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:
- India: The World’s Fastest Growing Large Economy?
Popular Narrative India has been the world’s favorite country for the last three years. It is believed to have superseded China as the world’s fastest growing large economy. India is expected to grow at 7.5%. Compare that to the mere 6.3% growth that China has “fallen” to. India's quarterly annualized GDP growth rate since 2008, according to MOSPI (statistics ministry) - click to enlarge. The IMF, the World Bank, and the international media have celebrated...
- Gold Sector Update – What Stance is Appropriate?
The Technical Picture - a Comparison of Antecedents We wanted to post an update to our late December post on the gold sector for some time now (see “Gold – Ready to Spring Another Surprise?” for the details). Perhaps it was a good thing that some time has passed, as the current juncture seems particularly interesting. We received quite a few mails from friends and readers recently, expressing concern about the inability of gold stocks to lead, or even confirm strength in gold of...
- Don’t Blame Trump When the World Ends
Alien Economics There was, indeed, a time when clear thinking and lucid communication via the written word were held in high regard. As far as we can tell, this wonderful epoch concluded in 1936. Everything since has been tortured with varying degrees of gobbledygook. One should probably not be overly surprised that the abominable statist rag Time Magazine is fulsomely praising Keynes' nigh unreadable tome. We too suspect that this book has actually lowered the planet-wide IQ –...
- What is the Best Time to Buy Stocks?
Chasing Entry Points Something similar to the following has probably happened to you at some point: you want to buy a stock on a certain day and in order to time your entry, you start watching how it trades. Alas, the price rises and rises, and your patience begins to wear thin. Shouldn't a correction set in soon and provide you with a more favorable buying opportunity? Apple-Spotting – a five minute intraday chart showing the action in AAPL on February 1, 2017 - an...
- Incrementum Advisory Board Meeting, Q1 2017 and Some Additional Reflections
Looming Currency and Liquidity Problems The quarterly meeting of the Incrementum Advisory Board was held on January 11, approximately one month ago. A download link to a PDF document containing the full transcript including charts an be found at the end of this post. As always, a broad range of topics was discussed; although some time has passed since the meeting, all these issues remain relevant. Our comments below are taking developments that have taken place since then into...
- Trump and the Draining of the Swamp
Swamp Critters BALTIMORE – The Dow is back above the 20,000-point mark. Federal debt, as officially tallied, is up to nearly $20 trillion. The two go together, egging each other on. The Dow is up 20 times since 1980. So is the U.S. national debt. Debt feeds the stock market and the swamp. What’s not up so much is real output, as measured by GDP. It’s up only 6.4 times over the same period. Debt and asset prices have been rising three times as fast as GDP for 36 years! Best...
- Gold and Silver Divergence – Precious Metals Supply and Demand
Gold and Silver Divergence – Precious Metals Supply and Demand Last week, the prices of the metals went up, with the gold price rising every day and the silver price stalling out after rising 42 cents on Tuesday. The gold-silver ratio went up a bit this week, an unusual occurrence when prices are rising. Everyone knows that the price of silver is supposed to outperform — the way Pavlov’s Dogs know that food comes after the bell. Speculators usually make it...
- Making America Great Again – How to Judge Policy
A Simple Formula MIAMI – How do we know if new programs will make the economy better... or worse? Here’s a simple formula: W = rv (w-w – w-l) That is, wealth is equal to the real value of win-win exchanges minus the loss from win-lose exchanges. Yes, dear reader, it’s as simple as that. Like a whittler working on a piece of wood, we’ve shaved so much off, there is nothing left of it... except the essential heartwood. When devising a win-win,...
- When Trumponomics Meets Abenomics
Thirty Year Retread What will President Trump and Japanese Prime Minister Shinzo Abe talk about when they meet later today? Will they gab about what fishing holes the big belly bass are biting at? Will they share insider secrets on what watering holes are serving up the stiffest drinks? [ed. note: when we edited this article for Acting Man, the meeting was already underway] Japan's prime minister Shinzo Abe, a dyed-in-the-wool Keynesian and militarist, meets America's...
- The Great Wailing
Regret and Suffering BALTIMORE – Victoribus spolia... So far, the most satisfying thing about the Trump win has been the howls and whines coming from the establishment. Each appointment – some good, some bad from our perspective – has brought forth such heavy lamentations. Oh no! Alaric the Visigoth is here! Hide the women and children! And don't forget the vestal virgins, if you can find any... You’d think Washington had been invaded by Goths, now...
- Receive a One Percent Gift When Buying or Selling a Home
How to Save Money When Buying or Make More When Selling a Home In your professional capacity and perhaps also in your private life, you may be closely involved with financial and commodity markets. Trading in stocks, bonds or futures is part of your daily routine. Occasionally you probably have to deal with real estate as well though – if you e.g. want to purchase an apartment or a house, or if own a home you wish to sell. The people who took this photograph probably want to...
- Silver Futures Market Assistance – Precious Metals Supply and Demand
Silver Is Pushed Up Again This week, the prices of the metals moved up on Monday. Then the gold price went sideways for the rest of the week, but the silver price jumped on Friday. Taking off for real or not? Photo credit: NASA Is this the rocket ship to $50? Will Trump’s stimulus plan push up the price of silver? Or just push silver speculators to push up the price, at their own expense, again? This will again be a brief Report this week, as we are busy...