"But we only owe it to ourselves," politicians used to tell us. Yes, but it is so staggering WE will not pay it. But it will crush the living standards of future citizens who will inherit the burden. The world will learn that the ancients had it right when they said "All debt must be eventually paid, either by the borrower or the lender."
The big question right now is, "How many trillions of dollars of debt will tower over our economy until the sheer weight of it crashes down? Or, will the debt pile up beyond trillions, quadrillions, quintillions, sextillians, and so on?" One sextillion dollars, by the way, is shown as: $1,000,000,000,000,000,000,000.00.
There is no evidence in the history of all of humankind that any money unit could survive as a medium of exchange were it able to it achieve such stupendous numbers.
Incidentally, any reader who has tucked away an old U.S.Note (as opposed to the Federal Reserve notes) is holding a descendant of the old "greenback dollars" the federal government issued to help pay its military bills in the Civil War.
This chain of thought was prompted by this from Bloomberg news;
We grant some of them are downright funny. Recently we got one from a 'grandson' who wanted to know if we had heard of his auto accident that morning. intrigued, we asked what happened. The pitch began and I interrupted to ask which of our grandsons this was. He replied, "You don't recognize your own grandson's voice?"
'"We have a lot of grandsons," we explained. "Not one of them has a foreign accent!" (Click.)
Congress at long last has heard consumers' complaints about the hated robo calls and voted to do something about it. The House voted overwhelmingly to try to dwork on it. The bill goes to the Senata, and, if approved, to the president's desk.
If the government's "Do not Call" program is an example of fighting robocalls we are not hopeful much will change..
What are German savers up to? They are hoarding cash in mattresses, closets, bank savings accounts and anywhere they can get their hands on it in a hurry, even if some German banks have already adopted negative interest rates. In other words, some Germans are willing to put their spare cash in banks and PAY THE BANK for the service!
This is contrary to the advice of European economists who are pushing consumers to 'get out there and spend that extra cash.'
The savings trend seems to date back to the early 1920s when Germany was clobbered by wild hyperinflation. The German mark fell to worthlessness by November, 1923.
Germans then invented World Thrift Day establishing the motto "Never spend more than you earn."
A substantial number of consumers are constantly encouraged to live beyond their means, but apparently the echoes of several generations ago still influence German habits and, for now, they're trying to set aside some cash for that proverbial "rainy day."
(Why should this be a question?)
This is current law. Google 12 U.S. Code section 411 for a copy. The Federal Reserve notes in your pocketbook or sugar bowl are obligations of the United States to the Federal Reserve System. Which means we are using IOUs for money, but since those IOUs are declared to be legal tender they are accepted in the marketplace and for taxes. They are, by defination, fiat currency deriving legality because of the signatures on each note by the U.S. Treasurer and the Secretary of the Treasury.
THE MAIN QUESTION: If U.S. paper currency can be redeemed in lawful money what the heck IS "lawful money?"
Presenting a $10.00 note for redemption and accepting two $5.00 notes or ten ones is merely swapping iOUs for other IOUs of different face values. They are all legal tender but not lawful money under the present U.S. Code.
So . . . how does one swap a Federal Reserve Note for Lawful Money?
Until 1965 paper notes could be traded for silver coins, mostly dimes, quarter dollars, and half-dollars. But the domestic plug was pulled in 1965 and the formerly silver coins were pulled from circulation with base-metal slugs substituted. They still circulate today, made mostly of copper with a thin veneer of nickel applied to give them the appearance of silver. Still, U.S. coins still contain a bit of intrinsic value. Paper notes do not. They come off the presses at the U.S. Bureau of Engraving and Printing upon orders of the Federal Reserve System. The Fed pays the cost of production, plus overhead. A skidload of $100.00 notes costs the same as a skidoload of $1.00 bills.
Coins, on the other hand, are not printed. They are minted by the U.S. Treasury Department and the central bank pays face value for them. (!) Because they have some minor intrinsic value they are as close to "lawful money" as one can get.
Oddly engouh the minor coins, the cent and nickel, are the most costly to produce. The cent is made primarily of cheap zinc with a thin veneer of copper to give the appearance of the pre-1982 cent which was about 98 percent copper. The market metallic value of the present nickel is about 80 percent of its face value and costs the mint more than 5 cents to manufacture. The cent also costs more than face value to mint and one might wonder why these two minor coins are still being made since the taxpayers are losing money on the process.
Until mid-August, 1971, foreign nations could trade their paper U.S. dollars for gold at the U.S. Treasury at the rate of $42.22 per troy ounce. The gold window closed August 15th, 1971, and the dollar has floated as a fiat currency ever since.
However, prompted by the success of South Africa's 1 troy ounce gold Kruggerand, the U.S. began minting and selling a gold Eagle coin containing 1 troy ounce of pure gold. The face value is $50.00 but this bullion coin retails for about $1,500.00.
And there we have it. A clear definition of the noun "dollar" is difficult to establish. The U.S. has drifted far from the definition of money established by the Constitition and the Coinage Act of 1792. How long we can bobble along on this uncertain sea of confusion about the nature of currency and credit we cannot guess. One thing is certain; of the trillions of U.S. dollars afloat in the world only a fraction exist in the form of coins. Paper currency is next with respect to dollar volume with $100.00 notes exceeding the $1.00 note in number. Most of the money supply, however, exists as electronic blips in the bowels of computers.
As far as money is concerned the world seems to be skating on rather thin ice. ~JW
'I'm tired of freeloading billionaires.' ~Sen. Elizabeth Warren
It galls Warren to see people pile up considerable net worth and her Socialist turn of mind persuades her the accumulation of wealth is 'unfair" to those who have neither the knack for accumation or the ambition.
We are reminded of the furor prior to the turn of the 20th century when a member of the Vanderbilt family accumulated an enormous land mass hear Asheville, North Carolina, and constructed the magnificent Biltmore House. People remarked that it was totally unfair that one man could personally own such real estate - failing to consider the employment that the project provided. Today the property is still in private hands and is a major taxpayer in Asheville. Moreover, it still provides valuable employment for large numbers of people.
The vast Vanderbilt fortune began, by the way, when a teenage Cornelius Vanderbilt began a modest ferry service across New York harbor from Staten Island to Manhattan. He was known as "Commodore" for the rest of his life. He parlayed his little boating service into a major enterprise and later became a railroad magnate. Ms. Warren may not be familiar with his knack for money accumlation and investment but would surely insist the government should have taken his "surplus" and given it to people who were having trouble making ends meet.
Accumulating wealth should not be condemned. Ill-gotten gains are another matter. A wealthy drug cartel leader would be described as dealing with ill-gotten gains. Cheats in business and industry should be examined under the law, and we presently have plenty of official agencies charged with doing that.
Although we look askance at the leftist slant of the Times' opinions and reporting we don't disagree with the above observation. We're confident the barrage of media political coverage will increase to a suffocating level over the next 12 months. Moderators and their guests will chatter as fast as vocal apparatus will let them in the assumption listeners hang on to and absorb every word...every opinion. (We can only guess what Edward R. Murrow would say if he heard a liberal chatterbox on NPR ask an obscure guest from academia or liberal think-tank "So...what's your opinion of how the impeachment inquiry will play out?" Since when does the exchange of liberal opion pass as 'news coverage'?)
We'll survive. We're not so sure the growing number of media outlets will...particularly newspapers. We note our local paper will cease publication of a Saturday print edition on Saturdays commencing in January.
Pensioners have reason to worry about the stability of their income stream. it rarely seems to live up to the illusion of a cushy retirement we imagined when we were young. Even indexing the payout to the Consumer Price Index does not seem to erase the erosive effect of a falling dollar.
The late economist Ludwig von Mises wrote this in February, 1950:
Nearly 70 years have passed since Mises raised the issue of the depreciating dollar. Fifty two cents today won't even buy a cup of coffee let alone supply one's daily caloric and protein needs. And what will the dollar buy thirty years hence? No person on earth has a clue.
So what does a bloke or blokess do about it?
Restricting outlays to NEEDS and postponing certain wants is a good starting place. Those 7 year car loans are crazy. So is the pricey house bought in the belief the price will always go up.
And quit trying to buy happiness with credit cards. Happiness is elusive. Finding contentment is hard enough and it, too, is elusive when a tower of debt hangs over one's head.
What calumny is THIS? Everybody knows the U.S. dollar became the world's reserve currency with the adoption of the Bretton Woods Agreement at the end of World War 2. What could possibly dislodge the Almighty Dollar from its lofty position? Why, the world prices almost everything used in international trade in U.S. dollars. What could possibly take its place?
This graph shows the game changes over several hundred years:
Portugal was King of the Hill in the 15th century, followed by Spain. Traces of the Spanish "Piece of Eight" appear in the U.S. Monetary Act of 1792 when the size and weight of the new U.S. dollar were copied from the old Spanish milled dollar which was popular in Colonial America. (This silver coin was valued at eight reales, or bits. "Shave and a haircut, two bits.")
Netherlands currency rose to the top spot in international trade for a time, followed by dominance of France in the 18th century. Great Britain ran the show during late 18th century, through the 19th century and into the 20th. After WW1 the U.S. muscled its way to dominance to fill the increasing vacuum caused by the weakening British pound. Bretton Woods confirmed monetary trends and the dollar as been the world's reserve currency ever since.
Now comes Vladimir Putin to say the U.S. is using the dollar as a political weapon, imposing sanctions and what not. He thinks this is causing countries around the world to seek a different currency to serve the reserve function.
So, whose turn next? The European Union? Russia? China? Bitcoin?
Why not GOLD? Almost all central banks have some stowed in their vaults. Each troy ounce consists of 480 grains of pure gold and the measure is not about to change. Individual nations can calculate their money units in fractions of the troy ounce and get on with business, letting the markplace calculate prices based on the age-old laws of supply and demand.
In the 2020 election voters may be tempted
to
jump into Socialism in a really big way!
Thanks to the strong leftist tilt in
popular media and a high percentage of colleges and universities,
easily beguiled American youth hear the siren call of Socialism and may
march to the polls a year from now to vote for it.
In an editorial on the subject the New York Post writes: "Last year, Brooklyn College’s Mitchell Langbert found that, among 51 top-tier colleges, 78% of the departments had zero, or almost zero, Republicans. Democratic profs outnumbered GOPers in every single field at every school. The overall ratio: 10.4 Dems per Republican. At Wellesley and Williams, it topped 130-1."
The question of the money muddle is still on the minds of a small group of worriers who think debauching the currency was a bad idea and is leading to financial chaos. It was summed up on the Internet in a comment by an anonymous citizen who signed his name "Fred."
"The dollar has already lost 98+ percent of its buying power since the advent of The Fed after being stable for 100+ years. No way the bankers who run the world can go back to sound, hard money after working for 150 years to destroy it. ~ Fred"
Fred gets an "A" for being brief. And he's right to suspect that
bankers will not be at all interested in returning to the discipline of
a dollar defined, as it is by Constitutional mandate, as a certain
amount
of silver and its equivalent in gold. These were the monies of
the U.S. Constitution and they've been abandoned. The mandate
concerning money was not Constitutionally AMENDED...it was merely abondoned in a manner of which the
general public was not aware.
So, the general expection seems to be that monetary inflation will
continue to rule. We believe this will continue to be the course
politicians and bankers will follow, but it will fail. There has
never in all of history been
an episode of money inflation that did not
end in pain and frustration.
Old-time economists like Von Mises, Hazlitt, Hayek, Rothbard, and many
more wrote convincingly in favor of sound money but they were not able
to catch on with the general public . Inflalting the money supply
is believed to
somehow wipe out poverty. It never has.
Opinions
from the left - opinions from the right.
Mix them all together to create an awesome plight.
Is compromise the answer? Do cool heads still prevail?
Or, do the texting masses just prefer to rant and rail.
The Fed cannot admit it. There's
little it can do.
Quantitative Easing was only helpful
to a few.
It wants inflation higher. It will
"make things come alive."
But the Fed is strangely failing
no matter how it may strive.
We'd like to see sound money return to save the day
With long forgotten lessons coming into play.
It's contrary to the experts. They tell us "take on debt!"
But we suggest the opposite. Stay solvent and you're set.
Pay no attention to the windbags when
they speak.
No debt and some savings is what
we all should seek.
Let's erase all this confusion. Let's
bring back common sense.
Restore the Constitution and
celebrate its eloquence.
~Wrisley
Why
are the people so restless?
"Chile is the most stable and wealthy country in South America. Catalonia is the most prosperous part of Spain. Paris is hardly a hellhole of repression. And Hong Kong is the freest city of China. If the beneficiaries of freedoms and democratic rights come to regard them as insufficient to produce the political, economic and social results they demand, what does that portend for democracy’s future?" ~Pat Buchanan
Pat
Buchanan surely recalls the tale of Benjamin Franklin's response to a
person who asked what kind of government the Founders had created in
that hot ummer of 1787.
A republic," he responded. "If you can keep it."
Now - a republic is not the same thing as a democracy. Since the late 18th century the United State of America (a phrase coined by an Englishman, Thomas Paine,) morphed from a representative republic into a democracy with all the trimmings of quasi-socialism. As John Adams and other early U.S. Statesmen knew very well experiments with democracy always led to turmoil and collapse. They were well aware of Scot professor Alexander Tytler's "Cycle of Democracy." Drawing from the history of the Athenian Republic he concluded that democracies had a life span of little more than 200 years. He described the cycle as a circular illustration.
For more on the Cycle of Democracy Google Alexander Tytler. (Mind the second "T".)