Why Don’t Our Experiences Match Government Statistics?

If you buy groceries, you might notice a disconnect between what you experience at the store and the number you read in the news regarding inflation.  If you receive Social Security you may wonder why your benefits seem to buy less even though you get no increase because price inflation is supposedly extremely low.
The answer is simple.  Government economic statistics are wrong.  Or, at least, they don’t match the reality people experience.
The good guy who runs ShadowStats.com explains it all to us.  (I am a subscriber only and receive no benefits if you purchase a subscription.)
In a nutshell …
If you figure unemployment stats they way they were prior to 1980, the number would be about 22% which is almost Great Depression levels.
The reason we don’t see bread-lines in the streets is because almost 60 million are on food stamps which works out to about 1 in 6 in the United States.  Great economy you have rolling there Barak.
And inflation is deliberately massaged down using “hedonics” and other voodoo so the government doesn’t have to give Social Security recipients cost-of-living increases.
Can a nation thrive with all the fraud going on?  If so, how long?  I don’t know.
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Retirement Rescinded – Part Two

In Part One of what is now starting to look more and more like a diatribe against tax-sheltered retirement plans, I discussed some of the problems that I believe are common to employer-sponsored, defined-benefit pensions plans as well as IRA and 401k plans.

Part of my issue with IRAs and 401k plans has to do with what I believe is a long-term bias that can turn into a disaster.

Of course these vehicles are a terrific way to reduce taxes during your earning years while allowing those funds to grow unmolested by taxes.  On the other hand there is no guarantee what the tax rate will be at the time of retirement when withdrawals begin.  So while there should be a net tax savings, that amount cannot be determined for certain prior to retirement.  Tax laws and rates change.

For young people these financial instruments are great.  And a market crash correction is a blessing for those in their 20s and 30s as they get to load up their funds with stocks when they are cheap. And the longer stocks stay depressed, the better.

(It is highly improper any more to speak of a market “crash.”  These declines are now just “corrections.”)

The situation folks approaching age 60 and beyond face is a very different one from those just beginning their careers.  A market that drops 40% the year you retire followed by ten years of moribund growth can be a disaster as your time horizon is very different from the 30 year-old.

And here’s my gripe.  Due to the regulations governing IRA and 401k accounts, there is a limited set of strategies individuals can employ to hedge against a major correction.  And a hedge is something that could be wise as people near or enter retirement.  Should that crash correction happen — and they do, you know — things could get unpleasant really fast.

I keep saying it — people forget how risky common stocks can be.  If you’re a retiree or hope to be one in the next 10 years, look yourself in the mirror and answer these questions:

  • Do I have a plan in place to reconfigure my portfolio, whether tax-sheltered or otherwise, to preserve my wealth in the event of a 40% to 50% market crash correction from which the overall markets will not recover for 10 years?
  • Will I be able to time the implementation of this strategy so I miss most of the draw-down from the crash correction?
  • Or will I do what many do — sit there and hope things turn around?
  • Or will I wind up selling at the bottom in desperation to preserve what’s left?  This is too often what happens.

Maybe you have so much money that a 50% haircut doesn’t matter to you.

Remember that bonds are not immune to market moves.  And the interest US treasuries earn doesn’t even keep up with inflation – if you use honest inflation figures.

I’m very worried.  But maybe that’s just my nature.

My point is simple — the long-term bias that served the IRA and 401k investors so well for decades might turn around and bite them just when they need those funds.

Being in a tax-sheltered fund limits the options to “tail-hedge,” or otherwise take specific actions to keep from being road-kill when the next crash correction arrives.  There are tail-hedging strategies that involve derivative plays and other vehicles that simply cannot be employed in a tax-sheltered fund.

So in an effort to supposedly reduce the amount of risk permitted in your IRA, those making the rules might have instead actually prohibited you from reducing that risk.

I’ll get more specific on this in the next post in this series.

As always, thanks for reading.

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Retirees Are the New Endangered Species

Sunday morning here in the Midwest sees the local iHop busy with folks just getting out of church. Many of those customers are senior citizens –  retirees. If I’m right, this will change over the next few years. Why and it what way are topics I plan to address in the coming months.

People underestimate the probability of things going terribly wrong for the economy or for their own finances. Maybe they don’t have the capacity to work through what they would do if their finances blew up. Perhaps they think that their pensions, 401k and IRA funds, and Social Security are secure. Perhaps they have no point of reference when it comes to mass failure of institutions on which they had placed their financial hopes.  Whatever the reason, the hope and confidence that millions have placed in financial intermediaries and governments for a secure retirement are going to turn to disappointment and despair.

Thing are already getting frayed at the edges. For example, how many members of the Teamsters Central States Fund expected to get a cut in retirement benefits by at least 60%?  Can other pension funds blow up?  Of course.  And they will.  We just don’t know who’ll be next and when.

Pension funds are massively underfunded, just like Medicare and Social Security.  Benefit cuts are assured.  Retirees need to have at least a Plan B if not a Plan C to implement in case they are determined to be “too wealthy” to continue to receive full Medicare or SS benefits.  Means testing is likely.

There is no agency that can backstop even a very small percentage of private pension funds if they go insolvent.  Well, the government could just print the billions or trillions needed and put the money into people’s bank accounts.  But we know what that would cause.

I’m not the first one to say it, “The most endangered species in the US is the retiree.”

Surviving this pension fund pile-up is more a matter of getting the underlying causes of market moves and disruptions right so the right strategy is employed at the right time.  Such information will likely not be provided to the retail investor by the brokerages.  I mean, did they issue the warning in 2000 or 2006-08?  Okay, so why would one think they would do so now?

So we all have to ask ourselves what we’d do if the value of the income we receive in our retirements were to drop by 50% or more.  What if the components of one’s IRA or 401k cratered and the government stepped in to “bail you out” by replacing the securities in your retirement fund with 30-year Treasuries earning 3% that cannot be sold or redeemed until maturity?

Maybe it won’t happen.  Maybe it will be worse.  Even if I were a world-class expert at analyzing macroeconomic data and government statistics, what good is that if the data is manipulated?

Those of us who are not yet retired need to get to work on this at once.  One possibility is creating a micro business that one can carry into retirement.  After all, there are only so many stores that need greeters.

I the pension disaster materializes as I expect, Grandma and Grandpa will be off to iHop one Sunday morning, but this time as employees rather than as customers.

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Russia, Israel, Iraq, Goldman, Sex and More

(The following is one of my “classics” that was written in July of 2014.  I post it now as a testimony to our government’s inability to fix the world since most of it reads like it could have been written today. See what you think.)

I feel compelled to write to you tonight. But on what topic shall I write? I’m pulled in so many directions. I try to avoid being classified as “doom enthusiast,” but it’s tough to ignore the things that are going wrong world-wide. Some of them might very well smack us right in our tail-ends. Let’s take a brief inventory and see if I can pick something out on which I can focus my meager analytical abilities.

  • Iraq is deteriorating into just about what one would expect: a failed state. Now this ISIS outfit seems to have reached Baghdad, and unconfirmed reports claim it has either taken or is shelling Baghdad International Airport. So much for trillions of dollars and a whole lot of injured or dead U. S. soldiers over the years. Not to mention the horrible conditions the people of Iraq have had to endure. The area is no stranger to religious wars, so what did the fools who started and perpetuated all this Iraq war stuff expect? World improvement is not a discipline in which governments have had many successes. But persist they will. Blockheads.
  • Closer to home, our southern border with Mexico is solid as a sieve. If there’s a policy for handling those streaming into our country, I sure cannot discern what it is. It’s not even clear who is responsible for dealing with the situation. I’m all for people having the opportunity to pursue a better life. In fact, I happen to be in that category. But this is out of control. And shouldn’t the leadership of Mexico be embarrassed by the fact that so many want to get out of their country?
  • Hamas is launching its notoriously poorly-directed rockets into Israel. I’ve never seen one of their rockets, but they must sort of be like jumbo-sized bottle rockets. You set the thing off and are just happy it doesn’t turn around and hit you in the butt. Israel has no such limitations. They have plenty of munitions that can hit the target. And they’re not afraid to use them. For some strange reason each fool who takes over the White House makes a magnificently futile effort to fix this problem between Israel and the Palestinians. It’s like some ritual they have to follow. Lemmings, the bunch of them.
  • President Putin made some remarks in the last day or so that could be considered to be distinctly uncharitable to the U. S. government. I recommend you read those remarks. I also recommend caution in dealing with him. Unlike Hamas, Mr. Putin’s weapons are unlikely to miss their targets. I actually have respect for Mr. Putin. Not that I’d want him as our leader, but he actually makes statements that sound like they make sense. And he hasn’t invaded Ukraine yet, and that makes me happy. So, at great risk to my reputation, I’m prepared to accept that he might not be a blockhead. Perhaps he’s being sincere. Or perhaps he’s just playing a very carefully planned game of chess. But I’m pretty sure he should not be ignored.
  • While on the subject of Mr. Putin, reports are that he’s trying to create an anti-U.S. dollar alliance of countries. Not that I blame him. Anyone who wants to sit on a pile of federal reserve notes or US treasuries is a lunatic in my opinion. The monetary and fiscal policies being pursued in the US are certainly not dollar positive. The great masses of US citizens are blissfully unaware of all of this. Although they are starting to figure out from their visits to the grocery store that something’s not right with the economy. I suspect they will be given plenty of additional evidence of the weakness of our economy in the near future.
  • I know very well what hyperinflation is. It’s not just jumbo-sized inflation, but rather a repudiation of the currency itself. The value of the currency drops so dramatically in so short a period of time that it collapses into worthlessness, devastating the country. I’ve been listening to well-educated and well-informed economists and investors predict hyperinflation for the US for some time. It seems like the date of its predicted inception keeps getting pushing into the future by these economists making us wonder how serious the threat really is. Since I’ve been accused of being a “doom enthusiast” I’m not going to declare the threat of hyperinflation to be just a phantom. I’m prepared to believe the threat is real — it’s just that timing problem again. Why do I believe the threat is real? Because many of the factors that have lead to hyperinflation in other countries are firmly in place here. John Williams seems like a level-headed and very bright economist. His site can be a big help for those exploring this disturbing topic.
  • Another disturbing topic is the current news about Goldman Sachs. They stand accused by a group of former female employees of, well, I’ll let you read an excerpt from the Bloomberg news story yourselves: “Women report a ‘boy’s club’ atmosphere, where binge drinking is common and women are either sexualized or ignored,” according to the [court] filing. While I abhor this behavior, if it did indeed happen, the lunacy of this is that of all the things Goldman could be accused of… You can finish that sentence yourselves.

See? Look what happens. I don’t even scratch the surface in making a list of the things gone haywire only to find that this blog post has gone on long enough. I clearly need to do a better job of planning what I want to say to you. I recognize the struggle it must be for you to plow through my musings. I only hope you are rewarded in some way or another for considering what I’ve laid out before you.

Thank you for reading. Peace.

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The US Government Hoarding Disorder

We’re all familiar with those poor souls who are plagued with what’s called a hording disorder. You’ve seen them on television specials, perhaps. Or maybe you live with one.  Their entire houses are often filled with junk that is remarkable in its volume and uselessness. And sometimes it gets so severe that it’s hard for family members to find any space even to live. I believe its one manifestation of Obsessive-Compulsive Disorder or OCD.

I have some friends who’ve had to deal with this illness, and it can have disastrous consequences.  The wife/mother kept so much junk that whole areas of the garage and basement not to mention closets were inaccessible.  Her case was relatively mild in that they did have rooms with enough free space that family members could have a bed and get some sleep.  But not much else.

The problem resolved itself, at least temporarily, when the house finally caught fire, effectively cleaning out her stash of junk.  Fortunately, no one was injured.  All in all it was a small mercy.  Insurance to the rescue.  However it remains to be seen if the house, now reconstructed, will once again get filled with useless items.  Unless her problem has been dealt with, the answer is probably yes.

It occurs to me that our federal government has the same problem.  Only instead of hoarding junk it hoards programs and departments that have no relevancy to current needs.  Unlike a room full of junk at home, maintaining useless programs and departments have a real financial cost.

The excuses are so similar.  “Well, it might come in useful someday,” would be one.  “You never know when we’ll need that and it would be awful to be without it,” is another.  Examples?

One would be the Selective Service System.  Right now a debate is raging as to whether the nation should register women as well as men.  What about a debate as to whether we still need an agency that has had nothing to do since the early 1970’s?  Do we really think a military situation is going to erupt that will require the rapid infusion of new draftees?  Especially when such a large portion of top military brass wants nothing to do with conscripts but vastly prefers volunteers?

I just happened to choose Selective Service since it’s in the news.  You can choose the programs and agencies you wish for further examples of Government Hoarding Disorder.  In fact, you should do that.  Not only you, but so should your friends and acquaintances.  Suggest it to them.

Why?  Simple.  People commonly have their “special programs” that they don’t think the nation can do without.  And if citizens have those preferences, you can guarantee that legislators, not to mention those leading those government agencies and programs, feel even stronger.

Assuming elected leadership agrees and wishes to satiate its limitless desire for growing the government, Government Hoarding Disorder will be yet one more contributor to national bankruptcy.

Of all the presidents who served within the collective memories of those living in the US today, Ronald Reagan is probably remembered as the foremost exponent of limiting the size of government.  In fact, in his campaign against incumbent Jimmy Carter, candidate Reagan criticized the Department of Energy as useless.  Yet, somehow, that department continues today.

If Reagan was unwilling or unable to get rid of a department he deemed useless, what’s the chance of one of the current contenders for the office of president doing so?  Nil.

Hence it may well be that our case of Government Hoarding Disorder will continue until our national financial house burns down.

By the way, who is it who said that there is nothing so permanent as a temporary government program?

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Yellen, Putin, and Financial Insolvency

December 19, 2015

So, Yellen & Team targeted the Fed Funds rate a quarter-point higher. Got a lot of press. The amusing part of it all is that there are any people left who think that the Fed has any credibility or knows what it’s doing.

But the big story to me was the meeting Kerry had with the Russians. He comes out of the meeting and declares one more of Obama’s “red lines” gone. Apparently now Mr. Assad no longer needs to go – Obama has “seen the light?” Now we are in substantial agreement with the Russians concerning Syria’s and Assad’s future – that it is to be left to the Syrians. The amusing part of it all is that there are any people left who think that Obama has any credibility or knows what he’s doing.

Well, with regard to money and banking, here’s a guy who did know what he was doing – the Austrian economist Ludwig von Mises. He tells us, “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” – Human Action, Chapter XX: Interest, Credit Expansion, The Trade Cycle.

A nation cannot continue to expand credit forever to cover deficits as Mises tells us. Given that the US continues to expand its debt via legislation such as that passed under the leadership of Mr. Ryan with help from his partner Mrs. Pelosi, it looks like we are opting for a “final and total catastrophe of the currency system” as opposed to a more gradual adjustment from the voluntary abandonment of credit expansion – something our leaders have proven unwilling to do.

And I have to wonder if perhaps the Russians just explained the economic facts of life to Mr. Kerry. To wit, that if we want to screw with Russia and China that they will initiate actions that will bring the US economy to its knees. If I were the Russians or the Chinese and were fed up with the US, I would use the economic leverage the US government has given them via unprecedented US debt levels. Just speculation on my part.

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Do Syria and Iraq Still Exist?

It’s time to peer outside our borders once again and see what the winds of political change have wrought. In doing so, I’ll take a look at two victims of U.S. Government assistance, Syria and Iraq. Actually, I’m not sure that last sentence makes sense. By that I mean, do those two nations really exist anymore?

What lies within the boundaries of what is labeled “Iraq” on a map is an ungovernable menagerie of tribes and religious sects that were kludged together by European powers after World War I.  I mean no insult to any of those people groups stuck in the make-believe country of Iraq. It’s just that they were forced into a political entity created by those outside their cultures. So much for “with the consent of the governed” and that sort of stuff. Not surprisingly, they object to the whole western arrangement. And it has required essentially tyrannical leadership to keep the whole thing from blowing to pieces.

Being unstable in design, Iraq has been the target of continuous interventions by western powers. The U.S. Government, unstable in its thinking, can’t resist jumping in where it doesn’t belong. Especially where oil is involved. Whatever the motivation, the results have been uniformly awful — and not just for the Iraqis. Our friend, the Law of Unintended Consequences, continues to operate outside of Washington’s control. Regardless of the lives, money, and munitions that the U.S. Government has poured into Iraq over the decades, the results can hardly be called positive. A better word would be “tragedy”.

The Middle-East is a rough neighborhood. Where there is a power vacuum, someone or some entity is going to fill that vacuum. When Washington booted out Saddam it also substantially weakened the Iraqi defenses. That this ISIS group has moved in is not a surprise at all. What has surprised me is the delay. What have they been waiting for?

The central government in Baghdad is that in name only as it does not command the loyalty of the peoples living within the borders of Iraq. As the Iraqi government tries to beat back ISIS while circling the wagons, nations are reducing their embassy staffs and getting out of Dodge.

Without a functioning government, the term “Iraq” refers only to a region of land. It does not refer to a nation. Hence it is with great sadness that, as I consider the sacrifices that U.S. service men and women have made in that region, I conclude that Iraq is a country no more. And hence those sacrifices and the billions or trillions of dollars spent in that region have been a tragic waste. That Washington intransigently refuses to acknowledge that fact is a measure of how divorced that leadership is from reality.

The situation in Syria is similar. While Washington’s involvement there has been of a different form and degree, that nation might well be considered to exist no more. Part of Syria is occupied by hostile forces. Call it a civil war if you like. Call it uprisings sponsored by western governments. But call it a real country is getting difficult.

Whenever I suffer through the agony of listening to buffoons such as Mr. McCain or Mr. Obama, I keep being drawn to a series of names. Iraq, Syria, Libya, Egypt, Lebanon, Iran, Afghanistan. Name one — just one — that is better off for Washington’s involvement.

If forced to compare the objectives as stated by the above mentioned two gentlemen and similar officials with results on the ground, one would have to conclude that all of the U.S. Government’s foreign operations have been failures.

For example, we were told by Mr. Obama that Mr. Assad had to leave as president of Syria. No doubt Washington and friends stirred up various groups a bit to help things along. But last I checked, he’s still there. The west wanted Assad gone and new leadership in Syria. The result is the opposite — Syria is gone and Assad is still governing something while other groups take over parts of what was Syria. Nice work, huh?

And what about all those “red lines” concerning Iran and its alleged nuclear weapons program? Silence. Well, perhaps that’s for the best.

I’m sorry to be so negative, but real people’s lives and livelihoods are at stake here. Not the least of which are ours. Now Washington has turned its attention to Ukraine. This might just be its undoing. See, there’s this next door neighbor to Ukraine called Russia. And unlike the other poor victims of U.S. Government beneficence, it has a nuclear weapons program. And unlike America, Russia has a leader with overwhelming support of his people.

I don’t purport to be able to see into Mr. Putin’s mind. Be we can watch his actions. And listen to what he says. I’m not predicting nuclear war. But we have heard Mr. Putin and his staff speak of destroying the U.S. dollar as a means of bankrupting Washington so it can no longer afford to inject itself into other countries’ affairs. And I believe he means to do it. And he’s got help from other nations such as China and Brazil that share Russia’s goals regarding the dollar.

I heard that Mr. Kerry was dispatched to India in an effort to get that nation on-board with Washington’s financial and geopolitical interests. I understand Mr. Kerry can chalk that trip up to his considerable string of failures. I’m not surprised. India is lining up with the rest of the BRICS. Go home, John.

Mr. Putin and other like-minded leaders are already working on plans to end the “unipolar” world, a euphemism for the U.S. Government’s global hegemony that it has enjoyed since the conclusion of World War II. Knocking the dollar off its perch will do it.

I’m going to continue to watch the USDX as a measure of the health of the dollar — and conversely the progress of Mr. Putin and his associates. I expect to see some v0latility – it won’t go straight down and may have some substantial rallies.  But it’s fate is sealed due, in large part, to dereliction on the part of US fiscal and monetary policies.

Just watch the US dollar and you’ll know a lot more about the direction of international political machinations than you will by listening to the propaganda spewed out by jackass politicians and their subservient media lapdogs.

See how easy all this is?

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US Government Offers Limited Intelligence

Let’s do a quick review of some of the conflicts in progress, brought to you by our misguided leaders.

  • Apparently for all the rockets Hamas has fired into Israel, they must not be too short on funds. Especially since it’s reported they are buying missiles and high tech gear from North Korea. See, I was wondering what that little guy in North Korea has been up to, and now we know. Unsatisfied with just arming himself so he can blow the Korean peninsula, Japan, or who knows where else to smithereens, he’s expanding his weapons business to other unstable parts of the world.
  • There was hope of an extension of the temporary cease-fire in the Israel/Hamas conflict. But those hopes have been blown to smithereens as well. Along with more of Hamas’ infamous tunnels. Another swing and a miss for Mr. Kerry. I recommend poor John emulate his boss and take more vacations. Like I’ve said before, Washington is big on hubris. And the idea that the US government can fix the Middle East is a terrific example. I profoundly question the intelligence of any US incursions into the Middle East.
  • President Obama has approved limited intelligence. Well, that’s not how the story reads, but when I saw those two words together, “limited intelligence”, I briefly thought that Washington and/or the mainstream press had a rare moment of truth. Actually it’s worse. Mr. Obama has authorized the sharing of a limited amount of intelligence information with Ukraine so they can blow the so-called rebels to pieces. He’s considering sharing even more intelligence so the Ukrainian military can better targets the insurgents. This is seen as a way of propping up Ukraine and sending a message to Mr. Putin. With these continuing attempts to provoke Mr. Putin, I wonder what he might eventually send back. Of course, there’s no reason for Washington to be propping up Ukraine or poking sticks at Putin. But, as noted, Washington does have a surplus of limited intelligence they wish to share. No doubt about that.
  • Americans are getting poorer, so says that bastion of the establishment media, The New York Times. The Times claims, “The reasons for these declines are complex and controversial.” Now there’s some fine journalism. Give the stats and then bail out of any analysis because things are complex and controversial. Then again, maybe it’s okay – just another case of “limited intelligence”. Oh, and the decline in the wealth of Americans is worse than the article says because the Times uses the highly inaccurate inflation figures generated by the limited intelligence, US government bean-counters.
  • I’ve also heard that all of Washington’s efforts in Libya have resulted in the evacuation of the US embassy there. I haven’t checked up on Syria, Chicago, or any number of other trouble spots today, so I’ll just let those ride for now so I can get on with other responsibilities.

Dear friend, I feel I’ve accomplished my purposes this evening. I’ve taken a snap shot of world hot spots, examined governmental limited intelligence, and demonstrated how government limited intelligence has impacted the US economy,

I hope I’ve made your visit to this site worth your while.

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Brazil & Ukraine: Signs of the Declining Power of Washington

Here I was, all warmed up to write on the economy and what those bilious blockheads in Washington are doing to us now. How they are destroying our currency, our livelihoods, our retirement dreams – and that’s not all. However delightful that project sounded, I found myself interrupted in my economic cogitations by the continuing story of Ukraine.

I chose the word “story” very carefully. Words like “crisis” get thrown around way too much. Sort of like the little boy who cried “wolf” one time too many. I’m not sure the situation in Ukraine is a real live crisis, a make-believe crisis, or just another run-of-the-mill conflict where politicians with bloated egos are trying to push each other around. Whatever the case, I’ve been ineluctably drawn from economics to the conflict in Ukraine. (“Conflict” is another good word for us to use. There’s always some conflict in progress wherever I look so I’m safe using it to describe most any spot on the planet.)

Let’s take inventory of what’s swirling around the media regarding Ukraine:

  • Tragically, an airliner was shot down over Ukraine killing around 300 people. Depending on who you listen to, it’s either the work of Ukrainians trying to make the Russians look bad, the Russian rebels in Ukraine trying to make the Ukrainian government look bad, the Russian government trying to make the Ukrainian government look bad, the CIA trying to make everyone look bad, or somebody just shooting the thing down by accident and trying not to make themselves bad.
  • Stories are whirling around of the distribution of Russian government flyers to those in Russia near the border with Ukraine advising them of how to prepare for an evacuation. If true, that’s interesting timing. Why now?
  • With at least 173 Dutch citizens on the plane, Mr. Obama dropped by the Dutch embassy in Washington to pledge support of an investigation and to sign a sympathy book. I can’t take issue with Washington offering its condolences, but the comment about supporting an investigation sounds ominous. Could it be that Washington intends to manipulate the investigation in such a way as to further its idiotic provocations of Russia?
  • Confirming my fears that the US government will convert this tragedy into an opportunity to poke Moscow with a stick, is a story in The Washington Post, one of my favorite establishment mouthpieces. The Post tells us to expect perhaps insurmountable problems in the investigation of this crime and in prosecuting any suspects if they can be found. We learn from our friends at the Post that, “Despite mounting evidence that Russian-backed separatists downed a commercial aircraft over Ukraine last week, Western diplomats and law enforcement officials face significant obstacles prosecuting the culprits, according to current and former U.S. officials.”
  • The Post’s article continues by describing what those obstacles are, how Washington will be involved, and how the investigation will probably be futile in the sense that those responsible will probably never be identified.

I’m not pro-Russia. I’m not anti-Russia. While I am saddened by the loss of life, the death of one American on a plane that was never in our airspace and that crashed thousands of miles from the US is not a matter into which Washington should inject itself. Clearly neither the US government nor America were the targets of this tragedy.

But inject itself it must. The miscreants in Washington can’t help themselves. Russia has apparently become an enemy, Ukraine a pal, and Washington will not miss this opportunity for meddling.

The snag in all of this which apparently is lost on Washington is the fact that Russia is not impotent. Forces are gathering internationally to strike at America’s economy when they believe the time is right. Part of those forces is spelled BRICS: Brazil, Russia, India, China, and South Africa. Various leaders of those nations have even come right out and stated their goal of dethroning Washington.

While the masses were focused on the World Cup, a far more ominous event for the US government’s economic hegemony occurred in Brazil – the creation of the BRICS development bank and a $100 billion reserve fund. While it is heralded as a “compliment” to existing international financial structures, when one blows away the smoke the purpose is clear – to replace the US dollar as the world’s reserve currency. To move power from the West to the East, a process that has been underway for some time.

I could and will write more on this as this story is not going away soon, but I have reached my capacity for this evening. And I happily note that I did accomplish what I originally set out to do – write to you on economics. And here I thought I had gotten pulled off task by discussing what’s happening in Ukraine.

Maybe it is all about the money after all?

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US Government Hubris Knows No Limit

Just when you think Washington has reached the theoretical maximum in hubris, those miscreants have found a way to push the envelop even further. This time their fanatical predilection for international meddling has manifested itself in two obscene actions, one by Mr. Obama and one by the US Senate.

The July 16th issue of the New York Times reports that Mr. Obama has taken it upon himself to tighten the vise on Russia. The article, Raising Stakes on Russia, U.S. Adds Sanctions, details his latest attempt to provoke Mr. Putin in gloriously depressing detail.

Not to be outdone, the US Senate has a bill pending called — and we’re not making this title up — the “Russian Aggression Prevention Act of 2014“. And it gets worse. I read in the beginning of the act its stated purpose: To prevent further Russian aggression toward Ukraine and other sovereign states in Europe and Eurasia, and for other purposes.  I’m speechless.

Naturally such a noble undertaking requires some money. Paging to the bottom of the bill we find the words, There is authorized to be appropriated to the Secretary of State $7,500,000 for each of fiscal years 2014 through 2017 to carry out the activities required by subsections (a) through (c) . At the moment I don’t even want to know what subsections (a) though (c) contain. There is a limit to my ability to ingest such vast quantities of stupidity and arrogance. “To prevent further Russian aggression,” indeed. You guys in Washington really think you can and should do that, huh?

In an effort to find a bright spot, however, I note that the bill is not law – yet.

Those of you who have been with me for a while can probably almost write the rest of this article yourselves. You know how I abhor meddling in the affairs of other nations. Unlike Washington, I’d prefer our government not sponsor another Cold War. The last one did enough damage — economically and politically. Unfortunately, Cold War II seems to be getting underway.

Time for some of my trade-make bullet-points:

  • Does the US Government really think it can prevent any potential “Russian aggression” from occurring as the expressed purpose of this bill states? Seems to me that “prevention” means taking action when you believe aggression is about to occur. In other words, you act preemptively. If that doesn’t give you pause, I don’t know what will.
  • I wonder if the following tidbit has anything to do with recent US sabre-rattling and sanctions against Russia: Russia ‘to reopen Cold War Cuban listening post used to spy on America’. I am just old enough to remember the Cuban missile crisis, although I was not old enough to apprehend what was happening at the time. So nice that we will apparently get a chance to hear a similar tune played now that I’m old enough to understand and appreciate the lyrics.

As I’ve often pointed out, I am regularly reminded of my shortcomings. And I’m troubled that Washington continues to demonstrate that it has no concept of its own shortcomings. This conflict with Russia is wrong on so many levels that I believe our leaders must be beset by willful blindness. Or they are from another planet. From the point of the political philosophy on which the nation was founded, this action is condemned. From the point of the state of the US economy, this action is condemned.

And with the US dollar in a perilous situation, this is insanity. It is perched precariously in its position as the reserve currency of the world. Precariously due to mismanagement of the US governmental finances by Washington, and by the desire of nations such as Russia and China to knock the dollar off the lofty perch it has enjoyed since the end of World War II in their own good time.

For those who do not know what a full blown currency crisis looks like, I believe you are about to get a real-life education. For those who think the Federal Reserve Bank can control things before they get out of hand, you are about to get an education in the impotence of central banks in such dire circumstances.

In spite of what some self-appointed sages might say, it is difficult to predict when the economic dam will break. There are a myriad of factors at work, many of which are not apparent. Few of which can be accurately measured. And remember our good friend, the Law of Unintended Consequences. I’m just going to say I’ll be surprised if the currency crisis doesn’t get underway within the next twelve months. I won’t be surprised if it gets underway yet in 2014.  On the other hand, the day of reckoning might be postpones a couple more years.

Everywhere I look I see governmental hubris and misplaced confidence. When the education begins, I hope enough citizens understand the lessons correctly.

It is my desire, dear friends, that I will be able to share some guideposts with you that might help you formulate your own views and actions. With that it mind, it’s a privilege to have you as readers.

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