Note: The Monday Taki post is up in the usual place. It is a different take on the post here today. Sunday Thoughts is up behind the green door for those who are in need of audio stimulation. There is a post on the war as well.
A half century ago, President Richard Nixon closed the gold window. American citizens had been prohibited from owning gold since the early 1930s, but foreign governments could exchange their extra dollars for gold. France tried to make a run on the US gold supply so the American government was forced to break the final link between the dollar and gold, thus ending the gold standard. This set off a chain of events that eventually led to what has been known as the petro-dollar.
Nixon was forced to break the gold peg because it was a fiction. In theory, the amount of dollars in circulation reflected the amount of gold held by the United States, but in reality, the American government had been printing as much money as they thought they needed. The reason the French were racing to redeem their dollars for gold was that they knew the peg was a lie. Once that lie was fully understood, a run on the dollar and global monetary collapse was possible.
It is a good lesson about the reality of the gold standard. It was an example of the old adage that if you need a gold standard to control a corrupt government, that government is corrupt enough to find a way around it. Much of the good living of the post-war years was due to expansionary monetary policy. The cost of that was paid in the 1970’s with spasm of inflation and finally a recession in the early 1980’s that supposedly put monetary policy back in order.
The thing is the money printing after the war was not a problem because those extra dollars could find a home in the expanding American economy and most especially in the rebuilding of Europe. The dollar was the world reserve currency so everyone in the world was willing to take dollars for payment. Europe was in rubble and needed rebuilding, so the demand for dollars seemed endless. As a result, the United States supplied as many dollars as was needed.
The monetary crisis on the 1970’s was due in large part to the fact that Europe had recovered and no longer needed a flood of dollars. The trouble was the American economy was dependent on the expansion of the money supply. The subsequent negotiations that ended with the petro-dollar and the Louvre Accords was supposed to solve this problem. Instead, it merely shifted the target for extra dollars to low labor cost areas like Asia and South America.
That has been the story of the last thirty years. American manufacturing, technology and services have been shifted to low cost areas. The extra dollars followed them in the form of investment, thus keeping inflation in the United States low. The dollars not soaked up in these countries came back in the form of investments in treasuries, equities and real estate. The system let the government expand and asset values to mushroom, without creating retail inflation.
Like the 1970’s, the place for the extra dollars is drying up. That means they are flowing back in the form of inflation. China is no longer the cheap labor economy desperate for investments, so they are not soaking up extra dollars. In fact, China is a maturing economy determined to shift from exports to domestic consumption. It is also not willing to accept inflation from the United States and Europe. The result is too much money in the West creating an inflation spiral.
It is not the only reason for inflation. Stimulus policies aimed at sustaining the standard of living against economic reality are a big driver. The supply chain crisis that is the result of decades of outsourcing is another driver. Then you have the berserk response to the crisis in Ukraine, which is creating havoc in fuel and energy markets. In a complex system like the global economy, there are always many contributing factors to the things we see in the marketplace.
One way to look at the current economic crisis is as a consequence of the Second World War and the subsequent Cold War. The half century long state of war in the United States and the West resulted in an economic system designed to wage global war without operating a war economy. When the war ended, there was no great demobilization and normalization. The cost was seen as too high, so American leaders found what looked like a cheap way to avoid it.
Unlike the 1970’s, the short term solution for the present inflation is not a contraction of the money supply. The Federal Reserve is carrying trillions of assets on its balance sheet which it has to unload. It will now be selling those into a rapidly declining market, as asset prices have been artificially sustained with the combination of free credit and the flows of extra dollars into assets. The Fed could easily set off a collapse in asset values and a global credit crisis if it is not cautious.
The biggest problem facing the country is the lack of competence in the decision making areas of the ruling class. The economic side is dominated by monetarists, who think an economy is just the sum of it money. The political class is full of carny weirdos selected for their entertainment value. Of course, the senior generation has been conditioned to seek good times, rather than make sacrifices. America lacks the human capital to tackle the problems we face.
The situation facing America is not unlike that which faced the Russians after the collapse of the Soviet Union. The cost of terrible governance over seventy years came home all at once and they lacked the political leaders to manage it. The Russians not only faced an economic catastrophe, but a political one as well. They went through a decade of chaos followed by a decade of slow recovery. That is what most likely awaits the United States and its European dependents.
If you like my work and wish to kick in a few bucks, you can buy me a beer. You can sign up for a SubscribeStar subscription and get some extra content. You can donate via PayPal. My crypto addresses are here for those who prefer that option. You can send gold bars to: Z Media LLC P.O. Box 432 Cockeysville, MD 21030-0432. Thank you for your support!
Promotions: We have a new addition to the list. Havamal Soap Works is the maker of natural, handmade soap and bath products. If you are looking to reduce the volume of man-made chemicals in your life, all-natural personal products are a good start. If you use this link you get 15% off of your purchase.
The good folks at Alaska Chaga are offering a ten percent discount to readers of this site. You just click on the this link and they take care of the rest. About a year ago they sent me some of their stuff. Up until that point, I had never heard of chaga, but I gave a try and it is very good. It is a tea, but it has a mild flavor. It’s autumn here in Lagos, so it is my daily beverage now.
Minter & Richter Designs makes high-quality, hand-made by one guy in Boston, titanium wedding rings for men and women and they are now offering readers a fifteen percent discount on purchases if you use this link. If you are headed to Boston, they are also offering my readers 20% off their 5-star rated Airbnb. Just email them directly to book at
sa***@mi*********************.com
.
This article is conflating money with currency. Money has real value, as in bartering. Eggs, clothes, tools, skilled labor, precious gems, precious metals, etc. are money and have real value. Currency is fiat paper notes issued by Central Banks and Governments as a replacement for money. Fiat because there is no money backing up the currency. Non fiat currency at least has money backing it up, like precious metals, gems or resources. Real assets. This is an important distinction to make as we enter at best a major recession, at worst a Greater Depression leading to a Great Reset with… Read more »
[…] Read the Whole Article […]
this is far from the 1970s = the US us 30 trillion in debt (that we know of)
THEY SHIPPED OUR JOBS AND OPENED OUR BORDERS TO 10S OF MILLIONS OF INVADERS!!
Blame all politicians, media and corporations for demise of the US..
[…] Read the Whole Article […]
This is the inevitable end of Progressivism. The worst part of this is the malinvestment created by ever lower, “new normal”, interest rates that pushed everyone farther out on the risk curve. The Federal Government and nearly every municipal government is broke. It is bad enough that the pensions aren’t sufficiently funded to pay the pensioners. It is that what funds are there bid up risk assets when less risky assets no longer paid traditionally steady yields. The stock market and private equity have bid up prices on businesses that can’t generate the cash flows to justify the prices paid… Read more »
look on the bright side, none of the retired gov people deserve the pensions they *won’t* be getting.
None of this is from stupidity. The destruction of the existing order was planned out , long ago. They like to reset, kill people, bankrupt and starve the rest. Nothin new under the sun.
All this was planned. Really. Sure taking their time doing it. Not to mention it was arguably easier to wipe the slate clean in the past; just initiate a nuke war.
Nuclear war would be messy. Dangerous for the elites. This way they will be able to hang out in their all-white gated communities with tons of armed security while the rest of us starve and kill each other for scraps.
Few quibbles with today’s post. You note many things, including that the Fed has trillions of assets on its balance sheet. I think you’re wrong, however, when you say “…which it has to unload.” I admit I don’t know the details, but the Fed has very wide discretion to buy and sell those assets. To the best of my knowledge, it is under no obligation of duration or quantity it may amass. It may be theoretically restricted from buying certain assets, but some observers claim they have back-door ways to do so if the want. Overall your essay seems correct.… Read more »
Russia is certainly not an economy on the scale of the US or China, but I believe that their economy has been underrated by the West and international (Western-controlled) agencies for a long time.
Just looking at how badly the US and EU sanctions recently applied to Russia have backfired, I think that, in realpolitk terms, there’s an argument to be made that Russia is a top 10, possibly top 5 world economy.
You don’t think the Fed isn’t already cashing out yet? Feds are pulling money out of the Wall Street and depressing the market and big money has already responded by dropping out, opting to invest in the commodity markets. That’s why fuel prices are increasing. Expect this to continue until late August. At which point, fuel prices will reverse and speculators will be back in the stock market. That will give them two months of recovery until elections. All part of the plan.
“The Monday Taki post is up behind the green door.”
Mistake surely?
“The situation facing America is not unlike that which faced the Russians after the collapse of the Soviet Union… The Russians not only faced an economic catastrophe, but a political one as well.”
Life expectancy was destroyed by the collapse:
Alcohol consumption skyrocketed:
US life expectancy is also stagnating or even decreasing. Drug related deaths have multiplied over the decades. And the US hasn’t even collapsed yet.
I’m doing my part to drive up the alcohol consumption.
But the bottle down and stop being a parasite lol
Pick up something heavy, do this repeatedly.
Of course, you are correct.
Why not both lift and drink?
The tiny hats don’t have big biceps, not sure why building up mine will change anything
There’s nothing more “right wing” than being in top tier shape.
Nothing. If you can’t take care of yourself, you can’t take care of anyone.
That is just Z’s playful optimism, we are no more trouble than the soviet could dream of. The young of the US have been educated to think the destruction of their culture and extinction of their people is the highest good . that exceeds even soviet level of indoctrination .
Yes. Many of the White young, especially women, have been working hard to lower their standard of living: climate change, Covid, Ukraine. It is seen as a moral imperative. On the other hand, they complain that they have a hard time buying homes and getting good jobs. Lowering your standard of living sounds more fun than it is
The Fed has a Sophie’s choice to make over the next year. Option A, they can raise rates and temper inflation, (meaning going back to stealing 2-3% from us year after year instead of 10+%) or Option B, they can keep doing what they’ve been doing, keep the insolvent government liquid and thus functioning without a 50% budget cut. Should they choose the former, the government will need to drastically curtail spending across the board, and shrink to levels not seen in decades, while also causing a brutal recession out of the 1930’s, only without half the population on farms… Read more »
Option C is then starting a war with Russia, and maybe China, in the hopes of robbing them blind in order to keep the decadence going and get them back in line with globohomo.
That was the apparent original Option C but something changed dramatically that caused the Empire to back off. Maybe Xi and Putin would not commit to refraining from turning Manhattan and New Zealand into glass?
I think JR has it about right but there is a lot of infighting starting to break out among the Clouds, so it is not off the table that the United States will default if the faction in that camp prevails over those who want demand destruction. I agree the latter is more likely but it is not a given.
Nah, they began to understand that the dirts were on to them and wouldn’t be the jannisaries, again. Hell No, we won’t go. Jew.
Don’t forget the third front against Iran and a fourth front prosecuting CW2 against the deplorables in the name of the Homeland.
I wonder where they will get all the bodies they need to prosecute all those conflicts?
They will be unable to keep the Imperial City dindus in check when the food and fuel shortages begin…but, tomorrow the world!
Mark Levin and Ben Shapiro: Die for Israel you stupid goyem!
Fat chance..they know the US would lose a conventional war, and nukes are suicide..
We are very good at observation, analysis, and prognostication leading to doom & gloom prophesies, but piss poor at devising practical solutions other than bend over and smile. Whining is not a solution to anything. Now is the time to roll up your sleeves and get to work. Every normal (read sane) family is already belt-tightening (that’s an obvious reaction). But how many of us are eating better (and less), losing those extra pounds, getting fitter, conducting neighborhood reconnaissance (who can you trust), or have an escape plan if you live in a big city? November is a long way… Read more »
I don’t know what moron would downvote this. Though I am an absolute pessimist (there is nothing on the macro level for us to do), anyone who disagrees about personal preparedness for whatever insanity is coming is your typical keyboard warrior.
I have a couple of feds that monitor my posts. They can be a little touchy sometimes. Perhaps common sense will win the day eventually.
“They went through a decade of chaos followed by a decade of slow recovery. That is what most likely awaits the United States and its European dependents.” If all it takes is 20 years, we will be lucky. I know that the 2nd Amendment has been under attack for more than 50 years. There is some truth to the statement that our leaders want to ban the 2nd Amendment because they are doing something they would be shot for. You see lots of Clown World politicians retiring because they see what’s coming and don’t want to be on the side… Read more »
I realize the ancient Hebrews did it differently (every 75 years?). But a runaway or hyperinflation reduces the value of money — and any debt payable in it — worth zero, or very close. This is a de-facto jubilee. Problem: how do you have any trade, much less collect taxes, when the money unit can’t be trusted? Having one’s debts erased through this process sounds wonderful if one is a debtor, and governments are by far the deepest in debt. But it kind of sucks if you were a present or future creditor.
Every 49th year. In answer to your last two sentences: Governments should never be a debtor (the borrower is the servant of the lender) and no one should be a usurer. The argument that debt based financing is the only way to quickly obtain the things one needs is a deception. There are historical precedents whereby people with a skill could finance a joint venture. They would need some startup capital. Say a boat captain wanted to buy a boat but couldn’t afford it. He could afford 10%. He could present his proposal to a bank. If his history was… Read more »
Yeah, and leaving the fields fallow every so often. These Jews really like to pick and choose. Maybe they’re not really “Jews” after all. Either way, a den of vipers.
I was told by someone well-versed in MDMA that all we had to do was MMT.
Being a bear of very little brain, these acronomicons confused me.
But it sounded like MMT is the good money printing which, being good, avoids the problems of the bad money printing.
I did a dive into MMT the other night to try and understand it, but to anyone with a logical brain, it seems suicidal and in total ignorance of historical precedence. But as Thomas Sowell has remarked, it’s something so stupid that only a Harvard man can come up with it.
Not that they aren’t that stupid, but MMT was a pretext to keep the free money flowing.
MMT suffers the same problem as Keynesianism — you have to run a political policy that will get you tossed out of office. Keynes said government has to cut spending in the good times. Never going to happen. MMT says you have to set tax policy based on where you are seeing inflation, targeting those groups who are buying those goods. That is, if you see rent increasing, tax the people who rent. If fuel is increasing, tax the people who buy fuel. Absolutely the worst thing to do is cancel debt — that frees up money to drive price… Read more »
MMT is essentially the economists’ version of those Looney Tunes clips where Wile E. Coyote chases the Roadrunner off the thousand foot tall cliff into mid-air.
We all know how those end.
Except the little thud and small cloud of dust Wile E. Coyote made when he hit bottom will be more like an A-bomb when MMT goes splat.
MMT is high octane money because it bypasses the Fed. Just double the inflation for each dollar of MMT they create. Nothing would be trapped in inert bank reserves. There’s nothing worse than MMT and it would destroy this country in a heartbeat (after reading the articles recently on latest degeneracy, perhaps a bonus?).
I read a little while back (can’t remember where) that Russia is toying with the notion of MMT. Now I hear China is looking to move to a consumer economy.
What is it about money? Can people not learn even as the US is circling the drain in front of them?
If this thing ends up in neo-feudalism like people say, does that mean progress is taking it back 1000 years? Who knows, I might like it, but the spectacle is something to behold!
De Gaulle was one of the greatest statemen of the twentieth. He started the war with nothing: renounced by the French and British establishment alike he managed by tenacity, duplicity and a great deal of that Gallic histrionics which he knew drove the British nuts, to have France enjoying equal victor status to Britain. As the Cold War fraught lines stabilized and it transpired that the joint US and Soviet battle plan was to fight a nuclear war on European soil, he build a sovereign nuclear strike force, making it clear that half of the missiles were aimed at America.… Read more »
That was meant for Marty.
Similarly, France left NATO under De Gaulle for similar reasons. As such, they’re one of the few Western European nations still talking rationally about Ukraine and Russia.
Yes. And they could afford to stay out of Gulf War II.
Freedom fries, anyone?
I almost forgot: after winning the Algeria war, he let them have their independence. He recognized that keeping Algeria would mean letting hordes of Arab into France, since French colonial subjects were French citizens, and that Algeria itself was a liability.
Random fact: when under French rule, Algeria was the number one exporter of phosphate in the world. Phosphate, however is corrosive, so all the machinery has to be recapitalized every five years. Five years after the French went home, Algeria no longer produced phosphate.
Felix, that’s a good one—phosphate. One could point to practically every colonized African crap hole for the similar results. Few—if any—retained their standard of living after their White “overlords” left.
Phosphates? Hmmm…. Yes, that reminds me. Here’s an article on a similar boom & bust story [Edit: well no there’s not; it’s flagged as spam. Fine, just google Nauru if you want.] Although not a former French property, Nauru’s story is sadly typical of post-colonial life. But atypical in an important way: The tiny nation had a renewable resource that, if it had been intelligently husbanded, could have easily supported the citizens in comfort indefinitely. In lieu of the fable of the goose that laid golden eggs, Nauru’s wealth was not quite as precious nor aesthetically pleasing as solid gold,… Read more »
Morrocco still does, #1 export, # 2 is their educated young people. Kinda like the philipines.. Don’t know much about economics, stock markets, banking etc.. Frankly I don’t think the bastards in charge do either. Dosen’t seem to matter what schemes & scams they are pulling it all goes to shit sooner or later. My oldest son has an MBA & likes to play the markets. He was telling his brother & me about his latest roller coaster boondoggle & my younger son told him that there is a secret “Goy alert” algorithm shlomo sees what you’re doing and waits… Read more »
Spingehra-
I believe your point about Moroccan phosphate production is why the US eventually recognized their claim to the Western Sahara disputed region, which also contains a great deal of phosphate.
Algeria produces gas and some oil, but nowhere near the scale of Saudi or Russia. They are a country that substitutes could be found for.
I spent a year in casablanca, worked with the Moroccan army training some of their NCOs in maintainance, repair & overhaul of some of their stuff. Their history with America goes back a long way. They were the first country to recognize America as its own separate nation. In Casablanca there is JFK & FDR boulevards. Other american references such as Texas & California neighborhoods When you land in Casa & head to passport control you walk down a long hallway that is lined with photos of the Kennedy family. The king and Jack Kennedy were personal friends & actually… Read more »
You might wish to consult demographics statistics for France.About 40% of their current population traces ancestry to EARLY 20th century immigration. Nearly a million Algerians alone emigrated after independence (early 60s). You’ll note that most of that was long, long before the silly Progressive policies we have today, although the liberal ideals of even nearly a century ago were not very well-thought-out, judging by results.
This seems to be a curse of any fading colonial power: the barbarians from the former colonies often conquer the Colonial power. Happened to ancient Rome, France, UK, now the USA…
Nearly a million Algerians alone emigrated after independence (early 60s).
Yes, the Harkis – Algerians who’d fought on the side of France. I didn’t say de Gaulle’s plan worked, but he did what he could to prevent the deluge.
Similar to America after Vietnam defeat. We took in about 1.5M if I recall. Mostly among, but other officials as well.
True, de Gaulle developed independent nuclear and conventional forces, but to what purpose? The post-NATO forces remained in the Tubingen-Karlsruhe area, where their “Anciens” had been billeted since 1945.The Army was large but not particularly well-equipped for the heavy armored combat envisaged for Central Europe–should the Soviets crash through the legendary Fulda Gap, en route to the Rhine. The existence of a handful of IRBMs, around 20 Mirage IVs of very limited range (thus the purchase of KC-135s), a few IRBM-equipped submarines, and some Pluton tac nukes (for the Armee’ de Terre) DID please the career officer corps. And maintaining… Read more »
I get a kick out of the Great Reset thing. I think it’s just tptb trying to convince themselves and everybody else they’re still in control. The truth imo is it’s going to happen because it has to happen, not because anybody is successfully manipulating society. Whoever is trying is only riding the tiger. There’s a lot of angst about it among the conspiracy-minded. They rightfully think it’s a malevolent plan to destroy us dirts, but I think conspiracism gives too much credit these days. There was a time when tptb could pull these things off, but their success didn’t… Read more »
The Great Reset strikes me as a group believing they are setting out a controlled demolition but are instead lighting a forest fire. It may not go as planned.
Bingo. I have the same feeling about it.
Great, succinct way to put it.
I’m just not seeing how they run their global digital panopticon on renewables.
I just replied on another blog on that literal subject. I pointed out that gigantic fires especially in the West/Southwest are due to decades of poor forest management practice. Because periodic smaller fires (natural or controlled burns) might inconvenience certain connected people, the net result is that brush and other undergrowth accumulates over many decades, until eventually the weather’s been tinder-dry, and any motorist’s flicked cigarette butt or lightning strike will do the trick. It’s a textbook example of the government preventing smaller problems (relatively small fires, that have the natural effect of clearing out the kindling), but it’s “paid… Read more »
“Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth. Lenin was certainly right. There is no subtler, no surer means of… Read more »
Debasing the currency has created a generation of renters and debt spenders, and then they have the gall to explain we should all live in cramped apartments for Mother Earth while Blackrock makes a killing in buying up available housing. It’s more or less becoming a state of neo-feudalism, sort of like working at a factory town where the company owns everything and you can only spend money at the company story. The difference here is the homes are lousier, the store items less durable, and with even less freedom of speech and movement. If this continues, the boomers will… Read more »
I can already hear what they are going to say “If you don’t like the rules of the new mega landlords then buy your own $2 million 3 bedroom 2 bath 1200 square foot house. It is free enterprise.”
Fortunes will be made and lost over the next few years. Some of the losers will be: 1). Anyone in ESG assets 2) Anyone with a 60/40 Portfolio on Autopilot since 1991. 3) Anyone with an Annuity 4) Anyone who just bough a house in an over-inflated area. 5) Anyone with a job dependent on government largess. 6) Anyone with a job dependent on consumer discretionary spending. 7) Anyone saving in cash. My prediction, we’ll hit rock bottom when some megachurch attending hick who listened to Dave Ramsey for years finds his “emergency fund” is useless. The house he was… Read more »
When everyone lost their shirts in the boom of the 1920s and subsequent bust, everyday people learned the stock market is not for everyday people. Even while these people were still alive, everyone got lured back into the market. Now it is just taken for granted that stocks always go up. Now we have all these Boomers holding onto stock “wealth” and real estate wealth they think is going to fund their retirement. Nobody asks what will happen over the course of their retirement as they are trying to sell these assets to fund their retirements. Can Millennials and Gen-X… Read more »
Also, keep in mind, that once upon a time, people expected something called “dividends” to own stocks. “You will pay me X to own your little share.’ What a novel concept.
There is the apocryphal story circa October 1929 about papa Joe Kennedy getting a stock tip from his shoeshine boy, and Joe immediately paying the kid before he even finished the first shoe, and running back to his office to sell everything.
I agree with all of that except for the “fortunes will be made” part, at least in the sense of the immediate. In the past that would be exactly what would happen, but the assets that will be snappled up such as real estate will have to be held far longer than any point since the early Thirties, and it might even be worse than then. We can also expect more and more government aggression on the seizure and redistribution fronts and the normal passes given will be fewer and further between. That’s where the real kinetic action will be.… Read more »
Fortunes will be made by people who own real assets such as farmland and commodities. Anyone who produces tangible goods and services.
I “liked” that comment but it is more “livings will be made” than “fortunes will be made.” As Falcone wrote, Southhampton beach compounds are about to become the abandoned Southern mansions of the post-Antebellum era (which is a great line).
Ooooossshh. I find Dave Ramsey’s smugness a bit hard to endure at times but I thought he was giving not-so-smart people good advice. Your criticism of him stings me but I am intrigued.
You list all the people who are going to lose and it seems to include most people who tried to live responsibly and plan for the future.
Who, if anyone, is going to prosper in the future that you foresee?
(I’m grateful for the guidance of you guys who are more well-versed in finance and economics than me.)
Dave Ramsey is giving great advice if you live in 1990. Like so many other boomers he’s crystalized in amber from the late 80’s. Broad, sweeping underlying changes and cycles have eluded him. I also don’t like his every man a landlord mindset. Not everyone is cut out to be a landlord, especially in a country about to go through sweeping “tenants rights” laws. Most Americans are entitled, paycheck to paycheck scum that you would never want to rent to. He glosses over the costs of a new door because the tenant carved a phone number into it, the cat… Read more »
Anyone investing in rental property after the two-year moratorium, which likely will reappear very soon, probably doesn’t need to own a checking account.
If you could hijack Dave Ramsey’s show for an hour, John Galt style, what advice would you give to his listeners?
That’s a great question. I would say. Listen. First, I know it will upset a lot of you, but I find it inappropriate to use bible quotes out of context when giving investment advice. I would say, look, if you’re over 60 you’ll never listen to me anyway so please turn off your radio now. You will starve to death. For the rest of you, you have no business tithing unless you have assets and are already debt free. Tithe yourself first. God doesn’t need the money. Second, understand that the market didn’t emerge from a cocoon in 1985. It… Read more »
Say what you will, one aspect of Ramsey advice is dead on—stay out of debt, or basically spend less than you make. As to predicting the future wrt investments, there are other voices.
With the exception of renting out a former home for about a year, I’ve never been (nor would I ever wish) to be a landlord. That said, there is an upside. Much of Dad’s wealth (and time) is laid to his being the owner/manager of several homes. It gave him something to do the last twenty years of his life. Not everybody’s idea of good use of time would be to drive two hours solely to inspect one or two properties, do minimal repairs, and return home. However, he was a tax wizard and know how to deduct everything.
” I find Dave Ramsey’s smugness a bit hard to endure at times but I thought he was giving not-so-smart people good advice. ” Question is, should “not so smart” people be invested in the stock market and if so, should they be managing their accounts? I have to wonder what Vanguard thinks of Ramsey and if they help promote him. Staying out of consumer debt is great advice. Living within your means is also great advice. But thinking you are going to get rich buying mutual funds, maybe not so much. But you can’t really blame people either. Despite… Read more »
That’s true, we have a gun to our heads to get out of cash, by design and since 1970. I would recommend not buying any stock that has a PE ratio of 50 however.
Ramsey’s basic philosophy is that debt is a prison, so pay off all your debts. He also doesn’t tell people to blindly invest. Don’t throw out the baby with the bath water. A LOT of people paid off their homes and cars realizing they’d be better off not owing anyone anything. That’s real freedom. Some of your points are valid. But we should be encouraging really everyone to get out of debt and abandon the consumerist society. We can’t save everyone, but we can save a lot of people. The freest people you know have no consumer debt, no mortgage… Read more »
Back in my libertarian days, I remember reading about Charles de Gaulle from a Rothbard article. “And last but not least, de Gaulle’s admirable political independence has been matched by a healthy economic independence, best expressed by his firm refusal, in the face of maximum political pressure by the United State, to go along with Anglo-American policies of easy money and inflation. Guided by the libertarian economist and monetary expert Jacques Ruef , de Gaulle has fought the good fight, almost alone, for hard money and for a return to a genuine gold standard at a realistically valued rate (e.g.,… Read more »
I can’t understand why everyone is so negative on the prospects for this awesome (former) country. I just saw over on Sailer’s blog some Nigerian bint was accepted to every Ivy League dump. You just have to unshakable faith that creatures like her are the future and it’s gonna be glorious. She and her ilk are going to save the world – you just watch – LOL.
The Ivy Leagues have or more or less explicit “Whites need not apply” acceptance plan. A lot of the push to remove consistent grading in High School is probably to give the Ivies cover to enroll whoever they want. It’s a pickle though, since the most qualified are all Asians, and while Asians would make better elites in terms of the trains running on time, they aren’t exactly friends of white people. These institutions have reached the cargo-cult phase ,where they truly believe that the degree confers merit on the recipient as opposed to the degree expressing the merit in… Read more »
The “consistent” grading in high school is already a total fiction. In the big cities, you can “graduate” high school having never taken anything more advanced than algebra 1 or having never taken a chemistry class or anything else you are supposed to learn in high school and still graduate with straight As. There are endless schemes to get around any academic standards. “Education” has turned into a cargo cult.
More and more convinced high school has zero value for 50% of the country. Half the students of most schools should have full-time apprenticeships starting at 15-16. Another 30% should finish high school and enter a high-skills trade. The other 20%, maybe, will find value in 4-year college.
Do this, and you would see High School morph to what it was 100 years ago, about as much rigor as a mid-tier University.
There was a time when most kids left school at 14, either to go into apprenticeships or into work to help support the family. (Friendly reminder that child labor in the US peaked in 1918.) You had to pass a test to go on to high school.
Ivan Illich was extremely critical of the western educational system and advocated its entire abandonment. He said: “School divides life into two segments, which are increasingly of comparable length. As much as anything else, schooling implies custodial care for persons who are declared undesirable elsewhere by the simple fact that a school has been built to serve them.” And: “The American university has become the final stage of the most all encompassing initiation rite the world has ever known. No society in history has been able to survive without ritual or myth, but ours is the first which has needed… Read more »
I’m reminded of the black college football player at North Carolina (I think it was) who grew angry at the idea of having to go to class. He said, “I didn’t come here to read books! I came here to play football!”
When I graduated HS and then later on went to University, I was surprised to see that my first semester math book at my University was the exact same one as I used in my last year of HS. As I look back, I now see just how advanced but typical was my HS coursework (at that time) in a White HS where 90% went on to college. How we’ve declined in those 50 years since—thanks to the civil rights era and subsequent minority population expansion.
Compsci: In addition to the civil rights era and minority population expansion, add modern feminism. Very few women are intellectually fit or psychologically suited for college, not to mention the socially deleterious subsequent delay of marriage and childbearing. For every empty-headed young girl who headed off to college to become a woke, entitled sl*t with a degree in communications, a young man was denied the opportunity of an education and career and supportive wife and family.
I believe United Airlines has public stated that they have lost interest in hiring White male pilots. This will work fine as long as the flights are routine and the autopilot can handle most of the duties. However, when an engine is on fire with one of these new diverse crews, things could get interesting.
Nick Nolte’s Mugshot: Between the POX of the TSA and the covid mask theater and pilot vaxx heart attacks and the diverse melees that routinely occur on board, I’m frankly surprised how many idiot Whites continue to fly. Husband and I stopped years ago (I quit before he did). Employer wants to send him off for a few days to a shitlib city at the end of the summer and he reluctantly agreed, but they’ll be paying his salary plus gas, hotel, and and other expenses for the 2 days drive there and the 2 days back in addition to… Read more »
Back in 2005, I was accepted to Harvard Law. I lasted for a total of 9 days. What I discovered was three things.
1) I didn’t belong, because of #2
2) The people who did belong, academically speaking, were orders of magnitude better than me.
3) The individuals who should not have been let through the front door, had difficulty the first week with organizational paperwork. I’m not kidding. I’m guessing they didn’t know how to write a simple brief/essay, but there they were.
Is it fair to say that in the last 20 months the USD in the United States retail economy has lost at least 30% of its value?
The Family Dollar Store in now $1.25 and then there is shrinkflation.
We are double in the price of gas.
We are up at least 30 – 40% in housing/real estate.
The Russian Ruble this morning is at 56.43/USD down from 138 just 3 months ago.
Currencies back by commodities are the future.
Probably so. I’d estimate one’s time buys about 25-30% fewer things then it used to. Gas isn’t a good comp though, because 20 months ago road traffic had dropped 50+%, so the price was artificially suppressed. But yeah, purchasing power is in decline.
Best quote “The biggest problem facing the country is the lack of competence in the decision making areas of the ruling class”
Thanks Mr. Z
I thought much the same, although it’s not just incompetence, but also a lack of will.
Not sure it’s true, though, @Raymond R.
If it were pure incompetence, given 4 policy choices and choosing between them at random, they would be erring in our favor at least once in a while.
I thought vaguely that it was a lack of competency, up until a decade ago. Someone told me that it was intentionally being screwed, up. I didn’t believe it. With just a few days of diligence of searching and reading, I did see that it’s not just incompetency, it’s intentional.
The people in congress, etc, aren’t really the ruling class, they are just the smoke screen.
Pointing to the clowns while ignoring the ring leader, is a habit from which we need to disabuse the masses.
The United States is trapped. Our total debt to GDP is ~275%, with fed debt at ~125% of GDP or close to 750% of govt revenues. That level of debt can only be sustained with extremely low interest rates. But inflation is making that impossible. Now, if the inflation was temporary, we might be able to get through this period, but the inflationary pressures are structural – deglobalization and under-investment in energy causing the end of cheap oil – so inflation will be a constant threat if fed keeps interest rates too low. If you want to see our dilemma… Read more »
Driving down energy costs would be a boon to the government and everyone else, but the opposite is a boat anchor. Everything is getting way more expensive, which means way more government spending->”rinse, lather, repeat” as they say.
And then we circle back to not just the incompetence, but the raging madness of our trash elites. The rising price of energy is seen as being done in service of Gaia, therefore said trash elites think it’s a GOOD thing, in all of the short, medium and long terms.
Therefore there will be no, absolutely no, pursuit of lower energy costs by any of our trash elites. The plebes just have to go broke, that’s all.
Inflation, as a matter of definition, drives up prices by lowering the value of money. When it does this it also increases sales taxes, spending more on a taxable item means a higher sales tax receipt. Thus states, cities and other government entities are seeing booming income from that source while one of their major expenses, public employee salaries, have yet to follow suit. Too bad that will be rectified.
“That level of debt can only be sustained with extremely low interest rates. But inflation is making that impossible.” Right, @Citizen of a Silly Country. I’m hesitant to claim that the economic advisors of the 80’s did it intentionally, but the way the Fed added money to the economy, through the top, put an excess of money in the hands of the top-end investors. So they bid up the price of stocks, because that is the kinds of goods they were buying. Contrast that with now, where they shoveled freight-car loads of cash into the bottom end. What kinds of… Read more »
Yep. People don’t understand that the Fed doesn’t print money; it prints bank reserves. They are different. Bank reserves are money for banks, not people.
QE, without cranking up fiscal deficits, causes asset price inflation. QE to fund fiscal deficits causes inflation in the real world.
“Of course, the senior generation has been conditioned to seek good times, rather than make sacrifices.”
I hope you don’t think that younger cohorts have been conditioned to make sacrifices.
and this from Z’s Taki article: ” the money to do it will be eaten up by a swelling pensioner class that is not known for sacrifice. Like locusts, the baby boomers will leave nothing behind once they depart this mortal coil.” Extreme take I believe but not without some merit. Actually what are the olds doing (not just boomers) that is locust like? Spending their own money or expecting life to be what they were promised if they saved? No matter what, the younger generations will leave far less, contribute less and suffer more when these generations pass. All… Read more »
“Actually what are the olds doing (not just boomers) that is locust like? Spending their own money or expecting life to be what they were promised if they saved?”
Actually, where is the detriment or character flaw in my ‘Me First, Me First, Me First!’ philosophy?
Boomer in the ’90s:
“Outsourcing is great because it drives up my 401(k) so much higher!”
“You stupid discarded blue collar workers in our country need to retrain and all become web designers!”
“I have a God-given right for cheap lawn maintenance!”
I do understand that most of the Boomers couldn’t foresee the consequences of their selfishness and many would probably undo the past if they could.
A goodly number of us Boomers knew what Mr. Perot was saying about “giant sucking sounds” was quite true, and vited that way. But we were the cohort that could put 2 & 2 together, a cohort that was overwhelmed by: 1) all of the short-sighted, greedy fucks around us; 2) the shitheads on Wall Street for whom the consequences of leveraged buyouts and labor arbitrage on their “fellow Americans” (heh) meant precisely nothing so long as they were making bank; 3) the neocons and american exceptionalists. So thise of us who saw it did what we could. We wanted… Read more »
And did young Stephen sicken?
And did young Stephen die?
David Wright: “Actually what are the olds doing (not just boomers) that is locust like? Spending their own money or expecting life to be what they were promised if they saved?” Even though Social Security was a Ponzi scheme from the get-go, even FDR only promised it would ensure the old would have a roof over their head and enough to eat in their twilight years. For the past 30+ years Silents and Boomers (and my parents were Silents and I’m a Boomer) have tightly clutched the fantasy that their admittedly inflated SS contributions authorized them to buy a holiday… Read more »
“they envision a decades-long vacation that they think they paid for, when their actual contributions…. would not cover more than a few years of the lifestyle to which they believe they’re entitled.”
God yes. We can’t afford to replace all the hips and knees of all the Boomers. Let’s not even mention Viagra… They are so shamefully selfish.
If Joe Biden wanted to win again in a landslide, all that he would have to do was propose a new entitlement that all Boomers are entitled to a 3 month tour of some exotic country, all expenses paid.
He’d get a majority of the GOP Boomer vote as well.
Why is it that everyone and his brother is now on the internet screaming like a canary-in-the-coal-mine about the impending collapse of our society and economy with ever greater detail and erudition, but the only solution that may be uttered in the public square is . . . VOTE HARDER PEOPLE!!! Why can’t we openly talk about the the ancient tried-and-true solutions that historically have been the most successful means of restoring real accountability to those most responsible for creating this mess in the first place? Why do we have check & balance institutions like law enforcement organizations that only… Read more »
When all you have is a hammer, then everything looks like a nail
Suffering is a hell of a motivator. You’re right, times are still too good to foment change. My sister and brother-in-law, who do work hard for what they have, spent TWO MONTHS in the Caribbean with their two year old, at the beginning of the year. I asked them what they would do if they couldn’t get back,(due to Coof nonsense). They just shrugged and said they would stay. I’m guessing they don’t realize their assets can be frozen. Then what. The reality is that at this particular time in history, the United States is still the best place on… Read more »
I’ll continue to post that the Median Individual Income in the US is still ~$36K and the Median Family Income is ~$66K. Inflation and mass immigration are destroying whatever hope for getting ahead they had.
When I report this to my acquaintances, they dismiss me as a hater!
Have you lost your optimism about American Exceptionalism?
One upside of the collapse is that it’ll really put a dent in the human capital problem. Turd worlders come here and act as a huge anchor on the economy because there’s lots of gibs and no anarchy. When that flips — no gibs, lots of anarchy — there’s no real difference between here and Guatemala, so given the basic human preference to live among our own, lots of that anchor will start heading back to Guatemala. Digging out from under the rubble is a lot easier with a mostly White population of about 250 million (which is where it… Read more »
Unfortunately, our government will protect the Guatemalans at the expense of us… Post
We will get a wall at the border as soon as these parasites start to flee this madhouse.
I’m not so sure. Most of the back-breaking work is preformed by the browns these days. Most of the whites i see are fat. A collapse will certainly be salubrious. But the exiting of the “anchor”, while aesthetically pleasing, will hurt short term. Of course, the Somalis aren’t going any where. I’m curious to see what happens when the mass famine in Africa begins.
When people can’t fill up their gas tank, or put food on the table, they’re not going to be paying cash to illegals to mow their lawns or raise their children.
It doesn’t work like this. I write from a country next to Guatemala where I have lived for more than 20 years. USA will never descend to the level of Guatemala, not even after the worst crisis and collapse. There will always be a welfare state superior to Guatemala and the security will be much better than Guatemala. Giving that most of the people we send you are the ones with less qualifications and studies, coming back here would mean a dramatic decrease in their salary. A Guatemalan woman cleaning homes in Guatemala earns only peanuts. A Guatemalan woman cleaning… Read more »
“. There will always be a welfare state superior to Guatemala and the security will be much better than Guatemala.”
The current welfare state will be impossible to maintain, and Guatemalans are about to learn their position in the hierarchy as to Negroes as soon as the gibs get thin, which will be soon. A combination of fear and patronage will keep some gibs flowing to blacks, and even those will be diminished.
I agree the false messages of hope lure people across the border, but in a digital age the pretense can be maintained only so long.
“The current welfare state will be impossible to maintain, and Guatemalans are about to learn their position in the hierarchy as to Negroes as soon as the gibs get thin, which will be soon” Even with all that, the gibs received by Guatemalans in USA will be superior to the gibs received by Guatemalans in Guatemala. It’s like the lion joke: “I don’t have to run faster than a lion, I have to run faster than you”. Let me tell you an example. In Central America, the gibs given to foreign people (for example, really poor people from poorer neighbor… Read more »
Furthermore, the idea of 1st generation sacrifice to put your offspring into a typical university-the next step from a shit government school will compound the failure of the illegals. I’m guessing that large family ethics, all in all, are better where these illegals came from than here at this time in history.
I just watched a clip of the Tranny party in DC. It was part of the pride celebration. I can’t imagine seeing this as a potential immigrant and thinking this is a country on the right course.
Immigrants will reverse course? Second look at pride parades?
These links suggest otherwise: https://tinyurl.com/2p9xp9kr https://tinyurl.com/2bm8mdrxn
You are thinking way too conventionally. You assume things will just continue on their current trajectory of endless welfare and endless free medical care for all, regardless of citizenship status. Things will get harsh and gov handouts will go away. It’s inevitable. The squats will leave of their own free will at some point. It happened in 2008 with a net return of south of the border immigrants when the economy slowed during the recession. It can happen again.
The problem wouldn’t have been solved if both Hart (b.1912) and Celler (b.1888) had been killed by lightning. The real problem began with Europe’s mass dumping of their impoverished, unskilled, and illiterate in the pre-screening days of the 19th century. How could they possibly assimilate? Give them a copy of The Federalist Papers? It was never going to happen. What happened was parallel, mutually suspicious, and sometimes hostile societies evolving in close proximity, yet still separate. And none of them ever gave SFA about the Founders.
For the immigrants, there are at least two (probably many more) categories: Those who are here primarily to work. They send most of their earnings home. This describes a large number of Latin Americans. They like the work opportunity here, but they may not intend to remain permanently, even if they could. Not every foreign nation is a cesspool: a family can live quite well in Mexico (by local standards of course) on an income a fraction of what a US family would consume. The second category of course, is those who are here for the gibs. Virtually anyone who… Read more »
At a time like this, you’d really want the Chairman of the Fed to be some gimlet-eyed math dude who doesn’t know the earth revolves around the sun because who the hell cares about things that don’t matter to the job at hand. Instead, we have Yellen talking about all the current things and raising pervert flags because it’s the month devoted to perverts.
But like someone said, God is not mocked. At least, not forever.
Treasury, of course
Other than pecking order, is there a meaningful difference?
Powell and Lagarde are lawyers. The better “gimlet-eyed math dudes” are busy making serious money on Wall Street. The Federal Reserve System employs hundreds of PhD economists, including math dudes, who apparently could not see all this inflation heating up.
The fact that two lawyers, one of whom has been found guilty of corruption, run the world money system says it all I think,
We need to bring back manufacturing to our shores but as I look around me I see guys in their 50’s still with a work ethic, below them it’s spotty, some younger guys are hard workers but there simply are not enough of them. The feminization of our culture has given us a low birth rate of competent whites. We are left with a generation of soft men. I cant see much hope in rebuilding our economy in order to reverse 30 years of outsourcing with this crew of multicultural diversity hires we are bringing into our system, let alone… Read more »
Nobody was prepared for GenX to be the guys holding everything together
I have said for a long time that the health and wellbeing of the financial elite must come into question before anything changes. When they start feeling the pinch, they will clear out the political class in a hurry. We are not there yet, but we are going in that direction.
You can sort of see outlines of this now. Fink, who ostensibly works for him, is sniping at Powell. Yellen has sniped at both but recently started with her mea culpas. Bezos is mad at all of them. Closing the economy and the resultant supply chain interruptions along with the psychotic Russia sanctions are doing something rare: trickling up to the people who actually matter on these things. The middle and working classes being devastated normally merits a shrug if not a celebration, but the Financial Class feeling the sting? That’s just wrong in their selfish minds.
Jack Dobson: Every time I read of a luxury car-jacking in LA or some Armenian in CA robbed of his high-end watch, I smile. But it’s still a very long way from these sort of material crimes to the elites genuinely fearing for their physical safety or the future of their spawn.
This is really an essay unto itself. The finance industry, for the most part, basically pays protection to keep the politicians at bay. The industry focuses on controlling the Fed. So far, the Fed has been able to bail everyone out of every catastrophe. When the final, uncontainable crisis comes and the Fed fails, we will get political reform.
It’s going to hurt at some point.
The US, Europe and Japan will face the same choice: Save the bond market via yield curve control or save your currency via higher interest rates.
They’ll all choice their bond market because losing the bond market means hard default. Losing the currency means soft default.
They think that they’ll be able to pull a Zimbabwe (who were able to export a bunch of people to SA) or Venezuela (who were able to export a bunch of people to pretty much everywhere), but they’ve no place to export their potential street rioters. Japan might be able to pull off a government collapse since any replacement Japanese government is going to be like the last one, but the Euros an Americans wouldn’t be able to pull off the same stunt. (Just to restate, not that they won’t try).
The US will try to run the game plan from the 1940s – financial repression, i.e. high inflation and low interest rates.
But, at some point, the market may not go along. If that happens, look for the Fed to impose yield curve control at some point. At that point, the dollar starts losing value.
Of course, if we ever reach that point, the Euro and Yen would have been destroyed already.
Z, they’re not that smart, speaking of the financial elite. Many have gotten there by being connected and during a period of easy money. They don’t have what it takes to make the tough decisions as to who gets to stay and who goes bye bye. These financial elites are not your grandmother’s finial elite. They are not nearly as shrewd, cold blooded, and capable. They suffer from the same problems as everyone else. And they are too deeply interwoven with the political class to make a clear break. They’re stuck in the same sinking ship. Good riddance. Their millions… Read more »
This is essentially the bottom line. Take note of all the financial elites bitching about the free money in the form of below market interest rates starting to get tighter. These types never have conducted business in a reality-based world.
As I responded to someone else, this will not be a repeat of the Great Depression wherein great fortunes were made as those with liquid assets snappled up devalued real estate and corporations. When everything is worthless, everyone is poor. Some just have better weaponry and gardening skills.
Also, “hence my vision of abandoned mansions in the hamptons to parallel the abandoned plantations when that economic model fell apart as our current one will to” is a great line and image and likely to prove the case.
“The main mark of modern governments is that we do not know who governs, de facto any more than de jure. We see the politician and not his backer; still less the backer of the backer; or, what is most important of all, the banker of the backer.”
J.R.R. Tolkien
“but as I look around me I see guys in their 50’s still with a work ethic, below them it’s spotty” Agreed but the work ethic goes along with a whole different “way of being”, individually and collectively. It means investing in hard skills individually and collectively and putting off rewards years and decades into the future. That’s gone. As Bifo Berardi pointed out, the future died around 1976. Even if as an individual you invest in your own hard skills and subsequently find employment, you could be let go because of the decision of some 20-something or 30-something MBA… Read more »
Why would anyone in their right mind want to be a blue collar employee? Management cares more about their pet goldfish than the people who work for them, regardless of what they say about the matter. Ergo, everybody wants to be a boss, one of the most basic tenets of the USA is employment and social upward mobility. A guy that’s spent a lifetime refining his craft and that of younger co-workers dies as a nobody to anyone but his immediate family. The only reason for embracing the Protestant work ethic is being able to participate in the consumer economy… Read more »
I can’t see why anyone would be a blue collar employee, but I can think of over 100,000 reasons to be a blue collar contractor. To be honest, a lot of blue collar workers haven’t realized that, since the collapse of unions, it pays to be as mercenary with employers as it pays them to be mercenary with employees.
as I look around me I see guys in their 50’s still with a work ethic, below them it’s spotty, some younger guys are hard workers but there simply are not enough of them.
The hard workers will soon be fired – they make the other guys look bad.
Perhaps, but in some organizations here, it’s the opposite. Hard workers are needed to do the real work and fill in the void left by the AA types. The problem is how to thread the needle—keep the valuable employees adequately compensated, while avoiding charges of discrimination from the worthless ones.
FROM LAWRENCE OF ARABIA-
Auda Abu Tayi: “Paper! Paper! There is no gold in Aqaba.
No gold! No great box!”
Lawrence: “Did Auda come to Aqaba for gold?”
Auda Abu Tayi: “For my pleasure as you said, but gold is
honurable, and Aurens promised gold. Aurens lied.”
This idea would never be implemented by anyone in Washington, but what if we just canceled all mortgage debt? One day, a proclamation is issued saying “you no longer have to pay your mortgage. The banks just have to eat it.” That would wipe out 11.18 trillion dollars, completely reversing inflation, and freeing the middle class from 71% of their debt burden. I know it would likely trigger a recession, but we’re facing a massive recession either way. I need someone who’s good at economics to see this.
One man’s debt is another man’s retirement asset. Just sayin’…
Exactly. Your better bet, albeit in better times, is a forgiveness of student loan debt is some form or another. What’s happening now are students leaving school with a burden equivalent to a house payment—but without the house. These people have been sold a bill of goods (BS) as to the value of a college experience which has caused higher education to expand artificially beyond all societal need, while dumping crippled “consumers” into the marketplace.
Most student debt is at the post-grad level. The people who got their BA or BS and believed (rightly or wrongly) that what they really needed was another qualification. If there’s to be a bailout, let it come from the Admitting Institutions’ endowments. When those are depleted, we can have another conversation. And if you still don’t believe there’s a scam do your preferred web search on either colleges/universities w/ lowest graduation rates.
“let it come from the admitting institutions endowments” Absolutely. If Dartmouth wants to clear the debt of it’s former students then it can do so, otherwise let them pay their debt.
And, no , hell no, to mortgage debt relief. I still owe on a mortgage so I suppose I would benefit for a brief time but it would be a social catastrophe and as much as I hate banks, we still need them and this would take them out.
Mortgage debt is secured by an actual asset: The home or piece of real estate in question.
If you want to contemplate insane debt jubilees, I would think you would be better off looking into unsecured debt (student loans, payday loans, credit cards with >20% APR, etc.), most of which preys on poor people and the young.
If it is a bustout of the whole society and we are moving from the “cooking the books” phase into the “steal the office air conditioner to sell to the scrapper” phase, why not push for getting some for our people too? I think the most hyperinflated asset is real estate – lets deflate that sucker by jubileeing all residential mortgages, and save America!
“That would wipe out 11.18 trillion dollars, completely reversing inflation”
No, @Jason Knight, it would do the opposite, give runaway inflation. The consumption-inclined populace would not immediately switch to being investment- or saving-inclined. They would instead spend every penny they previously spent on mortgage to immediate consumption goods, bidding up prices through the roof.
Indeed. The paid off home is the single largest asset the retired have to draw upon. They have that asset only because payments are a “forced” savings for most people. Even then, we’ve seen inroads on second mortgages to pull out that savings for other “important” investments like new cars, and vacations. 😉
There are only two ways to draw on that asset – sell it (then you need to pay for alternative housing) or take a loan against it (incurring interest and payments or otherwise resort to option one to pay it off). Neither of those are particularly helpful as sources for ongoing g living expenses.
Ok, lets look at the reality there. If “inflation busting” is thr goal, its hard to gey better than wiping out residential mortgages. You destroy $12 trillion in currency, while redirecting a few hundred million in payments from (inflated) financial sector into retail goods, though probably a lot more into durable goods (cars, appliances, etc). Probably no mid-term effect from shifting those cash flows from the finance sector to retail sector, as that sort of action is not a money-creating course on the scale of the finance sector. But keeping to the first order, you get like a 45:1 tradeoff… Read more »
“You destroy $12 trillion in currency, while redirecting a few hundred million in payments from (inflated) financial sector into retail goods, though probably a lot more into durable goods (cars, appliances, etc).”
It does not wipe out any currency. It simply transfers an asset from the current holder to the current debtor.
And redirecting money that used to go towards mortgage is exactly the cause of inflation in all those goods. Look at how much destruction came from just suspending rent and student loan payments!
I can’t wait to see the buying spree everyone goes on – new cars, new homes, credit cards – once you arbitrarily decide that nobody is actually responsible for paying for anything. Car loan forgiveness! Student loan forgiveness! The issue isn’t the loans. The issue is STUPID PEOPLE being given consequence-free access to vast sums of money. We pay cash for just about everything. We could “finance”, but we save up and buy things instead. That has the added benefit of preventing us from buying stupid things we don’t need. My best friend got greedy in 2007, bought a crazy… Read more »
When I was in business school at a major university, 1981-85, we were force-fed the “lessons” from the Japanese ‘miracle’. Their auto industry was the shining example. I clearly remember being a young man and sitting in the auditorium, where the large group of us were being lectured, thinking, “this shit might work for the Japanese, never going to work for Americans…” At the same time, ‘marketing’ (the major) was being turned into a ‘science’, with all kinds of finance-style calculations. Invest this, increase sales by this. I also clearly remember thinking, “this shit is sales, a crock trying to… Read more »
“Management” in the USA and Britain is invariably about the shenanigans of marketing and finance, and never about engineering. Marketing and finance are crack cocaine while engineering is a hard slog. That’s why people like Deming never got any recognition in the USA. All about the fast buck and design, production, and long-term planning be damned.
I was also in B-school during this same period. The one major, lasting and important concept from the Japanese management stuff (most of which was crap) was “continuous improvement/six-sigma”. What’s left of American manufacturing definitely adopted and benefitted from this concept. The marketing science, as you suggest, ending up being much more important than anyone thought at the time. Today’s internet marketing concepts of customer acquisition cost, “share of voice”, lifetime customer value, target marketing etc. all rose to prominence in business schools and consulting firms in the late70s/80’s. The marketing case studies we did stand up pretty well over… Read more »
The one major, lasting and important concept from the Japanese management stuff (most of which was crap) was “continuous improvement/six-sigma”. What’s left of American manufacturing definitely adopted and benefitted from this concept. I want to say this first began spreading around US manufacturing in the mid-to-late 00s. In my little corner of the world I was tasked with doing some of the initial statistical analysis that attempted to make a credible extrapolation from a small population of cost-reduced prototypes to long-term production yields. I found Student’s t-test very handy for that effort. Outside my little corner, in the mid-to-late 00s,… Read more »
The market looks like it will crash starting today through the end of the month. For the first time, I will not buy a single share on the dip since this is going to last a long, long time and even that assumes the United States remains economically viable.
Looking at the 1 and 2 hour charts I think we may see a bit of a dead cat bounce today. It seems a little early for the Fed to start a 4th of July pump to keep the sheep docile.
Beautifully written. The only detail I would add was that it was not only that Japan and Europe had recovered by the 1960s but that the costs of LBJ’s Great Society program and the Vietnam war necessitated deficit spending. People like de Gaulle saw this and felt they were being paid in increasingly worthless dollars. It wasn’t only the French. If memory serves even the British ambassador (Henderson?) turned up at the US Treasury with $300m, which he tried to convert into gold. So Bretton Woods went up in smoke. Ad hoc arrangements — such as the petro-dollar — were… Read more »
“Is” instead of “was”; mea culpa.
i think many people just want to see pelosi et als burned to the ground, regardless of the cost to the country. maybe the cloud people are the only ones with skin in the game, in which case most people will be happy to pour gasoline on the fire, once it begins. weird times right now, with all kinds of unusual motivations…
I know, if we don’t own anything or have any skin in the game, why should we care of all of their homes and vineyards get burned to the ground. Even in Italy the people would be too smart and wise to let a gangster’s daughter own a large vineyard as she does in Napa. That lady should be counting her blessings right about now. She’s going to need them. She’s played the aristocrat long enough. Reality check incoming.
As my grandma used to say, it all comes out in the wash.