The evidence mounts that the smartest move an American can make is relocation to another country. Peter Schiff reveals the ignorant maelstrom that American government has become. H/t Mike Marnell
Wednesday, October 3, 2012
Philips Electronics Pulls Debate Funding
In this dismal, uninteresting, and tragic presidential election, the only bright spots are Gary Johnson's candidacy and his six percent polling result. Minor parties rarely get more than one or two percent. Six will be the best showing in the Libertarian Party's history and, finally, some evidence that a few Americans are beginning to reject the Progressivism that the Republican Party established in 1908 with the reelection of the first Progressive president, Theodore Roosevelt. Johnson is the only candidate who questions the current monetary regime and favors sharp reductions in government. In contrast, both Romney and Obama favored the largest expansion in government in our lifetimes, the bailout of Wall Street, which is no longer discussed in the pro-Fed media.
Philips Electronics is a historically Dutch firm that was founded in the early twentieth century and has been a consistent competitor to GE. With 125,000-or-so employees, Philips is global. It does business in more than 100 countries; its scientists and executives speak multiple languages. Unlike GE, Goldman Sachs, GM, or Merck, Philips has little to gain from the favors of Obama and Romney.
US News (h/t Mike Marnell) reports that Philips and the venerable YWCA have pulled their support from the presidential debates because the Commission on Presidential debates insists on excluding Governor Gary Johnson. Manipulation by the pro-Fed establishment is not new. In the Republican primary, the Republicans and the media cheated against Ron Paul. According to US News:
In a letter announcing its sponsorship withdrawal, Philips wrote that it was concerned the commission's work "may appear to support bi-partisan" instead of "non-partisan" politics. The YWCA similarly wrote that it was dropping out because it is a "non-partisan" women's organization.
Americans have a diehard bias in favor of the two-party system. Given the two parties' performance, the bias is self-destructive. Gary Johnson offers a libertarian alternative to twin advocates of Progressivism, whose ideas have caused the real hourly wage to stagnate for the past 40 years, have been responsible for increasing income inequality, have attacked economic innovation, and have cut your standard of living in half unless most of your wealth comes from stock-and-bond appreciation.
The rule that only candidates with 15% or more in the polls can participate in the televised debate evidences the diminution of democracy and freedom in the United States. The United States has become a two-party-based oligarchy chiefly responsive to corporate interests. Given how infrequently third parties have obtained 10% of the vote, setting the bar at 15% is a clever way to ensure that the presidential debates are limited to unbalanced Progressivism.
Philips Electronics is a historically Dutch firm that was founded in the early twentieth century and has been a consistent competitor to GE. With 125,000-or-so employees, Philips is global. It does business in more than 100 countries; its scientists and executives speak multiple languages. Unlike GE, Goldman Sachs, GM, or Merck, Philips has little to gain from the favors of Obama and Romney.
US News (h/t Mike Marnell) reports that Philips and the venerable YWCA have pulled their support from the presidential debates because the Commission on Presidential debates insists on excluding Governor Gary Johnson. Manipulation by the pro-Fed establishment is not new. In the Republican primary, the Republicans and the media cheated against Ron Paul. According to US News:
In a letter announcing its sponsorship withdrawal, Philips wrote that it was concerned the commission's work "may appear to support bi-partisan" instead of "non-partisan" politics. The YWCA similarly wrote that it was dropping out because it is a "non-partisan" women's organization.
Americans have a diehard bias in favor of the two-party system. Given the two parties' performance, the bias is self-destructive. Gary Johnson offers a libertarian alternative to twin advocates of Progressivism, whose ideas have caused the real hourly wage to stagnate for the past 40 years, have been responsible for increasing income inequality, have attacked economic innovation, and have cut your standard of living in half unless most of your wealth comes from stock-and-bond appreciation.
The rule that only candidates with 15% or more in the polls can participate in the televised debate evidences the diminution of democracy and freedom in the United States. The United States has become a two-party-based oligarchy chiefly responsive to corporate interests. Given how infrequently third parties have obtained 10% of the vote, setting the bar at 15% is a clever way to ensure that the presidential debates are limited to unbalanced Progressivism.
Thursday, September 13, 2012
QE 3: Gold Bugs, Stockholders Celebrate While American Workers Starve
Joe, a retired, Kingston, NY commodities trader and Brooklyn College alum, is a drinking buddy. He predicted $1750 gold on Labor Day while he, Mike and Mark Marnell, a left wing attorney, and I were imbibing a 1.75 liter bottle of four-year-old single malt scotch called McClelland's. I picked it up at JK's Wine and Liquor in the Kingston Plaza mall. For only $43 for a jumbo bottle, McClelland's is a good buy.
On that fateful Labor Day Joe predicted $1750 gold this month. It just about hit $1750 the other day, but today it soared to a bid of $1769 (at 2:26 P.M.). The reason is the Fed's announcement of quantitative easing. My brokerage accounts, because of the recent moves in the general stock market coupled with the recovery in metals prices and real estate, are at or near all-time highs. According to Kitco: " Spot gold was last quoted up $37.50 an ounce at $1,769.50. December Comex silver last traded up $1.298 at $34.60 an ounce." The stock market is also buoyant: The Dow is up 224 points, or 1.68 percent, and the S&P 500 is up 1.76% at 1461.
Quantitative easing or QE3 is one more round of money printing. Monetary expansion boosts the stock market because increasing the quantity of money reduces the price of money, the interest rate. A lower interest rate increases the discounted future value of profits. That increases the stock market because stock prices discount future earnings. It is a mechanical relationship. As a result, the Fed has played the Nixon card with Obama: in 1972 Nixon encouraged then-Fed Chairman Arthur Burns to ease so that the stock market would go up; now, Ben Bernanke's Fed is easing and Obama will win the election. Likewise, the Europeans are accommodating Obama. A recent German court decision held that Germany can participate in a bailout of profligate Greece and other southern rim nations. Hardworking Germans can now sacrifice their savings to fund pensions of Greek public sector retirees who have produced little and demand much.
Joe does not have much faith in the stock market. He is right in a fundamental sense: there is no reason to have faith in the structural reality of the underlying economy. The excesses of the Clinton and Bush years are still around, and Obama has done nothing to correct them. Americans, for an unfathomable reason, tend to reelect presidents when the stock market is high. The monetary expansion that increases the stock market harms most of them; in other words, most Americans vote for politicians who directly harm them.
The reason is that the monetary expansion that boosts the stock market devalues wages. As the money supply has expanded since the Reagan and Clinton years, the link between real wages and productivity has been eliminated for the first 40-year period in American history. American workers are no better off today than they were in the early 1970s, but stockholders are much better off. In other words, the income inequality that liberals grieve over is directly due to the policies of Paul Krugman, Woodrow Wilson, Franklin Roosevelt, Richard Nixon, Ronald Reagan, Bill Clinton, George Bush, and Barack Obama. Obama has done nothing to clean up this mess. Historically, he has contributed more to it than anyone else.
The stock market may continue up through the fall and possibly into 2013. Eventually monetary bubbles implode as bondholders realize that their bonds are going to become worthless. As real interest rates start to rise, Fed policy becomes irrelevant. If the Fed continues to print money thereafter, there will be a monetary collapse. Otherwise, there will be rising interest rates and stagflation as the expansion of the monetary base is transformed into cash money.
If real interest rates start to rise, the stock market will not do well, but commodities will because of the inflation. If the dollar remains stable, the increasing money supply will continue to boost the stock market.
I am easing out of the stock market. I had sold the stocks in my pension fund (I still have real estate), which were about five percent of my total stock holdings. I have low-beta (low-risk, high dividend) stocks like Philip Morris, Kimberly Clark, and Heniz in one brokerage account, and higher risk stocks in the other. I will sell the higher-risk stocks over the coming months, except for the gold mine stocks. I hold both the gold index and the Van Eck juniors index. I would like to be able to pick gold mining stocks, but I lack the expertise.
The stock market is likely to continue up into the coming year; thereafter, all bets are off. If you look at a picture of the S&P 500 since 1950 there are two massive peaks in 2000 and 2007; we are approaching the height of those two peaks now. Because of the massive monetary stimulus, the peak could get higher in nominal terms. As the monetary expansion translates into a depreciating dollar the reverse can and will occur.
On that fateful Labor Day Joe predicted $1750 gold this month. It just about hit $1750 the other day, but today it soared to a bid of $1769 (at 2:26 P.M.). The reason is the Fed's announcement of quantitative easing. My brokerage accounts, because of the recent moves in the general stock market coupled with the recovery in metals prices and real estate, are at or near all-time highs. According to Kitco: " Spot gold was last quoted up $37.50 an ounce at $1,769.50. December Comex silver last traded up $1.298 at $34.60 an ounce." The stock market is also buoyant: The Dow is up 224 points, or 1.68 percent, and the S&P 500 is up 1.76% at 1461.
Quantitative easing or QE3 is one more round of money printing. Monetary expansion boosts the stock market because increasing the quantity of money reduces the price of money, the interest rate. A lower interest rate increases the discounted future value of profits. That increases the stock market because stock prices discount future earnings. It is a mechanical relationship. As a result, the Fed has played the Nixon card with Obama: in 1972 Nixon encouraged then-Fed Chairman Arthur Burns to ease so that the stock market would go up; now, Ben Bernanke's Fed is easing and Obama will win the election. Likewise, the Europeans are accommodating Obama. A recent German court decision held that Germany can participate in a bailout of profligate Greece and other southern rim nations. Hardworking Germans can now sacrifice their savings to fund pensions of Greek public sector retirees who have produced little and demand much.
Joe does not have much faith in the stock market. He is right in a fundamental sense: there is no reason to have faith in the structural reality of the underlying economy. The excesses of the Clinton and Bush years are still around, and Obama has done nothing to correct them. Americans, for an unfathomable reason, tend to reelect presidents when the stock market is high. The monetary expansion that increases the stock market harms most of them; in other words, most Americans vote for politicians who directly harm them.
The reason is that the monetary expansion that boosts the stock market devalues wages. As the money supply has expanded since the Reagan and Clinton years, the link between real wages and productivity has been eliminated for the first 40-year period in American history. American workers are no better off today than they were in the early 1970s, but stockholders are much better off. In other words, the income inequality that liberals grieve over is directly due to the policies of Paul Krugman, Woodrow Wilson, Franklin Roosevelt, Richard Nixon, Ronald Reagan, Bill Clinton, George Bush, and Barack Obama. Obama has done nothing to clean up this mess. Historically, he has contributed more to it than anyone else.
The stock market may continue up through the fall and possibly into 2013. Eventually monetary bubbles implode as bondholders realize that their bonds are going to become worthless. As real interest rates start to rise, Fed policy becomes irrelevant. If the Fed continues to print money thereafter, there will be a monetary collapse. Otherwise, there will be rising interest rates and stagflation as the expansion of the monetary base is transformed into cash money.
If real interest rates start to rise, the stock market will not do well, but commodities will because of the inflation. If the dollar remains stable, the increasing money supply will continue to boost the stock market.
I am easing out of the stock market. I had sold the stocks in my pension fund (I still have real estate), which were about five percent of my total stock holdings. I have low-beta (low-risk, high dividend) stocks like Philip Morris, Kimberly Clark, and Heniz in one brokerage account, and higher risk stocks in the other. I will sell the higher-risk stocks over the coming months, except for the gold mine stocks. I hold both the gold index and the Van Eck juniors index. I would like to be able to pick gold mining stocks, but I lack the expertise.
The stock market is likely to continue up into the coming year; thereafter, all bets are off. If you look at a picture of the S&P 500 since 1950 there are two massive peaks in 2000 and 2007; we are approaching the height of those two peaks now. Because of the massive monetary stimulus, the peak could get higher in nominal terms. As the monetary expansion translates into a depreciating dollar the reverse can and will occur.
Saturday, September 8, 2012
Thoughts on Coming Economic Dislocation
Money is not just a matter of perception. As the amount of money is increased, the supply forces higher prices or misallocation of resources. Faith in the currency is reduced; people stop working hard because they realize that asset prices (stocks) are increasing, but wages aren’t increasing. Foreign dollar holders realize that the dollar is getting cheaper. Those are not merely perception. They are caused in large part by increasing the amount of dollars.
The chief differences between Ron Paul and Gary Johnson versus Mitt Romney and Barack Obama are (a) a commitment to limiting the money supply and (b) a commitment to reducing the scope of government, which is a corollary of (a). I’m not sure that a monetary collapse can be avoided by anyone at this point, but the public needs to be made aware that the reason for the coming instability is government, not freedom. The response in many places to economic dislocation has been authoritarian.
In two to three thousand years of human history this has happened numerous times, and no one has found a way around it. It happened in Rome, in China (recall the Chinese invented paper money), and it will happen again.
Keynesian economics says that you can stimulate the economy with government spending and monetary expansion, and monetarist (Republican) economics says that you can stimulate the economy with monetary expansion alone. Neither has a plan of action for what to do when the indebtedness and cheap money cause economic dislocations, reallocate wealth to the wealthy, and reduce the standards of living of those whose livelihood is concentrated in cheapened dollars rather than stocks, real estate, commodities, and leveraged assets.
Anyone who works has already been harmed—with a standard of living likely half of what it would have been with a gold standard. Literally half. The productivity gains since 1970 have not been translated into higher wages for the first time in American history. Our standard of living is already much lower than it would have been had Nixon retained the gold standard, raised interested rates, and caused a recession that would have forced up the dollar. There would have been short run unemployment, but real wages would have continued to rise with productivity.
The people who are being hurt are (a) retirees, (b) those who have their wealth in dollars (CDs, savings), and (c) wage earners. The pain will get worse. The way out is to redefine yourself as an asset owner through leveraged purchases of real estate, commodities, and stocks, especially if there is a cyclical correction in the stock market soon.
As a society, the stabilization of the money supply and reduction in government spending has to be done through public choice; the public is not so choosing, so I don’t think there will be a way out as a society until the pain of inflation or other economic dislocation becomes great, when it will be too late.
The belief in something for nothing (for the Republicans, to hedge fund owners, Wall street, real estate owners, stockholders, cronies like Halliburton; and for the Democrats, the same as for the Republicans plus welfare recipients, public employees, and cronies like Soros) is simply too strong in both parties. Both parties (despite the Republicans’ recent platform position in favor of the gold standard) are committed to paper money whose quantity they consistently expand. This started with Nixon and Reagan.
Eliminating it would require sharp reductions in spending and stabilization of the money supply. The problem is that we have already printed $10 trillion dollars and sent them overseas (compared to a massively increased US money supply of $2.6 trillion). If the US stabilizes, perhaps the dollar will continue as the world’s currency, and pain will be avoided in our lifetime. As Giustra points out in the video, this is unlikely because neither party is interested in restraining government, and the public, convinced by the television set, favors the government spending, both domestic and military.
The chief differences between Ron Paul and Gary Johnson versus Mitt Romney and Barack Obama are (a) a commitment to limiting the money supply and (b) a commitment to reducing the scope of government, which is a corollary of (a). I’m not sure that a monetary collapse can be avoided by anyone at this point, but the public needs to be made aware that the reason for the coming instability is government, not freedom. The response in many places to economic dislocation has been authoritarian.
In two to three thousand years of human history this has happened numerous times, and no one has found a way around it. It happened in Rome, in China (recall the Chinese invented paper money), and it will happen again.
Keynesian economics says that you can stimulate the economy with government spending and monetary expansion, and monetarist (Republican) economics says that you can stimulate the economy with monetary expansion alone. Neither has a plan of action for what to do when the indebtedness and cheap money cause economic dislocations, reallocate wealth to the wealthy, and reduce the standards of living of those whose livelihood is concentrated in cheapened dollars rather than stocks, real estate, commodities, and leveraged assets.
Anyone who works has already been harmed—with a standard of living likely half of what it would have been with a gold standard. Literally half. The productivity gains since 1970 have not been translated into higher wages for the first time in American history. Our standard of living is already much lower than it would have been had Nixon retained the gold standard, raised interested rates, and caused a recession that would have forced up the dollar. There would have been short run unemployment, but real wages would have continued to rise with productivity.
The people who are being hurt are (a) retirees, (b) those who have their wealth in dollars (CDs, savings), and (c) wage earners. The pain will get worse. The way out is to redefine yourself as an asset owner through leveraged purchases of real estate, commodities, and stocks, especially if there is a cyclical correction in the stock market soon.
As a society, the stabilization of the money supply and reduction in government spending has to be done through public choice; the public is not so choosing, so I don’t think there will be a way out as a society until the pain of inflation or other economic dislocation becomes great, when it will be too late.
The belief in something for nothing (for the Republicans, to hedge fund owners, Wall street, real estate owners, stockholders, cronies like Halliburton; and for the Democrats, the same as for the Republicans plus welfare recipients, public employees, and cronies like Soros) is simply too strong in both parties. Both parties (despite the Republicans’ recent platform position in favor of the gold standard) are committed to paper money whose quantity they consistently expand. This started with Nixon and Reagan.
Eliminating it would require sharp reductions in spending and stabilization of the money supply. The problem is that we have already printed $10 trillion dollars and sent them overseas (compared to a massively increased US money supply of $2.6 trillion). If the US stabilizes, perhaps the dollar will continue as the world’s currency, and pain will be avoided in our lifetime. As Giustra points out in the video, this is unlikely because neither party is interested in restraining government, and the public, convinced by the television set, favors the government spending, both domestic and military.
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