Hell Bent on Destroying the Currency

Posted on August 26, 2011 by MN Gordon

We’re in San Francisco today taking a break from our daily labors to ride cable cars up and down Powell Street and traverse through the city’s sundried districts, like Chinatown, North Beach and Fisherman’s Warf, with our wife and son.

Looking around we see hardly a sign of economic turmoil.  People are bustling about, the hotel rooms are dearly priced, and the restaurants are full.  Perhaps a stroll through the Tenderloin would change our opinion.  But even in good times that neighborhood’s a lost cause.

The weather’s cool and foggy.  We’ve heard breathing in the moist bay air somehow stimulates the mind and body to ideas and creativities that would otherwise go missed. Like one night in 1905, when 11-year old Frank Epperson left a stirring stick in a drink he was mixing on his porch.  The next morning he discovered the drink was frozen to the stick and, if you can believe it, he’d invented the Popsicle.

So last night we gave it a try… We took in a deep breath of the cool moist air hoping to reach our inner Kerouac or Jack London in the thick bay mist.  But, alas, wherever you go you always find yourself.

And once again we have gold on the mind. Continue reading →

Posted in Inflation, MN Gordon | Tagged , , , | Leave a comment

We Are All Screwed

Posted on August 23, 2011 by MN Gordon

Travels have taken us to Pueblo, Colorado.  Until a week ago we’d never heard of the place. Yet here we are, observing life outside the Los Angeles Basin, and writing to you from the banks of the Arkansas River.

If you didn’t know, Pueblo’s located about 45 miles south of Colorado Springs.  The place was founded as a trading settlement in this mid-19th century, before Utes and Jicarilla Apaches raided the place.  But for the Native Americans it was a short victory… Steel mining and milling led to a boom several decades later and Pueblo passed from the hand of Indian tribal rule forever.

Yesterday we rode the historic Royal Gorge railroad route beneath gigantic 1,000 foot granite walls, along the winding waters of the Arkansas River.  Today we’ll be making our way to the 700 plus year old Anasazi dwellings leading to Pikes Peak.

Coincidentally, Pike’s Peak was the site of one of the greatest gold rushes of North American history.  In 1859, it was “Pike’s Peak or Bust!” for the estimated 100,000 gold seeking “Fifty-Niners” who crashed the Southern Rocky Mountains with gold fever.

Back then gold was money.  There was no Federal Reserve to print up paper notes.  To obtain money, you either had to trade a product or a service for it. Continue reading →

Posted in Economy, MN Gordon | Tagged , , , , | Leave a comment

When Hell Froze Over

Posted on August 19, 2011 by MN Gordon

“By the pricking of my thumbs, something wicked this way comes.” – William Shakespeare, Macbeth

On Tuesday, presidential candidate Rick Perry said further money printing between now and the election by Federal Reserve Chairman Ben Bernanke “…is almost treasonous.”

Immediately, politicos and pundits had their panties in a wad.  Karl Rove, White House press secretary Jay Carney, and Democratic National Committee spokesman Brad Woodhouse, among others, were compelled to denounce Perry for his “very unfortunate comment.”

Obviously, words can be dangerous things.  And they should be chosen carefully.  But come on…this is an election season after all.  What good would it be without a little hyperbole and good old fashioned populism?

When you get right down to it, Perry’s comment wasn’t too far off the mark.  Bernanke’s track record proves this.  Most notably the Fed’s Term Asset-Backed Securities Loan Facility (TALF), which, according to Matt Taibbi of Rolling Stone, “sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses.”

Was all this really in the best interest of the American people? Continue reading →

Posted in Inflation, MN Gordon | Tagged , , , , | Leave a comment

On Driving the Economy into a Brick Wall

Posted on August 16, 2011 by MN Gordon

Last Friday the University of Michigan reported a consumer sentiment measurement of 54.9 for August…down from 63.7 in July.  It has been quite a while since consumers have been so in the dumps.  In fact, consumer disposition has not been this down and out since May 1980, back when Jimmy Carter was making a mess of things in the White House.

No doubt, consumers have a lot of to be worried about.  For example, there’s high unemployment, stagnant to declining real wages, and, of course, those jokers in Washington who can’t seem to do anything right.  But what does this latest consumer sentiment reading really mean?

Axiomatically, negative consumer sentiment will lead to reduced consumer spending.  In an economy where consumer spending accounts for 70 percent of GDP a reduction in consumer spending will lead to little or no growth – or, perhaps, even contraction.  From our vantage point it appears the economy is rolling over.

Sure we could be wrong.  These things take time to fully express themselves.  But in hindsight it will be crystal clear…

Ten years from now, for instance, it will be absolutely evident that the economy’s contortions and flailings in the summer of 2011 are an extension of the Great Recession. Moreover, it will be totally clear that the Great Recession never ended Continue reading →

Posted in Economy, MN Gordon | Tagged , , , , , , , | Leave a comment