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.
Mirror, 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.
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.
A 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.
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.
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…
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.
Pardon 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.
You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.
Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke
One Response to “Are We Becoming a Nation of Silver-Haired Crooks?”
Most read in the last 20 days:
- Gold – An Overview of Macroeconomic Price Drivers
Fundamental Analysis of Gold As we often point out in these pages, even though gold is currently not the generally used medium of exchange, its monetary characteristics continue to be the main basis for its valuation. Thus, analysis of the gold market requires a different approach from that employed in the analysis of industrial commodities (or more generally, goods that are primarily bought and sold for their use value). Gold's extremely high stock-to-flow ratio and the main source of...
- Doomsday Device
Disappearing Credit All across the banking world – from commercial loans to leases and real estate – credit is collapsing. Ambrose Evans-Pritchard writing for British newspaper The Telegraph: Credit strategists are increasingly disturbed by a sudden and rare contraction of U.S. bank lending, fearing a synchronized slowdown in the U.S. and China this year that could catch euphoric markets badly off guard. Data from the U.S. Federal Reserve shows that the $2 trillion market...
- India – Is Kashmir Gone?
Everything Gets Worse (Part XII) - Pakistan vs. India After 70 years of so-called independence, one has to be a professional victim not to look within oneself for the reasons for starvation, unnatural deaths, utter backwardness, drudgery, disease, and misery in India. Intellectual capital accumulated in the West over the last 2,500 years — available for free in real-time via the internet — can be downloaded by a passionate learner. In the age of modern technology, another mostly...
- Pulling Levers to Steer the Machine
Ticks on a Dog A brief comment on Fed chief Janet Yellen’s revealing speech at the University of Michigan. Bloomberg: “Before, we had to press down on the gas pedal trying to give the economy all of the oomph that we possibly could,” Yellen said Monday in Ann Arbor, Michigan. The Fed is now trying to “give it some gas, but not so much that we’re pushing down hard on the accelerator.” […] “The appropriate stance of policy now is closer to, let me call it...
- Credit Contraction Episodes
Approaching a Tipping Point Taking the path of least resistance doesn’t always lead to places worth going. In fact, it often leads to places that are better to avoid. Repeatedly skipping work to sleep in and living off credit cards will eventually lead to the poorhouse. Sometimes the path of least resistance turns out to be problematic The same holds true for monetary policy. In particular, cheap credit policies that favor short-term expediency have the...
- Cracks in Ponzi-Finance Land
Retail Debt Debacles The retail sector has replaced the oil sector in a sense, and not in a good way. It is the sector that is most likely to see a large surge in bankruptcies this year. Junk bonds issued by retailers are performing dismally, and within the group the bonds of companies that were subject to leveraged buyouts by private equity firms seem to be doing the worst (a function of their outsized debt loads). Here is a chart showing the y-t-d performance of a number of these...
- Mea Culpa – Precious Metals Supply and Demand
Input Data Errors Dear Readers, I owe you an apology. I made a mistake. I am writing this letter in the first person, because I made the mistake. Let me explain what happened. The wrong stuff went into the funnel in the upper left-hand corner... I wrote software to calculate the gold basis and co-basis (and of course silver too). The app does not just calculate the near contract. It calculates the basis for many contracts out in the distance, so I can see the...
- French Election – Bad Dream Intrusion
The “Nightmare Option” The French presidential election was temporarily relegated to the back-pages following the US strike on Syria, but a few days ago, the Economist Magazine returned to the topic, noting that a potential “nightmare option” has suddenly come into view. In recent months certainty had increased that once the election moved into its second round, it would be plain sailing for whichever establishment candidate Ms. Le Pen was going to face. That certainty has been...
- The Cost of a Trump Presidency
Opportunity Cost Rears its Head Last Thursday’s wanton attack on a Syrian air field by the US and its bellicose actions toward North Korea have brought the real cost of candidate Trump’s landslide victory last November to the forefront. It didn't take long for Donald Trump to drop his non-interventionist mask. The decision was likely driven by Machiavellian considerations with respect to domestic conditions, but that doesn't make it any better. Unlike...
- Heavily Armed Swamp Critters
Worst Mistake GUALFIN, ARGENTINA – By our calculation, it took just 76 days for President Trump to get on board with the Clinton-Bush-Obama agenda. Now there can be no doubt where he’s headed. He’s gone Full Empire. Not that it was unexpected. But the speed with which the president abandoned his supporters and went over to the Deep State is breathtaking. Once there was only a Trump fragrance called Empire... now he has gone full empire himself Among the noise...
- Hell To Pay
Behind the Curve Economic nonsense comes a dime a dozen. For example, Federal Reserve Chair Janet Yellen “think(s) we have a healthy economy now.” She even told the University of Michigan’s Ford School of Public Policy so earlier this week. Does she know what she’s talking about? Somehow, this cartoon never gets old... If you go by a partial subset of the ‘official’ government statistics, perhaps, it appears she does. The unemployment...
- Trump Is An Insider Now
Conspiracy of the Few GUALFIN, ARGENTINA – “U.S. stocks fall on Trump talk…” began a headline at Bloomberg. Or it may be Trump action. We had already counted six major campaign promises – including no O’care repeal and no “America First” foreign policy – already buried (some for the better). A bunch of campaign promises get the MOAB treatment... A great many theories have been proposed to explain Trump's recent series of u-turns: 1. he is in thrall to...