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I highly recommend what is just an incredible article in today’s Wall Street Journal by Lewis Lehrman called “The Nixon Shock Heard ‘Round the World.” The article recounts President Richard Nixon’s machinations in 1971, where he decided to go the wholly statist route of separating the dollar from the gold tether set in place during the Bretton Woods Conference of 1944, and at the same time impose wage and price controls on major portions of the U.S. economy — ostensibly to “battle inflation.”
As the article relates, by dint of his weaselly charm alone, Nixon somehow got his entire economic team– including Paul Volcker who later became Fed Chair under Carter and Reagan– to buy into this radical (and authoritarian) policy, which marked the true acceleration of the dollar’s decline to this day, as the graph included in the above-linked article illustrates:
It’s kind of incredible, but that was what passed for a “Republican” back in those days. And as much crap as we give Jimmy Carter for continuing (and in some cases exacerbating) these policies in the following years, the progenitor was the “Republican” Nixon. He destroyed the Bretton Wood’s Agreement, and our last tie to a stable currency, leading the U.S. into its first hard decline since the Great Depression.
So let’s give thanks to the true “progressives,” who worked within the Republican Party to return to the more classical liberal economic policies characterized by Murray Rothbard and Milton Friedman, policies which emphasized non-statist and individual influences as the prime actors in an efficient economy, rather than those of the top-down centralized planning influences of John Kenneth Galbraith and the big government types who’d dominated since Woodrow Wilson and Franklin Roosevelt’s eras.
True, we’ve had a slip back in the last number of years, but it’s not like there has been no institutional learning. Even though misguided and flawed bills like Obamacare are passed, no overt attempt to control mass wages and prices will likely every be attempted again by a President or Congress.
We must also, however, remain ever vigilant that such coarse moves are never bruited about — even in the worst of economic times.
I sold nothing today, NOTHING. Why? Mostly because everything was up for the jump, and then I had meetings all day and just decided I’d wait for Tuesday morning to take my decision. Besides, I’m hedged on most everything large from last week, so I’m not overtly concerned about “safety” at this point.
I will be in relatively early tomorrow and let you know what I’m doing.
Best to you all.
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I’m with you.
took a few coins of the table, calls on WNR,WLT. sold puts, PH,WLT
regards
chuck
Jake!
I finished my trimming back to a respectable core today, save one.. will sit tight with the rest. Thank you again sir.
things are turning ugly again…not calling a 500 point drop here but….futures are sliding
Normally, I ship your political posts. But the last 2 where first I read in its entirety.
Keep it going.
…. I swear, that ship was a skip when I hit submit … boy I am getting dyslexic in my old age and there is no edit button, I should not post before my first coffee….
I thought you were saying you shipped them to your mother or something. I was prepared to be flattered.
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Interesting post.
The article is even better. Make sure you read it… an interesting example of overstepped Executive Power.
Can’t believe no one called him on it. Too bad the hippies back then were so dumb.
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ha ha tricky dick
Nixon, yea, he was a bastard. It’s bad enough that he separated us from the gold, but he really was as close to a tyrant this country ever had. Somewhere around FDR the two party system melded into the big government statist system with Republican and Democrat wings. By the time Nixon came along he determined he could do whatever he wanted as executive. He was a disgrace. That was a time that the media at least pretended to be objective. I have to assume they would have gone after him even if he had been a Democrat. Today I am not sure the media knows how to do anything but carry water for their dear leader.
Turnaround Tuesday. I sold nothing yesterday nor bought anything, not that anyone cares. In 2008 we had rallies of 11%, 17% and over 20%. We have thus far rallied 10%. I doubt the melt up scenario. Europe is going to trap us in the news cycle of death and I suspect we head back down. Whatever shit that Goldman and the Fed were up to following the Fed announcement last week is pretty much over. Options week is always interesting but I suggest that we may not grind higher because of it. We shot a nice load yesterday and I figure we are going back down a ways. Just my thoughts of course. Maybe we hit 12K by September. I doubt it and will be in no hurray to make purchases. In fact I may add a few short ETF trading vehicles to cushion any decline in my LT portfolio. Not huge purchases because those things scare me to death but just enough to keep the boat steady.
I had hoped we would melt back up so gold would come down but it looks like it is more inclined to go to $2000 than return to $1500. Again, I don’t know shit and prefer to simply vent and bloviate about that which vexes me concerning the markets. I don’t want to be too cynical about the economy and markets but I do not want to find myself in denial like so many either.
You know, it wasn’t that long ago that I thought these “prepper” people were craaaazy. Dude, why are you buying barrels of rice? Why do you have 50 boxes of shotgun shells? Why is your closet filled with water jugs? Why do you have bags of old coins? Now I find myself preparing. Maybe I got sucked into the doom and gloom vortex. The marital unit went down to the extension service office and learned to can. We head over to the farmer’s market and buy veggies. Now my shelves are lined with delicious canned goods like my grandma used to have. And she is making jam that is to die for. We started a small garden in the yard. Surprisingly it is providing. We stock up on bullets. We have enough food stored to last, we figure, for 3-4 months. 6 if we really had to stretch it I suppose. And if we mention this to most people they think we are being overly cautious, wasting our time/money or are just crazy conservative red necks. We don’t bring it up anymore except to those we are rallying around like family, friends and church.
Anyway, sorry for taking up your time and space. Good luck today.
I have not yet gone the “prepper” route. What kind of weapons are you storing away for those bullets. I’m told a decent pump shotgun should be the first purchase.
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I’ve been told that a shotgun is your best bet if your concern is home protection. The reason is that if you were woken in the middle of the night by a home invasion, your odds of actually hitting your mark with a pistol in such a high stress situation are greatly reduced. With a shotgun you just fire from the hip and as long as you’re close, you’ll get the job done. That’s what I’ve been told, as I’ve recently been looking at purchasing a .45 (I swear, ever since I moved to Texas a little under a year ago, I’ve had the itch to own a firearm, must be something in the water) and everyone tells me to get a shotgun first.
That’s exactly what I’ve heard. My bro is a cop out in Cally too, he says “.45 for stopping power.”
Yeah, in Tejas, “keeping up w. the Joneses” means having the appropriately fashionable hand cannon.
Where’d you move to?
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Moved to Sugarland in October from beautiful Dana Point, CA. Once my daughter was born (Our 2nd child, have a five year old son too) we wanted my wife to be able to stay home instead of taking them to daycare. Really hard to leave Cali, but to be perfectly honest, it was just too hard to be a single income family there. The crash of ’08 really hit us hard, as both the Mrs. and I worked for the same bank, which of course failed.
I still really want a .45, but the shotgun is at the top of the list, and that will be purchased in the next few weeks. What county is your bro serving in?
Marin. He’s in high cotton area. Not too many gang bangers.
Dana Point is niiiiiice. I have another bro who lives in the San Diego area.
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One of my brothers lives in Marin (Novato). Really nice up there. San Diego is nice too, my wife worked in Oceanside, not sure if you’re familiar with it. I worked out of our Corp Office in Newport Beach. Let’s just say it has been quite the change moving to Texas.
Well, yeah, Houston being the Queens NY of the Southwest. Sprawl and concrete everywhere. Can’t argue with the state income tax levels however, and it’s nice to be warm in the winter.
A tetch brutal in the humid summers of course.
Yeah, I know Oceanside too. Newport Beach is pretty nice as well. High cotton.
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How did you finally pull the trigger? Mrs I live in Irvine. Spent few years in Newport Beach (renting). Don’t own a house yet, although we have looked around, still think it needs to fall another 50-75k in certain areas. Only other areas we’d consider moving to are Philly/NYC.
Where you @ Impac?
Started looking for work in the Houston area. Flew out for an interview, accepted the position, went home and started packing. I hate to make it sound so simple, but once you have your mind set, that’s it. I loaded up a 26′ truck and made a vacation out of it. We hit the Grand Canyon and the Carlsbad Caverns in New Mexico on the way here. Just bought a house in May in a place called Sienna Plantation. You should check out their site, it’s insane what kind of value you get here. They have so much to offer for kids, it’s sick.
Yea, the first purchase for home defense is a shotgun. A standard Remington 870 or Mossberg 500 will do the job. You can swap out the barrels easily, long for hunting, short for defense. Get yourself some self defense loads. Buck shot will go through a lot of walls which isn’t cool.
I live in a concealed carry state and carry a .380 in a pocket holster. Effective range about 8 feet, LOL. I carry a Makarov when traveling, camping, etc. It’s heavy and getting ammo for it is not exciting but I love it.
The next on the list would be an assault rifle. Any AR/AK will do. It’s generally thought that trying to bring a deer down with a 5.56 is inhumane. A 7.62 is the better choice. Why would you have this in your arsenal? Because it is far better to engage the target at a distance than up close. Will that ever be necessary? I dunno. How bad could things get? I do not own one currently. No where convenient to practice with it.
Grab yourself a .22 for target practice. The ammo is far cheaper and you won’t have any trouble shooting the rounds at target ranges. Whether rifle or handgun.
Interesting… i’d never heard of the Makarov. Looks like the pistol version of an AK – – in that it has a simple action and contains easily replaced working parts.
Somewhat ironic that you are a fan of Soviet weapons!
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Indeed, the simplicity can’t be beat. Many prefer the AK to the AR/M-16 as well. Just look at respective dissasembly charts to see why.
It is ironic, but when it comes to price and action it is a fine handgun. The Czechs make some really good weapons as well like the CZ-75/85. Not as flashy as a Kel-Tec or Glock or grand as the SW1911, but a splendid gun nonetheless. I chose the Makarov over the CZ-75…used. The SW1911 is out of my price range as is most Glocks and K-T.
Remington 870 Supermagnum (cheap, takes 2.75-3.5 inch shells, customizable). Then an SKS or AK. Then a good long range hunting rifle with a good scope (like a 7mm magnum), then a powerful handgun or two. After that, the basics are covered and you can just buy whatever you want to for fun.
Although I don’t like Nixon, we owed countries around the world 40,000 tonnes in gold and we only had like 7,000. What choice did we have? He made a “strategic default” because the US was underwater on their loan in gold. Although Vietnam contributed, all the debt prior wasn’t his fault. (yes people will officially call it something like a “debt restructuring” and not a default but I see it as default because you paid a gold debt in paper)
You can blame part of that for the vietnam war, and part of it on the previous ponzi scheme unfunded liabilities made by johnson and kennedy that also would have had no possible way of being paid for. Or the lack of financial education in our school system so the leaders can fall for the scam recognizing it will get them more votes because the US isn’t financially educated even at the basics to know that the decisions made will bankrupt them and not give them a better future.
we owed countries around the world 40,000 tonnes in gold and we only had like 7,000. What choice did we have?
Sell assets to buy more gold. That’s what the whole hedge was there for, so you don’t get yourself too deeply into debt.
“Derrr”
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What “assets” would you suggest? Entire states? We were broke… The system only works as long as the nation is solvent and trusted, otherwise around the world those that hold the reserve currency suddenly demand physical delivery of gold until the dollar is tied to no gold because the US doesn’t have any. This was coming either way starting after we escalated the spending from the korean war and entered the vietnam war was far more costly than anticipated, but presidents Kennedy and Johnson also had a bunch of ponzi scheme social programs that would have been impossible to pay for. He didn’t just do it “just for fun” it was a strategic default essentially.
Foreign Governments had the guarantee that they could always trade their dollars for gold. As long as American monetary policy was TRUSTED, and debt was not OVER EXTENDED, there was no problem. But, in the late 1960’s Washington lost its credibility. The printing presses were churning out dollar bills at full speed to pay for the costly Vietnam War. This led to a huge dollar surplus, and a rising deficit on the American trade balance. Set against the dollar, the appreciation of gold was strongly below par. No one wanted, the dollar, they wanted gold! From May 1971 onwards many countries responded by trading billions of dollars against gold. The safes of the bullion depository at Fort Knox, emptied rapidly. By retracting the promise that the dollar could be traded for gold, Nixon was able to save the countries remaining gold supply and keep the dollar as the reserve currency. If the foreign governments raided the gold entirely all at once in the following few years… This may be a stretch but we wouldn’t have any assets left, and the country we owed our most debt to and thus transferred all our gold/assets to would have likely became the new world reserve currency as well.
One way or another, we were going to pay the price someday for the social security + medicare ponzi schemes, the fiscally irresponsible war… Sound money does not work with a fiscally irresponsible nation. You cannot have a lasting gold standard for longer than a few decades without bankrupting the country if you do not have fiscally responsible leaders and a population that is financially intelligent enough to know the difference.
Yes, I am familiar with the leadup and the “reason” for taking us off the gold standard.
And the answer to your question was “yes, you sell assets (not entire states, unnecessary) until you’re in balance” — or you decouple the dollar price of gold and let it price naturally (easier), and get your fiscal house in order by tearing down the Ponzi systems ASAP.
We lasted for 25 years past FDR on a gold exchange promise… it was only adding to the camel’s back that necessitated our leaving it.
Unload the camel first, next time.
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I bet Alberta would be happy to buy one of your Hawaiian Islands at the next auction.
The Feds do not own Hawaii the state. They may, however, own some property on one of her islands… they own some 75% of the land west of the Mississippi.
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Key West perhaps?
Oh, good news! Fitch just reaffirmed our AAA rating!
Now I can sleep at night. Whew.
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“no overt attempt to control mass wages and prices will likely every be attempted again by a President or Congress”
I fully expect price “controls” in the next few years
Not if there are Republicans in power. Again, the knowledge base is too deep… government can’t get away with that shit anymore. Too many people know that it never works…
And that’s important, because if you read the above article, you’ll note it’s pretty clear that Nixon had absolutely no idea how deleterious to the economy that stupid policy would be.
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I’d expect more fiscal responsibility from tea party members than this:
http://tpmmuckraker.talkingpointsmemo.com/2011/08/tea_party_rep_bank_should_have_known_i_wouldnt_be_able_to_repay_22_million_loan.php?source=patrick.net
Tea Party aligned Georgia Rep. Tom Graves (R), who castigates Washington for fiscal irresponsibility, reached an out of court settlement Wednesday after he was sued for defaulting on a $2.2 million loan — which his attorney argued is the bank’s fault for lending him the money in the first place.
Graves and his business partner Chip Rogers — who is the state Senate’s Republican majority leader — took out a $2.2 million loan from the Bartow County Bank in 2007 to buy and renovate a local motel. The project soon went belly-up.
The bank, which has since failed and had its assets taken over, sued Graves and Rogers for defaulting. The two Republicans then countersued, “accusing [the bank] of improperly declaring the loan in default after reneging on a promise to refinance it at more favorable terms,” according to Jeremy Redmon and Aaron Gould Sheinin of the Atlanta Journal-Constitution .
In June, Simon Bloom, the attorney for Graves and Rogers, argued in a court filing that the default was the bank’s fault because it lent the pair the money knowing full well they couldn’t pay. Bloom cited a deposition in which bank officials saw Graves and Rogers’ financial records, and then had them sign personal guarantees so they’d “‘have some skin in the game’ presumably meaning a sense of personal obligation for the debts … even though they clearly could not fulfill the obligation.” Graves and Rogers said they were unaware of that particular filing.
The case was settled out of court on Wednesday, and a Graves spokesman called the case “fully resolved in an equitable and fair manner.”
Talking Points Memo on Facebook
Graves and Rogers bought the motel through a limited-liability company, which they transferred to John Edens in 2009. They say that as a result they’re not responsible for the loan repayments — or for the $41,500 in unpaid taxes, penalties and interest owed the town and county for the motel. The AJC reports that Edens fell behind on electricity payments and had to shut the motel down. He then stripped it of anything of value.
The city says the abandoned site has become a nuisance, and estimates it would cost $100,000 of taxpayer money to tear it down.
Graves, who won a special election in 2010 to replace Rep. Nathan Deal (R), voted against the House bill to raise the debt ceiling on August 1st. TPM readers will also remember Graves’ dire warnings about President Obama’s mechanical “autopen” that he feared could one day be used to sign phony legislation.
LOL @ Talking Points memo and the typical lefty misunderstanding of business and personal finance. People make investments all the time using limited liability companies to shield their personal exposure. You don’t have any trades that went badly?
Individual’s finances have absolutely no parrallel with the fiscal character of the United States, and our nation’s spending beyond our capacity to finance the overage. If we were held to the same standard as an individual, the whole nation would be foreclosed and locked up in a debtor’s gaol.
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For me the article was more about personal responsibility. I’ve never heard of talking points before this morning. I don’t know if the bank should have provided them with a loan or not based on their financial standing, however if they signed a personal guarantee (which seems to be a point of contention) and the deal goes badly they should be held accountable to whatever terms they have agreed to. Transferring to LLC probably doesn’t waive the guarantee. If I sign and goes badly and I know what the downside is then I’m stuck with it. Claiming the bank shouldn’t have given me money doesn’t cut it.
We can extrapolate to all the folks that took out neg am home loans. End of the day, most probably shouldn’t have been provided loans, however they signed their name. Yes, there were sketchy mortgage companies and yes, there were sketchy loan agents, but I was taught to never sign something I didn’t fully understand. I do think there is blame all around in the situation.
There’s a difference between signing a personal guarantee and putting the asset in an LLC. If he signed a personal guarantee then he is liable and needs to either pay the loan or declare BK.
That still has nothing to do with wanting to make sure the US gets its fiscal house in order. In fact, personal exegesis might make one even more sensitive to the peril the US is in.
Whatever the story, it’s a cheap shot by the main lefty at TPM to obfuscate the point of good fiscal policy by trying to cast an advocate for that status in a bad light. It’s cheap politics, and dishonest as well.
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damn you for making me look up exegesis on wikipedia.
🙂
or classify it as ” do as I say, not as I do” … a classic GOP remedy!!!
Again, the only reason Dems are not called out much for their hypocrisy is because they have low standards of personal behaviour.
One of the risks of advocating for a righteous life is that one’s failures (which are inevitable, for we are all human) will always bear the risk of bringing the label “hypocrite” on one’s head.
Well guess what? Occassionally failing is no reason to give up, and the increasing number of Dems willing to shrug of bad behavior (mostly because they like to indulge in it publicly) is far worse than the greatest examples of alleged “hypocrisy” one can muster.
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All of that is irrelevant when speaking of the egregious fiscal position of this country, however — as not even Warren Buffet would ever be allowed to get as upside down as the US has gotten with regard to its obligations.
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Another TX governor that speaks before thinking … Ugh!
No, no, really, we want four more years of the Thinking Man’s Thinker, Obama.
Can’t you Dems do anything but attack ad homenum? You are your own worst enemy. Why not spend this time recalling Barack’s policy accomplishments instead?
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You think I’m happy with him either …. the pussy does too much negotiating and gives away the store for minor gains to his base … he needs to get tough on policy that makes a difference not the short term gains.
Like his vote against raising the debt ceiling a while back.
No, like conceding tax extensions for a few more weeks of unemployment … that did nothing to help the deficits and only provided a few more weeks of relief for unemployed while giving two more years of tax cuts to those that didn’t need them … the “job creators” who haven’t provided any jobs now for 9 months and counting.
Jake … it’s middle of the road …. cuts and revenue make for a left wing liberal?
I’m not explaining your stupidity to you again Teahouse, so forget it.
You don’t raise taxes in a recession. The taxes were cut 8 years ago. Clue in, or don’t… you may just not have the capacity, I dunno.
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with an expiration date … the whole story Jake.
What part of revenue and cuts hurts you so much … corporations don’t stimulate economies during depressions … your tax cut extensions don’t provide jobs … the only job creator during a depression is the government but the GOP is seeing to it that we get no jobs bills passed under the guise of austerity for our children and grandchildren’s sake …. what a rouse! You want to compare us to Europe … look no farther back than their latest austerity measures and the ensuing riots there …. coming to a city near you soon if your party doesn’t put the country ahead of their own interests.
The riots are due to “austerity measures?” Lol. What’s been cut for the chavs?
No, the riots are because too many of them are unemployed FOREVER, the fruits of an entrenched welfare state.
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So Obama hasn’t been left enough for you?
Is this another example of your “Slightly to the left” politics?
😉
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Perry already opening up a double digit lead on der Mittens.
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Sorry – time for a rant.
While traditionally I’ve been ID’d with Dems, I consider myself fiscally conservative. I’ve voted both Dem and Rep, based on who I felt the best person for the job would be. Realistically I would welcome a third ‘centrist’ party. The squabbling over the debt ceiling and balanced budget just makes me sick from both parties. Cutting future spending increases does not count as cutting spending to me. Too many political games
Personally I’d like to see Jeff Immelt feel bad about GE not paying any income taxes and offer up a few hundred six sigma black belts to look at making our biggest outlays more efficient starting with Medicare and Social Security. I’m not even talking about cutting the benefits at this point, although I’m open to it; just make the process of delivering these programs as efficient as possible. Second, stop the fraud – charge those that commit fraud with treason – they are deliberately taking advantage of the system.
The defense department reminds me of Ford and GM a few years ago – lots of different groups and lots of political games. Both GM and Ford had great products to offer consumers. The only problem is that they were part of the European group and not North American group. NA groups bosses wanted to feel relevant and forced them to build separate cars instead of focusing on selling the car in NA market. I know there are different needs for each of the different branches of military, but there is plenty of overlap. Look at the mess the Littoral combat ship has been.
I’m 30, I’m sick of this. My wife and I have not over extended ourselves, we’ve been saving money for years and still haven’t purchased a house, we don’t have any credit card debt.
I just see political gamesmanship and ‘pissing matches’. Yes I voted for Obama, will I vote for him again, I don’t know. With the current political system, do I think one person can make a difference, not really.
My main point is that my generation (at least I hope) sees all the political games and is sick of it.
Well, I just plan not to have any assistance from the gov’t — soc sec or Medicare wise — ever. I think you’ll be good following that plan.
And you are smart not to have bought a house. Unless you find your dream home, I would stay away for at least another two years.
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…. and then you find that the guys that play the game honestly are the long term losers as the cheaters and spendthrifts seem to get bailed out over and over … the honest guy keeps paying for his neighbors transgressions and never gets rewarded for his effort. Our society rewards the wrong players.
Yup. Wish I bought a house, took out a heloc, bot a boat load of gold and silver, declared bk, got my credit score back to 700 a few years later and waited things out.
If you are worried about the cheaters and the spendthrifts and the lazy and the slothful getting “bailed out” let your local Congresscritter know.
Teahhouse, I think yours is Barney Frank… give him an earful on that latest “too big to fail” Dodd Frank Bill, not to mention his refusal (still) to reform Freddie and Fannie.
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Don’t let him know … throw his ass out and demand term limits!
Jake, you’d be wrong as usual when it comes to politics … Frank is Taunton, Keating is Cape Cod. Stick to your knitting … Gold!
Whichever, the whole state is rife w. commies. Pick your targets.
Get to work!
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You went to school here as well right? W&M?
Amherst Collective.
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I love this.
I love that av.
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This web site does not render appropriately on my android – you might want to try and fix that