Twittering to Death
Posterity's Debt To Me
Coping with Deflation
My Immigrant Relative
The Eloquent Pogo
December 2, 2016
THE BIG MISCHIEF MAKER: DEBT.
"When most people (when enough people) are willing – are eager – to go into hock for the next six years in order to have a car with an LCD touchscreen, leather (and heated) seats, six airbags, a six-speaker stereo, electronic climate control AC and power everything – which pretty much every new car now comes standard with – the car companies build cars to satisfy that artificial demand.
"Artificial because based on economic unreality. That is a good way to think about debt. It is nonexistent wealth.
You are promising to pay with money you haven’t earned yet.
"And maybe won’t." LIFE IN HOCK
Kudos to Eric Peters for
his comments on auto debt. The consuming public is constantly drawn into
deals in which they buy cars they can't afford with money they don't
have. We know all about it, having passed through that phase in
mid-life. We finally figured out the old timers had it right - -
"Debt is slavery of the free." (Publilius Cyrus.)
In the 1930s Harvard
professor P.R. Sorokin made a strong case for living with one's means.
His book. "The Crisis of Our Age" favored the idea of freedom,
observing "A very little can satisfy our necessities, but nothing our
desires. Who has most? He who desires least."
This is contrary to
modern consumerism which is based on "A little down- - and a little
along." How is it possible to have a thriving economy, say the
economic engineers, if consumers are unwilling to go deeply into hock?
aren't the only culprit. Boats are high on the list of things bought on
the installment plan. Our own fascination with sailboats began in
August, 1957, when went for our first sail with a local businessman who had
been born and reared in New Bedford, MA. (We later learned his father
had been the prosecuting attorney in the famous Lizzie Borden trial)
us to work tending the jib of his 19 foot sloop rigged yacht and we were
hooked immediately. On the trip back to the cove, where he moored his
boat, we asked "Do banks lend money for sailboats?" There was
a very long pause. Then came his answer. "Son, if you have to
borrow to buy a boat you can't afford one."
heeded his advice and never bought a boat with a mortgage on it.
Sometimes an emergency can drive someone into debt. A furnace fails in
the dead of winter and a new one is needed. The rainy day fund may not
cover it and it's necessary to borrow. There are plenty of occasions
when borrowed money can come to one's rescue. But as Eric Peters
notes, it doesn't really make sense to go into hock for six years for a
shiny new car that will lose much of its value the moment you drive it off the
HYPERINFLATION RUINS THE BOLIVAR.
This chart is a sad reminder of the economic damage a government can do
when it sets hyperinflation into motion by printing excess currency in a
hopeless effort to boost the economy. History is littered with such
episodes, but each generation seldom looks to the past for guidance in
the management of money and makes the same mistakes over and over
Can this happen
here in the USA? It has already happened, although on a
slow-motion basis. Consider the purchasing power of the U.S.
dollar of 1914 compared to the dollar of 2016. Today's dollar has
a value of less than a nickel compared to 1914. An early 20th
century example of what a nickel would buy was reported some years ago
by Frank Chodoroff. For five cents he purchased a mug of beer and
an "ample sandwich" for lunch.
Our own memory of
the "olden days" contains plenty of examples of prices before
steady inflation took hold. A twelve ounce bottle of Pepsi Cola could be
purchased for a nickel. Two nickels would gain a youngster matinee
admission to a movie theatre for TWO full length features, a newsreel,
cartoons, and previews of coming attractions.
the days, my friend. We thought they'd never end.
"The forces of nationalism and
populism have been unleashed all over the West and all over the world. There
is no going back."
After casting an eye on world-wide political trends, veteran scribe Pat
Buchanan concludes that the recent election of Donald Trump to the U.S.
presidency is but one example of the trend to a populist view on the part of
people across the globe.
out right before our eyes and we may as well get used to it. As Buchanan
observes, "There is no going back." Buchanan's View
Got a rupee in your
DIf it's a 500 or 1,000 rupee note it will
become worthless January 1st.
|Well, who could have seen this
coming? The slippery slope towards
full government control in a cash-less society is where Indian PM Modi
is heading following his chaos-creating de-monetization efforts of the
last two weeks. While massive opposition protests are planned, Modi
remains indignant, as Reuters
reports, “we can gradually move from a less-cash
society to a cashless society…this is the chance for you to enter the
digital world.” CASHlESS SOCIETY
quite an uproar in India about all this. It bears watching as the
proposals for establishing a "cashless society" increase
everywhere. Greece has entered the picture with a call for a TAX
on all ATM withdrawals. Squelching the desire for pocket currency
would keep cash in digital form in banks where the hated negative
interest rate may apply.
The manufacturer in western Massachusetts that makes the paper the
currency is printed on won't be happy with the trend to cashlessness,
but you can bet a lot of bankers and politicians think it's a grand
“In India, if there are five people thinking about making a law,
there are 50 people thinking about breaking that law.”
~ Mukesh Butani, New Delhi
After December 30th the 1,000 nd 500 rupee currency notes will become
worthless. It's an attempt by the government to flush cash hoards out of
hiding. If the present nots aren't deposited or exchanged for new notes
by the end of the year the owners of high denomination notes could be ruined.
It's another chapter on the "war on cash". Messrs. Ken Rogoff
and Larry Summers, two prominent U.S. supporters of the cashless system, have
already called for eliminating the $100.00 not and $50.00 dollar note by
simply ceasing to print any more of them. There's been no talk of
canceling the legal tender status of the 100s and 50s, but without the threat
of such an action the present supply of big bills would continue to remain in
hoards or circulate in the underground economy. The coming debate on the
subject will bear close scrutiny.
In the meantime, the Wall Street Journal's report on the Indian struggle to
flush hoards into the open is discussed by "Tyler Durden" in BLACK
|| "The magnitude of
wealth today is not due to investment skills but to the enormous growth
of credit and money printing that the world has experienced since the
creation of the Fed in 1913. This has caused a global explosion in asset
values of unparalleled proportions." ~Egon von Greyerz
There he goes
again! Von Greyerz, a gold bug from Switzerland, sees danger ahead
for the debt-based currency system. He observes that a paper monetary
unit, based on nothing more than a promise to pay off the debt on
which it is based sometime in the future, is less reliable for wealth
preservation than a
relatively rare piece of metal wrested from the earth. History
is on his side.
Gold gets its value
from its rarity, beauty, durability, and several thousand years of
acceptance as a medium of economic exchange and store of value.
Paper (and digital) currency are evidence of debt....a solemn promise to
pay at some point in the sweet bye and bye,
As long the
major nations of the world hoard gold it's probably a good idea for
cautious people to stash a gold coin or two at the bottom of the
sock drawer. Just in case von Greyerz is right.
| "Mr. Trump won because
the United States has had the 15 worst years of misgovernment by all
branches and both parties, and the only period of absolute and relative
decline, in its history. The new president will have a clear mandate for
reform of taxes, spending, health care, immigration, and campaign
financing; for a workfare program to address decrepit infrastructure;
and for a redefinition of the national interest between George W.
Bush’s mindless interventionism and Mr. Obama’s Panglossian crusade
to make friends of America’s enemies." A Vanquished
Black reminds us that Donald Trump is the oldest and wealthiest person
elected president, the first not to have had a public office or high
military command, the first to pay for his own campaign, and the first
since Washington to waive his salary.
facts aren't the main point of his commentary, but it confirms the wish
of voters on November 8th to make some significant changes at the top of
the power structure in Washington, D.C. How Trump will fare over
the next four years should be fascinating. More important, how
we-the-people fare has us holding our breath!
One tiny ray of hope.
little was said about the problems of fiat currency,
Mr. Trump has
hinted he at least has no objection to considering a gold standard.
Not since Ronald Reagan's election has any serious attention be given to
restoring a gold backing to the U.S. dollar. Modern economists will
explain why it will be impossible to return to the "barbaric relic" of
a gold standard. They will ignore entirely the fact that all central banks hoard
The dollar price of gold is already serving a useful purpose as a barometer
in detecting whether or not an inflationary or deflationary storm may be in
the offing. We're sticking with the dollar price of gold as a reasonable indicator for the
average Joe and Jane Twelvepack. If the price drops it indicates a
stronger dollar, which tends to be deflationary. If the gold price runs
steeply higher it's safe to say trust in the dollar is weaker. The
general price level rises. That's price inflation.
As a kid we lived in a time of a great depression. It had its grim
moments. As an adult we lived through a time of double-digit
inflation. It, too, had its grim moments. We concluded that
whatever happened to the purchasing power of whatever passed for money we
would live beneath our means. The government has rarely been able to do
that, which is why it struggles under a huge debt burden and can't seem to
fine-tune the economy to suit everybody.
To illustrate the decline in purchasing power of the dollar....when we were
born a troy ounce of gold could be bought for $20.67. Today it
takes about $1,200.00 to buy an ounce of gold. The gold didn't change.
A troy ounce of it was 480 grains of the precious metal then - - and it
still is today. It was the dollar that lost ground.
The big question is: Can the USA clear up some of the money
muddle during the Trump administration?
+ + + +
The Nov. 16 interview with Brietbart's Joel
Pollak was too much for NPR.
| We overheard the NPR interview that
apparently outraged so many listeners the network's ombudsman has
recommend that NPR quit doing live interviews with conservatives.
Pollak stood up for former Brietbart editor Steve Bannon who has moved
to an advisory position in the new Trump administration. The
emphasis seems to be on LIVE interviews. When recorded interviews
are made they can be edited in case the interviewee says
something the network does not approve.
programming flows mainly from politically liberal centers such as
Boston, Washington, DC, and New York. It's staff and contributors
lean heavily left. We would not expect NPR, for example, to say anything
negative about a member of the cast of the hit musical
"Hamilton" scolding a prominent member of the audience - Vice
President elect Mike Pence - from the stage following the show. In
our view, entertainers are entitled to hold any political view
that attracts them, but paying customers usually don't go to
Broadway musicals to get a political lecture from an actor following a
heard every opinion in the book about immigration.
one that makes good sense.
|| "I’m all for
immigration and completely open borders to enable opportunity
seekers from anyplace to move anyplace else. With two
big, critically important, caveats: 1) there can be no welfare or free
government services, so everyone has to pay his own way, and no
freeloaders are attracted 2) all property is privately owned, to
minimize the possibility of squatter camps full of beggars" ~Doug
with Mr. Casey may be seen as mean-spirited and selfish, but the welfare state
is teetering on the brink of bankruptcy - the evidence for which can be seen
in the funds shortfalls in Medicare and Social Security, not to mention the
phenomenal public debt, the strain on school budgets, etc. It's impossible to
keep piling newcomers onto the welfare rolls without eventually going broke.
Meanwhile, how goes the global WAR ON CASH?
Joe Salerno brings us an update.
global war on cash is remarkably well coordinated. Less than a week after the
Indian government announced it was withdrawing its two highest denomination
currency notes, r from circulation, the Anti-Cash Axis, which comprises a
witch’s brew of national governments, establishment media outlets,
international bureaucracies and, especially, gigantic multinational banks, has
launched a concerted attack on Australia." War on Cash
this 18th day of November, the clash between the forces of inflation and
deflation doesn't tell us much. The dollar price of gold (one of our
favorite barometers) indicates the worry about high inflation isn't much of a
factor at the moment, but the strength of the U,S, dollar against other
currencies hints at that old Debbil deflation. Example -
one can buy a Euro today for $1.06.
here is the Federal Reserve is aiming at inflation - weakening the purchasing
power of the dollar somewhat - while world monetary turmoil is presently
making the dollar stronger. Let's hope Mr. Trump and his administration
gets a handle on this before we find ourselves sinking into the economic
malaise we suffered more than eighty years ago.
"I can recall that when
Obama was first elected Rush Limbaugh said on his radio show that he
did not want this leftist ideologue to succeed. Holy cow. All
hell broke loose among the [mainstream media] who feigned outrage
— outrage!! — over how 'unpatriotic' and traitorous
Limbaugh supposedly was. All the same people who are now doing
everything they can think of to make Trump fail, and will continue to
do so for at least the next four years." ~Thomas de
right, of course. Had Hillary won and Trump supporters had taken
to the street to break windows and wreck public property the media
would be running hours of video showing how awful the carnage
was. For some reason the childish liberal street protests don't
interest media much.
Yesterday we overheard a portion of an afternoon talk show on National
Public Radio (NPR) in which the host was sampling the opinions of
citizens who were outraged because Trump won the race to the White
House. It was as if the host had said "If you think your
life will be torn to shreds because of Trump, please call us!"
We think the media ought to tone down their left-leaning rhetoric and
bone up on the fundamental economics facing the world. If Trump
and Congress can steer the U.S. from 2017 to 2020 without a painful
economic correction (think recession) it will be a miracle. Mr.
Trump may be able to push through a tax cut program but he, like
Ronald Reagan, will have to pile up more debt to do it. Republicans
don't like to be reminded that the public debt topped $1 trillion for
the first time in 1982. $1,137,345,000,000.00 to be
On the other hand, Democrats don't like to be reminded of the huge
debt increase on President Obama's watch. Trump will inherit a
public debt of nearly $20 trillion and unfunded liabilities of an
unthinkable amount greater than that.
The favorite way to lessen the impact of government debt is
inflation. The sooner attention is given the tug-of-war between
the natural force of deflation and the politically inspired method of
inflation - the better.
'"In a shock announcement on Nov. 8, India declared that 500-
and 1,000-rupee notes are no longer legal tender. Imagine that —
the money in your wallet or purse is instantly made worthless by
government decree. That’s what happened. There were limited
exceptions for hospitals and gas stations. Naturally, gas lines
formed everywhere, and some people rushed to hospitals to prepay for
future medical care with now worthless bank notes. The other
exception to worthlessness was if you deposited the notes in the
bank. There you would receive 'digital credit' in your account. Of
course, the tax man was waiting at the bank to ask you where you got
the money. Those without an acceptable answer can expect trouble
from the Indian Revenue Service. " ~Jim Rickards
about governments promoting the cashless society have circulated for
months. We have posted most them here along with our skeptical
comments. Ken Rogoff, Larry Summers, and other notables have
been promoting the idea of not printing big bills in the U.S., too.
Some residents of Israel remember
the sudden shift to shekels from
the pound. If you had hoarded pounds you had to
.turn them in before they we try tore declared null and void. If you
did you had to explain why you held so many. If you chose to
hold them they became worthless.
U.S. stop printing $100.00 notes...and even $50.00 notes...it's
unlikely Congress will cancel the ones already in circulation.
Congress may inflate all currency to near worthlessness but
they won't cancel their role as legal tender. Today, for
instance, the old $1.00 silver certificates are worth a dollar, even
though the Treasury stopped redeeming them in silver in 1968.
| "The Donald has triumphed with an
underfunded campaign — he spent barely half of what [Clinton]
with a skeletal crew and without the party’s full backing won out
because not all of America agrees with the values of Jay Z, Beyoncé,
Springsteen, Hollywood in general and gay marriage in particular."
Taki Theodoracopulos's name may seem to be a tongue twister, but his
opinions usually make sense and his writing is easy to follow.
His readers call him "Taki."
Taki's latest column caught our eye because it deals with the
decided heavy-handedness of the mainstream news media in its
coverage of the recent elongated presidential political
campaign. We wonder how the news media will get its mojo
Hate Trump. . . hate his
The pundits pile in to
explain why Trump's choices are wrong.
We're still learning the
names of Trump's chief of staff and other choices for his presidential
inner circle, and commentators are already throwing brickbats. They
are especially critical of Stephen Bannon who has been named chief
strategist and senior counsel. Bannon ran the conservative Brietbart
news operation that consistently boosted Trump for the top
Trump is not going to get much breathing room from the media. It may
be a tough four years for Trump and company, although if he pulls off some
of his goals - such as tax breaks for the citizenry and corporations - and
the economic engine springs to life, he might get a break from the
So far, the U.S. dollar has got some pink in its cheeks in parity with
other world currencies. This morning, for instance, you could buy a
euro for only $1.07. The dollar is showing its muscle to other major
currencies, too, but the downside is that a strong dollar carries with it the
threat of deflation. This is not what highly placed planners
want. Their goal is a bit more INFLATION. The Federal Reserve
has been aiming for an annual price inflation rate of 2 percent or more, which
means they want each dollar to lose 2¢ of value each year.
Unfortunately, stimulating monetary inflation can backfire if it slips
into overdrive and produced average price rises in double digits, or
DEFLATION, on the other hand, is considered a horror of horrors. It
means that the purchasing power of each dollar in one's pocket buys
more. That's good news for savers who have little debt hanging over
their heads. But those saddled with heavy debt are in hot
water. They must pay back their loans in scarcer dollars. This
includes the U.S. Treasury, which historically relies on inflation to
lighten the weight of its multi-trillion dollar public debt.
Where is the dollar headed? Up or down? Using the dollar price
of gold as a barometer, it's evident a fear of inflation doesn't
predominate. At least, at the moment. This morning one can
buy 1,217th of an ounce of gold for $1.00. Last week, prior to
the election, one could get only 1,300th of an ounce of gold for a
dollars that buy greater quantities of gold hint at deflation. Weak dollars point toward
Let's keep an eye on it while everyone else is still fighting over
THEY PROTESTETH TOO MUCH.
public and private property ought to earn considerable jail time.
Angry protestors believe they are within the law to storm through city
streets screaming their outrage, throwing rocks, smashing cars and store
windows, and generally behaving like dangerously spoiled brats.
Forgotten is the American tradition of peaceable assembly to
voice collective grievances. It doesn't occur to liberal hotheads,
augmented by rowdies who don't vote but enjoy destroying other
people's property, that there's no provision in the Bill of Rights that
condones public demonstrations that lead to the destruction of public or
We can't recall such carrying-on after Barach Obama beat John McCain and
Mitt Romney. If ticked off conservatives took to the streets
and beat up liberals we didn't hear of it. Surely, the liberal media
would have mentioned it.
The present atmosphere of angst, loathing, and outrage of Clinton
supporters will eventually taper off and we can get back to worrying about
something else, like erosion of the world's currencies and the uncertain
future created by the biggest burden of debt the world has ever
seen. Somehow, the fundamental danger of constantly spending more
than one's income must find its way into the national consciousness.
It applies to local, state, and national governments just as it does to
Perhaps one day we will see citizens in the street bearing signs citing
the ancient remark of Publilius Cyrus: "Debt is slavery of the
media tried hard to control the election outcome.
Their liberal bias was not as convincing this time.
public’s loathing and distrust of the press is richly deserved and
indicative of one of Western society’s greatest failings: the free
press has failed. Only the fact that there is no alternative keeps
it going. Few people now pay much attention to the common
misrepresentation of public issues and people; nor should they. The
American press turned itself inside out trying to portray Mr. Trump
as a misogynist, a racist and an authoritarian populist whipping up
mobs and inciting violence. All this was unmitigated
rubbish." Loathing of the Press
Conrad Black levels his criticism directly at the
press. . . including not only newspapers but politically liberal
journalism in broadcast and other media as well.
We were appalled at the extent National Public Radio (NPR) went
in its talk programming to trash Trump. We recall many
weeks ago a tirade by Max Boot about Trump's
"deficiencies." We waited for the interviewer to
challenge him, but he didn't. We waited for a follow-up
interview with someone who spoke for the Trump camp.
That didn't happen, either.
There was a time when broadcasters felt obliged to at least thinly
disguise their bias by offering a semblance of balance in their