Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
US COVID-19 Death Toll Higher Than China’s Now. Will Gold Rally? - 4th Apr 20
Concerned That Asia Could Blow A Hole In Future Economic Recovery - 4th Apr 20
Bracing for Europe’s Coronavirus Contractionand Debt Crisis - 4th Apr 20
Stocks: When Grass Looks Greener on the Other Side of the ... Pond - 3rd Apr 20
How the C-Factor Could Decimate 2020 Global Gold and Silver Production - 3rd Apr 20
US Between Scylla and Charybdis Covid-19 - 3rd Apr 20
Covid19 What's Your Risk of Death Analysis by Age, Gender, Comorbidities and BMI - 3rd Apr 20
US Coronavirus Infections & Deaths Trend Trajectory - How Bad Will it Get? - 2nd Apr 20
Silver Looks Bearish Short to Medium Term - 2nd Apr 20
Mickey Fulp: 'Never Let a Good Crisis Go to Waste' - 2nd Apr 20
Stock Market Selloff Structure Explained – Fibonacci On Deck - 2nd Apr 20
COVID-19 FINANCIAL LOCKDOWN: Can PAYPAL Be Trusted to Handle US $1200 Stimulus Payments? - 2nd Apr 20
Day in the Life of Coronavirus LOCKDOWN - Sheffield, UK - 2nd Apr 20
UK Coronavirus Infections and Deaths Trend Trajectory - Deviation Against Forecast - 1st Apr 20
Huge Unemployment Is Coming. Will It Push Gold Prices Up? - 1st Apr 20
Gold Powerful 2008 Lessons That Apply Today - 1st Apr 20
US Coronavirus Infections and Deaths Projections Trend Forecast - Video - 1st Apr 20
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20
US and UK Coronavirus Trend Trajectories vs Bear Market and AI Stocks Sector - 30th Mar 20
Are Gold and Silver Mirroring 1999 to 2011 Again? - 30th Mar 20
Stock Market Next Cycle Low 7th April - 30th Mar 20
United States Coronavirus Infections and Deaths Trend Forecasts Into End April 2020 - 29th Mar 20
Some Positives in a Virus Wracked World - 29th Mar 20
Expert Tips to Save on Your Business’s Office Supply Purchases - 29th Mar 20
An Investment in Life - 29th Mar 20
Sheffield Coronavirus Pandemic Infections and Deaths Forecast - 29th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

America – Then and Now – Part 1

Politics / US Politics Jul 29, 2017 - 03:55 PM GMT

By: Andy_Sutton

Politics

Yesterday Andy had a chance to go on Liberty Talk Radio and talk about what is going on economically. We decided that despite what we felt was a great show, that it didn’t even scratch the surface in terms of the differences between how things used to be and how they are now. Particularly disturbing is the relative lack of understanding or willingness to even accept the changes that have taken place by the majority of the population. The latter is called ‘normalcy bias’. It is something ingrained in each of us as a human and either reinforced or stunted by our experiences. We aren’t sure how far down the road of ‘Then and Now’ we’ll get in today’s installment. There may be future installments.


What is most important for people to understand is the effect time and delay have on human perception. Here’s a good example. If you took the American Economy of the 1950s and turned it over a period of a few months into the American Economy of today, no one would recognize it. It would have been chronicled in the media as being the worst crash in history, and so forth. But spread the same events out over a half century and not only do people not notice, they tend to embrace the changes (even the negative ones) as part of the new ‘reality’. A sense of learned helplessness sets in and apathy is soon to follow.

While this revelation will not be news to many of the readers of this column, we have been reached out to recently by a cluster of people who are first starting to become aware of what is going on around them. To be totally honest, they’re tired of being lied to by the mainstream press about pretty much everything. We find this encouraging. In addition to pointing them towards a few precious and trusted resources online, we’ve promised to put together some educational tidbits which will give them the ‘other side of the story’. At least they will have given themselves the chance to create an informed opinion about matters, rather than opting to have one spoon fed to them by the Goebbles-ish mainstream press.

Part One – Then

By ‘then’ we mean the pre-fiat age for sure and, for good measure, the pre-central bank era as well. We might add that before the ink was even dry on the Constitution, America was back at war. Not with Britain or a principality, but with elements within its own leadership who wanted a central bank as the main player in the economy. People like Robert Morris and Alexander Hamilton were instrumental in pushing these early central bank models. Fortunately, there were individuals like Thomas Jefferson and even George Washington who, despite their respective roles as statesman and military genius, knew enough economics to understand that a central bank issuing notes at its own leisure was more dangerous to the new nation than any army could ever be (more on this below). If only our politicians today understood just half of what these men did. Notice I call today’s leaders ‘politicians’ and not ‘statesmen’. There’s a huge difference and we’ll just leave it at that. There are few precious examples, the most well-known being Dr. Ron Paul.

The Coinage Act of 1792 specified that a ‘dollar’ was to be a silver coin, weighing 371.25 grains. The silver was to be as pure as technology would allow. Today that is 99.9% pure. Even purer that Ivory soap. Over time, banks were created and while the banks were allowed to issue paper notes, they had to have the silver in house to back up the notes. But similar in fashion to how the grain bankers used to rip the people off thousands of years ago by over issuing notes, the silver banks of the early 19th century pulled the same stunts. One thing has never changed and that is human greed. No matter how much we get, we always want more. It’s universal. Some people resist it better than others, but everyone battles with greed.

As you can probably guess, the silver bankers did the same thing as the grain bankers. They issued more notes than they had silver so they could use the extra notes to make themselves ‘rich’. The biggest problem back then is people were pretty sharp and eventually it became obvious that there was way too much paper floating around and the people would run on the bank and attempt to redeem their silver. The bank would eventually run out and run to the already corrupted USGovt, which let them off the hook, ruling it wasn’t necessary allow redemption for all notes. It is somewhat unclear if the law ever laid hands on these bankers, but if today is any indication, then we lean towards ‘probably not’ as a good choice. Cynical perhaps, but with plenty of backing from current happenings.

Difference #1 – The Monetary System

The takeaway from all of this is that those Americans understood what money was. It wasn’t a piece of paper. It was something that had scarcity, intrinsic value, was an accurate store of wealth, and could still be a unit of account. You could have x number of ounces of silver or x number of coins just as easily as you could have y amount of dollars. In addition, like paper money, the silver coins were homogenous (they were all the same). What is stated above is probably the most important economic difference between then and now. The awareness of the people was a check on wanton robbery by the monetary ‘authorities’ of the day; in this case, the silver bankers. The monetary system is an important component of the foundation of any economic system that wants to expand beyond direct exchange (barter) and its limitations such as coincidence of wants. In the next installment, we’ll discuss how things changed from this point where the populace was enlightened to the point where the populace was dumbed down and couldn’t care less about stores of wealth and intrinsic value. If these things are important to you when it comes to your money, then you’re one of a different 1 percent. You have something in common with the great thinkers who founded this Republic. The one we couldn’t keep. But it wasn’t the fault of the Founders or the Republic. We were warned.

We cannot stress how important the issue of understanding the monetary system is. Everything – literally everything that goes on in our economy stems from the monetary system. Growth, inflation, deflation, employment, price levels (note this is different than inflation/deflation), and trade. Everything. If you have an honest monetary system, you have a decent shot at an honest economy. Much better than average in fact. Reason being if you have enough leaders who understand this issue and understand it deeply, then almost by definition they will be committed to making sure that not only is the monetary system honest, but the systems of government that spring up around the economy are honest as well. Washington and Jefferson got it. Our guys today? We are sure some of them get it, but it is not politically nor financially expedient for them to pursue an honest system. Their economic advisors understand it almost universally, yet pursue a dishonest system to their own enrichment and at your expense – and ours.

Difference #2 – The Central Bank

Much like the monetary system, the central bank model is another important component of the foundation and, unfortunately, the central bank model of the past few hundred years is corrupt from birth. The model is a carefully designed and constructed system. A system developed with one intent – to rob a nation of its wealth and conscript said nation to a lifetime of servitude. A mouthful, yes. True? Absolutely. We and many others have laid it out, but if you’re new to all this, a great read on the topic is ‘Creature from Jekyll Island’ by G. Edward Griffin. Were it up to us, this would be required reading in every school in America, and the rest of the world for that matter. One debate that has never really gotten much momentum in today’s discourse about economies, financial markets, and so forth is the need for a central bank at all. Sadly, most of the discourse surrounds how much power these institutions should have beyond what they already possess.

As we pointed out earlier, the first attempts at central banks in the new United States of America were squashed because there was a general awareness amongst not only the leaders of the day, but the populace as well, about what could happen. Jefferson spoke poignantly in saying the following regarding central banks:

"I believe that banking institutions are more dangerous to our liberties than standing armies," Jefferson wrote. "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around (these banks) will deprive the people of all property until their children wake up homeless on the continent their fathers conquered."

How much did he miss by? Are we homeless? Of course not, we have houses! Who owns them? Huh. Well, we do. What about that pesky mortgage that is due the first of the month or whenever? Who really owns that house? Who really owns that land? Who really owns the vehicles we drive around while we work longer workdays and take on more menial jobs to continue making payments? Exactly. Jefferson didn’t miss by much. Were it not for the credit available, which is directly attributable to the US central bank (privately owned, despite popular opinion otherwise), the living standard of the average American would have already taken a serious thrashing. This thrashing would have really started to show in the early 1990s, but would have been evident – and felt long before that.

Again, this series of articles is not meant to be all inclusive, but a primer for some and hopefully a reminder for others. Congress will undoubtedly ignore it. The Keynesians will laugh at it, cite their Harvard, Stanford, and Yale degrees in Economics and ask why they are Nobel Laureates while we are obscure, little known peons. That’s ok. Jamie Dimon over at JP Morgan will scoff and tell us how healthy the USConsumer is while said consumer is buried in JP Morgan’s (as well as others) debt. The USGovt will continue to break the law by continuing to operate above the joke that is referred to as the ‘Debt Ceiling’. The US Govt will also continue to break the law by incessantly violating Gramm-Rudman-Hollings – the balanced budget law passed in 1985. Like the laws of Economics, the laws of the land don’t matter when the population is unaware; much unlike the same population 240 years ago. Let that sink in. We’ll be with you again soon with more on ‘Then and Now’.

Graham Mehl is a pseudonym. He currently works for a hedge fund and is responsible for economic forecasting and modeling. He has a graduate degree with honors from The Wharton School of the University of Pennsylvania among his educational achievements. Prior to his current position, he served as an economic research associate for a G7 central bank.

By Andy Sutton

http://www.andysutton.com

Andy Sutton is the former Chief Market Strategist for Sutton & Associates. While no longer involved in the investment community, Andy continues to perform his own research and acts as a freelance writer, publishing occasional ‘My Two Cents’ articles. Andy also maintains a blog called ‘Extemporania’ at http://www.andysutton.com/blog.

Andy Sutton Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules