Archive for the ‘debt’ Category

Money’s Swan Song

August 11, 2019

In the beginning God created the heavens and the earth.

Well a lot has happened since then.

Our Creator had done some amazing creating through that original sparkle, and has given us the wherewithal to jump in there and participate in the creative playing out of all things in our domain.

The power to create was not given to other species on our planet—only to us.

We humans have done some pretty amazing things with our God-given talents.

After hunting and gathering, we planted, harvested and ate the fruits of our labors.

in the course of history, we have moved far beyond just eating, drinking and homesteading.

It’s been ever onward and upward for us, since we got a hold of this divine spark thing that we call creativity.

We’ve built pyramids and great walls, temples, mosques, cathedrals, skyscrapers, great bridges and machines that move across those bridges.

We’ve built roads, rails, blazed trails, had great successes and fails. We’ve devised tools, schools, lots of rules; we’ve forged implements, arts, coins, currency, and we’ve maintained a steady errancy.

We’ve painted, sculpted, interpreted the real world as works of art. We’ve disrupted, interrupted, corrupted and upended nature itself.

Now our carbonized creation turns—in some ways—against us.

Back at the olden time, when we received the power to cultivate earth, we were instructed to subdue those elements of the natural world that seem to be active against us—like, say, lions and tigers and bears. Such critters we had to subdue, so they would not make mincemeat of us.

Earthquakes, volcanoes, storms, tsunamis, etc.— these adverse forces we could not subdue, so we took shelter. As the ages rolled by, our sheltering instincts developed into elaborate structures.

And we have done pretty well with that. We homo sapiens have taken control of the planet—or at least we think we have. The planet may yet rise up to bite us in the ass. We shall see what happens with that.

A major sea-change that happened along the long odyssey of our progress was: we devised ways to substitute real goods into artificial representations of wealth.

Better known as making money.

MoneySwan

Land, food, livestock, clothing, shelter and such commodities that are essential for survival—all these are now exchanged by monies, currencies, paper-backed assets. And the latest thing is: electrons seem to be our new currency.

Our ancestors carved trails out of the wilderness. They gathered grains, sowed seeds, domesticated animals, and sold to neighbors or merchants all the produce thereof.

As those primary goods coalesced over the ages as markets, their value was measured and traded as money. This we called trade. Then we called it commerce, then business, and now. . . economics. We humans invented the system a long time ago because . . . well, because . . . I don’t why.

lt’s just what we do I guess.

For one thing, it made the process of manipulating wealth easier.

In economics, wealth was and is evaluated in terms of dollars or yuan or yen, or marks, francs, drachmas, denarii, zlotys, rubles, pesos, pounds sterling, etc.

Euros are the new kid on the block. They seem to have trouble making that one work.

The difficulty with retaining true value in these currencies is related to the fact that they’re—in real survival life terms—not really worth anything.

They only represent wealth. But they are not really the real thing.

I say the EU is having trouble establishing the value of their Euro. This goes way back.

The Brits, for instance, were having trouble in the 1930’s retaining the value of their pound. It seemed that their constructed currency could not maintain its value compared to gold.

Who the hell can compete with gold?

Gold goes way back.

Way back.

The second chapter of Genesis, for instance, mentions gold.

“The name of the first (river) is Pishon; it flows around the whole land of Havilah, where there is gold.”

I suppose there’s a reason why gold goes way back in our history. Even though you can’t eat it, drink it, or keep your household warm with it, it is . . .

quite shiny.

Beautiful stuff, that gold. Precious!

Back to the Brits. As the world economy was falling apart back in the ’30’s, many savvy persons decided they would trade their British currency—pounds—for gold.

So many savvies were wanting to get back to gold, that the British government quit selling it.

What would happen after such an arrangement?

I think it was that fellow Keynes who figured out that—guess what—the economy just kept on cranking—all the goods and stuff and commodities and products and financial instruments and whatnot—just kept swirling around in international commerce.

The world didn’t stop turning. Business just kept on doing their thing. Rich get richer and poor get poorer and hey what else is new.

What else is new? Nothing. Nothing new under the sun.

Guess what. We didn’t really need gold to back currency! It was just a phase we were going through—the golden age of gold.

Back in ’73, Nixon pulled the same trick as the Brits had done in the ’30’s. He and his Bretton Woods powers-that-be decided we could no longer afford to sell gold for dollars. Too many folks wanted the gold instead of the dollars.

So we see that man-made currencies are not foolproof, and the gold bugs are always trying to make a comeback.

Money is a habit; that’s all. A very old habit.

Folks are born and bred into this modern economic world.  We are commercialized, or socialized (depending on your politics) to just keep spending those pounds and dollars and cents and euros and yuan and yen and SDRs and thusandsuch.

Nowadays we don’t really even use the money any more. Now it’s just electrons flowing around that represent debits and credits.

And that’s why—I suppose— the central banks of the world can keep cranking out their reserves, because the right to assign value is now reserved to them. It has nothing to do with gold or fiscal guarantee.

The central banks, in the fatal footsteps of every financial crisis, have reserved the right to “create money out of thin air.”

I told you we were creative!

The greatest discovery of the modern world:  we don’t even need anything to take the place of gold.

Money is just an old habit we have; we’ll never put it to rest. So somebody has to be “printing” it somewhere.  We spend so much money that all the .govs of the world are running deep debts trying to keep all the citizens fat ‘n happy.

There’s so much liquidity in the world today that the dark swan of excess has smooth sailing. Someday, some Leninish strongman will come along and dissolve all that debt into even more liquidity.

It will be a meal ticket for everybody. Yes, Virginia, there is a free lunch, doesn’t matter who’s paying for it.

It’s only money.

Glass half-Full

The Knave New World

May 2, 2019

In 2007, Alan Greenspan published a fascinating book that chronicled not only his own life, but the life of the monetary world in which he grew up,  and in which he ultimately played a major role as Chairman of the Federal Reserve.

  https://www.amazon.com/Age-Turbulence-Adventures-New-World/dp/0143114166 

Mr. Greenspan’s keen observation of contemporary monetary history is demonstrated throughout the book. On page 92, Alan had this to report about the legendary Reagan tax cuts of the 1980’s:

“The cornerstone of the Reagan tax cuts was a bill that had been proposed by Congressman Jack Kemp and Senator William Roth. It called for a dramatic three-year, 30 percent rollback of taxes on both businesses and individuals and was designed to jolt the economy out of its slump, which was now entering its second year. I (Greenspan) believed that if spending was restrained as much as Reagan proposed, and as long as the Federal Reserve continued to enforce strict control of the money supply, the plan was credible, though it would be a hard sell. This was the consensus of the rest of the economic board as well.

But (David) Stockman (Reagan’s Budget Director) and Don Regan, the incoming treasury secretary, were having doubts. They were leary of the growing federal deficit, already more than $50 billion a year, and they began quietly telling the President he ought to hold off on tax cuts. Instead, they wanted him to try getting Congress to cut spending first, then see whether the resulting savings would allow for tax reductions.”

Well good luck with that!

And gollee, that was about 39 years ago, and about 20 trillion $$ of federal deficit ago. . .

Ronald Reagan, God bless ‘im, was the last of the Mohicans of old-style let’s-try-to-balance-the-budget school.

Yet we still pay lip-service to that principle.

But–let’s face it– those days are gone forever. They went out with with saddle oxfords and gumball machines and  Archie Bunker and 1-cent lollipops and debits on the left with credits on the right that balanced each other out.

Now Reagan, God rest his soul,  is no longer with us, nor Kemp,  and the world is a totally different place. Ronald Reagan was the last of a balancing breed that has vanished into fiscal history.

The cowboy hero has ridden into the sunset.

David Stockman is, however, still with us, and still living in the past,  still harping, God bless ‘im, on old-hat financial and fiscal responsibility. Good luck with that, Dave!

https://www.deepstatedeclassified.com/dsd20190426/

In his most recent newsletter, David Stockman posted this assessment of our present situation:

“The Main Street economy is failing. But the Wall Street fantasy is thriving. You can lay responsibility for this dangerous disconnect at the doorstep of the Eccles Building.

The Federal Reserve’s extreme monetary central planning regime long ago disabled capital markets and destroyed price discovery.

Bubble Finance has euthanized workers and savers and lobotomized traders and speculators.

And our monetary central planners know it.”

While Mr. Stockman’s assessment may very well be true, it may also be irrelevant.

The world . . . as it always does and always has, has changed.

Tap your ruby slippers together, David.

RubySlippers

and close your eyes and realize: We’re not in Kansas any more. All the rules have changed. Take off your rose-colored glasses.

We’re not wheelin’ and dealin’ in ole Wall Street any more, or Peoria or Pittsburgh or Palm Springs. Now we are in, as Aldous Huxley once said, a Brave New World. . .

A world in which monetary markets and price discovery are no longer the primary determinants in the money game. . . a world that has, yes Virginia, yes Alice and yes Dorothy, been commandeered by a thunderous consumerist horde who have no wish to be bound by these old financial fuddy-duddy obsolete principles, a world that has been fundamentally transformed by Keynesian realpolitic and by the pragmatic keep-bailing-this-boat central bankers of the world with their legions of yassah data-crunching technocrats to maintain the welfare of us all.

And we will never go back.

Because money itself is, and always has been, truth be told, worthless, being nothing more than klinky coins that can get you a wad of chewing gum, or paper bills that can get you a sugar-high from a vending machine, or electrons that can get you a charged-up night on the town, or a day in the sun, a week at Disney if you’re lucky, and a health-insured, social-security certified lifetime in this knave new world.

The “Capitalism” of Adam Smith and John Stuart Mill and Jacob Marley and JP Morgan and even Warren Buffet has . . . gone the way of the buffalo.

Now it’s just benevolent electrons whirling around the world taking care of everybody.

And when you finally see the writing on the wall, Dave, look at those deficits and . . . read ‘em and weep. Nobody cares about deficits any more.

The central bankers of the world will never have to face the music of fiscal responsibility that keeps ringing in your ears.

We’re never going back to the old balancing acts. Where we’re headed is. . . everybody gets a meal-ticket as long as all’s quiet on the Western front and the red sun still rises in the east. Welcome to the knave new world.

Glass half-Full

Could be a problem

March 1, 2019

Our nation slides toward oblivion in unredeemable debt.

But who cares? It’s only money.

The national debt will never be repaid. We all know it, but nobody talks about it because we’re lost and we’ve never been here before.

We’ve never been at a juncture in history where money doesn’t matter.

In ages past, money mattered, but it doesn’t any more.

If you’re one of the inequality lackeys you’ve got a meal-ticket on a card, or so I’m told.

If you’re one of the equality beneficiaries you’ve got an expense account on a chip in your billfold.

The real movers and shakers are all just electrons streaming around in netspace, racking up virtual debits and credits in a webbish world that strains to retain some ideal standard that hasn’t really existed since grampa died and gramma went to the nursing home.

We pretend that the national debt matters while our brave new worldview slips into blahblah debit card oblivia, along a slow slide of credita magnifica.

But we’re in a long, sluggish slide.

The leftish cadres analyze and strategize to death our slow slog into postcapitalist egality mediocrity.

Meanwhile back at the suburban ranch conservatives dream of pie-in-the-sky return to days gone by in which every man or woman set a course toward their own comfort and prosperity. Good luck with that.

All along the watchtower, our planet bleeds, while civilization recedes.

Our manifest destiny bleeds out as welfare mediocrity. We’re all on welfare, just haven’t admitted it yet.  We’re all leaning on the largesse of a depleting State. When someone trips the alarm we’ll be racing to the exits.

Common sense poses now as tweets, while common decency slowly but surely retreats.

Maybe it’s always been this way, but never before on such electronified magnitude as we have now.

Digiboard

BroknColm

What began in human history as sword-swinging  contention stealthily slashes through our sedated society as a hi-tek tirade of weaponized malcontent.

The imminent ideology showdown will not likely roll in as some entertaining video event. Rather, it may be a bloody mess, a severe letdown, or, as we used to say in the old country, a pain in the ass.

Might be a good time to get saved.

Turn or burn.   Travelers’ Rest.

Smoke

This is for the birds

January 25, 2019

I thought I’d take a gander

at our nation’s slow meander

into polarized politics’ clown’d identities,

as chronic deficits  drain our amenities.

Meanwhile back at the ranch

not much chance in extending an olive branch

in  the present  state of our union,

cuz our leaders share no communion.

They find it advantageous to split  into camps

which somehow blows out our Liberty lamps.

So obsessed with the clown scenario showdown,

congress anoints the annual guvmint shutdown,

until  the farcical politics runs its course

while our nation’s deficit’s on a runaway horse.

Someday no credibility will be left in the US dollar

as Fed and Treasury in red ink they waller.

Someday dollars will be valued as turds,

cuz their politicking’s all for the birds.

ArguBrds

Glass half-Full

Et tu, Brussels?

October 23, 2018

Of course everybody who goes to Rome brings home mucho pictures. People travel there from all over the world to tour the originating sites of the ancient Empire; then they take a little chunk of early European history home, in the form of photographs.

When we were there, yes, we certainly did do the obligatory tourist ritual of snapping photos of the so-called Imperial City. You’ve probably seen classic images of the Roman ruins, which commemorate the Empire period of two thousand years ago.

But I was most fascinated with a relatively new structure there, Il Vittoriano.

Designed in 1885, inaugurated in 1911, and completed in 1925, this incredible monument makes an absolutely grandiose visual impression when you first catch sight of it.

VitorioB

You can see from this grand edifice that the Italians have never forsaken their proudly imperial self-image.

This morning, however, a Roman venue of a grittier sort—the Circus Maximus— was brought to my attention. In his Seeking Alpha post,

    https://seekingalpha.com/article/4213358-now-circus-maximus?isDirectRoadblock=false

Mark J. Grant used that  ancient racetrack as a metaphor for the  fiscal contest that is now heating up over in Europe.

Here’s what Mark wrote about the presently escalating Continental showdown:

“The new “Circus Maximus” will include all of the European Union and their population of 512 million people. Sit back and enjoy the grand spectacle as Italy has now presented its budget and the European Commission has sent it back. Rome then reacted to Brussels and stood steadfast on the banks of the Tiber and now the overmasters in Brussels and Berlin will hand down judgment, and likely some form of bureaucratic justice, that was not fashioned in Italy, but which Italy is expected to obey.”

The original Circus Maximus, however is just a dirt racetrack.

If you’re a boomer geezer like me, you may remember, from a classic race scene in the 1959 MGM movie, Ben Hur, Charlton Heston heroically outmaneuvering a less-than-honorable competing charioteer, to win the great chariot race.

  BenHur

That scene may or may not have taken place in the Circus Maximus of olden times.

The real Circus Maximus, where those famous chariot races usually took place, wasn’t conducted in the Colosseum. The actual site was really a huge dirt track, located near the Tiber River, beneath Palatine Hill, where Roman emperors and their hobnobbing hoodoo entourages could view the spectacle from an elevated, privileged position. Here’s what the real Circus Maximus looks like now:

CircMax1

Seeking Alpha blogger Mark J. Grant speculates figuratively on how the present European budgetary shootout at the Circus corral may turn out:

“The European Commission will likely wield the big stick. This is initiating its so-called ‘Excessive Deficit Procedure.’ This process has never been used before and will likely be tortuous for both Italy and the European Union. Fines have never been applied to any country, with previous breaches by France and Germany overlooked, and yet, there is always a first time.”

If Mark J Grant’s racetrack metaphor is indeed indicative of the present European Contest, we’ll see in the days ahead whether Italy’s impudent leaders can prevail in their fiscal rebellion, or whether they will go down with classic mutterings of “. . . et tu, Brussels?”

Smoke