A Salutary Effect

BALTIMORE – “Ike and Dick Sure to Click” was an exciting election slogan. Their Democratic opponents, Adlai Stevenson and Estes Kefauver, had their snazzy campaign jingle, too: “Adlai and Estes… They’re the Bestes.”

Surely, the men behind these slogans had their private hungers and perversions. But they kept them to themselves. The 1956 presidential election campaign was a dull affair.

 

Google “Adlai Stevenson’s wife,” and you will get only the barest biographical information. But Google “Melania Trump” or “Heidi Cruz”… oh la la! Just be sure there are no children around.

 

melania-trump-1-800Mirror, mirror on the wall, who’s the fairest of them all? The reality TV election is here!

Photo credit: Kena Betancur / AFP / Getty, Scott Olson / Getty

 

It’s all out in the open now. This is the most entertaining election in U.S. history… and the first episode of Reality Democracy, in which the only apparent goal – or effect – is to get the ratings up.

When we were in grammar school, the teacher told us that “anybody in this classroom could grow up to be president.” We looked around the room with dread and foreboding. But now it looks as though she was right.

But this election ought to have a very salutary effect on the public: No one will ever take an election seriously again.

 

Silver-Haired Crooks

On Easter Sunday, we met a smart man who confessed to having voted for Donald Trump in the Florida primary. Of course, we wanted to know: What was he thinking? More on that in a moment…

A headline in yesterday’s paper jolted us away from the election. “Japan’s hard-up retirees turn to crime,” begins the headline in the Financial Times.

 

recidivist pensioners in JapanA gang of elderly recidivists in a Japanese jail. We apologize for using a kind of tinny word here.

Photo credit: Kiyoshi Ota / Bloomberg

 

After years of QE (quantitative easing), ZIRP (zero-interest-rate policy), NIRP (negative-interest-rate policy), and Abenomics (Japanese prime minister Shinzō Abe’s stimulus-focused economic policies) – which is to say, all the standard deviations of modern central banking – older Japanese people must now break the law… to get “free board and lodging behind bars.”

Is this what is coming to the U.S.? “Yes,” is the safe answer. Japan has been ahead of us on this entire trip. Its stock market crashed in 1989. That led to a Great Recession, which the authorities fought like the Imperial Army defending Okinawa. Japanese policymakers invented QE… and for 26 years, they’ve held interest rates near zero.

 

Japan, rates and NikkeiJapanese interest rates and the Nikkei – the former are now at or below zero, the latter remains about 60% below its all time high made more than 26 years ago – click to enlarge.

 

Shinzō Abe became prime minister specifically to end Japan’s quarter-century-long slump. He failed. The “three arrows” of his Abenomics platform – fiscal stimulus, monetary easing, and structural reform – seem to have driven the defenders even further to ground.

 

Hard Choices

It should, by now, be obvious to everyone that William McChesney Martin was right. As the ninth chairman of the Board of Governors of the Federal Reserve, he was the man on duty during the election cycle of 1956.

And he was the man responsible for “normalizing” interest rates, after the Fed’s war-time deal with the Treasury to help fund the deficit with ultra-low rates. Some feared this would trigger economic calamity. But Martin saw clearly what his homologues of the 21st century would rather go blind than see:

 

“Under the hard choices left to us in wartime, we had to dictate even some of the smallest details of our economic life, but that strait jacketing of the economy is wholly inconsistent with democratic institutions and a private enterprise system…

In a Free Market, rates can go down as well as up and thus perform their proper function in the price mechanism. Dictated money rates breed dictated prices all across the board.”

 

He then described the consequences of what would become the Bernanke-Yellen Money Dictatorship:

 

[W]e would have no reliable safeguard against the erosion of our savings, our pensions, our life insurance policies – the capital upon which the institutions of private enterprise rest…

 

15 Mar 1951, Washington, DC, USA --- Original caption: 3/15/1951-Washington, DC- William McChesney Martin, Jr., above, has been named to succeed Thomas B. McCabe as Chairman and member of the Federal Reserve Board. Martin, now Assistant Treasury Secretary, was recomissioned by McCabe, who has resigned.William McChesney Martin, old school central banker (this species is reportedly extinct).

Photo credit: Bettmann / Corbis

 

So far, Mr. Bernanke and Ms. Yellen seem to have the matter under control. We see no erosion of the value of our financial assets. Instead, stocks and bonds have gone up in price.

But the companies behind them are now encrusted with crony barnacles like an old boat. The boat slows… and rides lower and lower in the water. Real capital formation declines… productivity sinks… wages stagnate…

And then, you have people who get poorer, not richer… and silver-haired crooks… desperate to be behind bars, where they find warm beds and old friends. Mr. Martin, who lived to be 91 years old and died in 1998, would have understood it.

 

The Genius of Trump

But let’s return to our intelligent friend, casting his vote in the primaries for Donald J. Trump:

“I know him well. He’s a friend of mine,” he began.

“A lot of the things he says you can’t take literally,” he replied under cross examination.

“Like that wall. He’s not going to build a wall. The Mexicans aren’t going to pay for it. But it’s a great image. It’s one that sticks in your mind.

 

trumpswallPardon us for sticking images into your mind…

Image via flipflopflyin.com

 

“You get lost when you talk about trade policies and export account deficits. People don’t know what you are talking about. And they take you for another Hillary Clinton or some other Beltway Insider. Blah, blah, blah… more of the same.

“But the wall is a strong image. It announces that Trump is different. And he’s going to protect the American people. That’s all it’s meant to do. It’s not meant to be taken literally.

“That’s why Donald Trump is a genius. He’s able to communicate in a different way. The wall image tells people what they really want to know, without getting lost in details.

“He’ll do things differently. And that’s why the cronies and the Deep State are so afraid of him.”

 

Chart by: St. Louis Federal Reserve Research

 

Chart and image captions by PT

 

The above article originally appeared at the Diary of a Rogue Economist, written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.

 

 
 

Emigrate While You Can... Learn More

 
 

 
 

Dear Readers!

It is that time of the year again – our semi-annual funding drive begins today. Give us a little hand in offsetting the costs of running this blog, as advertising revenue alone is insufficient. You can help us reach our modest funding goal by donating either via paypal or bitcoin. Those of you who have made a ton of money based on some of the things we have said in these pages (we actually made a few good calls lately!), please feel free to up your donations accordingly (we are sorry if you have followed one of our bad calls. This is of course your own fault). Other than that, we can only repeat that donations to this site are apt to secure many benefits. These range from sound sleep, to children including you in their songs, to the potential of obtaining privileges in the afterlife (the latter cannot be guaranteed, but it seems highly likely). As always, we are greatly honored by your readership and hope that our special mixture of entertainment and education is adding a little value to your life!

   

Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke

   
 

One Response to “Are We Becoming a Nation of Silver-Haired Crooks?”

  • paranumre:

    “He’ll do things differently”? Please define differently. Obama was going to give us “change” and sure enough he did. I’m with the deep state, I’m afraid of Trump too.

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • factoryA Striking Chart
      The Economy and the Stock Market As long time readers know, we are always paying close attention to the manufacturing sector, which is far more important to the US economy than is generally believed. In terms of gross output it is the largest sector of the economy, and it should of course be obvious that saving, investment and production are the only ways to create wealth.   What's left of the Brooklyn Domino Sugar Refinery. Photo credit: Paul Raphaelson   Contrary...
  • trump-putin-1024Trump and Putin Narrowly Escape Assassination Attempt
      The Gloves are Coming Off First a little bit of recent history. Readers are probably aware that some questions about the occasionally malfunctioning Deep State android... no, wait, we'll start again. Questions have recently been raised about the health of presidential candidate Hillary Clinton by various “alt-right” tinfoil hat-wearing conspiracy theorists, such as this one.   The monsters are normally hiding under Hillary's bed, but lately they have come out into the open...
  • trump-mapDonald’s Electoral Struggle
      Wicked and Terrible After touting her pro-labor union record, the Wicked Witch of Chappaqua rhetorically asked, “why am I not 50 points ahead?”  Her chief rival bluntly responded: “because you’re terrible.”*  No truer words have been uttered by any of the candidates about one of their opponents since the start of this extraordinary presidential campaign!   Electoral map (note that the coloration may no longer be applicable...)   That Hillary Clinton is...
  • swing-voterWhy the Fed Destroyed the Market Economy
      What Have You Done for Me Lately? Swing voters are a fickle bunch.  One election they vote Democrat.  The next they vote Republican. For they have no particular ideology or political philosophy to base their judgment upon.   The primacy of the wallet.   They don’t give a rip about questions of small government or big government.  Nor do they have any druthers about the welfare or warfare state. In effect, they really don’t care.  What’s important to the...
  • wallet-367975_960_720Janet Yellen’s Shame
      Playing Politics In honest capitalism, you do what you can to get other people to voluntarily give you money. This usually involves providing goods or services they think are worth the price. You may get a little wild and crazy from time to time, but you are always called to order by your customers.   In the market economy, consumers reign supreme. There is no such thing as a “lost” vote in the marketplace; every penny spent affects production. Mises noted: “Consumers...
  • warren-buffett-gold-coinGet Ready for a New Crisis – in Corporate Debt
      Imposter Dollar OUZILLY, France – We’re going back to basics here at the Diary. We’re getting everyone on the same page... learning together... connecting the dots... trying to figure out what is going on.   The new three dollar bill issued by the Apprehensive States of America.   We made a breakthrough when we identified the source of so many of today’s bizarre and grotesque trends. It’s the money – the new post-1971 dollar. This new dollar is green. You...
  • 4-ip-and-non-def-capital-goods-ordersThe Economy, the Stock Market and the Fed
      John Hussman on Recent Developments We always look forward to John Hussman's weekly missive on the markets. Some people say that he is a “permabear”, but we don't think that is a fair characterization. He is rightly wary of the stock market's historically extremely high valuation and the loose monetary policy driving the surge in asset prices.   The S&P 500 Index and the NYSE advance-decline line. Most market internals weakened steadily until early February 2016, but...
  • silkroadHanjin Marooning in San Pedro Bay
      Global Trade Reversal Expansions and contractions in global trade have played out over long secular trends for thousands of years.  The Silk Road, for example, was established by the Han Dynasty of China in 130 BC, and allowed for continuous trade between East and West for nearly 1,600 years.  In addition to economic trade, the Silk Road was also a conduit for culture and knowledge among its network of civilizations.   A map of the main ancient Silk Road - click to...
  • voltaireGreat Causes, a Sea of Debt and the 2017 Recession
      Great Cause NORMANDY, FRANCE – We continue our work with the bomb squad. Myth disposal is dangerous work: People love their myths more than they love life itself. They may kill for money. But they die for their religions, their governments, their clans... and their ideas.   Famous French hippie and author Voltaire. He wears the same sardonic grin in every painting, whether he's depicted at a young or an old age, doesn't matter. His real name was François-Marie Arouet; he...
  • wilsonand-morganThe Donald Versus Killary: War or Peace?
      War: A Warning from the Past Although history does not exactly repeat itself, it does provide parallels and sometimes quite ominous ones.  Such is the case with the current U.S. Presidential election and the one which occurred one hundred years earlier.   The Donald probably has the better slogan...   The dominating question which hung over the 1916 campaign was whether the country would remain neutral in regard to the horrific slaughter which was taking place on the...
  • hittite-leftoversA Rift in the Space-Time Continuum
      Weird and Unnatural NORMANDY, France – First, a quick look at the markets. The Dow bounced on Monday, recovering 239 points of the nearly 400 it lost on Friday. Why the comeback?   FOMC member Lael Brainard: her comments on Monday were touted as the “reason” for the stock market recovering half of Friday's losses. We suspect the real reason is the triple witching on Friday... Photo via twitter.com   The financial press has a ready answer: “Stocks gain...
  • ukraine-mapCrimea: Digging For The Truth
      Renewed Escalation This summer witnessed a renewed escalation between Russia and Ukraine after Russian President Vladimir Putin accused Ukraine of sending saboteurs to attack Russian troops, targeting “critical infrastructure”. Kiev denied the allegations and claimed Russia’s “fantasy” was nothing but a false pretense to launch a “new invasion”.   August 10: Russian president Putin announces that there was an altercation involving a group of Ukrainian saboteurs at...

Austrian Theory and Investment

Support Acting Man

Own physical gold and silver outside a bank

Archive

j9TJzzN

350x200

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com