the hackers and our account balances aren't raided.

       Paper or digital  currency can be  easily created.   That's the problem with the fiat-currency system.  The Constitution  called for precious metals to serve the role  of money because of their relative scarcity and  ability to  convey  value  across  long periods of time.  Most people, and their political representatives, hate  the constraining effect of  sound money - which is why  the sound money issue is not included in the  2016  political debates.

Big Government: The federal government wasted more than $100 billion on overpayments last year. It knows this, even tracks it, but somehow canít seem to stop it. Is there a better indication that government is too big? WASTE NOT, WANT NOT.


   Don't misunderstand. Our general mistrust of heavy financial debt comes only from the history books, plus some personal experience in our youth. We believe judicious use of borrowed money can be enormously helpful.  It's the runaway borrowing that runs us into trouble.

        In 2008 consumer credit card debt had soared.  The recession slammed on the brakes.  But the credit cards are being more widely distributed now and credit card debt is nearly $1 trillion.  Publisher Bill Bonner would point out that people are "Buying things they don't need with money they don't have."

     We've had that hollow feeling in the pit of our stomach from racking up debt that was nearly impossible to pay.  We've also enjoyed the feeling of not owing a soul a single dime. 

     Being debt free somehow makes the sun shine brighter and the air smell fresher.  Publilius Cyrus said ages ago:  "Debt is slavery of the free." 

   Some voters vow they'll stay home on election day.

    Political angst is really beginning to bubble as U.S. voters face the fact that their presidential choices in November will be Hillary Clinton and Donald Trump.  Some weeks remain, of course, before their nominations become official - and there's that nagging campaign of Bernie Sanders still nipping at the edges of the Clinton bid.  But the talking heads on media are assuming the bumper stickers this fall will be either Trump or Clinton.

    Conservative octogenarian Professor Thomas Sowell puts it this way:  "This year's general election will offer a choice between a thoroughly corrupt liar and an utterly irresponsible egomaniac."  GRIM CHOICES

     So, how did we put ourselves into a jam in the matter of choices? Sowell believes some of the blame must be placed on the American voter.  (Gasp!) 

It's true.  The federal government is not authorized to dictate who may be admitted to private toilet facilities.  It may cajole institutions receiving federal subsidies, such as public schools, etc., but it can't offer any Constitutional authority even then for withholding funds if the bathrooms don't suit social trends.