"With so much money the banks without the balance sheet capacity to absorb it will have little option but to discourage further deposits by charging depositors for the privilege by moving their rates into negative territory."

   ~Alasdair Macleod



       ~
Wrisley.com
riSeeking Answers in an Upside Down World. 
LINKS  PAGE 
(Caveat Emptor)

News and opinion from all over the political universe. 

Much of it to be taken with several grains of salt.
    
February 26th, 2021
MAIL:  The Editor                                                                                                                                            
Beware the Banks
They are caught between a rock and a hard place with respect to what they pay depositors.
   We've complained a lot lately about the piddling interest rates paid on a portion of our nest egg deposited in a local bank. It presently pays the magnificent sum of 0.01 percent. The Federal Reserve vows to keep interest rates low and money spewing into the economy at a great rate until the economy gains traction. 

   This could force banks to reduce rates to zero or even lower, into negative territory. That's when you put cash into an account and actually pay the bank some monthly sum to take care of your funds. Facing a prospect like this could prompt many customers to remove the lion's share from their accounts and either spend it...prompting higher price inflation...or investing it where prospects for a little yield are greater.

   Is cryptocurrency the answer? We don't think so. By definition it's another fiat currency. 

    Play the stock and bond markets? That's gambling and some people have a real knack for it. But if investors become spooked and rush to the exits you can lose your shirt. Or, at least, a chunk of money.

     No sure-fire answers have turned up, but "times, they are a-changing" with respect to accumulating funds for one's eventual retirement. It feels to us that low income and the very rich are doing okay at the moment, but the future looks dicey for the middle class.
In publishing a handout on the "Cycle of Democracy" in 1994 we noted that the national debt had reached a staggering $4.5 trillion dollars. By October 1, 2007 it had soared to $9.06 trillion! Barely one year later (Oct. 17, '08) it was $10.3 trillion!!   On April 22nd, 2009, another trillion dollars of debt had been added raising the public debt to $11.3 trillion. Our forebears thought of debt as slavery.  They would be shocked at what their descendants have done. Today's  public debt is nearly $29 trillion!!
 

Revisit THE CYCLE OF DEMOCRACY

"A democracy cannot exist as a permanent form of government.  It can only exist until the voters discover they can vote themselves largess from the public treasury.

"From that moment on, the majority always votes for the candidates promising them the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.

"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 are aware of the selfless efforts of a Georgia attorney to disprove the "Cycle."  He says he painstakingly researched everything Professor Tytler wrote and cannot find the above sequence. He does, however, observe that in Tytler's extensive writings on the nature of democracies through the ages the general trends are as the Cycle sequen states.
      The Gallup Poll has discovered a national trend in support of a third political party.  Professional political pundits say it won't work, but with both the Democrat and Republican parties in disarray in their efforts to expand central government and drive national debt into the stratosphere - we think Gallup's findings may hold a way out. 

      The U.S. has been relying on a wobbly two-legged milking stool ideology whereas a three-legged stool is needed. 

       So - by way of public service we offer the time-tested platform of the Radical Independent Party (RIP) as a guide.  The platform was written in 1994 and has not been changed in any way, except for the addition of the final plank in 2002.  Check it out.  You might find some elements in it that coincide with your own beliefs.  Radical Independent Party Platform


     Longtime analyst/commentator Michael Snyder sums it up this way: "We are literally in the process of completely destroying our money, and since the U.S. dollar is the de facto reserve currency of the whole world, the economic fate of the entire globe is in our hands." FIXING THE ECONOMY

   Sounds like Mr. Snyder has lost his bearings. There's plenty of money, isn't there?  If the government can send out trillions of dollars with the click of a few computer buttons why not do it? 

   The main reason is - AN ABUNDANCE OF CURRENCY DOES NOT HELP THE MONEY UNIT RETAIN ITS VALUE. IN FACT, THE MORE THAT IS ISSUED THE LESS EACH UNIT IS WORTH. SCARCITY OF ANYTHING LENDS IT VALUE. THIS APPLIES TO MONEY, TOO.

       Simon Black writes:  "I wrote about this recently-- economic prosperity isn’t rocket science. All that’s required is some basic fiscal restraint, economic freedom, and a stable currency. The free market takes care of the rest.

       "History shows that bad things tend to happen when politicians and bureaucrats try to engineer prosperity by debasing the currency.
Yet these people continue to print and spend money like drunken sailors… which is frankly an insult to drunken sailors everywhere. Even drunken sailors eventually realize when they’ve run out of money.

        "It’s entirely possible that such unprecedented debt and money expansion could cause serious problems with the currency-- including 1970s style inflation."
       
         We remember the double digit price inflation in the 1970s, don't you?  Paul Volcker saved the day when he was appointed chairman of the Federal Reserve and stopped inflation in its tracks  by raising interest rates.  The inflationary period also earned the nickname "stagflation."  That's when price inflation is high but the economy is crawling along at a lacklustre rate.  Much like today - except at the moment the inflation rate is said to be low.  But at the rate the USA is taking on debt to keep the economy afloat during this period of virus pandemic many observers are expecting a surge of stagflation/inflation.  It wasn't fun in the '70s.  Probably won't be this time, either.
     * * * * * * * * * * * *
    The economy is still chugging along in low gear. The Fed has created plenty of money since the financial emergency of 2008 but the virus triggered catastrophe and  turned a relatively healthy economy upside down. Unemployment is still twice the rate it was a year ago. The banks are not lending at former velocity nor are people spending at former levels. Hence, low price inflation. 

    Will it be a permanent fixture? Not likely writes the Daily Reckoning's Jim Rickards: "If central banks print money and that money is left in banks and not used by consumers, then actual inflation can be low. This is the situation in the U.S. today. The Federal Reserve has expanded the base money supply by over $6 trillion since 2008, with over $3 trillion of that coming since last February alone.

      "But very little actual inflation has resulted, or at least very little official inflation. This is because the velocity of money has been decreasing. Banks have not been lending much, and consumers haven’t been spending much of the new money. It’s just sitting in the banks.

       "Money printing first turns into inflation, and then hyperinflation, when consumers and businesses lose confidence in price stability and see more inflation on the horizon. At that point, money is dumped in exchange for current consumption or hard assets, thus increasing velocity."  HYPERINFLATION ODDS

No kind of money - not even gold and silver - can maintain value unless the quantity is limited.
No government has ever overcome this phenomenon by inflating the currency supply.   

       

Gov't says "Beware of Scams"
   Our grandmother called the telephone "The Devil's Trumpet." She was born in the 19th century before Graham Bell had the kinks worked out of the instrument and, in her youth, decided it was a device for delivering bad news or ringing for you when you were least prepared to stop whatever you were doing to answer it. 

     Her view cross out mind recently when examining a mailing piece from the Social Security Administration that warned the recipient to "Beware of Scams."  Con artists are busy pestering people via telephone warning them their Social Security number has been used for some malicious purpose and instructs the answerer to "press 1" for further information."  The government apparently is too busy with politics to mount an effort to trace and trap some of these robo-call pests. The best it can do is print a warning about the scam.  Ripoff robo-calls are are accepted as one of life's little irritations about little can be done. 

     As Frank Chodorov remarked many years ago, (see quote upper left) we have become a nation of panhandlers.  Even legitimate robo-calls, such as the ones "raising funds for police, firefighters, military veterans," etc., fail the bright light of close investigation.  Besides, where is it written that we must pay for a telephone service and be beseiged by unwanted sales pitches from ANYBODY? 

      And what about those calls from people with foreign accents pretending to represent some medical agency that recommends you for a back brace?