Tag Archives: gold standard

2 Cents Worth On Life Its Ownself

We didn’t even  look for things to interest us but the flow of information and misinformation from the media compels further review…..

Wow, Mother Nature revealed again how puny our doings on earth are in the grand scheme of things with that asteroid display over the Urals mountains Friday.   The reports are of hundreds of injuries and some relative severe damage to windows and structures from the sonic boom caused by the explosion of the descending asteroid.  Ironic that the news has also been ripe in the last week with the information about the passage of that large asteroid some 17,000 miles away today which in astronomical terms is whisker close.   Of course what we never remember is that each and every day we are bombarded by thousands of smaller asteroids which in turn shower us with hundreds of tons daily of debris from space. It pollutes our atmosphere and the EPA is doing anything about it!

The blooms on the Bradford Pear trees are going to burst out today or at least by tomorrow; they are on the verge.   At our latitude you can about set your calendar by them; they come out within 48 hours either way of Valentine’s Day each year.

Noticed several news items this year critical of the whole concept of the State of the Union address as a relic that should be radically changed.  It has become pure political pageantry.  I have said it should be eliminated for several decades now.  The President should issue a formal written report to Congress and have a serious working meeting for a day with top Congressional leaders where in fact they question him about the current concerns and issues of the day and the actions he purposes.  We get enough campaign speeches during the election season there is no need for another.  This should become the norm regardless of the party in power in the future.  The Congress can control this if they have the will.  After all it is they who have to invite the President to make the address in such a formal setting.  They can change the rules of the delivery of his report.

Once we got the cell phone it was only a matter of time til we reached the Dick Tracy stage of a communication device like he had.  Yep, the news now is that a couple of outfits in the biz are thinking of a “watch” smartphone.  You can phone with it, send messages, see videos and pictures and receive everything you get on the smartphone your carry in your pocket.  It was bound to happen.

Those people much smarter than me are finally also talking about the problem of our debt/money printing style of economic planning and policy and its effect on the value of the dollar.  A few decades ago well over 70% of all international transactions were denominated in dollars, today the figure is just barely over 60% and declining steadily.  Have a very strong and esteemed currency is good for our US economy even though it makes our exports a bit more expensive.  There are many more off-setting advantages to having the world standard currency.  More and more the yuan, Swiss franc and Japanese yen are used for those international transactions.  Factually, the Chinese have stopped buying our Treasuries already.  For a couple of years now they have bought them but at the same time have sold off other that matured and thus there net holdings have held steady at about 1.1 trillion.   The world markets (think Singapore, Australia, the Middle East, Japan) will one day soon turn on our debt (Treasury bills and notes) and stop buying them because they will fear even more Federal printing to cover our debt and deficits.  The interest we have to pay on those bonds will skyrocket.  You ask what does that have to do with Joe Blow–plenty, all his credit card, car loan and mortgage debt will go up even more and the Feds will likely demand even more taxes at the same time to cover the increased government expenditures.   The ONLY reason our Treasure debts are so low right now is because the Federal Reserve is buying over 80% of all of them with freshly printed made-up money on that money tree they have out in the back yard.

Chuck Hagel, Secretary of Defense or Surrender?

Some watch the science or history channel and see those episodes about how the Earth is doomed in the long run because our Sun will someday go nova and literally devour us as it expands.  Yep, that is true.  But we will already by long gone anyway.  The outer core of the Earth is molten iron that rotates around the inner solid core.  That movement of the iron is what gives us our electromagnetic field.  You know, the magnetic north pole and south pole.  Well, it is what also protects us from the Sun’s radiation now, today.  Without that protection we’ll not survive.  Mankind and all other forms of life worth discussing with be fried.   Just as Man doesn’t live forever, Mankind will not last forever.  We would have to leave the Solar System for another world.  That ain’t likely for lots of reason not the least of which is we won’t find another earth-like planet and it would take millions of years to get there unless you can find one of the time warp thingies.

The good and bad in man, the noble and venal haven’t really changed since recorded time.  The nature of Man is so poignantly revealed in the Bible stories.  The worst of evil, Satan, and lots of heroes but most of them as to be expected have their faults too–David, he slew Goliath, was a hero but he also had Uriah slain just so he could have his wife.  We haven’t and won’t fundamentally change regardless of modern secularist theories and that isn’t all bad because we each still have the choices to make that direct our life.  We have plenty of examples of the choices we should make even when they are the harder ones.   You just don’t go wrong doing the right thing even when you are pummeled by others at the time for doing it.
“Be not wise in thine own eyes: fear the Lord, and depart from evil”  Proverbs 3, 7.  Good advice then and now.  http://www.olcranky.wordpress.com

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2 Cents Worth On Life Its Ownself

Buckle up and here we go for some thoughts, reflections and opinions from the cheap seats…

There have been some murmurs about the Federal Reserve taking action to reduce its Treasury holdings without destroying the bond market and at the same time reducing the National debt and the deficits.  They would simply forgive the debt owed by the US Treasuries they have bought in the last few years.  This would reduce the debt by at least hundreds of billions if not over a trillion easily and simultaneously would reduce the deficit because no interest would  be due on that forgiven debt.  It sounds so simple.  But the problem is that such an action would focus attention on the fact that is funny money to begin with printed out of thin air by the Fed as a means for the government to fund its deficit spending and that there is nothing really supporting the value of the dollar other than “confidence” in our money.  It would be severe blow to that confidence.  After all if they can do it once they can do it twice.  Why not then just default on the Treasuries held by the Chinese; we don’t like them all that much anyway and they manipulate their currency.   It would be so appealing politically short-term but devastating in the near and long-term to our economy.  The politicos could brag and say “see, we fixed all that debt and deficit stuff” .  Of course what would it make the dollar worth in your pocket?

Both Dow and Dupont have recently announced pretty negative outlooks for the near and mid-term future of their businesses and industry.  Between they have also announced plans to cut 4000 jobs.  That is not a good sign.  When the economy is doing well those plants are humming putting out products for both industrial  and consumer use.  We all use tooth paste whether the economy is good or bad and that use doesn’t really indicate the health of the economy but when basic materials used in everything you can imagine are cut back we aren’t doing so well.

Greece just got a two-year extension of time to comply with it bailout loan terms.  Two more years to meet both revenue and deficit reduction goals.  This should come as no surprise.  Regrettably it is like a person going on a diet saying they will have only two more pieces of chocolate cake and then start next week.  Good luck with that.

The Federal Reserve at this month’s meeting stated it is continuing its ongoing purchases of goodies in the market place to the tune of at least 40 billion a month and will continue to crush savers by keeping interest rates near zero for two more years minimum.   They also posited that the economy is still sluggish.  Hey, we all know about the latter but some of us are concerned about the former.   How much more money can they prune off that money tree growing in their back yard before they kill it and our soon to be hyper-inflated economy they are fostering?

Good for the Brits.  They had the good sense and back bone  this week to tell the EU court to stuff it.  That court in a spasm of political correctness gone berserk had ordered Britain to allow all its prisoners to be allowed to vote in elections.  Not gonna happen at least with Cameron there.

With regard to Biden and his comments at the debate about Iran’s nuclear capacity one should caution him to know a bit more about engineering and history before he states so positively that Iran can’t have a nuke for a long time because even after they have the fissile material they still have to have a weapon for it.   Well, Joe, the weapon is the easiest and quickest part.  All they have to do is watch the History channel to see how to construct the bomb. They just need a big iron ball with ordinary explosives on the outside to ignite and force the fissile material to the middle where the nuclear reaction will take place.   Does the Joke really believe they are developing the material and haven’t given a moment’s thought to how they will deliver it to the intended target?   They already have some missiles we know and it doesn’t even have to be delivered that way necessarily.  They could simply build the device and put it 0n a truck or on a small ship and or even a cranky old DC-3.   They could quite likely get any of those all the way across Iraq to Israel without being intercepted.  They for sure good get them to the Strait of Hormuz which is their own shoreline.   I hate glibness with serious issues.

Sanctions against Iran are very problematical.  History should teach us that.  Doesn’t hurt to give them the old college try but don’t bet the ranch on them working.  The Soviet Union had an effective and real blockade against it for decades both by law and by inclination of much of the world and the Soviets themselves self-imposed sanctions by not trading with most of the West because to do so went against their ideology. They couldn’t allow their people to import Mercedes or Cadillacs and let them be compared to the cars the Commies made; nor TVs and a long list of other items.  They never reduced their danger to the western world in spite of being cut off.   Likewise North Korea has been a pariah for decades and sanctioned out the wazoo but that hasn’t fazed them, ditto for Myanmar.   Fanaticism and locked-in ideology doesn’t bend to normal logic.  The Iranians in spite of timid protests here and there are obviously content to let their country be dominated by the Ayatollah and his cohorts.   As long as their religious beliefs and goals remain pure in their minds they really don’t care about the condition of their people, after all, they will all end up in paradise for their sacrifices.  Sadly my friends it will require a much firmer hand than saying they will have a lower standard of living.

“There is no worse heresy than that the office sanctifies the holder of it.”  Lord Acton, British historian and statesman.  http://www.olcranky.wordpress.com

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2 Cents Worth On Life Its Ownself

Let’s reach into the lottery ball container and see what we can pull out for rumination or amusement…..

Notice that Datsun is going for a comeback with an ultra cheap care.  It will sell in the  3k to 5k range and is directed to the third world market.  It is a car with all the basics but eliminates those electric windows, electric seats, minimal air bags, etc.  Hmm, with our economy continuing to head south one can’t help but wonder if they might want to consider selling a few of those in the USA.  For getting around town for routine errands it beats a Vespa and sure is economical to operate.  Give them some cutesy distinctive paint jobs and there is as segment that would take pride in flaunting their down-sizing life or some would just appreciate the cheap transportation.   There might be a bigger market here than they think.

Is there any worse feeling in the whole world than when you cause an injury to your own child?  If you have raised kids then you know what I mean.  Sooner or later when you are tired or distracted for just that couple of seconds you will do something that hurts your child.  It could be as simple as not noticing them when you are mad and slam that door to the laundry room without noticing that they are ankle-biting their way right behind you.  I did it a couple of times.  Once my second daughter was getting out of the car along with her three brothers and sisters and Mom pregnant with number 5 on the way, we were tired and wanting to get in the house.  I shut the car door and heard her cry.  I had shut in on her hand, her fingers were caught in the door jam.   Thankfully, there were no broken bones, her little fingers were so small that she only had a really bad bruise.  But I had a huge bruise on my heart.   Had could I have been so careless?  Once I also made my oldest son wait much longer than necessary when he fell on the tennis court and cut his chin.  He wailed. I went over and checked but didn’t see any blood and calmed him and told him to sit still and we continued our tennis.  He kept crying really loud and I went back and looked closer.  There was a huge gash just under his chin and obviously needed stitches; it was bleeding, strange but true.  Why didn’t I look closer the first time.  We did get him to the ER right away for those stitches.  Even after 40 years you can still feel that sinking feeling of being the worst parent in the world.

Maybe you noticed that another solar panel outfit with Dept. of Energy loans just filed Chapter 7 bankruptcy ( a liquidation process).  It had recently renegotiated its 465 million dollar loan with the Feds.  It publicly blamed unfair competition from the Chinese for its failure but an internal memo indicated it might have been, er, a faulty product.  It said that their panels worked just fine except in sunlight!

How can Bernancke stand there and lie through his teeth that the Fed’s buying new Treasuries and mortgage-backed securities is not “printing” money nor enabling the Feds from continuing the deficits and running up the national debt?  Does Ben have a secret room at the Fed with Trillions of dollars just lying around for him to use that the rest of us Hoi Polloi don’t know about?   Yeah, it is technically true they don’t “print” the money, they just hit the keystrokes on the computer.   This to the tune of at least 40 billion per month, forever apparently.  What is really deplorable is that the business press and media will not call him out on it.   Make him explain where the money comes from that he uses to buy all those instruments.  From the thin air of the Fed Wizard of Oz machine is where.   Oh, and by the way, the revised numbers show that in the last year the Fed bought 77% of all those new Treasury bills, notes and bonds.   Not that many folks wanting to loan us money any more, at least not at the current ridiculously low rates of interest.

Because of the dangerous world we live in with the threats from Islamist terrorists I urge you to read just a little of the history of the early days of the Prophet.   There are ample sources available to you.  For a Prophet of peace he sure engaged in lots of warfare and battles with those who opposed his message.  Yes, he won over some very devoted and fanatic followers but he also subdued many, many more with brute force.  It wasn’t the message that won over most of the people it was the sword of Islam.  Please don’t take my word for it, read just an hour or two of his and Islam early history.

Rather than debates on TV I really wish the modern way of our Presidential candidates to present their arguments, positions and policies was with written essays if you will.  You know as well as I do that these modern campaigns are all about appearance, sound bites and platitudes to appeal to the base and the frankly uniformed.  I would much prefer if each candidate would issues thoughtful and meaty essays on the various issues of the day.  Take tax matters for example, wouldn’t we all be better off if each candidate wrote a really long, 5000 words or so, piece on his view of what tax policy should be.  I am fine with him having as many aides, experts and whoever helping him write the article.  It would be so much more detailed and it would be in writing.  He could only change it with a really good explanation.  Sure they would nuance their words and try to be as vague as they could on lots of points but they couldn’t get by with nearly the flippancy now that is used to cover important topics of the day.  They could do the same thing foreign policy, Immigration, judicial appointments, national security, etc.  We would be so much more informed and have a better idea of what would happen under the administration of each of them.  Those articles could be published in the newspapers, online, etc.  They would have to be thoughtful, precise and forthcoming.  Boy, I wish that could become the new tradition in Presidential campaigning.    They should have all their written pieces published by the time of the conventions and then debate which written and detailed approach is best for the future.  Ah, but then they slew Socrates.

“fanaticism obliterates the feelings of humanity.”  E. Gibbon, English Historian extraordinaire.   http://www.olcranky.wordpress.com

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2 Cents Worth On Life Its Ownself

Between morning and afternoon naps the old folks still have a thought or two that we offer at the same bargain prices…..

Well, helicopter Ben says he will print more money this morning from Jackson Hole.   But, then again maybe he didn’t.  You have to be able to translate the Greek from the ancient Hebrew and then into economic-ese.  First the market took it as a yes, he would then  folded upon further review.  But upon even further review it decided he would print up some greenbacks for us.   You make your own decision.  My bet is that he will especially because his comments about the state of the economy and the unemployment rate were not optimistic at all.   At least the Federal government has a debt ceiling limit it must adhere to but Ben has the sky for his limit, literally.

He made my day.  Sure old Clint rambled a bit and was off message a lot.  But he did make his points forcefully.  The other side can have their Clooneys and Baldwins all they want.  I’ll take Dirty Harry on my side in that dark alley of political knife fights any day.   Clint looks like he could be your neighbor, not a pretty boy on a magazine cover.

Enjoy your Blue Moon Friday.  A Blue Moon is when we have two full moons in one calender month.  Hence the phrase once in a Blue Moon.

I don’t know how some of the economic pundits can still be debating about how much China is slowing down in its economic growth.   You sure can’t trust the numbers out of China but there are some numbers you can follow that reflect what is happening there that are independent of the Chinese Commie Party influence.  The actual shipments of iron ore have fallen more than 33% this year to China.  Same is true of coking coal.  This can be verified by following the numbers out of Australia and the Baltic Dry Index.  Steel is one of those items that give a pretty clear indication of economic growth or activity.   It goes into pretty much everything from cars to buildings to dish washers.   Whatever they are doing behind the curtain in China that we don’t see, they are clearly doing less of it.  For you investments you shouldn’t be counting on China for the near term.

There was a bit of talk about the Republican Convention authorizing a commission to study the idea of a gold standard fro our money.    We should at least do that.   The egg- head economists pooh pooh the idea as old -fashioned and not flexible enough for a “modern” economy.  They always start off by pointing out that there isn’t enough gold to support the money needs.  Well, that may be true but there are still ways of making a link between our money and gold.  I have my own idea which is to set a standard that we must have enough gold to equal 50% of the national debt at all  times based upon the average price of gold during the trailing twelve month period.  At least that would make the politicians pay serious attention to our (your) debt.  The way it is now there is no “governor” on the rise of the national debt other than the whims of the politicians of the  moment.   The government should also be required to accept gold at the market price as full payment and legal tender for all debts owed it.  I am certainly open to tinkering with the concept offered here but anything like that would be a vast improvement unless you trust your future to the politicians and their desire to buy votes and voters in perpetuity.

A gold link with the dollar would prevent what we have seen the last three years where the Fed has simply printed dollars to by Treasury bills and thus allow the Feds to run a huge deficit each year. The Fed has bought over 50% of all the Treasuries during this period per their own reports and those of the Treasury.  We wouldn’t have been able to finance our deficits because no one would have bought them or more realistically we would have had to pay much higher rates of interest.  Keeping those interest rates low has been the stated purpose of the Fed.

You have to laugh when you notice that Tim Geithner the tax cheat and our Treasury Secretary has not been visible for some months now.    The BO campaign clearly doesn’t want to have him with too much face time with the media now because he is a reminder of so much that has gone wrong with their policies.  Think back to ’09 and ’10 and he was on the  tube at least once a week.  Maybe we should start a movement for people to watch out for a “Timmy” sighting.

In addition to worrying about the tons of smoke and other emissions that Man puts into our environment every day I will give you something else to worry about that the EPA is completely ignoring and offering us no protection or solutions.   Every single day thousands of tons of debris from space falls to earth.  You see them in the falling stars and meteorites but there are many more that we never see.  Just think no one is protecting us from this pollution and we don’t even know all the evil elements that are in these celestial contaminants.   This is all in addition to that deadly radiation from the Sun.   One wonders how we made it from the trees and caves to our condos.

Go Curiousity.  It has started moving and exploring.  Can’t wait to see if we learn something really new or its just a dusty place with boring geography and elements.

“Only in states in which the power of the people is supreme has liberty any abode.”  Cicero.  Good words and a warning.  http://www.olcranky.wordpress.com

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2 Cents Worth On Life Its Ownself

We offer fodder for the bored and aimless mind, at bargain prices…..

Twenty odd years ago when Greece was applying for and finally admitted to the Eurozone they demanded and received a special “bailout” as their price to vote for the admission of Portugal.  They didn’t transfer to the Euro until about 10 years ago and now are on the brink of financial collapse and demanding more bailout from others.  A quote just this week from a “man on the street” in Athens pretty well sums up their problem and their attitude.  He said that all they needed to do was take the money from the rich people and everything would be fine. Of course that money would last less than a year with their public employee payrolls and pension benefits.  After that what is their next plan–to take the money from the rich in other European countries?   Good luck with that.

Do you recall what the public welfare plan was for Jamestown when it was first established?   Some of those earlier settlers didn’t want to work the fields, build the cabins and hunt for food and provide for defence.   The welfare program was pretty simple–you don’t work you don’t get to share in the food or housing.  Only those physically unable were exempt and the community provided charity but not as a government requirement.  They had a rough go of it for a couple of years but the Tidewater area of Virginia continued to grow over the years from 1609 onward until Virginia was the most populous of the Colonies.

I am going to start throwing my shoe at the TV if the commentators and pundits don’t quit using the phrase “same exact” or its more elegant version “exact same”.  Darn, doesn’t anyone at those places know how to use proper English and syntax.   Could there possibly be a more redundant phrase.   One word or the other will be quite sufficient.

Some expert continue to predict that China growth will be the engine for global economic expansion and help raise the US economy.  You might want to check the Baltic Dry Index for the last few months.  The Chinese have significantly reduced steel production, they have slowed their shipments or iron ore and coal and have even delayed or simply defaulted on a number of such shipments.  They don’t apparently plan on building nearly as much at least in the near term and thus that growth will be a pretty small engine of world growth.  Everyone best re-think that strategy.   It doesn’t hurt to remember that the Chinese economy is there for the pleasure and amusement and benefit of the Communist Party.  They still have a tight rein on that country.  If you don’t believe me, ask Bo.

Are you surprised that a member of the NLRB appointed by a Democrat just resigned and took the position as general counsel for the AFL-CIO?   One can only guess what side he was on in every issue brought before that bureaucratic board.  

Geithner says that raising questions and concerns about increasing, again, the National Debt cause people to doubt the full faith and credit of the US and its  ability to pay its bills.   I believe that that is exactly why the question should be raised and that the National Debt must be controlled immediately–so we WILL be able to pay our debts on time.  If if keeps going up there is a limit to how much our creditors will advance.  The Fed has been buying over 60% of all our new debt and the others are bound to be getting nervous.   I just wish for once the Democrats would agree that there has to be a limit on its size.  I mean can it go to 35 trillion, 50 trillion?  Surely any rational mind would agree that the sky is NOT the limit.   The current budget proposals of BO already project the Debt to almost hit 30 trillion within a decade.   If not now, when are we going to address this problem.   Cut just 1 %, a measly 1% of the actual expenditures, not projected growth rate increases, across the board and it could balance out over a few years.

Gold and the Gold standard has many critics.  They claim it has no inherent value; that it does not represent a storehouse of value.  They believe the fiat currency  is the modern world and the only way to advance and manage  a modern economy.  Certainly not all but many economists tout this approach.  But, but, but, what causes me pause is that the fact that numerous central banks around the world have been accumulating gold for the last couple of years and continue to do so even as we speak.  Those central banks are run by the same economists and left-wing politicos who denounce gold.   Do actions speak louder than words.

Well, did you get rich and retire on your Facebook stock?  Never have understood why there is much money in teenage girls talking about Fluffy their cat and their new hairstyle or clothes purchase, except other teenage girls.    No matter how many gazillion users it may have it seems from a business standpoint that it is now at least a niche market with limited upside.   But what do I know, if you think it is great then bet the farm on it.  But I would recommend if you do,  that you sharpen your other job skills and learn to like living in an efficiency apartment.

One can only laugh at the outer limits of political correctness in vogue today.  The other day on a NPR show a caller to a scientist suggested that Black holes should be called “gravity holes” to eliminate negative connotations.  Well, even on NPR the scientist was taken aback a bit.  Firstly we could note that they are called Black holes because no light can escape from them and thus they are black.  That is why they are harder to discern by astronomers.  Where is Alice, this must be Wonderland.

“I have noticed that nothing I never said ever did me any harm.”  Calvin Coolidge www.olcranky.wordpress.com

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Class Warfare And The Federal Reserve

The administration oozes daily rhetoric about issues and concerns that focuses on the allegation that there are different classes in the US and that those at the top of the socio-economic spectrum are taking advantage of those the WH deems not receiving a fair shake.   It is a class warfare campaign and has strong populists overtones.  We’ve seen this movie before in our history–actually several times.   There were the same arguments between Adams and Jefferson in the very earliest days.   Similar arguments were made by T. Roosevelt to some extent and the really hammered by Woodrow Wilson and then of course FDR.  Surely everyone remembers Williams Jennings Bryant and his cross of gold message.   No one was more anti-elite in rhetoric than Harry Truman yet his administration was filled with exactly those types in all positions  of influence.   Now we are hearing the same theme again. 

Those adopting this line always rail against Wall Street, “moneyed interest” , bankers or the alleged privileged and well-connected.  What is always interesting about these arguments is that they are advanced by those who are in fact part of the 1% and among the elites themselves and are usually surrounded by elites a la the current administration.   Bankers are always at the top of the list of those attacked because they control some of the flow of money.   Jefferson opposed the original bank of america but Hamilton won the argument with Washington and it was created and then died shortly thereafter due in part to the same old argument that it favored and worked only for the benefit of the wealthy.    Well of course banks do deal with those who have some money.  Money is their business so is it surprising that they mostly interact with those who have money to deposit or wish to float a loan. 

We created the Second Bank of the US in 1816 under Madison but it only had a 20 year charter.   It was conservative and restricted credit to those who were credit worthy and the banking system functioned quite well during this period.  We grew and prospered.  The economic growth was uneven and the common man didn’t directly benefit that much from the bank but they sure did overall because the overall economy was improving steadily in the long view.   The class warfare rhetoric rose again to the fore when Andrew Jackson ran for President.  He was rough and tumble and came from modest backgrounds and sure had “baggage”.  I mean how many men today would have a chance to be President that had been involved in duels and even killed men doing so?  What about being a bigamist which he was technically.   Makes Newt look like a choir boy by comparison.   But elected he was.  He didn’t like the Second Bank or the bankers in general.  There was a strong geographic element to the class warfare talk of that day because the populists were mostly from the South and the West.  It was the elites and money interest of the East that were the target.   That remained true for generations.  Somewhat ironic today that those mostly shouting the class warfare language are from the elite East where the money interest still reside.   The big banks then just as today were mostly in the East because that is where the big money was.  The money came from the trade of the big ports of the East and the fledgling industrial growth of that nation which was concentrated in the area. 

When the charter for the Second Bank came up for renewal Jackson vetoed the bill.  He took the reasonable position that it was unconstitutional since it was not a power granted to Congress under the Constitution and that foreign interests profited too much and influenced it too much with their money.  He also said it favored the East over the other regions of the country which was mostly true and that it only made those rich bankers get richer.  He chose to ignore the fact that even though those things might be true we were growing, expanding and had a great GDP for those days.   He was a very determined warrior against the Bank and even before it formal demise in 1836 he withdrew the funds of the US from the Bank and deposited them with local and regional banks.    Those banks in turn began to practice what we would call easy credit and the loans flew out the doors and the speculations especially in western lands took off again.  Those bank issued paper money supposedly backed by gold.  The speculation became so intense that even Jackson got concerned and required in future that all land purchases had to be paid for in “specie” gold and silver.  That naturally caused an immediate credit crunch.  People started wanting to withdraw their money from the banks by submitting their paper money for gold or silve and the banks couldn’t meet the demand and many of them collapsed.  That led to a great panic of 1837 and a severe depression which lasted well into the next decade.  

Monetary and fiscal policies are critical to the proper functioning of our economy and yes those policies will always have to be implemented by banks and bankers.   We must have them.  We can’t run our economy without them because then you would be left with an anarchic trade  and barter system which is not very efficient or practical.   The Federal Reserve system doesn’t “favor” the rich currently.  It favors us all.   The Federal Reserve system is no inherently evil or there only to enrich the 1% as established.  It was set up to be run by bankers with only limited political influence through the board.  The Fed isn’t our problem it is the politicians wanting to tinker with it and control it even more.  I sure don’t like many of the things it has done in the last few years and don’t like most of the current members of the board and especially Bernancke.  But do you want the politicians to have even more control over our monetary policy?   You want the politicians with a simple vote or threat of reprisal or regulation to control the money flow and money supply.  Ever time there was the slightest advantage for some more inflation to make people feel good temporarily they would be opening the spigots.  If anything we need more independence of the Federal Reserve board.  We need more members who elected by the regional banks and fewer appointed by the politicians in Washington of whatever party.   Before all those 99% ers destroy the Wall Street banks we best think long and hard about what will replace them.  There will have to be something to replace them for sure.  I would not want Barney Frank to control our monetary policy and would not want Dodd to be in charge of the money flow from the Federal Reserve or Elizabeth Warren to be the regulator of banks around the country.    It ain’t perfect by a long shot but it has served us pretty darn well for almost a century.   We can have bankers or czars.  I’ll take the bankers any day.  At least they can be sued for fraud and set to jail for criminal acts but czars?   It takes revolution to get rid of them if my remembrance of history is correct.   An important aside–Jackson before he went off the rails did pay off the entire national debt only to have it balloon again after the closure of the Second Bank.   If only….

“If a national debt is considered a blessing, then we can get on by borrowing.   But as I believe it is a national curse, my vow shall be to pay the national debt.  A. Jackson.   www.olcranky.wordpress.com

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2 Cents Worth On Life Its Ownselof

Have an extra cup of coffee and enjoy the leftover turkey sandwich and ponder the observations and musings of a wandering and wondering mind.

I and you know that the speed of   light is a constant and that it doesn’t vary regardless of circumstances.  Einsteing taught us that.  I know there is that recent experiment at CERN that indicated they exceeded the speed by the tiniest fraction.  It will be really big news if that experiment can be replicated.  In the meantime though I wonder what happens to the speed of light inside a Black Hole.  It is so strong that light can’t even escape and be emitted.  Does the speed of light even exist there?  Is it relevant in such an environment?  You figure it out for me and let me know.

Another science mystery haunts my mind.  We can’t “prove” gravity exists except by measuring its effects.  We can see apple fall from the tree.  We can measure the orbit of the Earth around the Sun and predict its course with great accuracy and we know it is the result of gravitional pull.  But the “thing” itself–gravity we can’t put our hands around it or smell it or see it or weigh it.  It is one of those things that is just there we know because we see what it does.  Kind of like a religious faith isn’t it?  Can’t measure God but many believe He is there from the effects of His teachings upon human affairs.

Most folks I fear do not have any understanding at all how the Europeans are planning to solve their debt crisis.  You should pay attention because like it or not it will have a direct and very significant impact on our own economy.  They are creating ab0ut 500 billion of new money by printing up bonds.  Then they are taking those bonds and using them for collateral  to borrow up to 4 or 5 times that amount by issuing even more new bonds backed by the orginal issue.  A bond is merely a fancy word for and IOU.  They will be requiring their banks to buy most of these bonds and our government will want some of our banks to do likewise to some extent.  Sound like a house of cards to you?

All the Keynesians and modern economists scoff at the idea of the gold standard for money.  They think it is silly and that governments should issue fiat money backed by only the faith of the people in the government.  Of course that socialist approach to economics has been all the rage in Europe for decades.  But if you read the details of the latest European proposal for new eurobonds (not to be confused with the ECSF bonds mentioned above) you will see an interesting feature.  This is even more money to shore of the finances of the weak countries in Europe.   They Eurobonds will be joint and several so that all the nations of the Eurozone will be fully liable for the debts on these bonds for all the other countries. The Germans have already indicated a big Nein to this idea.  But in the fine print is a proposal to have those eurobonds backed at least partially by gold from the gold reserves of each country.  Hmm, if gold is so useless and worthless why do all those countries still hold billions or trillions in gold and why would they think the new eurobonds will do better if backed by gold?

Why is it that so many ladies act like Thanksgiving or Christmas “sneaks” up on them?  Surely you have noticed that often a day or few before the big event there is a flurry of activity and they are running around with all these last minute things to do.  They just run out of time they say to get it all done, but of course they always do somehow to our great enjoyment.  But, I mean the date is there on the calender for weeks, months in advance.  How can they act surprised by the day finally arriving right on schedule like it does every year?

We all can remember certain Holidays better than others because of our personal situation at that time.  I have often wondered how my Dad felt on Thanksgiving in 1942.  He had only been gone a few weeks for the War and was in boot camp.  They got a special meal but otherwise it was just another day at training far into the night.  He along with hundreds of thousands of other men were going through the same experience far from family and friends.  I suspect they were mostly so tired they just wanted the day to end like they did every day until they got out of that basic training.   The War was hard.  My Mom burned all my Dad’s letters home during the War telling me her reason was that they were just too sad and reminded her of painful memories.

If you have family then you don’t need to look far to find something to be thankful about.  Yes, families can be turbulent and scrathy at times but they are yours and in most cases they are the ones who will be there for you when the worst of times comes knocking on the door. 

Even though you might get tired of the same foods for Thanksgiving there is also something quite comforting about the same menu and traditions.  So enjoy that cranberry sauce your aunty made that is too mushy and the pumpkin pie granny does out of the can that is way too soupy and relish the company of those you love and just as importantly those who love you, warts and all.

“There is no nonsense so arrant that it cannot be made the creed of the vast majority by adequate governmental action”  Bertrand Russell.  http://www.olcranky

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2 Cents Worth On Life Its Ownself

With interest rates at near zero for banks and very low even for consumers perhaps we should increase the price at this point.  But because we consider ourselves a public service we will hold the line at 2 cents for “an extended period of time” or maybe  into mid 2013.

The stock crash of ’87 was much worse than what we have seen in the last couple of weeks on a percentage basis.  The Dow was about 2200 or so and fell to just above 1500 within a day.  That was a huge sell off and shook the markets for a moment.  But the decline was temporary.   The market started a slow but steady slog back up that continued more or less without serious interruption until the Dot Com crash of 2000.  

The parable of the 99 and 1 sheep is all about the shepherd.   The 99 was safe and ok.  It was the one that was lost and needed help.  The Good shepherd couldn’t rest without going out to seek the lost one.  Not because he loved that one more or valued it more.  That sheep was his charge.  You might note that the parable doesn’t make clear whether or not he even found the lost sheep.  It was the looking, the trying, the doing his duty that is important.  Sometimes it is your attempt at something that is as important as the outcome.  If we all depend on positive outcomes all the time to measure our success as humans then we are likely to endure lots of disappointments.  But if we do our duty always we will meet with constant success.

Remember all those pundits who predicted that gold was overpriced at $1500?  Maybe it is overpriced now but folks are willing to pay over $1750 an ounce for it at the moment.  It is not a currency and will not be anytime soon but it sure is treated like one by the buying public around the world.  The politicians couldn’t allow a gold standard because then they would really have a hard time manipulating the books.  If all those borrowed dollars had to be backed up by gold reserves in some amount it would put the brakes on debt growth and the ability to print money.

The bottom line of the recent debt ceiling negotiations is that the Feds have been authorized to borrow another 2.4 trillion dollars in just a little over 16 months or so.  Think about that one for a moment.   Sooner or later those debts have to be paid.  You think they will be paid back with inflated dollars hot off the printing press?  Yep, and you don’t need a PHd in economics to figure that one out.

Should the SEC be investigating the Federal government to determine whether or not it is making “material misrepresentations” in the offering of its Treasury securities?  That is a classic violation of rule 10b5 of the 1934 Act.  How can the Pres. and others in the Administration go public talking about the US having a AAA rating and being sound financially when the underlying numbers show increasing debt and no reduction forever.   The accounting facts don’t gibe with the salesmanship.

We just passed the 66th anniversary of Hiroshima and Nagasaki.  The Japs still weren’t responding to calls for surrender so our naval forces moved in the following week literally to coastal towns of Japan to pound refineries and other infrastructure facilities.  The Navy brought to bear both air power and the big guns of battleships and cruisers.  The Japanese news agencies still wouldn’t acknowledge that we were now literally at their shores and could do so whenever we pleased.  They still retained over a million troops in Manchuria and had thousands of planes in the homeland for last-ditch kamikaze attacks.   Mercifully they finally threw in the towel about a week later.

At this time of severe drought around much of the world we should recall that 97% of all the water on earth is in the oceans.  Only 3% is fresh water and of that 2% is locked in the great ice sheets of the arctic and Antarctica.  Mankind depends for all its water needs on only 1% of the earth’s water and some of that is not reachable for practical purposes.  A thin margin for some 6 billion plus people.  Hot has it is this summer we quickly forget how cold it was over most of the country last winter.  It was really cold for a long time and the snow fall was tremendous in most areas of the nation.   Remember those pics of the folks in the Northeast shoveling out from all the snow even late into March?

Where do you go these days to buy fine stationery?  With the use of email and faxes it seems the art of penmanship is lost or almost so and that receiving a handwritten letter for a family member or loved one will soon be a relic like the wall art in the ice age caves of southern France.  Our grandkids will look at those old faded letters with their sepia tinge and think how quaint we were and how did we have the time to actually sit down and compose a written letter.   Sad but I suppose it is not to be stopped.  Well, not to worry we probably won’t have a post office to deliver them anyway.

“A little sleep, a little slumber, a little folding of the hands to rest, and poverty will come upon you like a robber.”  Proverbs  www.ocranky.wordpress.comlra

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2 Cents Worth On Life Its Ownself

Human foibles and money issues dominant the current thoughts of most.  So, let’s take a gander out some of those matters together.

We all know that the Fed Reserve has enormously increased it balance sheet by buying Treasuries and other securities to hold down rates and “pump” money into the economy.  Now that QE2 is ending there is discussion about how the Fed will reduce its balance sheet and remove that excess liquidity.  The most often mentioned method mentioned is for the Fed to sell it Treasuries and thereby reduce its balance sheet.  We still wonder how that works since the Fed will be getting cash for the Treasuries when they are sold.  They are replacing one asset with another and the balance sheet shouldn’t change.   Yeah, they might sell at a discount but it wouldn’t be that much to have a significant effect.  What is the explanation for this oft- quoted method of reducing the balance sheet.

Weiner Roasted.  Enough said.  But, but, but there will undoubtedly be lots more said until he wakes up and smells the coffee and resigns.

Bernancke talks again and the Market drops again.  What’s new?  Does it occur to anyone else we would all be better off if he only spoke two or three times a year when he gives his testimony before Congress and otherwise keeps his mouth shut.  The guy must have some secret desire to be a Bono-type rock star of economics.  

The possibility of sovereign default be a number of nations is all the news today–Greece, Portugal, Ireland and others around the world.  As always the current generation acts and some even actually believe this is something new under the Sun.  It has happened before, many times.  The 1890’s in Latin America and then again after WWI with Latin America mostly.  Of course the biggest was in the 1930’s.  You recall that under the Treaty of Versailles the Germans were required to pay billions in reparations for the cost of the War.  Those payments in turn were supposed to be used to repay the war loans made by the US to Britain and France during the War.  Germany had revolutions, tumult and hyperinflation during the 1920’s but demand for payment relief was denied by the Allies.  Some in the US wanted to grant relief but not Britain or France.  Then came Hitler and the payments stopped.  Sanctions (a familiar term today–Libya, Iran, North Korea) were threatened but Germany moved on with tremendous economic growth in the ’30’s and no one was willing to take military action.  The obligations were defaulted.   Some how the world survived.  I think we will survive Greece.

There were many eyebrows raised when Utah passed its recent laws regarding gold and silver as legal tender for transactions in that State.  Lots of man on the streets comments were how can they do that?  Well, it is refreshing that someone actually still reads the US Constitution.  Its right there for all to read.  It states that the States may make no coin except gold and silver.  They can do that and could have all along.  If our US economy gets noticeably worse Utah might have a bit of trading edge on other States because of that new provision and the availability of gold and silver coins there.

The cognoscenti in Washington so often speak about the Constitution as one formed by the people and our government one approved by the people.  Well, that is true only indirectly at best.  Yes, the preamble starts off talking about “we the people” but when the rubber meets the road and you look at the concluding Article and sections of the Constitution you will clearly see that the Constitution was NOT approved by the people.  It was ratified by the individual States, not some popular vote.  That approval only came after the first ten amendments were made part of the deal and confirmed the reserved powers of the sovereign States in the 9th and 10th amendments.  Without those the Constitution would likely not have received approval.

Even though over 90% of all the species that have ever existed on planet earth are now extinct we are here.  We and the planet survived without any dinosaurs for example and there were gazillions of them.  So what if the sand lizard becomes extinct in far West Texas and Eastern New Mexico?  The EPA seems to take the position that life as we know it will evaporate.   Get out of that academic cocoon.  The EPA has destroyed more jobs than any downturn.  All with no proof of their contention that the world needs these obscure species.  Life is a struggle and always has been as Darwin noted and only the species that adapt will make it.  Guess those eggheads at EPA forgot that part of their courses in evolution when taking their biology classes.   I would rather see a rough neck keep his job than save the lives of a thousand sand lizards.   If you love them then adopt one and take it home.

Think how much trouble we are in when Washington DC is the fastest growing and strongest housing market in the country.   This is not a good thing.  www.olcranky.wordpress.com

 

 

 

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King Dollar, Gold and Globalization

Our economy faces vexing problems today regarding the value of the dollar compared to the other world currencies and its effect on our own economy.  We’ve been off the gold standard now for decades and the lack of a linchpin for the dollar has allowed the Federal Reserve to print money based on its “feel” for what is best for the US economy.  Gold is high today and you can find a variety of opinions about where it will go from here.  Some predict a crash in the price of gold and that only fools would own it now others take a contrary position.  Whatever the future for gold it is interesting to note that all the major central banks still own substantial gold reserves as does the US government and even many other major institutions.  The University of Texas Endowment Fund for example is reported to own almost a billion dollars worth of gold at present.

During the War Between the States the Yankees went  off the gold standard to finance the war.  That was the first use of the “greenbacks” to pay government debts and for private use.  Shortly after the war under pressure from European creditors the US returned to the gold standard to bolster the dollar value and its credit standing in the world.  In fact the period after the war until WWI saw tremendous growth in the US economy (with the South lagging far behind due to the effects of the war).  There were panics and downturns to be sure but the overall trend was moving up substantially.   By the 1890’s there was a great deal of anguish over the value of the dollar and the peg to gold.  This was the cause celebre for William Jennings Bryan and his cohort of mainly farmer followers. 

They wanted cheaper dollars so they could pay off their debts with those cheaper dollars to the bankers and industrialists back East.   We were still a mainly agrarian society in raw numbers of population but changing with each decade.  It was a battle between those groups.  Of course that over simplifies everything.  Those bankers and industrialists also produced all those jobs back East that the working men loved.  As grim as their existence was often in the factories and mines and on the railroads it was a vast improvement over the grinding poverty most had known only a generation before on the farm. 

Even then we had globalization.   Those farmers were concerned with the costs of their loans and the transportation costs to move their crops to market back East or even exported.  Europe was still mostly self-sufficient agriculturally but that was changing and our wheat and corn were much cheaper and more abundant than theirs.   It was more of  city versus rural dispute rather than the classic class warfare so often described.   The price of crops had been dropping and thus the revenues of the farmers and they were pushing hard for a move off the gold standard so more money would flow into the economy and they could use those de-valued dollars to pay their loans.  This was when Bryan made his famous “Cross of Gold” speech.  The European creditors were becoming increasingly alarmed over the threat to the value of the dollar.  They started moving gold out of the US.  Literally taking it and putting onboard ships and moving it to London.   As the gold stocks sunk the confidence in the dollar began to sink also.  The House of Morgan with support from its London office and few others stepped in and bought gold and issued gold backed bonds.  They had to move quickly to prevent a collapse of the dollar.  It worked temporarily and some gold was actually taken off ships and returned to the Federal Reserve in New York. 

But capital and confidence in the business atmosphere on any government are not cast in stone and must be maintained.  The threat kept returning and the gold was drained more.  But then we found gold in Alaska and the Europeans had a couple of really bad crops.  The price of US agriculture zoomed for a while and the price of both gold and the dollar stabilized.  It really wasn’t any brilliant government policy that stabilized things but frankly sheer luck.  But that state of affairs managed until WWI when we underwent a real boom in industry to build everything needed for the War and that lasted through the ’20’s before the Great Depression came along. 

With the Depression Roosevelt removed the gold standard for debt payments and required everyone to turn in their gold for dollars.   The Depression lasted until WWII.  Making those cheap dollars again and killing off what the Feds considered “excess” hogs and cattle and plowing under crops the bolster prices for everything didn’t seem to help much.  Some think it did.  I don’t think you would find many ordinary folks and farmers of that era who believed those  government policies improved their lot.

Maybe we’ll get lucky again before the Feds come up with programs that aim for the stars but hit us in the backside.

“When we hear news we should always wait for the sacrament of confirmation.”  Voltaire www.olcranky.wordpress.coml

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