Interesting Snippets from the CMRE

Although there are no small number of high-profile individuals who maintain that our fiat-based monetary system is one of the biggest reasons why our country is in the mess it is in, one group has been preaching the gospel of "sound money" for more than three decades: the Committee for Monetary Research and Education. In "Gloomy Picture Perhaps Worse Than It Seems," trading advisor Rick Ackerman, editor of the Rick's Picks, highlighted some interesting snippets from the CMRE's most recent meeting, held last week in New York:

Gloomy forecasts have generally held sway at the Committee for Monetary Research and Education’s annual spring dinner, but this is the only time we can recall when there were no optimists on the dais bold enough to challenge a consensus now gloomier, probably, than at any time since the 1930s. Jim Grant’s off-the-cuff talk was about as sunny as the evening’s presentations got, and even he was unwilling to allow much more than a ray of hope that everything would somehow turn out all right. Bob Hoye, on the other hand, was unequivocally bearish: “The chances of anyone fixing this mess,” he told the crowd, “are literally zero.” But the scariest talk of the night came from Bill Beach, director of the Heritage Foundation’s Center for Data Analysis.  If you find today’s economic news too depressing to imbibe, he said, “things are even darker than they seem.”

A self-described data junkie who loves to delve into the statistical facts behind the headlines, Beach says today’s economic numbers are so appalling that he’s “scared to death” to look at them.  What is most extraordinary about these times, he said, is that government at all levels has never been so willing to take on more debt. As a result, said Beach, our children will be paying back interest and principal for many, many years to come. How much do we owe? Beach asked one person in the room to stand up.  That one person — one among a hundred in the banquet room of New York City’s Union League Club that night - could be said to represent the $182 billion required to bail out just one insurer, AIG. But if you add in the expenses the federal government will incur maintaining Social Security, Medicare and Medicaid over the next 20 years, you’d have to stack the entire room’s dinner guests up to the ceiling to equal the final tally. Nor will we likely be able to grow our way out of debt, said Beach, since, in order to succeed, today’s five-year-old would need to be three times as productive as we are now while getting his pocket picked clean by the tax collector.

Teapot Dome ‘Delay”

So when will the system finally unravel?  Barron’s editor Jack Willoughby reminded the audience that it took seven years for the Teapot Dome scandal of 1921 to have a measurable impact on the economy. Pressures are building this time as well, many of them attributable to corruption and scandal, and sooner or later something will have to give, said Willoughby. “Risk always hits at the weakest point.”

Hoye concluded the evening with a sobering look back on history. He noted that the economic contraction following the Panic of 1873 lasted for more than two decades, until 1895. Although the Federal Reserve came into existence two decades later and was holding the discount window wide open at the time of the 1929 crash, that didn’t prevent the economy from slipping into the Great Depression, noted Hoye, founder of the Vancouver-based Institutional Advisors. Quoting from a 1932 Barron’s editorial, the speaker reminded the audience that all of the Fed’s anti-deflationary remedies had failed, and that bonds had gotten sucked into “the vortex of deflation.”  As much could be said of the federal government’s current, recklessly extravagant bailout - a so-far failed effort that Bloomberg News has estimated at $12.8 trillion.

Comments

[Tax Lawyer]

Sorry, when you quote someone from the Heritage Foundation, or the CATO Institute, you lose all credibility in my opinion. They want the current administration to fail--their only hope after Bush/Cheney is that somehow Obama does worse, so bad that Bush and Cheney will not seem to be the originator of this mess, which began on their watch.

I for one am not in the least bit worried about the debt. I want the printing presses running 24/7. Some 6-10% annual inflation will start to kill those bonds stuck in a vortex, and free up new money to chase a higher return, hopefully in productive activities.

[roger]

Heritage Foundation.they don't come any worst
they are la creme de la creme just a bunch of rabid right wingers
8 years of The Cato Institute like policy by the Republican click et
voila world economy down the septic tank

[Gary]

Thanks for the update.

[farang]

If by "maintain" Social Security the speaker means repay what they have stolen, then he might have had a valid a point (but instead I see the usual lumping together of the financially fine Social Security with the failing and needing reform Medicare and Medicaid, a typical Right-Wing tactic to frighten the masses).

I say it is more interesting to note that had the criminally complicit Paulson and Geithner repaid and secured for 200+ years Social Security with the $12.8 trillion given instead without strings or disclosure to maintain the criminals lifestyles on Wall Street, we could be giving ourselves MORE benefits for generations, while increasing domestic spending, which is withering on the vine. And that increased spending would flow back into the Treasury coffers through increased sales tax revenue, to help pay off the debt incurred doing so. Who knows, maybe if we increased the benefits, retired folks would fly to see their grandkids, increasing airline revenue which has fallen off a cliff, or maybe purchase a new US made auto to tour the country, increasing hotel, motel, restaurant and amusement park revenue.

But hey, I'm no "Heritage" genius, nor a member of any other "well-funded by the ultra-wealthy think tanks", hanging out in places like Stanford where they give Doctorates to criminals like Condi Rice. Or Berkeley, where they hire torture advocates "attorneys" and label them "professors."

It's probably much better to give it to your millionaire and billionaire criminal cohorts to park in off-shore tax-free accounts, and then tell Congress to go fish when they ask why no loans are being made, or "Toxic Assets" being purchased with the Toxic Asset Repurchase Plan.

And heavens, even our Senate can "'see the wisdom" of not allowing bankruptcy judges to modify loans so Americans can stay in their home, keep making the modified payments to cash-starved banks and keep the real estate market from descending to depths Jules Verne couldn't imagine.

No no, MUCH better to allow these "Too Big To Fail" failed banks to hold foreclosed houses on the balance sheet and LIE about their value, then dump them on a falling market...yeah, you have to have a University Degree to be able to grasp that logic.

What do I know? I just have to pay for it and STFU.

Or,Hang Them, Now