Congress’s Radical Plan to End Illegal Money

Posted on July 21, 2017 by MN Gordon

One of the many downfalls of being the United States Secretary of the Treasury is the requirement to place one’s autograph on the face of the Federal Reserve’s legal tender notes.  There, on public display, is an overt record of a critical defect.  A signature endorsement of a Federal Reserve note by the Treasury Secretary represents their personal ratification of unconstitutional money.

If you recall, Article I, Section 8, of the U.S. Constitution empowers Congress – not the Federal Reserve – to coin money and regulate its value.  What’s more, Article I, Section 10, specifies that money be coined of gold and silver and cannot be bills of credit – such as paper legal tender notes.

As far as we can tell, paper dollars are illegal money on two counts.  First, they’re issued by the Federal Reserve.  Second, they’re bills of credit with no ties to gold or silver.

What gives?  Isn’t the U.S. Constitution supposed to be the supreme law of the land?

Don’t be silly.  Anyone with half their wits about them knows the U.S. Constitution has been reduced to a mere artifact of history.  Does this bother you? Continue reading →

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Adventures in Quantitative Tightening

Posted on July 14, 2017 by MN Gordon

All remaining doubts concerning the place the U.S. economy, and its tangled web of international credits and debts, is headed were clarified this week.  On Monday, Mark Yusko, CIO of Morgan Creek Capital Management, told CNBC that:

“…we’re flowing toward the path of 1928-29 when Hoover was president.  Now Trump is president.  Both were presidents with no experience who come in with a Congress that is all Republican, lots of big promises, lots of things that don’t happen and the fall is when people realize, ‘Wait, it hasn’t played out the way we thought.’

“[By the fall], we’ll have a lot more evidence of declining growth.  Growth has been slipping.”

If you recall, autumn of 1929 is when the U.S. stock market commenced a multi-year swan dive and the economy commenced a decade long Great Depression.  This is the path Yusko believes we’re flowing toward.  To be clear, this is a path that can be extraordinarily hazardous to your investment wealth. Continue reading →

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Tales from the FOMC Underground

Posted on July 7, 2017 by MN Gordon

Many of today’s economic troubles are due to a fantastic guess.  That the wealth effect of inflated asset prices would stimulate demand in the economy.

The premise, as we understand it, was that as stock portfolios bubbled up investors would feel better about their lot in life.  Some of them would feel so doggone good they’d go out and buy 72-inch flat screen televisions and brand-new electric cars with computerized dashboards on credit.  Before you know it, gross domestic product would go up – along with wages – and unemployment would go down.  A self-sustaining economic boom would follow.

This fantastic guess, however, has proven to be a critical error in judgement.  Asset prices bubbled up, flat screen televisions and new cars were bought in record numbers, and the unemployment rate – according to the government’s statistics – went down.  On the flipside, real GDP growth only marginally lurched upward, never eclipsing 3 percent during a calendar year, and the great big economic boom that was supposed to save the economy from itself turned out to be a great big dud. Continue reading →

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Work is for Idiots

Posted on June 30, 2017 by MN Gordon

The International Monetary Fund reported an unpleasant outlook for the U.S. economy on Wednesday.  The IMF, as part of its annual review, believes the U.S. economic model isn’t working as well as it could to generate shared income growth.

On the same day, in an unrelated interview on PBS Newshour, billionaire investor Warren Buffett offered a similar outlook:

“The real problem, in my view, is — this has been — the prosperity has been unbelievable for the extremely rich people.

“If you go to 1982, when Forbes put on their first 400 list, those people had [a total of] $93 billion.  They now have $2.4 trillion, [a multiple of] 25 for one.  This has been a prosperity that’s been disproportionately rewarding to the people on top.”

No doubt, U.S. wealth has become exceedingly concentrated into a very small number of hands over the last 40 years.  At the same time the middle class has been hollowed out into a shell of its former self.  Wages have stagnated.  Well-paying jobs that could support a family on a single income have disappeared. Continue reading →

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