“Our first and fundamental
maxim should be never to entangle ourselves in the broils of Europe….”
May 4, 2016
An unexpected turn of events. . .The Missus broke her leg yesterday and life has suddenly become a tad more complicated. This blog will be put on the back burner for a day or two until we re-organize
THE ENDLESS BATTLE BETWEEN LIBERALS AND
"Liberals generally want to increase the minimum wage, provide every working mother with free day care, institute a national health care system, increase poor women’s access to abortion, provide free contraception devices to any woman that wants them, expand Medicaid, remove 'under God' from the Pledge of Allegiance, provide every child with a free college education, increase funding for mass transit, pass stricter gun control laws, make “the rich” pay their “fair share,” increase the number of groups protected under anti-discrimination laws, grant special rights to LGBT
"Conservatives generally want to simplify the tax code, reduce government waste and fraud, amend the Constitution with a balanced budget amendment, restore prayer and Bible reading in public schools, repost the Ten Commandments in public schools, increase funding for abstinence education, force all school children to recite the Pledge of Allegiance, reform welfare, reform immigration, slow the rate of increase of certain federal programs while calling it a cut, make flag burning a crime, provide low-income children with educational vouchers to attend the school of their choice, prevent people from using marijuana for medical purposes, strictly enforce drug laws, increase defense spending, and maintain the warfare state.
"Oh, and both groups want to 'save” Social Security and Medicare for our seniors.' " ~Lawrence M. Vance
Mr. Vance's summary may be over-simplified, but both the GOP and the Democrat parties are generally pledged to maintaining a growing federal government despite any campaign promises to the contrary.
There's a little buzz circulating about the establishment of a third party in order to save the country from Hillary Clinton and Donald Trump. It probably will not get off the ground. Third parties rarely do. The voting majority is inclined toward cradle to grave assistance from government and will vote for it consistently even if it requires running constant budget deficits.
There's no epoch in history in living consistently beyond one's means led to anything but bankruptcy.
President Obama says the economy is doing very well. If this be so, asks Betsy McCaughey, why are so many people doing themselves in?
When the economy is booming along at an annual growth rate of 3.5 percent or more optimism tends to fill the air. When it's dragging along pessimism grips people who face fewer job prospects and a boatload of debt. There's a lot of hopelessness in pockets of the population. A growing number are throwing in the towel and checking out of life's travails. Some are taking the quick route. Others are taking the slow motion route with alcohol and other drugs,
The old adage "Money can't buy happiness" is true to a large extent, but it seems to make hopelessness a bit more bearable. But how does one accumulate money when so many people can't find jobs that pay enough to make ends meet?
we have elections without substance between candidates without a difference. Hillary is just Jeb Bush in a dress, Biden a universally applicable cipher, Cruz a compliant applicant for membership in the club. Since the parties collude in avoiding issues that people care about, the contest becomes a popularity contest of the sort found in middle school. Whoever wins, the Insiders win.
Of course Trump also is a billionaire,but he is a turncoat, a class traitor, the Benedict Arnold of billionaires. He addresses the issues that the Insiders want to remain unaddressed. He is indeed dangerous. He threatens the endless (immensely profitable) wars, the endless (immensely profitable) shipping of American jobs to China, the endless (immensely profitable) importation of cheap Mexican labor. He threatens the sacred rice bowls.
It is why he must be stopped.
Price inflation will either burst out of the gate, or it won't. The dead weight of unpayable debt will eventually lead to its doom.
We recently re-read a little tract written nearly forty years ago by Dr. Carl Weigand, then economics Professor Emeritus of Southern Illinois University. We had the pleasure of meeting him in the late 1970s. He had been a German teenager during the famous hyperinflation of the early 1920's that led to the destruction of the currency in November, 1923. Prior to the Great War the German mark exchanged at the rate of 4 marks to 1 U.S. dollar. By the autumn of 1923 the exchange rate was 4.2 trillion marks to the dollar. (!)
Weigand had moved to the U.S. as a young man and was working in Wall Street when the great crash occurred in October, 1929. He had a front seat for some of the explosive monetary developments of the twentieth century and was closely monitoring the scenario even in his retirement.
In 1977 he wrote, "The country is faced with grave problems. Years of inflationary boom may be followed by years of relative decline, which may seriously affect the character of American society, free enterprise, and personal freedom. But the country has the potential economic, social, and moral resources to overcome the threatening crisis. It all depends on whether the leaders have the necessary wisdom and courage to lead, and the people have the will and the stamina to make the necessary sacrifices. The future of America is ultimately not an economic but a moral issue."
In one sense Dr. Weigand's wise words of long ago still hold true The USA has the resources to overcome crisis. But in this sixteenth year of the twenty-first century it's reasonable to ask if the people, and - particularly the voting majority - are tough enough to tighten their belts and face the issues that must be met if an economic collapse is to be avoided. Scariest of all is the chore of choosing political leaders possessing wisdom and courage.
Von Greyerz on the money muddle.
Writing in the April 23rd Wall Street Journal, commentator Peggy Noonan says "My country is in trouble."
She's particularly distraught about the strange twists and turns of the presidential nominating process. "Some things have changed that shouldn't have changed," says she, and "Because the great choice for a nation of 320 million may come down to Crazy Man vs. Criminal." Meaning, of course, Donald Trump and Hillary Clinton.
Noonan is probably upset because she sees the nation drifting rapidly away from old-style conservatism of the style she so eloquently described in Ronald Reagan's hey day.
As Brazil is demonstrating right now too much government social control leads to financial disaster. People are taught they deserve to live the good life at the expense of the productive classes. That mindset pervades the U.S. and is growing. Milton Friedman's advice, "There is no such thing as a free lunch" has been forgotten. It has been replaced, partially through decades of "free lunches" at public schools with the idea everyone deserves food, clothing, shelter, medical care, formal education, and more. A ballooning government tries to oblige but inevitably runs into the biggest problem of all. Lack of money.
Solving the "money problem" might lead to a renewal of the old American spirit, the loss which Noonan laments.
We have all been taught to revere and support our elderly - but as old people outlive their financial resources and rely more heavily on the young to support them the financial demands on the young eventually become unsustainable. AARP where are you?
Our staff curmudgeon wrote this: "I'm uncomfortable with the idea my children, grandchildren, and five great-grandchildren owe me a living. Come the autumn of 2016 I'll vote for the politician who dares to say 'It's immoral to saddle posterity with so much debt just because we're unwilling to pay our own way. It's time to stop inflating...balance the budget...and live within our means.'
"His campaign would fail, of course. Voters aren't much attracted to traits such as responsible statesmanship in their politicians. The candidate who promises to keep spending money he doesn't have and sending the bill to posterity will win. For now." POSTERITY'S DEBT TO ME.
Andy Jackson became the face of the present $20.00 bill beginning in 1928,
In a recent interview Peter Schiff said: "America owes more money than all of the other debtor nations combined. Trump is right about that, we are broke, we’re flat broke, and we’re living off this credit bubble and we can’t prick it." BROKE
How can a mighty nation like the United States of America be "broke"? Especially since more than 8,000 metric tons of gold are stashed in the government's hideaways at Fort Knox and the Federal Reserve facilities in New York City?
Unfortunately, all that gold is not officially connected to the fiat currency that passes for money these days. This raises the question, of course, of why the federal government and the Fed hoard so much gold in the first place. (Let's save THAT topic 'til later.)
The point Schiff makes is debt bubbles are floating over almost everybody and every thing. Consider, for example, the official public debt of nearly $20 trillion. If a nation is in hock for such a massive sum with no plan whatever to pay it off....or even DOWN substantially....it's clear that trouble is brewing. Even rich Saudi Arabia is borrowing a few billion dollars to make ends meet. The deflation in crude oil prices made a serious dent in its cash flow,
Debt bubbles can be deadly. Even the nation's first Treasurer, Alexander Hamilton, who endorsed the idea of a nation taking on debt when necessary, never envisioned a operating on competing fiat currencies and gargantuan debt.
Speaking of Hamilton: His portrait has been on the $10.00 bill since 1928. His portrait was slated to be removed, but Treasury Secretary Jack Lew has just announcd that Hamilton will remain and Andrew Jackson will depart the $20,00 bill and a prominent (deceased) American woman will replace him. Also, consideration of suspending manufacture of the pesky one-cent coin is being considered.
Remember March 1, 2009? Economists were stumbling all over themselves trying to explain the mire into which the U.S. financial sector was sinking and the need for the Federal Reserve to open the money gates to stimulate the spongy economy. It was a simple formula. The Fed would hold interest rates in a low range which would stimulate borrowing. Its goal was to maintain a price inflation rate of 2 percent and higher. If the Fed couldn't inflate the economy might (gasp!) sink to deflation.
On that day our alter ego, the staff curmudgeon, penned a short piece: COPING WITH DEFLATION
"And what of the bank failures? There have been sixteen in the first two months of 2009. The FDIC is already feeling a pinch and is increasing the premiums member banks must pay to replenish the fund.. Depositors' accounts are insured up to $250,000.00 each. However, the FDIC only has the funds to cover a fraction of the total demand deposits in American banks, although in the case of a run on the banks it can tap directly into the U.S. Treasury. Also, it is not unlikely a surge in demand for cash would result in cash rationing. There is not nearly enough paper currency or coin to meet demand if depositors suddenly decide they prefer their mattress to the bank vault.
"The most worrisome thing about this major economic correction, in my view, is the damage it can do to the social order. The U.S. population in 1932, when FDR was elected, was 125 million people. In 2008, when Barack Obama got the nod, it was 143 percent greater, 304 million. Should the masses become angered in their scramble for their share of the pie we can expect to see ourselves put the Constitution on the shelf and install a dictator. This is the usual way a democracy that stumbles badly ends its days." (3-1-'09)