Things are not always as they may appear…
In 1939, a decade into the Great Depression, and the year Hitler’s Blitzkrieg invaded Poland, investor sentiment had reached extreme pessimism. Newspaper headlines provided daily confirmation the world was coming to an end. And to a certain extent they were right.
The New York Times front page headline from September 1, 1939, shouted in all caps and italics:
GERMAN ARMY ATTACKS POLAND;
CITIES BOMBED, PORT BLOCKADED;
DANZIG IS ACCEPTED INTO REICH
Indeed, the prospects for acquiring and building wealth appeared bleak. The unemployment rate in 1939 was at 17.2 percent. Widespread bank runs had decimated people’s savings and trust in financial institutions. The most logical strategy at the time was to stuff your money in a mattress.
Many people did. But not everyone… Continue reading
Did you get a 5.4 percent raise this year?
If you answered no, then your income is being systematically diminished by the federal government’s coordinated policies of dollar debasement.
You see, according to the Bureau of Labor Statistics, consumer prices increased 5.4 percent over the last 12 months. So if your income didn’t increase by a commensurate 5.4 percent, then you are earning less than you were just one year ago.
The fact is price inflation acts as a hidden tax. It’s the government’s underhanded way to increase spending without overtly increasing taxes. Yet the tax still takes place, as the dollars in your biweekly paycheck become worth less and less.
The primary culprit of rising prices is the over issuance of federal reserve notes by the Treasury via deficit spending. This debt based money enters the economy through government transfer payments and other spending programs. There, it competes with the existing stock of money to buy goods and services. Prices rise, accordingly.
Through the first 10 months of Washington’s fiscal year, which ends on September 30, the federal government has run a budget deficit of 2.54 trillion. Continue reading
[Editor’s Note: Work duties have taken us to southern Indiana this week. We’ve used the distraction as an opportunity to ignore the latest happenings in the world of money and markets. Thus, today we recall one of the early legends of the self-publishing business…and the generous gift he offered to the little guy entrepreneur. Enjoy!]
A Man of Confections
Ted Nicholas Peterson – known to friends as “Nick” – was a man of confections. Fudge, to be exact.
At age 21, and $96,000 in debt, he started his own confectionery business called, “Peterson’s House of Fudge,” in Wilmington, Delaware. Through the 1960s, by way of savvy marketing and an intense study of the awesome power of words, Nick grew his business from one store to ultimately 30 store franchises.
But, for Nick, the love of fudge was merely a starting point. For what Nick really loved was words, marketing, and entrepreneurship – and how he could empower the little guy to succeed. Continue reading
The popular economic tune being played by the popular press drones on. You know the melody by now…
That the post-pandemic boom is alive and well. That growth is enduring. That blue skies are here to stay.
If you listen closely, however, several notes ring sour.
The Commerce Department reported on Thursday that second quarter gross domestic product (GDP) increased at an annualized rate of 6.5 percent. This may sound good, initially. But economists with Dow Jones had estimated an 8.4 percent Q2 GDP increase. Once again, extreme fiscal stimulus, at the expense of a long term debt burden, drifted off key.
The monetary policy refrain was also lacking. This week, at the Federal Open Market Committee meeting press conference, Fed Chair Jay Powell remarked that, “we’re some way away from having had substantial further progress toward the maximum employment goal.”
Thus the Fed will continue to hold the federal funds rate near zero and will continue creating credit from thin air at a rate of $120 billion per month to purchase Treasuries and mortgage backed securities in the amounts of $80 billion and $40 billion, respectively. Continue reading