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Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

 
Best of William Histed
November 10,2008
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WHY SHOULD IT BE A GIVEN

THAT THE DOLLAR ALWAYS

DECREASES IN VALUE?

By WILLIAM HISTED

As if he didn't know the answer, soon to be former Vice-President Dick Cheney scolded the public on what it doesn't save more paper dollars. The U.S. savings rate is at 0 percent, or even in the negative column, he noted.

And why shouldn't it be?

Would you invest in a stock that was all but guaranteed to go down in value each and every year? Who would buy investment properties that were all but pre-determined to crash in value over the long-term?

The general investing public has been under the claim by the investment sales industry that "stocks always come back," and "long term you can get rich in stocks."

And so, Wall Street, the government and central bankers do anything to prop up this huge house of speculation.

In recent years, those who speculated in the stock market or speculated in real estate were rewarded by official and unofficial policy of the Federal Reserve Bank and the U.S. Congress. Those who truly throught they were saving in a "constant," the U.S. dollar, have been severely hurt by the loss in purchasing power. Such people often look at the constant NUMBER of dollars, not the VALUE and future value of those dollars which is not constant at all, but which is like a chart line that follows a course always south.

It is hard to convince savers that the future VALUE, or purchasing power  of their saved dollars is EVEN MORE IMPORTANT than the number of those dollars.

When was the last time the Federal Reserve Bank or the Congress intervened in the market place it is supposed to be regulating to help the holders of bank savings accounts or certificates of deposit keep up with inflation? As a matter of fact, the prudent savers have been taken advantage of by the money inflators.

Congress will come up with huge and immoral spending schemes to prop up the stock market and "the economy," but it does nothing to help the prudent who have saved paper dollars escape the ravages of inflation Congress and the central bankers create with their fiat "money."

The holder of a bank passbook savings account is masacred by the loss of purchasing power over a period of time, but I have yet to see the Federal Reserve Bank or Congress intervene to help them. No one is worried about their loss of real purchasing power.

No, the great god of our government and society seems to be the stock market and speculators.

This is not an accident. For as long as there have been governments and their central bank counterparts creating funny money has there been the issue of helping the debtor class at the expense of savers.

Remember that corporate banks, investment bankers, commercial banks and the like are using someone else's money, basically, so the loss of purchasing power of money is of little concern to them. They make their money on commissions and "spreads" of what they borrow money for and what they turn around and lend it for. In most cases, the real "owners" of the money are savers who bear the loss of purchasing power long term, not the money changers who simply handle the money for a fee or  "spread."

Also remember that among those we call the "debtor" class are many of the largest corporations. It is not unusual to find major U.S. and international corporations with debt equal to 50 percent and even 80 and 90 percent of their total resources. Their land, buildings, equipment, etc., are not hurt by the decline in the value of the dollar, but in fact are helped by it in a way. Those are real physical assets that one may argue does not go down "in value" with inflation.

Warren Buffett talks about his ideal of a great business would be a toll bridge in inflation. The value of the bridge goes up with inflation, and it would cost would- be competitors that much more to build their own bridge to compete. And with inflation, you can easily raise your tolls and people will pay it.

So the huge corporate debt hanging over our economy is paid back in much cheaper "dollars." The interest is also deducted from the corporate income taxes as a business expense. So you can see why many big companies actually "benefit" from inflation.

Government is another huge borrower, in fact, the BIGGEST, and it, too will replay lenders in "cheaper dollars."

One only wonders what recent purchasers of U.S. Treasury notes were thinking by taking miniscule interest rates and even having to pay federal income taxes on such interest as the principle of money will be eaten up by inflation in the years ahead. It is virtually a "given" that the dollar is going to be worth each and every year. No wonder our savings rate is so low.

And the common variety of bank interest payments are so low and treated unfairly at tax time that one wonders why anyone even saves for the long-term only to watch the value of the dollar erode as farm soil erodes in a flood.

There again, Congress has stepped in over the years to favor Wall Street and stock speculators by giving them preferred treatment on the taxation of dividends, such as with capital gains rates and other priveleged tax treatment.

We are abusing our "currency" as a nation. It would show even more than it does except that most of the other nations and their central bankers are doing the very same thing.

Down the road, it doesn't look good for most of the world's unbacked paper currencies or for the people who "save" these depreciating pieces of paper.