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                                                     January 16, 2017

    "The mainstream media are liberal, and liberals honor only one thing: political power. All the rest of it is window dressing. This has been true ever since the French Revolution. Power is the only currency that has any value in the world of political liberalism. The mainstream media know it. The mainstream media also know that the public really doesn't pay any attention to them anymore. They can scream, yell, roll on the floor, and hold their breath until they turn blue; nobody in Trump's camp really cares what they do.

    "They scream from the sidelines in outraged impotence. They have not given Trump any consideration at all. Yet Trump is obviously popular with his base. The people who voted for him pay no attention to the mainstream media."  HILLARY- MIA

Dr. Gary North's post-election views are uncharacteristically blunt.  He slams the liberal mainstream media, Hillary Clinton, and the two major political parties saying they've both been in the hip pocket of the Council on Foreign Relations since 1932.

        We're not prepared to fully agree with him on every point, but he seems to have figured out media's role in the present American political sea-change.  

         Our own guess is that mainstream media will continue to be battered in the pocketbook as people come to rely on other information sources to feed their particular world view.  The odds are the world will continue to lean left because Socialism has a strong lure...living out of the pockets of others.  


Each of these objects is a U.S. dollar.
An intriguing question remains unanswered: "What is a dollar?"

< Each of these objects is a legal United States dollar.  Obviously, they are not physically alike.  Does it matter?

        No one much cares - particularly in the age of digital currency in which a dollar in physical form doesn't matter.  

         Top row, l-r:  Eisenhower dollar, Susan B. Anthony dollar, Sacajawea dollar, dollar coin from the "Presidential Series."  They rarely circulate.

          At center is a Federal Reserve Note which, technically, is an IOU for one dollar.  The coin at bottom is a Silver Eagle currently made at the U.S. Mint and contains 1 ounce, troy, of pure silver. Its face value is $1.00.

         Were you to deposit these six objects in a bank the teller would be obliged to credit your account with $6.00, despite the fact that the dollar coin at the bottom of the picture contains a troy ounce of silver and is worth a lot more than a dollar.  

          "But," says the expert, "a dollar is only a measure of wealth....it doesn't have to actually be wealth itself."

           The Constitution declared the dollar to be a silver coin of specific weight.  Paper notes (IOUs) were "bills of credit" and not money, per se. That concept was turned upside down through the years and has left the world scratching its head about currency.  Not even bankers can declare which of the objects at left is a true "dollar."     

            We can't, either.  Can you?


NEWS...REAL AND FAKE.

   "During the primaries, anti-Trump Republicans hired the ex-spy to do 'oppo research' on Trump, i.e., to dig up dirt.

   "The spy contacted the Russians. They told him that Trump, at a Moscow hotel in 2013, had been engaged in depraved behavior, that they had the films to blackmail him, and that Trump’s aides had been colluding with them..

   "In December, a British diplomat gave the dossier to Sen. John McCain, who personally turned it over to James Comey of the FBI.

   "On Jan. 7, Director of National Intelligence James Clapper and his colleagues at the NSA, CIA and FBI decided the new president needed to know about the dossier. They provided him with a two-page synopsis.

   "Once CNN learned Trump had been briefed, the cable news network reported on the unpublished dossier, without going into the lurid details.

   "BuzzFeed released all 35 pages. The story exploded."  Trump's Enemies

<  Pat Buchanan reviews the "fake news" brouhaha and sees the makings of another Nixon-like Watergate.  The story has the flavor of the front page of The National Enquirer.  

     In order to "save the country" Trump's enemies appear eager to use every weapon in their arsenal, including a revival of a U.S.-Russian cold war.  Only yesterday we heard the suggestion that thr presidential election be declared null and void because of Russian computer hacking.  That idea seemed to go over like a lead balloon, but the allegation that Russians covertly filmed The Donald in a salacious hotel room romp in 2013 is just too good to be passed over by the mainstream press.  We have a hunch someone is already writing a book on the subject.

     One commentator has remarked that the last time the U.S. faced a sea change as the result of a presidential election was 1932.  A sweeping victory by Franklin Roosevelt brought hope to the hearts of Americans.  Today's political progressives are not willing to experiment with change and see the election of Donald Trump as the worst mistake voters ever made.  They'll not rest until they destroy him.      


     One major question to be addressed:  "What is money?"

      On September 1st, 2009, our staff curmudgeon wrote, "Which is better?  The money of the Constitution or  paper notes printed at will by the Federal Reserve System?"  

       He went on to define three principal forms of "money", only one of which is in general use today.

Commodity Money = Metal money of intrinsic value which cannot be created from thin air. 
     Fiduciary Money = bank notes that are redeemable in commodity money.
     Fiat Money = bank notes that are not redeemable.  Backed only by hope and stupendous debt. 

        The United States has not operated on a commodity or fiduciary monetary standard for decades, and there's not much call for it now.  In fact, anyone proposing the restoration of the Constitutional  mandate with respect to regulating the production and value of money  would be laughed off the stage.  However, the Federal Reserve Note is not "money" in the classic sense, and never was.  From 1914 through November of 1963 it was always redeemable in lawful money whenever the holder so desired.  From 1964 to the present the Fed notes have carried no printed memorandum concerning redeemability in lawful money. The note is merely  evidence that the United States owes the banking cartel whatever amount appears on the face it.  It is an IOU.  

         In these exciting days of the exodus of the Obama era and the advent of Donald Trump in the Oval Office there's not much interest in the economic ruin the debt-based currencies of the world are creating.  It's no fun for journalists to report and it's dull for average citizens.  But the issue of honest money versus fiat currency is waiting off stage for its cue.  

*  *  *  *  *  *

VENEZUELA'S ROAD TO FINANCIAL RUIN.
So what?    

    "It is only a matter of time until Venezuela will default on its foreign debt. After a short peak in 2009, when the country’s foreign exchange reserves stood at over $40 billion, Venezuela has been steadily hemorrhaging its reserves down to $10 billion. In 2016, Venezuela started to sell gold in order to compensate for the loss of its monetary reserves. As a consequence, Venezuela’s gold reserves plunged from over 360 tons down to less than 190 tons. Other than in the case that some foreign power, such as China, for example, would jump in as a lender, Venezuela’s default seems unavoidable." VENEZUELA As "news" goes these days this report by Antony Mueller is very far down the list of importance.  Besides, aren't those Latin American countries always in hot water because of money mis-management?  

       It certainly isn't new, and it isn't restricted to Latin America.  For some reason we were reminded of a book published in the mid 1950s by French economist Rene Sedilot.  It is titled All The Monies of the World.  It was reprinted by Franz Pick in 1971 and sold for $100.00 a copy.  (Used copies are available at Amazon.com at $68.00 or so.)

       Monies is little more than a catalog of the the debauchery of money in dozens of nations all over the globe, many of which no longer exist.  There is a lesson to be learned from the study of this dreary catalog.  Through the ages great nations flourished on a standard of honest money and failed when they resorted to debt and fiat currency.  

       As Professor Santayana pointed out, by avoiding a careful study of history we are doomed to repeat its mistakes.  Even the mighty USA makes serious monetary mistakes.    


Being permanently in hock is the American way of life...until it becomes unpayable. 

   "We seek your commitment to passing a fiscal year 2018 budget resolution that sets our new, unified Republican federal government on a path to balance in 10 years without the use of budgetary gimmicks or tax increases."   Senators. Marco Rubio, Ted Cruz and Mike Lee in a letter to Senate Republican leaders.  < Congress must raise the public debt ceiling in April or May and some serious disagreements are likely.  For one thing,  Dumping (modifying) Obamacare will take big bucks.  A proposal that the public debt be increased by $9 trillion over the next 10 years is already circulating and the likes of Sen. Rubio and others don't like it.  

       He's right.  Perpetual debt increases ALWAYS lead to big trouble!


Friday the Dow Jones Industrial Average came within a gnat's whisker of 20,000. It was within a fraction of one point, but couldn't hop over the barrier.  Maybe next week. On the other hand stock price averages could tumble sharply.  Uncertainty is what keeps market watchers on their toes. 

    Meanwhile, the first week of 2017 brought confirmation of the dangers of India's experiment with cancellation of its 500 and 1,000 rupee notes.  A slowing of economic growth showed up in the December numbers.  India's government is trying to wean its economy away for dependency on hand-to-hand paper currency, so it has jumped on the "cashless bandwagon". As far as we can tell the United States has no plans to actually CANCEL the legal tender function of paper currency now in circulation, although there is a push to quit printing $100.00 bills.  Possibly $50.00 bills as well. 

    Another pocket money topic resurfaced a few days ago;  what to do about the cost one cent coin and the nickel. It costs the mint more than  their face value to manufacture the nearly useless coins and suggestions the mint quit making them fizzle before they gain traction in Congress. Since October of 1982 the mint has made one cent coins of mostly cheap zinc coated with a thin veneer of copper. But the mint cannot get the manufacturing cost below nearly 1.5¢.  Mint research indicates there is no cheaper way to make this lowly coin.  

    Does the American public clamor for cent and nickel coins?  Not that we've heard.  So why go into a financial hole making them?  There are plenty of them in bags, jars, boxes, and other hoards that could be easily called into circulation with the payment of a small premium...say, paying 55¢ for every roll of cents.  Better, yet - just stop minting cents and nickels and let cash transaction be rounded to the nearest dime.  This would draw momentary outrage from some sectors - just at it did when the half-cent coin was eliminated in the 19th century.  People feared merchants would always round prices up in their own favor. The fear was short lived.           


  "It’s not just the government and the banks that are doing everything they can to make it impossible for you to get your own money in the form of cash. Now they have a new partner — big business!

   "It seems that businesses have their own war on cash. They hate handling it and it’s expensive to transport, store and insure. More and more, businesses are refusing to take your cash.

    "This is just another form of discrimination against the poor who may not have banking accounts or who rely on check cashing services and live paycheck to paycheck. It’s also aimed at you because it forces you into a digital system where your money can be hit with negative interest rates, service fees, account freezes, bail-in charges and other forms of theft."  Jim Rickards

< Jim Rickards earns a very good living encouraging people to buy gold.  He contends the present monetary system is doomed and that the day approaches when the government will launch a serious war on gold, ala Franklin Roosevelt's order in 1933 demanding that citizens turn in their gold coin in exchange for $20.67 per ounce.  Once in the Treasury vaults the mint price of gold was revalued from $20.67 a troy ounce to $35.00, dramatically increasing the dollar value of the government gold hoard.  

     What Rickards and other gold bugs overlook is:  The U.S. dollar of the early '30s was, by definition, a measure of gold.  The relationship of the dollar and gold was officially dropped in the summer of 1971 and, therefore, the U.S. government today has no more claim on privately held gold that it does your gold wedding bands, gold wristwatch, or other possessions of intrinsic  value. 

     The main point:  The U.S. called in gold in 1933 and PAID THE MINT PRICE FOR IT.  Would the government make the same call today and pay the market price, $1,160.00 per ounce?  We strongly doubt it.


SOMETHING AMISS WITH THE SWISS
They don't play along with the trend to cashlessness.

           Switzerland appears to march to a different drummer when it comes to eliminating cash from daily transactions.  John Ltzing, writing in the Wall Street Journal, says the Swiss buck the trend toward a "cashless society" which is currently causing misery in India and anxiety elsewhere. 

             In the United States the amount of paper currency and coin in circulation is $4,333.00 per capita.  In Switzerland it's more than double that, $9,214.00.  (According to the Bank of International Settlements.)  In Switzerland it would not be unusual for a car buyer to plunk down cash.  In the U.S. it's nearly un-thinkable.  In fact, any payment of more than $10,000.00 in cash must be reported to the Internal Revenue Service. 

              Proponents of cashlessness argue that old-fashioned coin and paper currency aren't necessary in the modern electronic age.  "Money" can easily flow into and out of one's bank account without ever taking the form of hand to hand currency.  The computers keep track of it all.  Digital transactions also tend to make it difficult to operate outside the law. Cash transactions can, and do, fly under the radar.  Plunk down cash at a bar or liquor store and one's name does not enter the computer system.   Use a debit or credit card and the digital transaction is locked in the cyber world maybe forever.  

              Not that making purchases at bars or liquor stores is unlawful.  But in some quarters it's frowned on if done to excess.  It's not inconceivable that some nosey agency might want to gather data on alcohol consumption habits.  The anonymity of cash purchases would interfere with any plan to comb computer records for names of possible bad habits. 

               Whether the promotion of cashlessness will continue in 2017 we don't know.  Probably.  But the Swiss seem to have resisted the trend toward abandoning their pocket cash.  Perhaps they know something we don't.