Biden is the worst president since Jimmy Carter. Oil was the problem both times. It was Arab oil in 1975. Intersest rates were 18%. So why aren't we opening Keystone. Using more of our natural gas and coal plants which are closing down?
Unfortunately, action taken in Washington DC has been largely disconnected from logic and thoughtful solutions for some time now. At worst, endless examples seem to strongly suggest a purposeful takedown of western economy and culture. At best, arrogant incompetence. And nobody paints that picture better than Bill!!
"It is the month of August on the shores of the Black Sea. It is raining, and the little town looks totally deserted. It is tough times, everyone is in debt, and everyone lives on credit.
Suddenly, a rich tourist comes to town and enters the only hotel. He puts a 100 Euro note on the reception counter, and goes to inspect the rooms in order to pick one.
The hotel proprietor takes the 100 Euro note and runs to pay his debt to the butcher.
The butcher takes the note and runs to pay his debt to the pig farmer.
The pig farmer takes the note and runs to pay his debt to his feed and fuel supplier.
The feed and fuel supplier takes the note and runs to pay his debt to the mechanic.
The mechanic runs back to the hotel to pay for the room he rented on his anniversary night.
The hotel proprietor then lays the 100 Euro note back on the counter so that the rich tourist will not suspect anything after inspecting the rooms.
At that moment, the rich tourist comes back from his inspection tour saying that he did not like any of the rooms, snatches up his 100 Euro note and leaves town.
No one earned anything; however, the town is now without debt, and looks to the future with a lot of optimism."
Question: Was the 100 Euro note even needed to accomplish the same result?
The original €100 bill was a holding bond - in exchange for being allowed to inspect rooms. There was no transaction of goods. Therefore the hotel proprietor stole the funds to pay his debts. You didn’t mention how sweaty he was when the room inspector had almost finished and was returning to the lobby - without the €100 bill awaiting him. It was a theft and a cover-up that left everyone happy the debts were paid, but otherwise in total misery without an economy or currency. Not exactly a fine moral example of how we should deal with debt in an economy. The example also suggests complete and utter bankruptcy of the economy before the “rich” tourist enters the scene. It therefore would never have happened as it’s impossible that any or all of the actors and professions existed at all. They would all have been in pure survival mode at that stage, regardless of profession if your hypothetical scenario actually were to happen.
Under the €100 bill scenario, knowing small business as I do, all parties would have created their own form of payment. I believe we are headed towards a system of barter at least for the short term. Bankruptcy is legal game where only the lawyer's fees are guarantee.
The 100 Euro note is in itself a debt instrument. What if all the money in the world was encompassed in a single 100 bill? I borrowed the $100 bill, how would I in fact pay the debt back plus interest?
Wealth is relative. If you're increasing your net worth while the majority goes over the waterfall; that's a great thing. The Central Bankers give you a fat pitch at least twice a decade. With the right strategy and some patience these apparatchik induced meltdowns can be life changing. I'm rooting the Keynesians on. A big disorderly meltdown sounds absolutely beautiful. I just hope the vaporization stays within the financial system.
Will the prices of raw materials continue to go up as countries and businesses try to keep supplying consumer needs in an electronic world, even as inflation drives down the value of every dollar earned? They should - but in this crazy world where 1Delta10TangoS are running the central banks - except for the competing green and environmental interests saying go electric, but don't mine electric component raw materials, and don't build coal/petroleum infrastructure to power all those new electric mandates.
A very entertaining article, Bill. Thank you. We face the same dilemma here in Canada with over educated, inexperienced people getting elected/appointed to positions that are way over their heads. It's a train wreck like no other.
Bill, It seems to prove all you need is a degree and kiss the right butt to be in government today.If some of the readers think Carter was the worst President we've had,than I won't insult your intelligence by suggesting you read"President Carter" by Stuart Eizenstat.Am I a Democrat or a Republican,no,just a free spirit.
The purpose of the story was to prove something that everyone in the Black Sea town has yet to understand: They never needed the rich tourist or his 100 Euro note.
All they needed was to create their own domestic/insular currency which all or many agree to accept as a vehicle of debt payment. It could even be paper scrip printed at the hotel, as long as it is created only at the moment of the transaction (for example, wealth creation), and not before (which would be inflationary).
In fact, a community could member-issue IOUs as money, which is exactly what the 100 Euro note momentarily took the place of. What is final is that money is the RESULT of economic actions, and not the PREREQUISITE of it.
A miner of gold or silver effectively creates money with every ounce of precious metal he discovers. Human labor, natural scarcity, and usefulness is what creates gold and silver's "intrinsic value." There is no cheating as with debt-based fractional reserve currencies. Privately issued money does not even need to be backed by gold or silver (although it is very wise to do so), as long at it is backed by a reliable community front of labor and goods.
While gold and silver coins have been historically proven the most reliable form of money, other non-metals money substitutes may also serve (at least locally). Money is mearly a storehouse of wealth, and all wealth really originates from human effort.
And by the way, you could never pay the debt back plus interest . . . even if the holder(s) of the 100 Euro note were to loan it to you; therefore, the question becomes an academic exercise.
I very much respect the insight and comments of Bill and his comrades and am wondering if Bill has ever tried to set up a meeting with Powell, Yellen or any other high-ranking Fed honcho to discuss his thoughts and predictions which seem to be hitting the bullseye regarding the Fed spending and subsequent runaway inflation. I would think Sir Bill would carry the kind of clout that would at least justify a meeting.
Ahem...Bill is not working in secret [think dept of jokers & clowns]. His books, his twitter account are in the public domain. 'They do not want the truth'! Denial works so much better, right up to the time that it doesn't. I have re tweeted his Diary articles a dozen times and, to date, I don't think anyone has written me to know more or even to comment.
Biden is the worst president since Jimmy Carter. Oil was the problem both times. It was Arab oil in 1975. Intersest rates were 18%. So why aren't we opening Keystone. Using more of our natural gas and coal plants which are closing down?
Unfortunately, action taken in Washington DC has been largely disconnected from logic and thoughtful solutions for some time now. At worst, endless examples seem to strongly suggest a purposeful takedown of western economy and culture. At best, arrogant incompetence. And nobody paints that picture better than Bill!!
That was an excellent article the other day on the absolute lack of real business world experience by the members of the Fed.
Is it possible to post the salaries of this group or is it a better kept secret than what SCOTUS maintains?
A monetary fable --
"It is the month of August on the shores of the Black Sea. It is raining, and the little town looks totally deserted. It is tough times, everyone is in debt, and everyone lives on credit.
Suddenly, a rich tourist comes to town and enters the only hotel. He puts a 100 Euro note on the reception counter, and goes to inspect the rooms in order to pick one.
The hotel proprietor takes the 100 Euro note and runs to pay his debt to the butcher.
The butcher takes the note and runs to pay his debt to the pig farmer.
The pig farmer takes the note and runs to pay his debt to his feed and fuel supplier.
The feed and fuel supplier takes the note and runs to pay his debt to the mechanic.
The mechanic runs back to the hotel to pay for the room he rented on his anniversary night.
The hotel proprietor then lays the 100 Euro note back on the counter so that the rich tourist will not suspect anything after inspecting the rooms.
At that moment, the rich tourist comes back from his inspection tour saying that he did not like any of the rooms, snatches up his 100 Euro note and leaves town.
No one earned anything; however, the town is now without debt, and looks to the future with a lot of optimism."
Question: Was the 100 Euro note even needed to accomplish the same result?
The original €100 bill was a holding bond - in exchange for being allowed to inspect rooms. There was no transaction of goods. Therefore the hotel proprietor stole the funds to pay his debts. You didn’t mention how sweaty he was when the room inspector had almost finished and was returning to the lobby - without the €100 bill awaiting him. It was a theft and a cover-up that left everyone happy the debts were paid, but otherwise in total misery without an economy or currency. Not exactly a fine moral example of how we should deal with debt in an economy. The example also suggests complete and utter bankruptcy of the economy before the “rich” tourist enters the scene. It therefore would never have happened as it’s impossible that any or all of the actors and professions existed at all. They would all have been in pure survival mode at that stage, regardless of profession if your hypothetical scenario actually were to happen.
Under the €100 bill scenario, knowing small business as I do, all parties would have created their own form of payment. I believe we are headed towards a system of barter at least for the short term. Bankruptcy is legal game where only the lawyer's fees are guarantee.
The 100 Euro note is in itself a debt instrument. What if all the money in the world was encompassed in a single 100 bill? I borrowed the $100 bill, how would I in fact pay the debt back plus interest?
well put mr. bonner! a perfect analogy! if only more people knew!
Wealth is relative. If you're increasing your net worth while the majority goes over the waterfall; that's a great thing. The Central Bankers give you a fat pitch at least twice a decade. With the right strategy and some patience these apparatchik induced meltdowns can be life changing. I'm rooting the Keynesians on. A big disorderly meltdown sounds absolutely beautiful. I just hope the vaporization stays within the financial system.
I wonder....
Will the prices of raw materials continue to go up as countries and businesses try to keep supplying consumer needs in an electronic world, even as inflation drives down the value of every dollar earned? They should - but in this crazy world where 1Delta10TangoS are running the central banks - except for the competing green and environmental interests saying go electric, but don't mine electric component raw materials, and don't build coal/petroleum infrastructure to power all those new electric mandates.
,5% not .05%, eh?!
Only good thing about inflation is paying off debt. Find ways to save! Collectively cutback purchasing “any wants”.
Please keep writing, I love your analogies and thought process. You bring smiles while telling difficult truths.
Thanks, Missouri Boy. I was born in St. Louis.
A very entertaining article, Bill. Thank you. We face the same dilemma here in Canada with over educated, inexperienced people getting elected/appointed to positions that are way over their heads. It's a train wreck like no other.
That response was intended for AFriend, not you. If I made a mistake I apologize. I generally agree with you.
Bill, It seems to prove all you need is a degree and kiss the right butt to be in government today.If some of the readers think Carter was the worst President we've had,than I won't insult your intelligence by suggesting you read"President Carter" by Stuart Eizenstat.Am I a Democrat or a Republican,no,just a free spirit.
But for authoring long-term, lasting damage, the award must go to Oblowme...
The purpose of the story was to prove something that everyone in the Black Sea town has yet to understand: They never needed the rich tourist or his 100 Euro note.
All they needed was to create their own domestic/insular currency which all or many agree to accept as a vehicle of debt payment. It could even be paper scrip printed at the hotel, as long as it is created only at the moment of the transaction (for example, wealth creation), and not before (which would be inflationary).
In fact, a community could member-issue IOUs as money, which is exactly what the 100 Euro note momentarily took the place of. What is final is that money is the RESULT of economic actions, and not the PREREQUISITE of it.
A miner of gold or silver effectively creates money with every ounce of precious metal he discovers. Human labor, natural scarcity, and usefulness is what creates gold and silver's "intrinsic value." There is no cheating as with debt-based fractional reserve currencies. Privately issued money does not even need to be backed by gold or silver (although it is very wise to do so), as long at it is backed by a reliable community front of labor and goods.
While gold and silver coins have been historically proven the most reliable form of money, other non-metals money substitutes may also serve (at least locally). Money is mearly a storehouse of wealth, and all wealth really originates from human effort.
And by the way, you could never pay the debt back plus interest . . . even if the holder(s) of the 100 Euro note were to loan it to you; therefore, the question becomes an academic exercise.
It is a hopeless situation.
I very much respect the insight and comments of Bill and his comrades and am wondering if Bill has ever tried to set up a meeting with Powell, Yellen or any other high-ranking Fed honcho to discuss his thoughts and predictions which seem to be hitting the bullseye regarding the Fed spending and subsequent runaway inflation. I would think Sir Bill would carry the kind of clout that would at least justify a meeting.
Ahem...Bill is not working in secret [think dept of jokers & clowns]. His books, his twitter account are in the public domain. 'They do not want the truth'! Denial works so much better, right up to the time that it doesn't. I have re tweeted his Diary articles a dozen times and, to date, I don't think anyone has written me to know more or even to comment.