The Sisyphean Folly of Printing Press Money

Something remarkable happened on Tuesday.  The Dow Jones Industrial Average (DJIA) broke the 30,000 point barrier for the first time ever.  President Trump commemorated the feat by calling the number “sacred.”

Some Americans were especially grateful as they said their Thanksgiving Day grace.  These generally include wealthy owners of stocks and other financial assets.  Forty years of inflationary monetary policies have elevated their prosperity to holiness.

The remaining Americans, through no fault of their own, missed out on these sanctified blessings.  Perhaps they’ll get some leftover table scraps for Christmas.  These, indeed, are the questions being asked.

Will Washington make this a Merry Christmas for cash strapped Americans?  Will the Treasury send out a second round of $1,200 stimulus checks for the yuletide?  Will Congress be Ebenezer Scrooge or Mr. Fezziwig?

These are important questions as 2020 approaches its twilight.  And this is the season of giving.  After months of rolling lockdowns ordered by state and local governments Americans need relief.  Moreover, they must first receive from Uncle Sam so they can give to their fellow kindreds.

This was a recent finding of a Franklin Templeton-Gallup survey.  Specifically, the survey found that 16 percent of Americans plan to spend more on holiday gifts this year.  But with another $1,200 stimulus check, 22 percent of Americans say they will spend more this holiday season.

Somehow, Christmas spending has become dependent on government stimulus checks.  But, remember, government stimulus is dependent on printing press money.  And printing press money is dependent on the dollar retaining some semblance of value.

Thus, herein lies the sacred folly.  The more that printing press money’s emitted, the more value the dollar loses.  We’ll have more on what this means for you and your wealth in just a moment.  But first some context…

Eternal Punishment

Sisyphus, the cunning king of Corinth, may have cheated death twice.  But Zeus ultimately got the last laugh.  Sisyphus was condemned to the eternal punishment of forever rolling a boulder up a hill in the depths of Hades.

Odysseus, the hero in Homer’s Odyssey, after descending into Hades, observed Sisyphus in his never ending tedium.  Odysseus provided the following account:

“Then I witnessed the torture of Sisyphus, as he wrestled with a huge rock with both hands.  Bracing himself and thrusting with hands and feet he pushed the boulder uphill to the top.  But every time, as he was about to send it toppling over the crest, its sheer weight turned it back, and once again towards the plain the pitiless rock rolled down.  So once more he had to wrestle with the thing and push it up, while the sweat poured from his limbs and the dust rose high above his head.”

The torturous task of Sisyphus’s condemnation was impossible to complete.  But what was worse: The physical exertion of pushing the boulder uphill?  Or the senseless repetition of having to do it again and again?

The futility of it all likely proved to be far more painful than the act of pushing the boulder itself.  From our experience, tender hands and a sore back quickly recede in the triumph of completing an arduous job.  Yet the drudgery of a meaningless task is further compounded when it can never be completed.

Corporate lawyers, for example, contribute little of meaningful value.  They may save their clients big bucks.  And for that they receive handsome compensation.  Yet they work long hours, delving into tedium and minutia.  Their work never ends.  Many are overweight.  Nearly all are miserable.

Likewise, paper pushers within government agencies make a career out of pursuing the meaningless.  The silver lining to the hell of their employment is the promise of a bountiful retirement.  Their dream, it seems, is a retirement where they can pursue the meaningless in comfort.  For many, this dream turns out to be a nightmare.

Here’s the point…

The Sisyphean Folly of Printing Press Money

We are living the Sisyphean folly of printing press money.  With each passing decade, extreme monetary and fiscal policies distort the economy and financial market in irregular and insane ways.  When the lopsided effects become wholly unstable the inevitable crisis arrives.

The solutions from the Federal Reserve and Congress are always the same.  To inject credit into financial markets and the economy.  Yet each bailout iteration requires greater and greater applications of credit.  What’s more, each bailout iteration then leads to the next crisis.

From Black Monday in 1987 to the savings and loan crisis of the early 1990s.  Then through the Asian financial crisis in 1997 to the dot com bubble and bust at the birth of the new millennium.  And on to the housing collapse and Great Recession in 2008-09 to now the 2020 fiasco.

The fingerprints of central planners are everywhere.  Yet, like Sisyphus, their task is never complete.  They’re resolute in their attempts to control the uncontrollable…while making a giant mess.

Many governments throughout history have attempted to stimulate the economy by debasing the currency.  Such vigorous and persistent attempts to substitute natural laws in finance for the wishes of legislatures are doomed.  Complete financial, moral, and political collapse always follows.

The folly would be comical if it weren’t so destructive.  Thanks to the planners’ handiwork, we’ve arrived at the absurd place where printing press money is being requested for Christmas.

How people earn their livelihood is no laughing matter.  Government interference through lockdowns or other penalties, to then provide compensation via printing press money is a downright insult.  And it has far reaching ramifications.

The dollar is being systematically destroyed.  This destruction has been going on for 107 years; since the passage of the Federal Reserve Act in 1913.  It has been going on in earnest since President Richard Nixon closed the gold window in 1971.

However, the $3.1 trillion deficit in 2020 to paper over the economic consequences of government lockdown orders is something special.  The Treasury in concert with the Fed is financing deficits with printing press money, and calling it stimulus.  This is outright dollar debasement.

What does this mean for you and your wealth?

Remember, the money you’ve saved, in addition to being property, also represents time and the sacrifices made to earn it.  When the Fed inflates your money away it not only steals your money.  It steals your life.

Albert Camus, in his 1942 essay The Myth of Sisyphus, saw Sisyphus as characterizing the absurdity of human life.  But Camus concluded:

“The  struggle itself toward the heights is enough to fill a man’s heart.  One must imagine Sisyphus happy.”

We’re not so sure.  Still, we keep on pushing.

Sincerely,

MN Gordon
for Economic Prism

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