Monday, December 14, 2009
Wednesday, December 9, 2009
Monday, November 9, 2009
The Dollar Depends on Politicians Now
The Dollar Depends on Politicians Now
It wasn’t too many decades ago that the dollar was, as the saying went, “as good as gold”. It was a truism, almost too obvious for mention because everyone understood the dollar’s essential attribute, namely, that it was redeemable into gold upon demand.
This redeemability was a fundamental building block that explained why the dollar had value and was readily accepted and used as a means of exchange in the purchase and sale of goods and services. The dollar did not require legal tender laws or other forms of government force for it to circulate as currency. It circulated freely by choice in place of gold, as a substitute for it because gold was too valuable to use in transactions day-to-day as currency. Gold was lost from abrasion as coins wore out over time, but paper could easily be replaced at little cost when worn.
But redeemability in practice actually meant far more than just the right everyone had to exchange their paper currency into gold coin. It imposed an essential discipline on the Federal Reserve and indeed, on the whole federal government. It was a dependable governor that throttled dollar creation because paper currency could only be printed if there was gold in reserve to back it. If the redeemability was removed, the unyielding, externally imposed discipline would go with it.
This point was well understood. After redeemability was ended by Franklin Roosevelt moments after assuming office in 1933, many thoughtful observers began to warn that an important safeguard on the quality of the currency and a necessary restraint on the growth of government had been lost. These warnings continued for years, particularly by those knowledgeable about gold. As but one example, a four-term Congressman from Omaha named Howard Buffett, who was the father of Wall Street legend Warren Buffett, in a speech on May 4, 1948 said: “Our finances will never be brought into order until Congress is compelled to do so. Making our money redeemable in gold will create this compulsion.”
Rep. Buffett’s admonition unfortunately fell on deaf ears. What’s worse, the financial mess he spoke about pales in comparison to the disarray of the federal government’s present finances. Because there has been no discipline for decades on the creation of dollars, too many dollars have been created. If the federal government wants to spend money, it is the primary responsibility of the Federal Reserve to make sure that politicians get all the dollars they want, regardless of the impact on the federal government’s overleveraged and rapidly deteriorating balance sheet.
Despite its pretentious claims and pompous rhetoric, the Federal Reserve does not exist to fight inflation or encourage full employment or regulate banks. It has achieved none of these aims, which is obvious from the fact that inflation, unemployment and bank failures are recurring, if not perennial problems.
Regardless why it was created or the initial intentions established for it, in a fiat currency world the Federal Reserve exists for only one reason – to create all the dollars the federal government wants to spend. The Federal Reserve does this job very well. Even as we have seen federal deficits soar into the stratosphere over the past couple of years, the federal government always has as many dollars as it wants to spend. However, these deficits cannot last forever, which is one of the key points made in a speech last week<>http://www.federalreserve.gov/newsevents/speech/bernanke20091019a.htm<> by Federal Reserve chairman Ben Bernanke.
He threw down the gauntlet – again, because he has made this point before. Namely, politicians cannot continue spending at present rates. “The United States must increase its national saving rate. Although we should deploy, as best we can, tools to increase private saving, the most effective way to accomplish this goal is by establishing a sustainable fiscal trajectory, anchored by a clear commitment to substantially reduce federal deficits over time.”
Like much of the rhetoric from policymakers, it sounds good. But it never translates into meaningful action. Maybe Mr. Bernanke is trying to distance himself from the dollar’s ongoing problems and put the blame on Congress and the President by highlighting that they are failing to maintain a “sustainable fiscal” policy. But like Alan Greenspan who is now trying to re-write history and put the blame for the housing bubble on anyone but himself, the reality is that Mr. Bernanke cannot totally blame politicians.
He could do what Paul Volcker did, and raise dollar interest rates to send a message to the market that he will not allow the dollar to be destroyed. But that is not likely to happen. There has been no indication that Mr. Bernanke will raise interest rates anytime soon, much less raise them to the level needed to convince the market that he intends to preserve the purchasing power of the dollar.
Sadly, the dollar is no longer as good as gold. It is now only as good as the empty rhetoric of politicians and central bankers.
J. Turk
It wasn’t too many decades ago that the dollar was, as the saying went, “as good as gold”. It was a truism, almost too obvious for mention because everyone understood the dollar’s essential attribute, namely, that it was redeemable into gold upon demand.
This redeemability was a fundamental building block that explained why the dollar had value and was readily accepted and used as a means of exchange in the purchase and sale of goods and services. The dollar did not require legal tender laws or other forms of government force for it to circulate as currency. It circulated freely by choice in place of gold, as a substitute for it because gold was too valuable to use in transactions day-to-day as currency. Gold was lost from abrasion as coins wore out over time, but paper could easily be replaced at little cost when worn.
But redeemability in practice actually meant far more than just the right everyone had to exchange their paper currency into gold coin. It imposed an essential discipline on the Federal Reserve and indeed, on the whole federal government. It was a dependable governor that throttled dollar creation because paper currency could only be printed if there was gold in reserve to back it. If the redeemability was removed, the unyielding, externally imposed discipline would go with it.
This point was well understood. After redeemability was ended by Franklin Roosevelt moments after assuming office in 1933, many thoughtful observers began to warn that an important safeguard on the quality of the currency and a necessary restraint on the growth of government had been lost. These warnings continued for years, particularly by those knowledgeable about gold. As but one example, a four-term Congressman from Omaha named Howard Buffett, who was the father of Wall Street legend Warren Buffett, in a speech on May 4, 1948 said: “Our finances will never be brought into order until Congress is compelled to do so. Making our money redeemable in gold will create this compulsion.”
Rep. Buffett’s admonition unfortunately fell on deaf ears. What’s worse, the financial mess he spoke about pales in comparison to the disarray of the federal government’s present finances. Because there has been no discipline for decades on the creation of dollars, too many dollars have been created. If the federal government wants to spend money, it is the primary responsibility of the Federal Reserve to make sure that politicians get all the dollars they want, regardless of the impact on the federal government’s overleveraged and rapidly deteriorating balance sheet.
Despite its pretentious claims and pompous rhetoric, the Federal Reserve does not exist to fight inflation or encourage full employment or regulate banks. It has achieved none of these aims, which is obvious from the fact that inflation, unemployment and bank failures are recurring, if not perennial problems.
Regardless why it was created or the initial intentions established for it, in a fiat currency world the Federal Reserve exists for only one reason – to create all the dollars the federal government wants to spend. The Federal Reserve does this job very well. Even as we have seen federal deficits soar into the stratosphere over the past couple of years, the federal government always has as many dollars as it wants to spend. However, these deficits cannot last forever, which is one of the key points made in a speech last week<>http://www.federalreserve.gov/newsevents/speech/bernanke20091019a.htm<> by Federal Reserve chairman Ben Bernanke.
He threw down the gauntlet – again, because he has made this point before. Namely, politicians cannot continue spending at present rates. “The United States must increase its national saving rate. Although we should deploy, as best we can, tools to increase private saving, the most effective way to accomplish this goal is by establishing a sustainable fiscal trajectory, anchored by a clear commitment to substantially reduce federal deficits over time.”
Like much of the rhetoric from policymakers, it sounds good. But it never translates into meaningful action. Maybe Mr. Bernanke is trying to distance himself from the dollar’s ongoing problems and put the blame on Congress and the President by highlighting that they are failing to maintain a “sustainable fiscal” policy. But like Alan Greenspan who is now trying to re-write history and put the blame for the housing bubble on anyone but himself, the reality is that Mr. Bernanke cannot totally blame politicians.
He could do what Paul Volcker did, and raise dollar interest rates to send a message to the market that he will not allow the dollar to be destroyed. But that is not likely to happen. There has been no indication that Mr. Bernanke will raise interest rates anytime soon, much less raise them to the level needed to convince the market that he intends to preserve the purchasing power of the dollar.
Sadly, the dollar is no longer as good as gold. It is now only as good as the empty rhetoric of politicians and central bankers.
J. Turk
Thursday, November 5, 2009
WIll Gold Soar
"Gold, Silver and PM stocks (not to mention gold itself) moved much higher yesterday and its taking place on on a very high volume - indicating that this is not a fake move. This is the case even though there is no breakdown in USD and the general stock market barely moved up, meaning that the PMs are very strong. If they are able soar high even without a significant help from these two key markets, then the moves corresponding to such help in the future are likely to be even more profound.
Therefore, if you were waiting to go long with the rest of your short-term capital dedicated to speculation in PMs, or you wanted to wait for a confirmation before adding to your long-term precious metals holdings - I think that it would make sense to do so now. "
Therefore, if you were waiting to go long with the rest of your short-term capital dedicated to speculation in PMs, or you wanted to wait for a confirmation before adding to your long-term precious metals holdings - I think that it would make sense to do so now. "
A great civilization is not conquered from without until it has destroyed itself within. The essential causes of the Roman decline lay in her people, her morals, her class struggles and failing trade, her bureaucratic despotism, her stifling taxes, and consuming wars. –The Story of Civilization III (1944)
Saturday, September 26, 2009
Go Slow
I read something interesting today. Something we frequently practice but surprisingly don't. “Go slow”. Hold on. After typing those two words I realized how uncommon it is to go slow. In our every growing culture of increasing competition, fighting for our place, going after the big “W”. Going slow can seem boring. Not true. Even though, the word slow has often been associated with losing one must reboot our mental hard drive and re-associate the word with our consumer culture driven drive. In our ever-demanding environments that push and pull every fiber of our beings this may be the greatest lesson of all, the one that leads to Shangri-La and helps build long lasting habits. The one that allows us to absorb, learn and excel in new skills and relax.
“This little change has more power than most people realize. It will help to learn skills from martial arts to art to computer activities. It will help form habits that are long lasting. "Slowing down will help you become more effective and ironically, help reach goals faster.” Says Zen habits
It works. It will keep you focused. It will keep you from becoming over whelmed. Multi tasking is for the birds no matter what your boss may tell you. Multi tasking increases stress, increased stress levels decrease quality of life and make us irritable and unpleasant to be around.
Realistically, my world of working fast, keeping deadlines and having to do many things at once is probably not going to go away but if I can concentrate on one thing, one thing that will require maybe 5 minutes, maybe 10, maybe an hour, or maybe 6 and stick to going slow on that one thing. Well, then I would have achieved two things. One, the task at hand hence increasing effectiveness, knowledge and skill level and two the art of going slow which will help me for a lifetime in every field. Hmmm. Would that be multi tasking?
Below Zenhabits suggest
Some of the reasons slow works, besides forming a groove:
1. Mindfulness. When you do something slowly, you can pay more attention to what you’re doing. I highly recommend that when you make changes, you do them mindfully, with full concentration. This increased awareness is necessary in the beginning, when you’re still forming the groove. Later, it’ll become automatic, but at first it’s anything but. You need to pay attention, and you can do this better when you do it slower.
2. You hold yourself back. Holding ourselves back is often considered a bad thing, but it’s not. It’s the best thing we can do, if we want changes to last. When we start a new change, often we are full of enthusiasm. But then we go all out and use up all of that enthusiasm, and run out of motivation or energy or get distracted by something else. But when you hold yourself back, you build up enthusiasm and keep it going for much longer — through that dreaded 2-3 week barrier when people often quit. So even if you want to run 3 miles at first, start with walking and then run-walking (in intervals), and only do a mile or so. You’ll want to do more, but stop yourself. Save that enthusiasm for next time.
3. You learn it right. Doing something slowly means you can learn to do it correctly, without being erratic, and later as it becomes second nature you’ll do it the right way. The importance is obvious in something like martial arts, but it’s also true in any physical activity. And every activity is physical (and mental).
4. Increased focus. When you do something slowly, you tend to do just one thing. It’s hard to multi-task and do something slowly — they don’t mix well. When you single-task, you can focus, instead of always being distracted. This leads to increased effectiveness.
5. Calm. Slow is calmer. Fast is hectic. Go slow to get rid of the chaos, and find peace.
“This little change has more power than most people realize. It will help to learn skills from martial arts to art to computer activities. It will help form habits that are long lasting. "Slowing down will help you become more effective and ironically, help reach goals faster.” Says Zen habits
It works. It will keep you focused. It will keep you from becoming over whelmed. Multi tasking is for the birds no matter what your boss may tell you. Multi tasking increases stress, increased stress levels decrease quality of life and make us irritable and unpleasant to be around.
Realistically, my world of working fast, keeping deadlines and having to do many things at once is probably not going to go away but if I can concentrate on one thing, one thing that will require maybe 5 minutes, maybe 10, maybe an hour, or maybe 6 and stick to going slow on that one thing. Well, then I would have achieved two things. One, the task at hand hence increasing effectiveness, knowledge and skill level and two the art of going slow which will help me for a lifetime in every field. Hmmm. Would that be multi tasking?
Below Zenhabits suggest
Some of the reasons slow works, besides forming a groove:
1. Mindfulness. When you do something slowly, you can pay more attention to what you’re doing. I highly recommend that when you make changes, you do them mindfully, with full concentration. This increased awareness is necessary in the beginning, when you’re still forming the groove. Later, it’ll become automatic, but at first it’s anything but. You need to pay attention, and you can do this better when you do it slower.
2. You hold yourself back. Holding ourselves back is often considered a bad thing, but it’s not. It’s the best thing we can do, if we want changes to last. When we start a new change, often we are full of enthusiasm. But then we go all out and use up all of that enthusiasm, and run out of motivation or energy or get distracted by something else. But when you hold yourself back, you build up enthusiasm and keep it going for much longer — through that dreaded 2-3 week barrier when people often quit. So even if you want to run 3 miles at first, start with walking and then run-walking (in intervals), and only do a mile or so. You’ll want to do more, but stop yourself. Save that enthusiasm for next time.
3. You learn it right. Doing something slowly means you can learn to do it correctly, without being erratic, and later as it becomes second nature you’ll do it the right way. The importance is obvious in something like martial arts, but it’s also true in any physical activity. And every activity is physical (and mental).
4. Increased focus. When you do something slowly, you tend to do just one thing. It’s hard to multi-task and do something slowly — they don’t mix well. When you single-task, you can focus, instead of always being distracted. This leads to increased effectiveness.
5. Calm. Slow is calmer. Fast is hectic. Go slow to get rid of the chaos, and find peace.
Monday, September 21, 2009
Today
Today is as good a day as any human being can have. Spent the day with good friends drinking wine, exploring our gardens, practicing my short game by the pool and laughing ...Alot.
Everyday I give thanks...I remember how lucky I am to be able to enjoy such a well designed life. A guy couldn't have it any better...Really. Doors have opened up that allow me to achieve almost complete freedom. It seems doors are always opening up as if by chance. Don't ask me because I almost don't know how it happened. I willed it and slowly but surely things started falling into place. One day I woke up and there it was....A perfectly designed life...Perfect in it's imperfection...Just how I like it.
I write, I make movies, I conceptualize, I trade, I chart (everything from stock and futures valuations, to stories, to my own life....I love graphs and when I was on my deathbed two years ago I thought of them and they brought me comfort.) I also love clearly written directions. I just became a professional swimming pool maintenance person by reading the inserted directions in the kit. I know...Exciting.
I make things grow and have the good fortune to be able to explore what I don't understand. Cooking, shamanism, you name it...If I dig it...I'll dig it out and throw it under the microscope.
My new passion is woodworking.... Whittling knobs... Hehe.... I always have new passions and am strung along by them on a daily, hourly and minute by minute basis. People like to say I'm a passion junky (not really...they don't call me a a passion junky...I call myself that....they call me obsessed, fixated...they say I have attention deficit, bipolar and sometimes they just straight up call me crazy but perception is everything so all I'm hearing is how passionate I am about so many things.
Regardless, I wake up and go to sleep when I want. Mornings: I farm and tend to the garden. I think up at least one grand idea daily. My boss resides and runs the Universe so he's pretty lax with his demands on my schedule although my understanding is that eventually I will have to go work for him full time right now he's given me complete sovereignty.
I've been lucky enough to surround myself with an elite class family. And lots of good women in my life to let me peek out of my testosterone fueled madness.
Women make it all better, man. Everything. They're better designed. Smarter. Curvier. They carry live humans inside them at times and let's face it they're a hell of a lot better to look at. They really should run more nations.
I've also come to know many brainiacs, athletes, artists, musicians.... they are my best friends.
I have loose plans for expanding and starting a global movement once I decide what it will stand for.
This was the "I" portion of my blog since it was the first one. It was to act as an introduction into the singular vision of it's author rather than a personal propaganda announcement. I like the word singular and coupled with vision it makes me sound way more interesting.... so....Im seeing double at 6am and have to go to sleep.
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