WalkAway Feminist Rejects the Democrats

Glenda R. McGee sent me this video of a former left-wing academic who has left the Democratic Party because of the political correctness and anti-Trump movements. She says that her former friends have stopped talking to her simply because she now questions identity politics.

She has noticed that Democrats are not nice, moral people; hence, she has reached a familiar conservative conclusion: If you expand government power, you might find out that you don't like the Democrats who have assumed  that power.

One point I have to add: For an academic, she's not bad looking, and this seems to be a trend. The good-looking people are leaving the Democratic Party, which is increasingly becoming a party of ugly people.

Trade War May Pressure New Bottom in Gold

President Trump's escalating trade war appears to be affecting gold prices, which respond to a stronger dollar.  The tariffs will make Chinese goods more expensive, but the Chinese can make their goods cheaper by making their currency cheaper to offset the effects of the tariffs.  There are many ways the Chinese can do this:  The yuan is pegged to the dollar, so they can lower the peg.  This is easy to do because the Chinese owe at least a trillion dollars in loans to the US, and they hold trillions in dollars and dollar-denominated loans that they’ve made to the US government. If they purchase dollars, the dollar will strengthen, and Chinese goods will become cheaper, offsetting the tariffs.  

In turn, the price of gold is affected by the dollar. A stronger dollar means cheaper gold. That correlation has held this week. 

In light of today’s White House threats of an additional $200 billion in tariffs,  the S&P 500 fell almost one percent and gold fell back to $1244, a fall of about $10.  The yuan renminbi-to-dollar exchange rate has fallen over the past couple of days to $0.1497, the lowest level this year.   

 It will be seen whether gold can hold a technical $1240 inflection point.  If not, there may be a good way down as the Sino-American trade-and-currency war escalates. That might provide a good entry point for gold, perhaps below the $1,000 mark.

Hope is not prediction, though.

Rising Suicide Rates Are Due to Collectivism, Not Individualism

          Jason Bellini of the Wall Street Journal interviews Princeton economists Anne Case and Angus Deaton, who observe that white American suicide rates have increased since 1999. During the same time period, suicide rates have not increased in Europe, and they have not increased among African Americans.  However, suicide rates have long been higher in many countries, including Finland and Japan.

The two biggest demographic segments affected by increasing suicide rates are the Southwest-and-Rocky Mountain region, which is among the more individualistic regions, and Americans without a college degree, who are twice as likely to commit suicide than Americans with a degree.  

Case and Deaton’s explanations don’t much extend the 125-year-old work of Emile Durkheim in his book Suicide.   For instance, they observe that increased individuality, especially in religion, may be associated with suicide, although they find no hard statisical evidence of a relationship.  Durkheim found that education raises suicide rates; perhaps increased education rates, short of college graduation, are having the reverse effect of what Case and Deaton claim. 

Durkheim, offered an explanation of suicide in addition to individualism and education: Increased social control.  According to Business Insider, the countries with the highest suicide rates in 2014 were Lithuania, South Korea, Belarus, Kazakhstan, Russia, China, India, Sri Lanka, Japan, Hungary Latvia, Ukraine, Moldova, Slovenia Finland, and Belgium. France has a higher suicide rate than the US.  These high-suicide rate countries are not characterized by individualism but rather by informal or authoritarian collectivism. Hence, Case and Deaton’s claim that the rise in suicide rates is due to the US’s lack of Finnish or French dirigisme appears ideologically motivated. 

Case and Deaton emphasize the lack of economic opportunity that has evolved since 1971, when the Federal Reserve Bank’s pure paper money system facilitated enhanced subsidization of the financial and computer technology industries.  Access to credit has been diverted from rural America to select, elite industries, and rural areas have been starved of credit. As well, American banks have subsidized plant relocations to China, and the Chinese provinces currently owe one trillion dollars to them.  

These government policies have reflected elite interests. It is not American free market capitalism that has been hard on workers, as Case and Deaton seem to claim, but American progressivism and government intervention, which have  amounted to a nonstop welfare-and-bailout program for billionaire donors to Princeton University.

 Rather than emphasize declining opportunity for self-actualizing entrepreneurship due to the increased involvement of government in the economy since the 1960s and relentless Fed subsidization of Wall Street, Case and Deaton emphasize the lack of a European-style welfare state even though socialist countries dominate the list of high-suicide-rate countries.

  Rather, it may be that Americans, who prefer individualism and self-actualization, have been increasingly stifled by the Great Society policies beloved by the Princeton elite.

 Case and Deaton note that life expectancy has been declining for the past two years, and that this may reflect underlying trends that may result in a Constitutional crisis. Maybe so, but the reaction of the rural, white population to declining opportunity has been different from what Case and Deaton advocate. Rural Americans voted for Donald Trump, who has deregulated industry and taken other steps to increase economic opportunity. Belorussian policies don't seem high on the priority list of rural Americans.

Jim Rickards Describes Increased Global Interest in Blockchain and Gold instead of the Dollar

Alex Stanczyk interviews Jim Rickards in the June 2018 edition of Gold Chronicles.  Rickards’s thesis is that the dollar is going to collapse.  I agree, but while it is easy to know that this will happen, it is hard to know when—whether in three years or 35 years. 

I am accumulating gold gradually and plan to have about 20% of my portfolio in gold and silver, although I’m at about eight percent now.  I’m not totally convinced that the downturn in the gold price from the 2011 peak--due to monetary expansion and the Trump stock market bubble--is over.

Rickards says that gold production has flatlined.  We all know that the “peak” thesis was wrong for oil, and I have little reason to believe that it will be right for gold.  However, production is not a determinative factor in the long run. 

Rickards claims that there is a new axis of gold formed by secondary and tertiary powers who are looking a way out of the dollar system, and they will hasten the invention of an alternative monetary system that will include both blockchain technology [but not Bitcoin] and gold.  Incidentally, I have purchased a small amount of Overstock.com, which has become a blockchain incubator.

Stanczyk says that gold is migrating from the West to the East, especially from London to Switzerland and then to China and India.  Gold reserves held in emerging market central banks increased 91% from 2006 to 2017.  The Russian central bank has purchased over 600 tons of gold over the past four years.  The Keynesian claims that gold is a “barbaric metal,” defunct, and meaningless with respect to monetary policy, seems to have escaped central bankers around the world.

          “The dollar is still boss,” Rickards says, but “Russia buys [gold] like clockwork.” Still,  remember that the price of oil collapsed a couple of years ago [and gold can still do the same].  The oil collapse hurt Russia’s economy. In the 2014-2016 period,  Russian dollar reserves declined by 40% due to the fall in the price of oil, but Rickards points out that the Russians did not stop buying gold even during this difficult period.  It’s like you buy $100 a month in gold, but then you lose your job. Even then, you still buy the gold. That’s conviction.

China is less transparent than Russia, according to Rickards. China has purchased 600 to two thousand tons; Turkey has acquired gold; Iran has acquired gold; Kazakhstan has been acquiring gold. From 1999 to 2010 central banks sold gold. [They apparently sold into the gold bull market.] Since then, the central banks have been buying gold.  The last time the US sold gold was 1980, despite the scoffing of foundation-funded academics.

The big sellers after 1980 were the UK, Switzerland, and the IMF. Germany, France, and Italy never sold.  The central banks that were selling have stopped. Now, on net, banks are buying.  Miners are having difficulty finding new gold. “What’s going on is strategic,” says Rickards.

The US dollar is currently more than 60% of global reserves, 80% of global payments, and 90% of oil payments.  The Establishment (Ben Bernanke, Tim Geithner, John Lipsky) sees continued dominance of the dollar.  Currently the US is in financial wars with Iran, Russia, North Korea, and possibly China. 

          The ubiquitous dollar enables the US to be effective at enforcing economic sanctions. The problem is that these countries, at the short end of US foreign policy and trade policy, are trying to get around the dollar system.  Russia, China, Iran, Turkey, Venezuela, and Brazil are looking for an alternative to the US dollar system.