We were never on the silver standard; we were on a gold standard. Gold has always been thought of as money for over 5,000 years. JP Morgan famously said, in a House committee hearing, "Money is gold, and nothing else."
Great article, as usual. Peter, can you write or discuss your thoughts on transferring these billions or trillions from Boomers to their offspring as they pass away? I'm curious about the macroeconomic impact.
I would think that the impact would be to keep the money siloed in a small segment of the population where it is now . It will just be in different bank accounts.
Paper currency and now electronic currency have no ties to physical limits when the money supply is manipulated to fine-tune economic activity. Years ago, money experts discounted any linkage between money and productive effort. The price we pay for that ignorance is the fiscal chaos of our times.
You're right on every point. You might have mentioned that ballooning income taxes on middle and low earners left even less available spendable income from which to invest. Legislators have less motivation to hold or reduce rates of lower earners because the get much more financial support from high earners, not only in generous campaign donations, but in bribes for generous legislation, like bought and paid for monopolies for power, internet, and phone providers.
The income tax should be uniform across the board, as well as simple. But Congress never cares about us, which is why I don't even bother voting anymore. If you aren't rich or famous, your Congressman or Senator doesn't care one iota about you. Thus, the income tax is a mess and will continue to be so.
My reading of the constitution is that incomes are not to be taxed. The sixteenth constitution violated that prohibition. It should have never been added. Never-the-less, you are right, if we are to have one, it should be uniform. The graduated system adds a level of corruption and should be abolished. It invited congress to add wording and processes that the rich could afford to pay for exceptions and exclusions.
There is no doubt that a convergence of factors has made it almost impossible to save money today. Another factor is financial ignorance. If people (especially young folks) are not taught the value of saving, they likely won't save. If you were in school in the last half of the twentieth century, you likely had a bank account in the form of passbook savings. The banks (and your parents) encouraged you to save a percentage of your allowance (or parents gave you the money) each week. Once a month the bank posted your interest (4 or 5%). You were able to literally watch your savings grow. You had to be 18, or have your parents do it, to make a withdrawal. Aside from something special you really wanted, withdrawals were seldom made. By the time I was 18, I had over $3000 in my passbook. I never spent birthday or holiday gifts-- they all were deposited. Today, youth don't understand things like compound interest or "pay yourself first". Today, the young people have no money smarts. Never mind saving, they are taught to borrow at a tender age. How can anybody get ahead when they are encouraged to be debtors?
Of course, when banks were paying fractions of 1 percent, it is hard to get your child excited about so little interest. As always, the bankers win and Americans lose.
You have to cultivate the mindset of saving before spending early in life. I remember saving up for purchases in the late 1960's after getting my first real job. I have always been a saver before being a spender. Even retired on a relatively fixed income, we (my wife and I) can still save money every month and our income is well below average.
But the real kicker was using some of those savings for investments that lost money and spending money on a bunch of useless things. Then you look out at the world where corruption reigns supreme and you get to thinking what future am I saving for? I can understand the younger generations losing trust in the system.
"Part is trade deals that opened markets but didn’t open theirs." Free trade doesn't work when there are massive differences in wages and benefits. When the US allowed China to enter the WTO, there was probably little America put out, other than unprocessed farm products, that China would want and could maybe afford.
Trump, like the Federal Reserve, always rewards debtors. Trump wants lower interest rates, which certainly don't help savers but will help inflation. Retirees, instead of using CDs, not have to play the stock market casino to hope for a decent return. The bankers destroyed the old 5 1/4% mandated passbook savings rate. Now we have businesses which cannot even survive with anything close to regular interest rates. Eventually, interest rates will be forced up by the need to feed the National Debt.
The debauchery of the currency has penalized the low income saver. Coin silver and the stability of the value of the currency will incentive savings.
We were never on the silver standard; we were on a gold standard. Gold has always been thought of as money for over 5,000 years. JP Morgan famously said, in a House committee hearing, "Money is gold, and nothing else."
Great article, as usual. Peter, can you write or discuss your thoughts on transferring these billions or trillions from Boomers to their offspring as they pass away? I'm curious about the macroeconomic impact.
I would think that the impact would be to keep the money siloed in a small segment of the population where it is now . It will just be in different bank accounts.
This is good, I’d like to see this too.
Paper currency and now electronic currency have no ties to physical limits when the money supply is manipulated to fine-tune economic activity. Years ago, money experts discounted any linkage between money and productive effort. The price we pay for that ignorance is the fiscal chaos of our times.
Appreciate these insights
Excellent summary of our situation and challenges.
You're right on every point. You might have mentioned that ballooning income taxes on middle and low earners left even less available spendable income from which to invest. Legislators have less motivation to hold or reduce rates of lower earners because the get much more financial support from high earners, not only in generous campaign donations, but in bribes for generous legislation, like bought and paid for monopolies for power, internet, and phone providers.
The income tax should be uniform across the board, as well as simple. But Congress never cares about us, which is why I don't even bother voting anymore. If you aren't rich or famous, your Congressman or Senator doesn't care one iota about you. Thus, the income tax is a mess and will continue to be so.
My reading of the constitution is that incomes are not to be taxed. The sixteenth constitution violated that prohibition. It should have never been added. Never-the-less, you are right, if we are to have one, it should be uniform. The graduated system adds a level of corruption and should be abolished. It invited congress to add wording and processes that the rich could afford to pay for exceptions and exclusions.
Excellent article – always succinct and straight to the bullseye of the issue. Thanks Peter!
Yes. Thank you. Why this isn’t general conversation in society, I don’t know. Exactly the same as you describe in Australia. Once again, thanks!
There is no doubt that a convergence of factors has made it almost impossible to save money today. Another factor is financial ignorance. If people (especially young folks) are not taught the value of saving, they likely won't save. If you were in school in the last half of the twentieth century, you likely had a bank account in the form of passbook savings. The banks (and your parents) encouraged you to save a percentage of your allowance (or parents gave you the money) each week. Once a month the bank posted your interest (4 or 5%). You were able to literally watch your savings grow. You had to be 18, or have your parents do it, to make a withdrawal. Aside from something special you really wanted, withdrawals were seldom made. By the time I was 18, I had over $3000 in my passbook. I never spent birthday or holiday gifts-- they all were deposited. Today, youth don't understand things like compound interest or "pay yourself first". Today, the young people have no money smarts. Never mind saving, they are taught to borrow at a tender age. How can anybody get ahead when they are encouraged to be debtors?
Of course, when banks were paying fractions of 1 percent, it is hard to get your child excited about so little interest. As always, the bankers win and Americans lose.
You have to cultivate the mindset of saving before spending early in life. I remember saving up for purchases in the late 1960's after getting my first real job. I have always been a saver before being a spender. Even retired on a relatively fixed income, we (my wife and I) can still save money every month and our income is well below average.
But the real kicker was using some of those savings for investments that lost money and spending money on a bunch of useless things. Then you look out at the world where corruption reigns supreme and you get to thinking what future am I saving for? I can understand the younger generations losing trust in the system.
But interest rates don't pay anything like in the 1960s, especially after inflation.
You nailed it…The FED!!!
The Fed and every other bank are all economic rapists.
I asked Google the other day what the current deposit reserve is…
ZERO!!!
If that’s true, we’re dealing with banks that are completely insolvent.
No more fractional reserve. ZERO!
They keep loaning us money they don’t actually have.
Then we pay interest on it.
Interest on fantom money!!!
Then we’re the scum of the earth if we miss a payment.
This scam has gone on long enough.
The great reset is the debt reset.
It can’t be paid off.
It’ll have to be reset.
Germany did it after WWII.
We’ll have to do the same.
It’ll likely be a reset from the dollar to Bitcoin.
But it won’t come without war.
The central banks can’t operate without national debt.
So they’ll fund wars to keep us distracted.
And/or cause economic collapse like they have before to consolidate the banking industry by crushing the small ones.
The Fed is the greatest scam ever pulled.
Any moderately intelligent person can see it doesn’t make sense.
Where’d they get the money to loan in 1913?
Who filled the Fed’s coffers so they could start lending money to the U.S government and all the poor countries? (They keep them poor by the way).
Every single government sponsored initiative (especially climate change) is just a money laundering scheme.
They launder our buying power and strip it away.
They’ve already raped generations not even born yet.
My little grandkids have already had their buying power stolen by the Fed.
When is it enough?
"Part is trade deals that opened markets but didn’t open theirs." Free trade doesn't work when there are massive differences in wages and benefits. When the US allowed China to enter the WTO, there was probably little America put out, other than unprocessed farm products, that China would want and could maybe afford.
Trump, like the Federal Reserve, always rewards debtors. Trump wants lower interest rates, which certainly don't help savers but will help inflation. Retirees, instead of using CDs, not have to play the stock market casino to hope for a decent return. The bankers destroyed the old 5 1/4% mandated passbook savings rate. Now we have businesses which cannot even survive with anything close to regular interest rates. Eventually, interest rates will be forced up by the need to feed the National Debt.