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Unvarnished Truth
Hucksterism Gone Wild

April 25th, 2019

Compared to the euro the U.S. dollar is stronger.
Compared to the price of gold the dollar is weaker.

So, what's going on? Dollar parity against foreign currencies like the European euro show the dollar has some muscle. This morning one could buy a euro for only $1.11 and a fraction. One would pay nearly $1.14 only a few weeks ago.

But compared to the price of gold it takes more dollars to buy the metal today than it did yesterday. As we're fond of explaining...when we were born a dollar would buy 1/20th of a troy ounce of gold. In fact, by definition it WAS 1/20th of ounce of gold. At noon today (April 25th) one dollar buys only 1/1,280th of an ounce. Unfortunately, the dollar is no longer measured in terms of gold, silver, or other commmodity. Therefore, fiat dollars can be printed (or computer created) in increasing numbers.

Which leads us to this question:

How Fast Should the Dollar be Allowed to Depreciate?
Should we care the $ loses 2 or 3 percent per year?

   In these days of perpetual monetary inflation we take for granted that anyone with a few spare dollars rarely benefits from depositing them in a bank account. A yield of 0.05 percent is a drop in the bucket in an era of depreciating currency. Think about it. You lend your cash to a bank which lends it out at a much higher rate for profit.

    But the Federal Reserve makes it clear that their objective is to depreciate the dollar at a rate of at least 2 percent, annually. The Fed is plainly saying "Our policy is designed to reduce the purchasing power of a dollar in one year's time to 98¢." If you want to maintain purchasing power and the Fed is successful in maintaining a 2 percent inflation rate you must rent out your spare cash at 2 percent in order to break even!

     There are a few banks presently offtering 2.1 percent, which at least offers savers a break even position against the present rate of price inflation. But beware pressure on the Fed to uncork another round of lower rates. That has the potential of dipping into negative interest rates. Under such a bleak scenario bank depositors will generally PAY the bank to hold their money.

      What does the future hold? We have no idea. But we know what the historical record shows. In slightly more than the century the Federal Reserve has existed the purchasing power of the United States dollar has fallen from $1.00 to less than a nickel!

Medicare hospital fund reserves likely to be exhausted in 2026.

(Reuters) - Medicare’s hospital insurance fund will be depleted in 2026, as previously forecast, and Social Security program costs are likely to exceed total income in 2020 for the first time since 1982, according to a government report released on Monday.

The report from the board of trustees for Social Security and Medicare also projected that Social Security funds could be depleted by 2035, leading to potential reductions in expected payouts to retirees and other beneficiaries.

U.S. healthcare costs are expected to be a hot topic during the 2020 presidential campaign, with uncertainty around possible cost-cutting solutions already weighing on healthcare stocks this year.

This item in Monday's news caught our eye. Were we prone to gambling we'd bet the Medicare hospital fund hits the depletion wall before 2026 - - unless, of course, Congress puts on its thinking cap and does what's necessary to shore up this fund. Also headed for big trouble is the Social Security Trust Fund. Elected officials don't want to touch it.

The Board of Trustees itself calculates Social Security’s long-term shortfall at a mind boggling $43+ TRILLION.

Simply put, the trust funds don’t have enough money to keep the programs going, at least under the current promises.

At the beginning of their report the Board states that, starting 2020, Social Security’s cost will exceed the money it earns in from interest and taxes.

It's hard to imagine this subject won't become prominent in the presidential political campaign of next year!

A peek at worldwide inflation.

    Double-digit price inflationi has a grip on much of the world at the moment, with Venezuela off the charts with an annual inflation rate of more than 8 million percent. The money unit in Venezuela is the bolivar and it is as worthless as the old German mark of 1923 and the Zimbabwe dollar of the early 21st century.

    The United States hasn't even approached double-digit price inflation since the awful 1970s when the CPI reached 13.5 percent in 1980. The last time the U.S. suffered a slight period of price DEFLATION was 1949 when the CPI dipped 1.3 percent. Prices have advanced steadily for seventy years amid periodic predictions of hyperinflationary blowoffs.

     So, where is the high inflation in the United States? The CPI is running along now at about 2 percent. Can't we muddle along at an anemic 2 percent?

      That's the objective of the Federal Reserve - to maintain price inflation at about 2 percent each year. Critics point out the Fed has driven the purchasing power of the 1914 dollar down to less than a nickel. (The Fed went into business in 1914.) It stands to reason it will not take another century or more to make the fiat dollar worthless.

        It's likely the machinations of the Federal Reserve System will come up in the presidential campaign debates in 2020. Let's hope so.

Is there enough gold in the world to [support] the idea of gold-backed currency and avert negative consequences?

There's a miniscule chance that the question of sound money may be brought up in the 2020 presidential election. Liberal media will ridicule the idea and the voting majority won't take time to dig into the question. Why should anyone care? We're getting along on debt-based currency - except for the fact that it is losing actual purchasing power each year.

"And here’s one thing that would have the Feds shouting objections. With a gold standard, their ability to print money would be restricted. They’re not going to like being told what they can and can’t do. There goes that power thing again." GOLD STANDARD

"Social decay is sweeping across our nation," claims Michael Snyder. From the data he cites we quite agree. Something is wrong with the video images we're getting from some of the country's major cities. It was not unusual in the 19th century for people to have to dodge horse manure in city streets, and sidestepping dog poo has been a hazard for ages. But reports of piles of human feces in public places turns not only the stomach but one's attention to the booming problem of homelessness in major cities.

It's extimated 28,000 homeless people populate once beatiful San Francisco. Twice that number are said to be hanging out in Los Angeles.

Seattle, Washington, is yet another attractive city that has been spoiled by troops of homeless who have pitched tents and other shelters in public places. A KOMO reporter produced a one hour documentary about it and it's worth the time to watch it. Mr. Snyder includes a link to it in his lament: WEST COAST HELLHOLES

   Well, the Mueller report is out....nearly 500 pages with passages blacked out. (Redacted.) We listened yestereday as NPR pundits gave their opinions. It was very gossipy. Perhaps we should download the entire report and read it for outself.

    But what for? How will our personal life and fortune be affected by a review of this document? On the other hand, we are possibly shirking our duty as a loyal citizen of the USA if we don't spend several hours trying to figure out what it all means.

   The bottom line is no legal action against President Trump has been extracted from the costly and long running investigation by Mr. Mueller. Of course several liberal journalists are insisting that Congress not drop the case but continue digging into the matter in ordrer to find some reason to dump Trump.

     Politicos on the left, aided and abetted by the chattering media commentators want Trump out. We get that. Trump is a total embarrassment to people who believe political leaders must follow rules of decorum in the conduct of their office. But if we-the-people have gone so far as to abandon the old rules of morals and manners must leadership continue to be held to higher public standards?

     Besides, in our book the rude behavior of President Trump is not as upsetting as the headlong rush into monetary disruption, the growing racial rift, the towering level of government and private debt, and several other harbingers of national dispruption. How do we get the gossiping "news" media to notice?

THE CALL FOR REPARATIONS

        According to a Google trend report there has been a sharp increase in interest in the 'Reparations for Slavery" issue. It has been introduced as a topic among Democrat presidential hopefuls. Last week, for example, Rev. Al Sharpton asked candidates if the U.S. government should research how to make amends for centuries of enslavement and oppression of
African-Americans.

    Confusion has arisen because a key point has been missed. The question is not whether reparations should be made...it is whether the government should create a commission TO STUDY THE MATTER. This has been the main issue since H.R. 40   was first introduced in the House of Representatives in 1989. A great many people believe that passage of such a bill by the House and Senate would lead directly to deposits from the U.S. Treasury into the bank accounts of persons whose ancestors were slaves.

    The purpose of the bill, which has languished so long in Congress, only calls for the establishment and funding of a commission to study the question and offer a remedy slavery's after-effects.   Getting this measure into the 2020 political campaigns has a potential of igniting more bonfires of racial divisiveness.