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Treading Water on a Sea of Funny Money

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[In the guest commentary below, Erich Simon sees Quantitative Easing as the death rattle of the U.S. economy. Americans will be taxed just to stay afloat as the financial system edges toward a seemingly inevitable day of reckoning. And although the gold coins you’ve socked away will probably be easy to barter in very hard times, they will not save the day for a global economy that can be brought back into balance only by a violent wrenching of the gears. RA]

In the good old days, before Quantitative Easing was used to “stimulate” the economy with printing-press money, bank loans were invested with the goal of producing sufficient profits to retire the loans. Sound investments produced profits, and society advanced — both fundamentally through the creation of new businesses; and economically as a result of new jobs created and the wealth-multiplier effect. Money remained sound, and its desired property as a store-of-value was affirmed.

But we are no longer in a growth economy. Rather, the economy is akin to a mature and declining product life-cycle. We have squeezed the final drop from the last technological apple plucked from the tree of the Industrial Revolution. The Green Revolution is similarly over, leaving behind state-sized swaths of barren, cracked and salt-encrusted clay, growing nothing more than the next generation of genetically modified Soylent Green. Inventions like penicillin have all been fully exploited. The latest medical breakthroughs, to fight cancer mostly, consume prodigious resources. The dot-com boom was the grand finale, an essentially frivolous exercise in non-productivity masked by its supposed social “contribution.”

After the predictable March 2000 crash, the winds of deflation began to blow, so that we now find ourselves in the throes of a terminal unemployment hangover. Today, we are a crowded, resource-depleted quagmire, a sea of unproductive participants sloshing in tank whose only sustenance comes from rebellion and revolution, taxation, reapportioned or strong-armed from the remaining pool of contributing participants (Government is surely not one of them). There simply is no other way to funnel and requisition necessities, let alone the hollowed luxuries, of our fading lifestyle.

As for “money,” it remains a tangible representation of what we produce. Ideally, it should exist in a quantity that is commensurate in value not with frivolous goods and misallocations, but with goods that add something of indisputable worth to the economy.

As long as what we produce has value, then our money will have value. When what we produce has little or no value – i.e., when it is squandered on grandiose public works projects, the repaving of roads and bridges that are in no disrepair; or worse, the costs of repairing the destruction from wars — then money becomes a drag on the social balance sheet. Which is to say, it loses its value. If the socioeconomic ship is headed over the falls, if there is no meaningful production amidst a hostile economic environment, then money turns into an entitlement coupon, like a food stamp. Like it is today.

Your Government at Work

Thus have money-printing and QE become the main ways that government now allocates dwindling natural resources.  This is a tail-chasing frenzy, trying to tinker with the social draw. A potentially bright economic future is being supplanted by Nationalism and police oversight, then by the military state. The vessel is indeed going over the falls, and nothing can save it — not even gold.

Gold and silver had their place in history, backing up “’money” before an evolved society could collectively guarantee it. Gold-backed money ensured fair and equal access to scarce natural resources. Gold will never recapture its role as “money” because of its role in today’s economic dilemma. Although it can be easily bartered because it is perceived as valuable, this will not buffer the financial cataclysm ahead, when international accounts are forced into balance. Gold would probably be hoarded anyway, since, at this late stage, it is every man for himself.

During the vast dishoarding of wealth that lies ahead, as the American Dream gets downsized beyond what anyone might now imagine, we should expect The Government to seize and redistribute assets according to whim. This must be done to keep the peace, and it will continue for as long as we can tread water inside the QE tank. How long that will continue depends on the Fed’s aggressiveness in rescuing whoever and whatever needs to be rescued.  The rescue coupons we receive from The Government will serve as claims against what wealth remains. With no savings to cushion hard times, deflation will continue to eat away at that wealth, impoverishing us all as we adjust to the collapse of necessities.

***

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  • RickJ August 15, 2012, 9:16 pm

    Steve: I am a Canadian Citizen. I do know that our constitution specifically avoided enshrining property rights during Trudeau’ s tenure.

  • RickJ August 14, 2012, 6:54 pm

    Kudos to the author. This reflects my own age of liquidation belief, that government and bank entities will continue to extract wealth until none is left, much like a bad disease.

    • Steve August 14, 2012, 7:59 pm

      Rick J, if one is only a debtor in possession by voluntary use of debt instruments called FRnotes, how; is there anything except the blood of daily labor to be extracted from a U.S. corporate legislative 14th political movement subject? (that is the tithe to the I.R.S., the state, and the FEES) Fee fife feod feud feudal tenant in fee peon serf slave, Blacks Law Dictionary Fourth Revised Edition 1968. Wealth – all U.S. persons lost that when they volunteered to the new federal legislative subject citizenship in 1868 – it took until 1973 for the infringement to complete within the federal district of OR.

      I’ll agree there are higher up task masters like Ryan, Obama, Romney, and Biden – but; all of those are slaves on a sliding scale of slavery to a master behind the curtain.

  • gary leibowitz August 14, 2012, 6:32 pm

    Here we go. My long awaited surprises.

    Retail sales reversed the losses from last month. Germany and France seem to be gathering evidence of faster growth. China in my mind is a non-issue.

    I now expect any correction to be less than 10 percent and short lived. Watch for talk about inflation soon.

    I have been touting a great earnings year and so far it’s coming true. There is still the expected 13 percent rise expected in the last quarter of the year. It is down from 17 percent. The way the recovery is going I can’t see a problem with those numbers.

    Still expecting a “flash crash”? Given the fact that the Fed has orchestrated a 4 year reprieve I expect the big drop wiill onlu occur when everyone is on board with this recovery. Only when we get heated spikes in price. At a minimum 6 months out.

  • mario cavolo August 14, 2012, 10:24 am

    Good Morning Gents to the futures getting the next big goose…3:00am EST

    Cheers,Mario

  • Rocky August 14, 2012, 6:11 am

    I haven’t read through all of the comments, but what I believe Mr Simon is saying is that the gov may recall dollars as money and declare that its coupons such as food stamps (or equivalent) are the new currency. FR notes are out , coupons are in. In that case, all our money as we know it will be worthless and replaced by gov coupons. I cannot believe at this point it would be possible to do this. Could it?

    &&&&&

    I have changed your name because there can’t be to Ricks in this forum. RA

    • Steve August 14, 2012, 7:50 pm

      Rocky, A Dollar is 371 4/16ths grains of fine silver struck as a Coin for the People. The value has not changed, or has it ? One is always free to commit High Treason as long as good men do nothing.

  • Steve August 14, 2012, 1:31 am

    The Problem:

    We all know Obama has never done anything real.

    How about Paul Ryan – just another do nothing:

    Paul Davis Ryan (born January 29, 1970) is the U.S. Representative for Wisconsin’s 1st congressional district, serving since 1999. On August 11, 2012, Mitt Romney chose Ryan to be his running mate,[1] making him the presumptive nominee of the Republican Party for Vice President of the United States in the 2012 election.[2][3]

    Born and raised in Janesville, Wisconsin, Ryan earned a B.A. degree from Miami University in Ohio. Following his studies, he worked as an aide to United States Senator Bob Kasten of Wisconsin, as legislative director for Senator Sam Brownback of Kansas, and as a speechwriter for former U.S. Representative and 1996 Republican vice presidential nominee Jack Kemp of New York. In 1998, Ryan won election to the United States House of Representatives, succeeding Republican Mark Neumann. He is now in his seventh term.

    As chair of the House Budget Committee, Ryan has focused on fiscal policy and has proposed privatizing Social Security and replacing Medicare for those Americans under 55 with a voucher program.[4] Ryan introduced a plan, The Path to Prosperity, in April 2011 which included significant changes to Medicare. He then helped introduce the similar The Path to Prosperity: A Blueprint for American Renewal in March 2012.[5]

  • BigTom August 13, 2012, 8:35 pm

    Not long ago I sold some PM’s to buy another motorcycle(I’m gonna have some fun on the way out the door). I got the queasy feeling at the time there may come a time in the future where there may be nothing to exchange these things for….Just a ‘feeling’, no facts here!

  • jhpace1 August 13, 2012, 8:34 pm

    The truth is, we have been as Americans been living in a planned box since before World War II that has been getting smaller and smaller, turning into a collar around each of our necks. Our mainstream science refutes “free energy”, so energy must be limited, regulated, and controlled. Our morals must be “unrestrained” so fraud, hucksterism, and demagogues rule the day. Humans are the problem – so kill the humans before birth and when they are no longer productive workers. Our money is a lie controlled by the top of the pyramid.

    Most Americans do not know about precious metals. In emergencies they will default straight to barter. Our officials are closing lemonade stands and yard sales in the name of equality, taxation, and control. Our cities are finally running up against the wall when it comes to entitlements on a smaller scale than the Federal govt.

    There’s no recovery until we break the collars and destroy the box. But not only are the controllers against us, but the people who live in the welfare system are against us as well. You cannot even escape to another country anymore – the US financial system has its’ tentacles in foreign govts. There is no solution.

    • Steve August 14, 2012, 1:18 am

      Forgotten is the faud (see Robert above) that everyone of the masses must prosecute on an individual basis. Bad things happen when individual men fail to act.

  • Rusty August 13, 2012, 8:11 pm

    http://www.washingtontimes.com/news/2012/aug/7/the-civil-war-of-2016/ Very hard for me to be even slightly bullish, with this option even being discussed.

    • Rusty August 13, 2012, 8:19 pm

      http://www.dailypaul.com/248764/71-year-old-taken-to-the-ground-for-questioning-paul-ryan#comments

      Seems to me a better way to handle the situation. The “blood pressure” comment is already going viral.

    • gary leibowitz August 13, 2012, 8:32 pm

      You must realize that the “show must go on”. He was on hallow ground and should have known better.

      I will say he was not a paid rabble-rouser. He was genuinely upset wich the Republican policy to go after senior citizens.

      This demonstrates my point. There are two very divided camps. The empathetic or the notion that there are people that soak the rich.

    • Rusty August 13, 2012, 8:59 pm

      http://www.businessinsider.com/paul-ryan-insider-trading-2012-8 Gary- I retort there must be a measure of basic fairness. It really doesn’t matter what I think; the Ed Show or Rachel Maddow will be all over this.

      I don’t have all the facts; but if the 71 year old man was a member of The Rotary Club, he has a right to speak out. Robert’s Rules of Order are in play at Rotary. Keep in mind Paul Ryan was a guest speaker at Rotary Club.

    • gary leibowitz August 13, 2012, 10:41 pm

      Yes there will be sides drawn over this. I just question the rough house approach, if it was necessary. I also think the Ryan response was flippant. Does he really think the impact on a good number of retirees will just be an inconvenience?

      As for his stock sales, much ado about nothing. No clear pattern of abuse. Small sums over many different time periods.

    • mario cavolo August 14, 2012, 4:34 pm

      Hi Rusty, I watched it. I’m a professional speaker and emcee. That guy and any similar was completely out of line and should have been removed from the meeting. It is completely inappropriate to interfere with a speaker’s presentation at an event.

      While, on the otherhand, cuffing and arresting him was equally ridiculous and out of line, and that’s the very scary part of what we are watching happening in America.

      Cheers, Mario

  • gary leibowitz August 13, 2012, 7:49 pm

    If banks revert back to the free swinging lend anyone that breaths, and corporate america stops trying to find more ways to profit from this situation we would have the recovery everyone expected.

    I find it ironic that if you were to just look at the balance sheet of corporate america you would conclude we are in our 4 th year of a booming economy. If you just look at borrowing costs you would come to the same conclusion. As for the top elite earners they too have never seen such profit margins.

    I do agree we got into this mess becuase politicians promised and delivered on their give-aways to all economic classes. The huge imbalance given to the top, is a pattern that repeats, and on that is the ultimate down fall of our economy.

    What bothers me is the strange conclusion that the middle-class should be punished for governments lack of discipline. By doing away with our so called “safety nets” the long term benefits will be huge. Huge for the top elite that is. Imagine a world where your taxes are permanently reduced and the middle class shinks to 1/4 of it’s current size. The increased pool of poor will just languish since there will no longer be government intervention. The coporate rates along with the top wage earners will be very low. A small super rich society.

    While you can blame the EU’s problem on a system that catered more exclusively to the middle-class, you can bet that any recovery, if maintaining the same class structure, will result in a more prosperous union. More prosperous than what our outcome will be. The political policy to destroy the middle class in America seems to have the upper hand. Imagine most middle class citizens blaming Obamacare and Unions pensions which exclusively benifit the middel class, while rallying for less government rules, and a lower corporate rates.

    History does repeat itself, no matter how technically advanced we become. Human nature is a constant. It can be emotionally manipulated regardless of which century you live in.

    • Steve August 14, 2012, 1:15 am

      Gary, the mobocracy does what the masses ask it to do. Look in the mirror, do not blame the mirror (politicols) it is YOUR REFLECTion people persons.

    • gary leibowitz August 14, 2012, 2:58 pm

      You would think that with instant access to the world library and news we would stop falling into the same trap.

      I guess we see what we want to.

    • Benjamin August 14, 2012, 8:36 pm

      “What bothers me is the strange conclusion that the middle-class should be punished for governments lack of discipline. By doing away with our so called “safety nets” the long term benefits will be huge. Huge for the top elite that is.”

      “You would think that with instant access to the world library and news we would stop falling into the same trap. I guess we see what we want to.”

      It’s about time you learned the value of money, Gary.

      As I mentioned in another post to you a week or so ago, the safety nets had a profoundly negative impact on the lives of my grandmother, in particular, and that side of the family in general. When my grandfather died, around 1965 (but definitely not later), he left behind a wife and six kids. Needless to say, things for were a “bit” tough for all of them.

      Long story short, by her mid-ish 40s, my grandmother’s health was declining. By her early 50s, she was in bad shape, due to the many years of hardship and under-nourishment. That is why, as a kid, I always thought 50 was old. She looked it and felt it. And as that last decade progressed, she was increasingly spending more time in a hospital bed. The last year, her 60th, was downright brutal and inhumane.

      Now, I’m not saying that her life would’ve been amazingly great without having to pay into social security and medicare. But that little bit of withheld money translated into a little more nutrition could’ve gone a long way towards keeping her healthier. Maybe it could’ve made the difference between a grueling last decade and death at age 60 vs dying quietly and with dignity in her 60s. And it could’ve meant so much less wasted resource in trying to “fix” problems through medical care. A little more food earlier in life vs hospitalization and surgeries later… You do the math.

      Of course, she would’ve used that little bit of money for the kids. She always put them first. Even so, that would’ve been of benefit to them. There’s a lot of health problems among them, historically and presently. I’ll spare the details, but yes, there is a very clear pattern in that branch of the family tree that more than suggests the havoc wrecked by a little bit of absent money.

      So much for the idea of only the super-rich benefiting from a complete abandonment of entitlements. Of course, the story I tell was then. Surely people don’t suffer like that anymore. But they do…

      How much do people suffer from the fact that employers must pay into FICA as their employees do? Think of all that lost opportunity and productivity. Think about how different things could’ve been and could be with a history of a smaller (or even nonexistent) persistent unemployment and underemployment rate than we’ve had. Think of how much less (or not at all) the government and the twin tumor of the banking/financial sector would’ve grown. Speaking of which…

      Ask 100 different people and you’ll get 100 different answers as to how things came to be so screwed up. The death of Glass-Steagall, Nixon killing the Bretton Woods gold standard, the death of the fixed-exchange standard that preceeded BW… But none of that ever mattered. Even the establishment of the Fed ultimately doesn’t matter. The ROOT problem is a government that thought and continues to think it can and should do things outside of its Constitutional limits. All else is/was just another (Paul) Ryan-style attempt to make functional the inherently dysfunctional.

  • Robert August 13, 2012, 5:40 pm

    Ya know-

    I’ve used economic principles and theories for a LONG time to self-describe my picture of the world.

    But lately, I turn more to sociology…

    Economic calamity probably is indeed in the works, but it will not be for economic reasons.

    Fraud is a crime. All crime must be prosecuted by a lawful society.

    When crime is allowed to persist unprosecuted for one segment of the population, then every other segment of the population slowly descends into lawlesness as well.

    I watched “Gangs of New York” for the umpteenth time yesterday. Despite the movies numerous historical inaccuracies, I think the underlying commentary is prescient to the modern times.

    Erich- you try to interlace the fabrication of “money” with something that has NOTHING to do with credit, money, savings, nor debt….

    Fraud is a crime.

    When crime goes unprosecuted, society descends into general lawlessness.

    Ignore the Fed ignore ZIRP/NIRP, ignore Gold.

    Pay attention to the story of Benjamin Lawsky (love his last name) and the Fed and Treasury response to New York’s actions vis-a-vis Standard Chartered Bank.

    The fraud was exposed, and rather than prosecute crime, the “enforcers” of the law instead castigated those who dared to expose the crime.

    Lies become woven into society until they form a fabric that covers the society in a blanket of warmth and comfort.

    Truth merely informs you that it is cold outside.

    The blanket is unravelling. The cold is overwhelming the thermal properties of decades of lies all woven together.

    Your choice is to either prepare yourself for the cold, or to frantically join those trying fervently to find a new strand of lies (China seems to be a VERY popular one) to weave into the blanket.

    China’s economy can not save a world where fraud is a crime that goes unprosecuted.

    Nothing but truth can “save” such a world.

    • mava August 13, 2012, 9:47 pm

      Very well said, Robert.

      It is not that you are turning to sociology to explain something. It is that the money is an accounting system for everything we do that we want to be accounted for. The government is faking that accounting every day, and the people demand more and more faking, because every time it happens, someone who hasn’t done some work for others, actually gets a credit. And so, the root problem is, of course that we (as a majority of Americans) do not want honest accounting, because we want the fraudulent accounting, and that has to do with sociology.

      We want to try to live fraudulently. Yet, we expect the economy to “recover”. What does “to recover” even means in this context? Fraudsters do not grow anything, they act as parasites. Does recovery still means increasing production? So, really, is it not insane, that we bail-out someone who made horrible bets expecting untold riches, and lost it, therefore we are defrauding the accounting, and still, expect the economy to recover?

      Pure insanity.

    • Steve August 14, 2012, 1:20 am

      Robert, I made a little comment below. Each individual must prosecute the fraud where they see it when they see it. Our problem is that the masses all want someone else to bite the bullet for them.

      I’d say to everyone who has a bitch – stop complaining and get to prosecuting – it is YOUR PROBLEM – prosecute the criminals and find Peace and Dignity.

    • mario cavolo August 14, 2012, 2:46 am

      Ditto Robert. I’ve always said that if I’m reincarnated I’ll come back as a sociologist. People’s behavior is deeply created not 100% by their individual will as they wish but so much by the environmet around them. Live surrounded by divorced people, when the going gets rough, tada!, you’ll divorce. Live surrounded by married people, tada!, you won’t. Oh, by the way, I’m not saying that’s good or bad, alas the wife’s beatings may continue. I’m just describing the reality of human behavior. Here in China, driving rules including the expectations and behavior of bth drivers and pedestrians are completely different than back in America. I drive here by the same rules and habits as locals, if I didn’t I would screw up the local way of doing things.

      So then in fact, no matter what “form” of gov it is, if we live in a society were big govt big biz turn against the best interests of sociey and start serving themselves instead of “of the people, by the people, for the people”, you’re pretty much screwed and hopefully can formulate a response to protect yourself or escape to a new life.

      Cheers, Mario

    • Steve August 14, 2012, 7:47 pm

      Mario, where are the Men who stood to fight for what is right. Run, find something else, expatriate – ???? These are not answers, they are excuses for not taking a STAND.

    • mava August 14, 2012, 9:49 pm

      Well, how do we prosecute Ben Bernanke? By waiting 4 years and electing someone to replace Obama? And then when he does nothing, we wait another 4 years to elect someone else? And then?

      This is essentially what we had been doing for years. It doesn’t work, because it is far easier for a new president to assign a new FED figure, which will do the same thing, then for us to carry the brunt of the abuse for 4 years, only to be left with just another Ben Bernanke.

      Promises of any elected figure don’t matter, because we can never ask from them, all we can do is try again.

      So, then we would need to change the rules, to make them responsible? But, the majority of Americans like theft, and they would never vote to change the rules.

      This situation is a trap without a solution. If this wasn’t so, then we would see numerous examples of nations who degraded their morals coming back up, but we don’t. They run till they crash and disappear. Because the decline of morality in a population is not something that can be reversed, it is like a black hole, you can only go deeper in it.

    • mario cavolo August 15, 2012, 12:58 pm

      Hi Steven, taking a STAND is one choice, for many a good one, the right one. A person could completely change their lifestyle wihin their own country, or in another country. I am proud of my Italian family, who left Italy 3-4 generations ago. They left the hills of southern Italy to seek a better life for their future and their family’s future in America. Not an easy choice. All kinds of responses are possible as we face life’s circumstances.

      Cheers, Mario

  • mario cavolo August 13, 2012, 5:31 pm

    The market is down .6% and the marketwatch headline is “Wall Street Deepens Losses”

    Good grief no wonder we should all be wary of the msm.

  • mario cavolo August 13, 2012, 5:14 pm

    Hi Erich, well thought out essay, thanks for contributing!

    The problem with the American midde class that actually isn’t a problem, but which they will only find out afterwards, is that much of the budget tightening and reducing they need to do will actually be of stuff, including excess square meters, which they will realize they don’t need and doesn’t make them “happy”. I’e said before that I see the trend in lifestyle for the American lower/middle class becoming more and more Asian, where families and other types of roommates share dwellings. There is so much that can be reasonably done to cut one’s true budget needs way way down, except for medical bills in the U.S which are a nightmare. For example, if a person is very busy and engaged, putting their time and energy into things they are excited about, which require their attention, then they are quite busy most of the time and all they really need when they are not engaged doing those things is a bathroom to wash up, a bed to sleep in, and some way to grab some food. We live in a 1000sqm apt, its smaller than what we could have rented, but we really like the warm feeling and 1st floor garden, so we moved in. It is half the size of another apt we could go rent at double the cost, but it has no bearing whatsover on how happy we feel as a family, whether living in 1000 or 2000 sq ft. . Neither does buying a 20,000 car with a $350/payment instead of an $8000 car with no payments, etc.

    Cheers, Mario

    • BDTR August 13, 2012, 6:35 pm

      “…our fading lifestyle.” – No such luck.

      “…but it has no bearing whatsover on how happy we feel as a family, whether living in 1000 or 2000 sq ft.”

      Such sensibilities eliminate class struggle! Ah-HA! Mario’s a communist, Mario’s a communist! Enough as enough is a maxim of Marx! Mario, you subversive little red workers devil you! Capitalist consultant, indeed. Comrade!

      (Ha-ha! Censor that scathing personal smear if you dare, Rick! You, now threateningly ogreish digital-red-pen wielding lopper of radical content from the darkish-side. Dare you spare Mario the terror and trauma of most scurrilous and indecent indictment? 🙂

      Our most hopefully fading ‘lifestyle’ is no death-wish. It’s manifest hope of a requisite revolution of mindset that establishes common good from a universal basis of recognized moderation of need for survival itself.

      Our extremes in greed and control are our undoing, always have and always will as long as we persist in the state of anti-equity. Every great hero of humanity has struggled to apply that in principle. Every tyrant has violently opposed it. Which side are you on?

      Meantime, we suffer, despair and die poor.

    • mario cavolo August 14, 2012, 2:33 am

      Cute B 🙂

      Actually the main driver is that everyone’s just trying to freakin’ save money!… American middle class are relatively poor at that, brainwashed by their society’s bank and big business to spend not save on plastic.

      Cheers, Mario

  • mava August 13, 2012, 4:01 pm

    No. The reason there is no recovery, is because we have not allowed the people who made mistakes, from bankers to homeowners, to go bankrupt and we did not confine the consequences of the bankruptcy to help them to walk out of their office windows on the n-th floors.

    Therefore, we all must pay, by not having any future. We love the snake oil sellers too much.

  • Benjamin August 13, 2012, 11:46 am

    “The vessel is indeed going over the falls, and nothing can save it — not even gold.”

    Indeed, nothing can correct a lie or save a system built on a lie; the real and honest can only vanquish them, not save them. But that is precisely why gold and silver are more than merely perceived value.

    Speaking of which, and simply because I must get this off my chest… I was recently gifted with a 1963 silver U.S. dime. But I’m not happy about it. It was given to me by a younger cousin, who told me about this one dime he had that “didn’t sound right”. I asked him if I could see it, knowing what it was, and when I told him what it was, he just shrugged and said I could have it because it probably would never be worth anything more than a couple of “dollars” (as if FRNS and Dollars are the same!)

    No thanks. Truth is worthless and tons of lies called FRNs are valuable. That is what I was told. I was so bummed to hear that fed back to me, after all the time and effort I’ve put into making sure that anyone I care about knew the dang difference.

  • John Jay August 13, 2012, 5:50 am

    Erich,
    All good points.
    However we actually do still produce some commodities that the rest of the world needs.
    “American farmers export 45 percent of their wheat, 34 percent of their soybeans, 71 percent of their almonds, and more than 60 percent of their sunflower oil.”
    From : usda.gov
    And with the ongoing drought in the USA, grains are worth more everyday.
    We are a long way from 1929 type deflation in grains.
    At the bottom of the GD I have read that a ton of grain went for $8.
    And a ton of sawdust sold for $9 !
    I won’t go on about other export potential products in energy etc.
    Or if we will ever reverse course on all the Free Trade Agreements if push comes to shove.
    The problem is not our lack of export potential, it is allowing our market to be a dumping ground for the rest of the world.

    I will stick to the “Big Picture”.
    I see several issues that need to play out to determine if the USA falls apart soon.

    1) How will the overhanging National Debt be resolved?
    2) Can Ben B turn ZIRP into NIRP, at least temporarily?
    3) What happens in Europe if Germany bails on the Euro like it did on the US Dollar when Bretton Woods fell apart in 1971?

    I have always hoped that we are the last man standing the economic insanity runs it’s course throughout the world.
    Time will tell!

  • Dp August 13, 2012, 2:42 am

    If providing basic goods and services in a value for value exchange becomes criminalized, criminals will move to satisfy the market demand. And the criminals will not honor the government attempts at setting the value of money. The government will just become yet another failed third world dictatorship to be ridiculed and mocked by the test of the world but people with real money will still have a comparative advantage over everyone else.


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