"The government is supposed to have essentially zero to do with the economy.  But today, it's the main thing that government does!"

                  ~ Doug Casey



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Wrisley.com
October 22nd, 2021





YESTERDAY MORNING BITCOIN HIT A RECORD PRICE OF $66,045.
This morning it had dropped to $61,369.
    A bitcoin frenzy is sweeping the land as people search for a means of protecting their accumulated wealth from the maw of inflation. 
We hear that Walmart is installing cryptocurrency ATMs to make it convenient for customers to exchange dollar cash for bitcoin.  Will they be able to convert their bitcoin back into cash as easily? 

    Bitcoin reached $64,000 some months ago and abruptly tumbled to half its dollar value.  Not a stellar performance for a medium hoping for acceptance as the new purchasing medium.  King Dollar is still the world's premiere currency for international trade, although its lofty position is threatened by the battering it takes from inflation. 


      Bitcoin could go to $100,000 by year's end, " experts say. 
Possibly.  A burst of hyperinflation could do that.  But quite unlikely to happen in only two months!

        And what if the government declares all paper and coin tokens null and void?  (It has never done that since 1792.)  We will draw a poster and take to the public thoroughfare in protest!  In the meantime, we'll continue to warn family and friends against gambling in digital currencies.  It  may be adventuresome and there will be some winners.  But the best means of supporting oneself is advice that's old as the hills.  FIND AN ECONOMIC NEED FOR GOODS OR SERVICES AND GO TO WORK!



Inflation ahead?  Sure.
Deflation ahead.  Absolutely.
     Some of us have been around long enough to recall the Great Depression of the 1930s.  Despite the massive growth of federal government the recovering economy sank back into depression in the winter of 1937-38 and didn't get into high gear again until war came along.  We vowed to lend assistance to Great Britain, obliged to fend off Adolph Hitler's ambitions, which made the U.S. factories begin to hum. 

      By the time we declared ourselves knee-deep in World War II the War Department was drafting America's young men for duty and civilians wrestled with goods rationing, including everything from gasoline to foodstuffs.  (Some folks now in retirement may remember lining up to buy a lard looking material called oleomargerine.  It came with a packet of yellow powder which one had to laboriously knead into the softened margerine.  Voila!  Butter!  At least it LOOKED like it.)

        Currency/credit inflation has played a nearly constant role in our economic calculations for generations.  It was particularly evident in the 1970s  - reaching double digits on an annual basis.  New Fed Chairman Paul Volcker put a stop to it by raising  interest rates to as high as 18 percent.  That brought inflation down to a "comfortable" level but never got rid of it. 

          The Fed is doing us no favors.  Price inflation is already surging, thanks to its excessive credit creation, and if not halted can easily accelerate into hyperinflation.  We have not suffered such an episode since the 18th century.  The U.S. Constition mandated a non-inflationary currency but the document has long since been abandoned on that matter.

            Professor Ludwig von Mises, in the quotation below, explains what happens.  The stage is set - we either stop inflating and live  within our means - surely a painful scenario - or we  let  inflation  run  until the dollar reaches its intrinsic value, zero.  The deflationary collapse will be even more painful. 

              Will bitcoin save the day?  No.  It's denominated in dollars.  If dollars lose value altogether how will we measure the value of bitcoin?  Declaring cryptocurrency legal tender is a possibility, but at this point of economic confusion who's to say what the citizenry will or will not accept?
      

The path ahead.

 

    Mises, the late Austrian School economist, taught that the job of the economist was to observe human action and explain, in clear terms, the consequences of various activities.  His study of history showed that there is ALWAYS an economic collapse when a "boom" was been created by borrowing money and paying it back in currency of less purchasing power than that which was borrowed.  Money inflation has always led to a calamitous end of booms.

    Can't inflation be stopped?  Sure.  But it would entail putting the federal government on a strict diet of immediately balancing the budget.  This, of course, would cause the economy to lapse into a distressing economic depression.  Living within their means would cause great discomfort to citizens and government alike, so we can be sure Congress will not choose that path.  Just the opposite.  It will continue to dump as much debt on the backs of posterity as it dares.  So, if Mises is correct - and history is clearly on his side - we must continue the downhill economic slide until the dollar reaches worthlessness.  We must all pay the penalty of nearly a century of mis-managed currency.  And then we can start to build all over again!



"Social Security cost-of-living adjustment highest since 1983.  It increases next year 5.9 percent."

Price inflation is likely to hit double-digits in 2022.  Can you see a bumpy economy ahead?.?

 


      Apprehension about the ebb and flow (and quality) of money runs high these days. Senior citizens see their cash assets losing purchasing power at a rapid rate because price inflation is commencing to look more menacing than officials claim.

   Middle income elderly are fearful of "outliving their resources" and being kicked out of their retirement facilities. Fear in one's senior years can be devastating. The young can take a punch in the pocketbook and hope for good luck in recovering.

    It is said Eskimos solved their problem of supporting the elderly by setting adrift the frail, unproductive elderly on ice floes when their care became more than a tribe could handle. A practical solution to an uncomfortable problem. Unthinkable today, of course.

     Or is it?

      Today we live under a central government that can't support its operations even by spending trillions of dollars it does not have. By issuing IOUs (bonds and other securities) which it promises posterity will pay back, Congress buys more time. In the present debt ceiling case it has bought a two month breather. And then?

       It's a mess, to be sure. The Federal Reserve System will be called upon to create new dollars, most of which will flow to the accounts of ultra rich while the the middle class suffers the cost of the resulting price inflation. The dependent poor tend to trust Uncle Sam to raise their stipend (free lunches) as inflation continues to assault purchasing power.

        So, what's a bloke to do about it? We think holding one's accumulated wealth in assets capable of retaining value over time makes sense. In generations past the U.S. dollar tucked away at interest in a savings account used to fill that choice. It doesn't anymore, and hasn't for years


TURNING POINT


   "History may record last weekend as the turning point against the Biden Administration’s Covid tyranny. From nurses to pilots to truckers to even Amtrak workers, it appears that America is standing up and saying 'enough!' Every one of our fellow citizens standing up on principle to oppose tyranny – facing the loss of their jobs and security – is owed a debt of gratitude by all who love liberty. Let’s hope that the peaceful rebellion continues to grow!"  THE GREAT SOUTHWEST REBELLION.

   Dr. Ron Paul recently turned 86 and is still near the top of his game.




   
    In the winter of 1937-38 the New Deal lost its momentum and it looked like a return to the depths of the Great Depression. Fear and apprehension returned to distract the citizenry. Even the threat of political aggression in Europe added fuel to the general nervousness among the people of North America.
    
     We personally recall the excitement of the New York World's Fair the following year and wondered why Germany had not finished building its exhibit pavillion. An adult explained that Germany was "at odds" with the United States.
   
     Adolph Hitler's misadventures and a Japanese sneak attack on Pearl Harbor put us on a war footing
  in the 1940s for the second time in the 20th century. The military draft helped clear up the unemployment problem and government took over management of the economy right down to price controls and rationing of certain foodstuffs.

     Following the war inflation boosted prices. 
   
       Between 1938 and 1948 the price of gasoline had more than DOUBLED. Strangely, the price of a 1st class postage stamp changed not at all. 

 

"These are the times that try men's souls."  ~Thos. Paine
   Were he writing today instead of the 18th cntury Mr. Paine would probably have chosen the politically correct "These are the times that try human souls."

   
Everywhere we look these days are signs of worry. Even fear, confusion, apprehension, and divisiveness. Despite rapid-fire reports of out of control political machinery and untrustworthy money, bewildering ideology pours forth from our radios and TV sets.

  "We report the truth as we know it," asserts the liberal Judy Woodruff of the PBS News Hour. "We report the truth as it is," sayS conservative Sean Hannity of FOX NEWS. Whose version of "truth" shall we accept?

   When a Novel Economics Laureate suggests Congress stamp a platium slug with the words "1 trillion dollars" and deposit it in the U.S. Treasury to spend as it wishes, can we take him seriously? He (Paul Krugman) is surely pulling our leg.

    And now government health officials are urging us to buy our flu shots despite the fact that incidents of flu are almost non-existent. They have been replaced by cases of COVID19 against which we all dutifully go about our public business in surgical masks.

     People are worried also about the winds of war. China has made clear its claim on Taiwan and the Taiwanese president has made clear her intention to NOT yield to Mainland China. Many a mother of teenage boys may be silently hoping the U.S. military will keep its nose, and its troops, out of the situation. 

     


WASHINGTON, Oct 7 (Reuters) - U.S. Senate leaders have agreed to raise the Treasury Department's borrowing authority until early December, averting a potential debt default later this month. The deal calls for a debt limit increase of $480 billion from the current $28.4 trillion. If approved by the Senate and House of Representatives, the U.S. debt limit would then be set at $28.9 trillion.

       There you have it, folks. The public debt ceiling will be increased by a mere 480,000 million dollars and we won't have to deal with it again until December. Merry Christmas.

* * * * * * * * * * * * * * * * * *
 "Passing an increase in the debt ceiling merely perpetuates the myth that there is any ceiling or control or limit on the government's ability to waste resources in the short run and its willingness to pass the burden of this squander onto future generations."  ~Ryan McMaken (The Mises Institute)
  
    McMaken points out that if Congress fails to pass a temporary fix to the debt ceiling that it must default on a substantial number of US bonds.   The United States will be plunged into recession. 
    
     So?  The U.S. continually stubs its economic toe and brings on periodic recessions.  We and the Missus have experienced ELEVEN official recessions since we  were married.  The economy is usually revived by the creation of more floods of funny money, which is exactly what the administration is trying to do right now with it's urgent plea for greater borrowing power.  Without blinking an eye they wish to pile trillions of more dollars of debt on today's youth and tomorrow's posterity.  (McMaken mentions "future generations" in his essay.  Do we-the-people give a rip about the generations who follow us?)

     Debt can damage government entitities as well as individuals.  As Benj. Franklin said, "Pay what you owe and you'll know what you own."  Most goveernments of the world have fallen into the bad habit of spending money they don't have  and then going to war when matters deteriorate.

We are wallowing in a flood of depreciating currency.
How, exactly, will it play out?

   No one can say, for sure, but some pretty good guesses are being made.  Investor Bill Sardi has written an extensive article on the subject (see  HERE )  and we recommend his ambitious essay.  He outlines several possibilities the mainstream news media have avoided - - including the tenuous position the FDIC is in.

   
"The only backstop is the Federal Deposit Insurance Corp. should a banking crisis occur.  The FDIC insures savings accounts up to $250,000.  The FDIC holds about $120.5 billion as of the 2nd quarter 2021 against $8.2 trillion in insured deposits (1.7-cents on the dollar).  Are American savers being set up to be completely vanquished of all their money?" 

    
  Sardi asks a valid question, although the FDIC has always maintained that it can draw on the U.S. Treasury if a bank run occurs. 

       Which brings us  to the curious rumor of the $1 trillion platinum coin. 
It has been rumored the U.S. Mint could create one and deposit it with the U.S. Treasury.  Overlooked is the fact the government cannot create actual value by engraving a dollar amount on any coin.  If the rumor gains traction we'll explain why this is so.

"We're able to borrow because we always pay what we owe."  ~Pres. Biden, Oct. 4, 2021

       Mr. Biden turns 79 next month and he is suffering from the mental slow-down that is not at all uncommon among senior citizens.  That's why they retire by their mid-70s.  They simply can't grasp the fundamentals of a civilization that's rapidly going broke.  (Note Bill Sardi's comment in the upper left box.)

        Mr. Biden's advisors are short-sighted Keynesians who truly believe that if government requires vast amounts of new cash it can print it endlessly, failing to see that inflating the money supply eventually leads to price  inflation. 

        In 1917, four years after the Federal Reserve went into operation, Congress decided it would be prudent to establish a cap (ceiling) on the amount of money it could borrow on the "full faith and credit of the United States."   The costs of World War were paid by heavy government borrowing.  War bond sales were a principal  source of cash but redeeming the bonds turned out to be a challenge for the Treasury and through the years Congress has raised the debt ceiling to provide money to meet obligations.

        We recall our personal experience in World War II buying war bonds at $18.75 which would be eventually redeemed at face value of $25.00.  We were disappointed to discover that when cashed for $25.00 the money would not buy what $18.75 did when we loaned it to the government.  (Inflation at work, again.)

          On Monday Mr. Biden 
said failing to raise the debt ceiling is "reckless and dangerous".  He claimed, ithe rise is necessary to "pay what we already owe, what has already been acquired" and "not anything new."    Huh?  What in thunder does THAT mean?  We have borrowed trillions of dollars and in order to pay it back we borrow trillions more? 
          
           What Biden proposes was cleverly explained years ago by former Colorado Governor Lamm:

            It's like Christmas in reverse.  We get the presents and send the bills to our posterity."

             Woe to this top-heavy federal government when posterity catches on what really awaits them in the future. 


'Warring factions of the Democratic party are bracing themselves for a potentially bruising month of negotiations over the two massive economic and social packages that have reached an impasse in Congress threatening to derail Joe Biden’s first term in office."   ~The Guardian (UK)


    The poplar Britsh news service sums it up pretty well. If Washington politics were a boxing match President Biden and his supporters would be against the ropes wishing the bell would ring so they'd have a between rounds respite.  But the fight has lapsed into October  and the prospect for passing the monster spending bills favored by Democrat liberals is clouded by such issues as what to do about the debt ceiling.

      Every now and then we are reminded to consult Professor Alexander Tytler's famous "Cycle of Democracy".  It was extracted from his 1776 study of the Athenian Republic.  His conclusion was that the lesson of history demonstrate that a democratic government framework is doomed.  Here's why:

"The average age of the world's greatest civilizations has been 200 years.  These nations have progressed through this sequence:

"From bondage to spiritual faith;
 from spiritual faith to great courage;
 from courage to liberty;
 from liberty to abundance;
 from abundance to selfishness;
 from selfishness to apathy;
 from apathy to dependence;
 from dependency back again into bondage."

Dr. Alexander Tytler, a Scot professor, wrote a scholarly tome, from which this concept comes,  called "The Athenian Republic" which was published shortly before the thirteen American colonies gained independence from Britain.  "Google" him to learn more.

NOTE:  We first posted the "Cycle of Democracy" on this site in 1994.  The public debt at the time was $4.5 trillion.  It is now above $28.5 trillion!



  "The toxic effect s of the Fed's relentless interest rate repression
are many, but among the worst has been the absolute savaging of bank depositors.  ~David Stockman
        Amen to that,  Mr. Stockman.  Amen!
         You may recall David Stockman as the youthful director of President Ronald Reagan's Office of Budget Management.  He's sharp of mind and articulate, although today's "woke" liberals have no understanding of the points at which he drives.

                          Our personal dilemma is a classic case.  After years of struggling we retired with more assets than debts.   A few years ago we deposited a sum of cash into a prominent national bank which offered "High Yield Savings" at  2.10 percent annual interest.  We  knew that was above the then "rate of inflation" (Consumer Price Index) and was duly insured by the Federal Deposit Insurance Corporation.  Therefore, although we could put the money into higher risk investments, such as stocks, bonds, etc., we chose the slow and steady assurance of a bank savings account. 

                           Today that same account pays a piddling 0.40 percent - far, far below the rate of inflation and therefore each dollar is losing purchasing power while we let it sit.  The villian is the Federal Reserve System which is hellbent to keep a lethargic economy alive by holding interest rates below what a free market rate would be.

                             Why not trade the money for Bitcoin?  That's trading fiat currency for an even fishier fiat system.  Digital purchasing power is popular, to be sure.  Many of our offspring brag about not carrying cash and using debit cards for even small purchases.  ( Debit cards are one thing.  CREDIT  cards are quite another.)

                               We and the Missus are supposed to be enjoying our Golden Years.  How can we when the system is slowly impoverishing us?

      
The voting majority has supported debt augmented federal budgets for years.
Today's youth don't realize what an unfair burden they have been handed by today's greedy. 

 The federal government’s new fiscal year began October 1st.  It was the deadline for Congress to pass a funding measure, but that hasn't happened yet.

    Common citizens have little choice but to sit on the sidelines, with fingers crossed, watching this political spectacle play out. Some may come to realize that even the mightiest nations cannot constantly borrow their way to prosperity. But they will try until an insoluble economic crunch occurs.


'Since the start of 2001, the value of the one-dollar Federal Reserve Note has fallen 84%.'
~By Seth Lipsky, publisher of the New York Sun.

   In our book Mr. Lipsky is one of the nation's few editor-publishers who understands the danger of decades of currency inflation. Moreover, he's one of the few newspapermen (his term) who knows what to do about it. Restore the money mandate of the United States Constitution. (Pause - for laughter from mainstream media.)

    Lipsky's editorial is brief and worth reading. Find it here at N.Y. SUN.





 HAVE WE BENEFITED FROM THE THE TWO-PARTY POLITICAL SYSTEM? 
Twenty-seven years ago we wrote and posted the platform of the Radical Independent Party on the Internet.
We never organized it nor expected its ideology to catch on.  And it certainly has not. 

     "The Radical Independent Party (RIP) is founded on the fundamental  idea that government belongs in the background to secure the safety of citizens, not micromanage their affairs. Knowing that it's impossible for the governing class to follow the prescription laid out in the United States Constitution, the RIP believes Republicans and Democrats will remain in control of the nation until they run it into bankruptcy. At some point an awakened citizenry will throw them overboard and try something else.

      "RIP ideology is based on the quaint idea that if people are generally left alone to pursue happiness they will do a better job of it than if they are forced to run their lives according to ideas of a self-appointed elite."

THE RADICAL INDEPENDENT PARTY PLATFORM

     At the end of the above link is a quote: "I can't understand why people are frightened of new ideas. I'm frightened of old ones!"  ~John Cage
    
     Supporters of the two-party political system will tell you it is scientifically impossible for the United States to survive with a multi-party system. We contend that the two-party system has demolished the Constituion. They can't even suppress ROBO PHONE CALLS! And as for "managing" the economy, consider this: The U.S. dollar of 1994 (already by then ruined by inflation) is now worth 54¢. A huge loss of purchasing power in only 27 years!

     The more we sit on our cans with hands out for the federal government dole the worse it will become. The challenge is, how do we convince the voting majority.
 


~Victor Davis Hanson
  
 
Dr. Hanson has obviously given the matter some serious thought and has the skill to lay those thoughts out in a well constructed essay.  If his conclusions are correct and any parts of the U.S. Constution still remain in effect, why for Heaven's sake are we-the-people forsaking the last remnants of freedom and liberty for the socialist schemes of central government? 



 
The mythical Social Security "trust fund".
     It is claimed the Social Security Administration has a trust fund that can backstop obligations until 2030 or so.  Not true. A legitimate Trust Fund existed decades ago when Social Security taxes did in fact go into an independent agency account. President Lyndon Johnson, however, decided that he needed all that 'free money' to pay for his misadventure in Vietnam, so the Social Security account was combined with the federal general fund and an accounting gimmick was created: a completely fake class of IOUs that were presented as a 'trust fund'.... IOUs with no marketable value at all.

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