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After living in Brazil as a child, where my family and I experienced wave after wave of hyperinflation (Part 1 of this series), we moved back to the U.S. and settled in Long Beach, New York.
My father found a nice home near the boardwalk, but still within walking distance of the train station so he could commute to work on the Long Island Railroad. The beach was nice in the summer, and I enjoyed swimming with the Polar Bear Club in the fall or biking to Far Rockaway in the winter. But the most exciting times were when Dad let me tag along to meetings with important people.
“Unlike Brazil,” he explained on a train to Washington one summer, “inflation isn’t a big problem in the United States, yet.” He lingered on the word “yet,” which seemed to echo repeatedly in the tchjk, tchjk, tchjk of the wheels bouncing over gaps in the track.
“But,” he warned, “we can already see the signs.”
“Big money printing like in Brazil?” I asked with surprise.
“God forbid, no! The big problem now is federal budget deficits. Maybe later, to finance the deficits, you could see big money printing. But fortunately, we’re not at that stage yet. That’s what we’ve got to stop. We’ve got to nip this in the bud. You and me. We’ll fight it together.”
It was 1959, and I wasn’t quite 13 years old. But I was old enough to contribute more than just curiosity. So I listened intently as he gave me the background in greater detail.
“You already know how the Brazilian cruzeiro is falling, and we’ve talked a lot about how it could be worthless someday. Well, fortunately, our history in the United States has been very different. After the Great Depression, the U.S. dollar was the one investment that not only survived, but actually thrived. Thanks to deflation, prices fell on virtually everything. So the dollar’s purchasing power surged. That was the saving grace of hard times. A strong dollar gave people something to work for. It was the essential foundation for recovery after the Depression.
“Then,” he continued, “the strength of the U.S. dollar domestically was reinforced with fixed exchange rates internationally. I’m talking about Bretton Woods, New Hampshire. That’s where over 700 delegates from 44 different countries got together after World War II and agreed to high fixed exchange rates for the dollar with all of the world’s most important currencies. But more recently, I’ve seen a few disturbing signs that could threaten the dollar. Corporate America starting to build up debts. Ditto for the federal government.”
“Yeah, debt is pretty bad,” I interjected.
“Not always,” he retorted with a smile. “Debt is OK as long as it’s in modest amounts or as long as you’ve got plenty of capital to back it up. But now, with President Eisenhower in his last year in office, the federal budget is going haywire. Estimates for the deficit are running close to $13 billion. That’s huge!”
A couple of hours later, we were ushered through the guard gate at the Treasury Department for a meeting with the Undersecretary, an old friend of my father’s. Our mission was to get him to convey to his boss, Treasury Secretary Robert Anderson, the deep concerns of Dad’s fiscally conservative clients about the growing deficit.
I watched as the man nodded politely for most of the meeting, but shook his head abruptly whenever the discussion turned to action statements. It was obvious that my father was searching for allies, and this man wasn’t one of them.
On the train back home, though, Dad remained determined. “We don’t need the Treasury Department,” he said. “We don’t need Congress or the Fed or even the president. All we need is the people, a popular revolution. If we can alert the people to the dangers, then the folks in Washington will listen. Our cause is right. The time is right. All we need is a focal point, something the public can sink its teeth into.”
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A few months later, in the first days of January, we thought we got it. Dad turned on the radio, and out poured a monotone voice I had learned to recognize: Dwight D. Eisenhower’s, delivering the State of the Union Address. He complained about the excessive costs of military hardware. He insisted that “we must avoid extremes of waste and inflation which could reduce job opportunities, take us out of world markets, shrink the value of savings.” Then came the big surprise: Ike announced he would submit to Congress a balanced budget.
The next morning, we ran down to the newsstand to check the papers. We were looking for the headline “IKE PROPOSES BALANCED BUDGET.” But none of the papers had it on the front page. Not the Daily News, not the Tribune, not the Times, not even the Journal. The only mention was buried on the inside pages, and the highlight of the story went something like this: “The most conspicuous reaction to Eisenhower’s speech came in the form of an unrestrained yawn by the Senate Democratic leader, Lyndon B. Johnson.”
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| Irving Weiss in Brazil, 1955 |
My father was outraged. The only time in my life that I had seen him more upset was one day back in Brazil, when our Willys Jeep Wagon broke down on a dirt road in the forest, and he gave it a swift kick that seemed to hurt him a lot more than it hurt the car. But it was also clear that he had made up his mind to do something about it.
He contacted Dean Alfange, a former candidate for governor, to get his assistance in organizing a nonprofit. The name: The Sound Dollar Committee. The mission: To lobby for a balanced budget and fight against inflation.
They decided to name former-President Herbert Hoover as Republican co-chairman and to name presidential adviser Bernard Baruch as Democratic co-chairman. Earlier, Dad had worked with Baruch closely enough to know that he’d be very sympathetic to the cause. But he had never met Hoover and wasn’t sure Hoover would accept. As it turned out, the opposite happened. Hoover was eager to join. But Baruch, despite his sympathies, was skeptical. Toward the end of February, Dad decided to make a final attempt to win his support. So while I strained to listen, he gave Baruch a call.
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| Bernard M. Baruch |
“It’s the wrong time,” Baruch said. “We really can’t do anything until we see the whites of their eyes.”
“But we’re already doing it,” my father replied. “We’ve already started the campaign. We’re running a full-page ad in The Wall Street Journal. We sent you a copy of the proof. Did you get it?”
“Yes, sure, sure. I saw it,” said Baruch unenthusiastically.” It’s all good, but I’ve tried time and time again to give them that same advice, to keep the budget balanced, to protect the dollar. Truman wouldn’t listen. Eisenhower wouldn’t listen. Now, as he’s on his way out, he’s changed his mind, maybe. Even if your campaign succeeds, I question whether they’ll follow through. But go ahead and see what you can do. You have my blessing.”
The Committee went ahead without him, and to maintain the political balance, they felt they’d better back off from Hoover as well. “No problem. We’ll get others, with names that are also pretty strong,” they said.
There were several, and back then, I knew them strictly by their first names — Dean, Leonard, Leslie, and others. The Sound Dollar Committee’s offices were at 500 Fifth Avenue, a short cab ride from Penn Central Station and an easy trip for me on days off from school. Dean was like an uncle, always welcoming me with open arms. The others seemed to like me too, sometimes treating me like a kid, sometimes emulating Dad and acting as a mentor.
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Years later, after Dad had passed away, I learned more about them. It was February 2004. I had recently bought the twin towers of Pratt & Whitney’s Administrative Office Building in Jupiter, Florida. And since we had a lot more space, I’d asked for cardboard boxes containing Dad’s memoirs to be delivered from our warehouse. For ten long days, the boxes sat in the empty office next to mine, beckoning to me through glass walls. I told everyone, myself included, that I was too busy to dig through them. It wasn’t until late on a Friday afternoon, when my staff had gone home and the office was quiet, that I became aware of the true cause of my procrastination.
The sun was down but Florida’s red sunset still flooded the room, much of it reflected from the lake below, where our “mascot,” a well-fed alligator, made her home. I picked one box to open at random, and a surge of grief rolled up my chest. I suddenly realized it was the first time I’d looked through any of Dad’s papers since he died. I had yet to fully accept his absence.
In the box, personal letters were mixed with public statements — some loose, some in folders or envelopes, some neatly joined with rusted paper clips. Many dated back to those days in the late 1950s, and from each, I could hear voices speaking.
One letter to Dad, yellowed by four and a half decades, was from Bernard Baruch, dated April 6, 1959, several weeks after our Sound Dollar Committee was founded. Baruch’s boldfaced, Madison Avenue letterhead competed with his Kingstree, South Carolina address typed lightly in the upper right corner. The word “Private” was handwritten across the top.
“Inflation,” he wrote, “flows from the selfish struggle for special advantage among pressure groups. Each seeks tax cuts or price increases or wage raises for itself, while urging the others to make the sacrifice, and with little regard for the national interest. Ever since the end of World War I, I have tried to show what the results would be — giving all of my time and resources to this. But alas, my efforts have not succeeded. I hope that you and those associated with you will be more successful because it is just and should win.”
The box also contained four sheets of the original Sound Dollar Committee stationery. The names of 17 members, printed in dark blue ink, lined up neatly along the left margin. Some of the names I recognized; some I did not. But my research revealed that each man on the list had his own urgent message for any leader or investor in the future who might have to confront federal deficits, money printing, or inflation.
One of those messages came from Leonard Spacek, who had worked closely under Arthur E. Andersen, the founder of the accounting firm that would become the largest and most prestigious in the world.
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| Leonard Spacek |
After Andersen’s death, Spacek took the helm as the second managing partner in the firm’s history, emerging as a fiercely outspoken champion of shareholders’ rights. He advocated strengthening audit procedures. He fought for standardizing accounting rules so that financial statements could be fairly compared. And in 1958, one year before joining the Sound Dollar Committee, he declared that “the man on the street … has the right to assume that he can accept as accurate the fundamental end results shown by the financial statements in annual reports.”
This approach may not have seemed very radical years later, but at the time, it was. And with it, Spacek made history. He’d be horrified if he’d lived to see how his successors led his own great firm down the path of accounting hocus-pocus. He’d be mortified by their role in the demise of Andersen’s big clients like Enron or Global Crossing. And he would have had no mercy for those who allowed Andersen to become the first accounting firm in history ever to be convicted of fraud. As SEC Chairman Arthur Levitt said of Spacek in his eulogy, “There aren’t any Leonard Spacek’s in the industry anymore.”
Also on the prominent member list of our Sound Dollar Committee were two retired generals. Why did they join? Dad once told me that it was because they saw the connection between fiscal prudence and national security; between financial safety and physical safety. Both goals, they believed, were threatened by the same human weaknesses — lack of discipline and outright greed. Neither, they insisted, could be achieved without the other for very long.
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| Leslie R. Groves |
General Leslie R. Groves was one of them, and he played an entirely different role in America’s history from any of the other members of our committee. Groves was a major force in the construction of the Pentagon. And he was the de-facto leader of a secret weapons project based in the New York District of the Army Corps of Engineers — the Manhattan Project, where the first atomic bomb was made. As one reviewer of his biography explained,
“To the uninformed, Groves’ contribution to the production of the atomic bomb was as scoutmaster for a collection of scientific mad monk geniuses in the desert of New Mexico. In fact … Groves was more of an absentee landlord at Los Alamos. The real action was going on elsewhere, primarily in massive industrial complexes at Hanford, Washington, and Oak Ridge, Tennessee. In some respects the building of these two industrial facilities was as impressive as the making of the bomb. That Groves was able to build, not one, but two, mammoth atomic factories in roughly eighteen months is staggering.”
Groves advocated no sharing of nuclear technology with allies. Even within the U.S. government, he zealously embargoed information from most agencies and departments, including the White House itself. In that sense, he was the world’s first and foremost proponent of nuclear nonproliferation. If he could see the nuclear terror threat we face today or hear the recent rumblings of nuclear war, he’d jump out of his grave in protest.
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| Dean Alfange |
Dean Alfange was the legal counsel to the Sound Dollar Committee, and his name was the last to appear on its stationery. Unlike any other politician in American history, he held nominations and appointments from virtually every party — the Democratic Party, the Republican Party, the American Labor Party and the Liberal Party of New York, which he helped found. That was the party under which he ran for governor of New York and also the one which helped him hone his libertarian views, memorialized in his poem, An American Creed:
I do not choose to be a common man.
It is my right to be uncommon if I can.
I seek opportunity, not security.
I do not wish to be a kept citizen,
Humbled and dulled by having the
State look after me.
I want to take the calculated risk;
To dream and to build,
To fail and to succeed.
I refuse to barter incentive for a dole;
I prefer the challenges of life
To the guaranteed existence;
The thrill of fulfillment
To the stale calm of utopia.
I will not trade freedom for beneficence
Nor my dignity for a handout.
I will never cower before any master
Nor bend to any threat.
It is my heritage to stand erect,
Proud and unafraid;
To think and act for myself,
To enjoy the benefit of my creations
And to face the world boldly and say:
This, with God’s help, I have done.
All this is what it means
To be an American.
I set Dean’s poem aside and returned to Dad’s boxes. At the bottom was a large brown tear sheet of newsprint that almost crumbled to my touch, the Sound Dollar Committee’s first full-page advertisement that ran in The Wall Street Journal.
“Inflation is a narcotic,” were the first words in the body of the ad. “It soothes and exhilarates while doing its deadly work. Already it has reduced our dollar to half of its purchasing power. It is the killer rampant in our midst, threatening to destroy us as it has other countries whose rulers thought they could have a little bit of controlled spending and inflation; a little cheapening of their money.
“THEN IT WAS TOO LATE! Deficit spending [and inflation] are the twin poisons which are undermining your future. Some people say we need deficit spending by our government for prosperity and growth. But they forget that the means can destroy the end.”
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| Sen. Lyndon Johnson |
Along the margins of the page, Dad then quoted other friends, supporters and leaders.
Lyndon B. Johnson, who was still a U.S. Senator: “We all know that the end of such a spending spree would be fiscal insolvency.”
William M. Martin, Jr., then chairman of the Federal Reserve: “No greater tragedy, short of war, could befall the free world than to have our country surrender to the easy delusion that a little inflation, year after year, is either inevitable or tolerable. For that way lies ultimate economic chaos.”
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| Sen. J.W. Fulbright |
Senator J.W. Fulbright: “Excessive inflation in the long run destroys the will to work and the will to save, which are the foundations of our economic system. Inflation is a deadly enemy of a free capitalistic system.”
For a few long moments, I sat silently in the dusk, my eyes scanning the lake for some sign of our friendly mascot; my mind, returning to Long Beach in 1959.
Back then, it was also February, and it was also dusk. Dad had just come home from work, proudly displaying a proof of the ad, scheduled to run in the Journal the next morning. He said he wasn’t sure if it would get any traction because inflation at the time was still very low.
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| Robert R. McCormick |
As it turned out, it was a powerful launch with a very powerful message, and it merely set off the first sparks. The Committee ran a similar ad in the Chicago Tribune. And the next day, Chicago Tribune owner Robert R. McCormick called to say: “I believe in what you fellows are doing. I’d like to run a two-page spread of my own at my own expense. Is that OK?”
“Are you kidding?” Dad replied. “Of course it’s OK!”
The Los Angeles Times and the New York Daily News followed suit. Soon, scores of newspapers and magazines joined the Sound Dollar Committee in its nationwide campaign to fight inflation, balance the budget, protect the dollar. Congressmen would walk into their offices on a Monday morning and be struck immediately with the clutter of mailbags. One asked his staff, “What the hell is this? Where did all this mail come from?”
“They’re protests, sir,” came the response.
“Protests against what?”
“They’re coupons protesting inflation — cut out from the newspapers. They’re running big ads against inflation.”
It was an avalanche! According to a survey by the Chicago Tribune on Capitol Hill, the total estimated response was 12 million postcards, coupons, letters, and telegrams.
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By mid-March, the public’s attitude had switched from apathy to intense interest. According to Business Week, “Just about anywhere you go these days, the talk will turn to inflation. The subject comes up with friends at cocktails, in brokers’ boardrooms, and among businessmen who feel a responsibility to avoid price increases.” All of a sudden, Washington “is a city full of inflation fighters. … Leaders in Congress began the session talking like big spenders; now they are talking about cutting Eisenhower’s budget.”
Senator William Proxmire, who had been in favor of the deficit spending, changed his mind and voted for the balanced budget. One congressman after another shifted his vote to support Eisenhower. The budget was balanced. And we were ecstatic.
As it turned out, however, it was the last balanced budget in the country’s history. Yes, in later years, the federal budget was sometimes said to have been “balanced,” but only with smoke-and-mirrors accounting that effectively moved red ink off the government’s books to separate government agencies. The only truly balanced federal budget of that era was in Fiscal Year 1960, thanks, in no small measure, to the Sound Dollar Committee.
My father lamented this failure for the rest of his life. “Looking back,” he said, “I was right in my debate with Bernard Baruch. We did not have to wait to be effective. But in a more enduring sense, Baruch was right. After Eisenhower left office, the country was led in the opposite direction from the one we had hoped for.”
A year later, Dad went back to Washington to deliver the same message to Fed Chairman William Martin, hoping he could come to our rescue. He was supportive in every way. But he also confided that there was little he could do except to stall a bit to slow things down.
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| William M. Martin |
His words were not encouraging. “Kennedy is putting tremendous pressure on me,” he confessed. “The president wants me to cut the discount rate, or lower bank reserve requirements, or both. He’s pushing ahead with pro-growth policies on all fronts. That would not be a bad thing, provided we could take it slow and easy, but the White House wants to move forward a lot faster. And they’re not alone. The Democrats in Congress and a lot of the banks are also on my tail.”
The Fed Chairman seemed to believe we were witnessing the early stages of a new era of growth, but not the moderate, sustainable growth that he would prefer. Instead, it looked like it could be the kind of growth that’s powered by a lot of debt, eventually leads to massive money printing, creates speculative bubbles, and ends very badly.
Chairman Martin was right, just like Bernard Baruch had been right. The country was flying off in a new direction. That direction would be good for a while, but it would ultimately threaten our financial system as we knew it. Someday, it might even undermine our democracy.
The lesson for investors is clear: Be careful what you wish for. If it requires a lot of debt and “just a little more inflation,” it will not end well.
Yes, you can certainly profit handsomely while it lasts. You’ll get economic growth. You’ll get more corporate earnings and rising stock prices. But you’ll also need to know how much cash to keep in reserve, when to start taking your profits off the table, and when to run for safety before the next bust. Count on us to alert you.
Good luck and God bless!
Martin
Dr. Weiss founded Weiss Research in 1971 and has dedicated his entire career to helping millions of average investors find truly safe havens and investments. He is Chairman of the Weiss Group, which includes Weiss Research and Weiss Ratings, the nation’s leading independent rating agency accepting no fees from rated companies. His last three books have all been New York Times Bestsellers and his most recent title is The Ultimate Money Guide for Bubbles, Busts, Recession and Depression.
{ 51 comments }
Martin,
When everything is said and done, since 1929 the stock market has done 300 times better when led by Democratic Presidents then when dominated by Republican Presidents…
In my opinion, it goes back to basic economics and the veloctiry of money….. When led by Democrat Presidents, the average American has more money and the velocity of money increases as they spend that money to buy goods and services and the economy improves along with the stock market… Under Republican Presidents, the average American has less money and the wealthier Americans whom the Republican Presidents support (and get their election funds from) have more and the velocity of money slows along with the economy and the stock market,
eagle495 your comment makes absolutely no sense you keep quoting the same comment why dont you do everyone a favor and quote your source of information AND GIVE US PROOF about how democrat administrations are 300 times better for the economy and stock market versus republican administrations AND PLEASE TELL ME WHY THE OBAMA ADMINISTRATION didnt DO 300 TIMES BETTER FOR THE STOCK MARKET AND THE ECONOMY or are we still waiting for all his explosive growth in wind and solar programs to work their way through the economy ALL IM GOING TO HEAR FROM YOU IS CRICKETS
Hawk,
I’ve given you several sources in the past and all you did was bad mouth them…. Can you add? Simply go back to 1929 and add up the gains (Mostly Democrates) and the losses (mostly Reblicans) and you will have proof that even you should be able to understand. As for Obam’s stock market gains, you must be living in the deep woods as virtually everyone knows that Obama not only recovered all of the Cheney/bush losses, but also took the stock market to new highs…
i know you quoted the huffington post as your source of information but you know the huffington post is not reliable info its just a liberal commentary i guess what im asking you is where is barack obamas 300 times better for the amercian economy and lets face it OBAMA promised 6%+ per year of growth for every year he was in office and everybody now knows that was a complete lie
Eagle495,
You are missing one important point about your leftist commie cult and that is 20 Trillion in debt. Don’t forget that. Oh and Graham, Leach & Bliley Act signed by Bill Clinton caused the collapse in the housing and banking sector 2008 – 2009
Convenient to leave that part of the equation out
Good no great article Martin sadly the lesson went unlearned and still is today.
We already are victims of over printing. 19 Trillion National Debt–wow. We must go to the GOLD standard. Thank you for your excellent advice.
I am a retired teacher, a widow, and need to invest asap.
Actually connie the national debt is precariously close to 20 trillion obama made out the budget for 2017 so he will have racked up to the national debt closer to 21 trillion before all his after glow is done no president in the history of the united states has done so much damage in such a short time to this great and wonderful country of ours and believe me we are all going to feel the effects of his spending spree in the near future and not in a good way
1959, the Sound Dollar Committee’s founding year (and also my birth year), represents a different time and era in government and finance. Since then, we’ve pursued the opposite policies from those men’s goals. The U.S. has proven resilient despite massive spending, large deficits and huge money printing.
Thank you Dr. Weiss.
This subject should be discussed in every School room!
Gerhard.
Martin, very good write-up and historical perspective of USA’s overall economic history and perspective of people over time.
What a wonderfully written piece as usual Martin. thanks.
The apathy of the American people fueled by the greed and corruption of the government, along with their continued debt spending will be AMERICA’S complete and utter demise.
Dr. Weiss ,
Thank you your well written article on our lost war with inflation. I thoroughly enjoyed it.
yours,
Tony Layton
Bring Mike Larsen back to write for money and markets. I feel like I’m on a dipsy doodle with all your new writers==even with Larry E.
Needs to be Impreached soon for our president is bad news and so wrong in things h is doing
They are All hurting innocent people and this is so wrong for this ban and keeping people out of us or not able to go back home. This needs to Stop now
well if you look closely the ban is 90 days in some circumstances 120 days its not banning muslims its banning individuals from certain terrorists nations THIS 90 DAY BAN IS ONLY FOR AMERICANS PROTECTION from certain terrorist nations individuals who wan to do harm to the citizens of the united states
Martin, you are correct. As a retired person, watching my costs rising, and my reserves dwindling, I know, personally, the cost of even a little inflation over the 10 years since retirement. If I should live 10 more years I fear I’ll be a pauper. Thank you Ms. Yellen, and your predecessors.
Dr. Weiss,
Thank you for such an informative and historical article. I have lived it as you have and still have the same opinion about having a balanced budget and no inflation as you do. I have had Dean Alfange’s poem on my office wall since 1970. It seemed like the thing to have on the wall to a freshly minted lawyer. Each of our children have a copy in their possession to remind them of the power and truth of Mr. Alfange’s words. May God continue to bless you, your family, and your work.
Dear Mr. Weiss, I have learned from your writing a bit about our county’s economic history and your own personal history, both interesting. I look upon you as a man of integrity. I was particularly touched by your comment “…a surge of grief rolled up my chest.” while you were reviewing your father’s papers. At 86 I am well acquainted with grief.
Thank you for sharing that fascinating bit of personal and national history, Dr. Weiss. You seem to be suggesting that zero inflation is not only possible but a good thing. That conflicts with the economic homily I have always heard that a little inflation is a good thing.
Martin
Very interesting and informative.
well written article. with Millennials wanting everything now i see little hope of getting back to sound spending. the day of the saver is dead and debt is king.
I too grew up in on the south shore of L.I.(Woodmere) and remember the low cost of movies $.10-.25, sandwiches $.10, Etc In 1941, my parents bought a new car for $800, a house for $8000. When I started college in 1955 I paid $235 a semester at the U of Mich (Instate students paid $90.) Drs visits were $5 and they made house calls. My grandfather had just retired and was bemoaning the high cost of living, and expressed his fears of “outliving his money” I had no idea what he was talking about. I am turning 80 in June and I now understand.Scary !
Your father and his eminent contempories toiled hard. And what did they achieve? – One balanced budget. Yet people don’t believe in an Illuminati? LOL!! Yeah right, the western elite bankrupted our nations by accident? Despite their Ivy League education, they didn’t know chronic deficits are bad. LOL!!
What a wonderful article.The opportunity to inform and to motivate positive thinking and action. The late George Santayana in 1903 stated the following,” Those who refuse to learn the lessons of history are doomed to repeat them again.” Some of us do adhere to these valued principles. Avante.
It is with thorough enjoyment that I read the history of our economic conditions, through the eyes of your father. The historic scenarios you present are both encouraging and frightening when I look at where we are headed today. There are answers but unfortunately the medicine is much too bitter for the public to take.
From a Biblical perspective we have many challenges ahead of us. Unfortunately, God’s plans and not always our plans. If you read the end of the story you find God’s plans are the ones that matter most. His timing is perfect.
This world is not falling apart it’s falling into place.
Thanks for the family insights and the poem as well.
This form is becoming more trouble than it is worth
I recently turned 48. I have seen America on a declining path now for many decades. I don’t think anyone wants to admit this and we bury our heads in the sand hoping that a political “savior” will descend upon us and save our nation from fiscal destruction. When I was young boy I enjoyed a middle class life with my family. My father ran a small savings and loan in Ohio and my mother, who had been head of nursing at a local hospital was a stay at home mom. We didn’t have a lot by todays standards but things in general were cheap and we could afford a decent life. To keep this short I will go on to say that this all changed in the blink of an eye in 1982 when my father committed suicide. His savings and loan went under like so many others. My mother and I struggled after that. As I have gone through life I have read many articles on finance and the economy and can honestly say that I have developed a deep seated hatred for our government and other large institutions that have wreaked havoc on our economy through their reckless fiscal behavior. I believe the majority of Americans are decent people but I have seen a steady erosion in our value system perpetrated by weak leadership at all levels. No president or Pope is going to save us from ourselves. It is going to take a MAJOR economic, political and dare I say, spiritual reset before we can even hope to begin cleaning up this mess we call America and get on the path to long-term, steady, sustainable growth.
The “Republican Revolution” began in 1980 when Reagan cut taxes to his wealthy supporters, but did not cut spending. That caused the Deficit and Debt to soar. Then came Republican GATT and NAFTA and the Republican removal of Glass Steagall and here we are with a crushed Middle Class and the average American much poorer than he or she was in 1980… Soon, even the most dim willted with awaken and throw the Republician Carpet Baggers out of office, despite the billions being spent my the Ultra Wealthy to keep their “friends” in office….
It is all very interesting and some what frightening what is in the future for us
What is the tipping point between healthy inflation and unhealthy? Some inflation helps justify long-term commitments, i.e. mortgages. Too high and saving for the future becomes imprudent, especially with essentially no interest accruing to savings these days.
Great analysis and very thought provoking. It is to bad that our leaders take the easy road of quick and easy gains at the risk of later having to pay the Piper.
Maybe our new leaders will do better but we will have to wait and see.
Your father was extremely wise and honest , indeed a dying breed. I am sending Dean
Alfange’s poem to every sensible and intelligent person I know. Thank you for illuminating us!
“Someday, it might even undermine our democracy.”
That day is already here. The U.S. democracy has been undermined for a long time and has become a consumer and debt driven corporatocracy.
Only 55% of registered voters bothered to cast a ballot in the last election. The remainder aren’t participating citizens, just consumers. So that’s how the government treats them and panders to protecting the profits of massive corporations, while the sheeple just follow anything that moves. The parasites in Congress are dysfunctional and have done mostly nothing but draw salaries and benefits on your dime. A spastic and clueless moron is now making “policy” in the White House. This would otherwise be a joke, but now it’s tragically true.
So much for democracy in America.
Martin,
Thanks so much for sharing this! Incredible the mess our Dollar is in now. 98% of original buying power gone! It was after WWII that the deep state emerged and began to consume massive amounts of our production. Eisenhower warned us but that train had left the station. Events at Roswell in 1947 and others sent the black budget off the charts reverse engineering and building Deep Underground Bases. It continues today and the spending is like a heroin addict that needs more and more to get the same hi. There is so much to this that the American People are unaware!
John
Martin, your father was some guy, he was certainly right in getting shot of the fed and all other government, including the shadow government cfr.
Abe L and JFK both died getting shot of the banksters, and of course Andrew Jackson who managed to get rid of the slime.
The elites run the show they have the dosh, some how we have to get it off them, before they start another war, and the crazy thing about it the neocons think they can win it?
Thanks Martin,Great to be reminded of how history repeats itself/ryhms with the past..A great service,Take Care,Cheers,Paul G
As this piece demonstrates, human nature seems to prefer fantasy over reality. At the end of the movie, ” The Man Who Shot Liberty Valance”, a character says, ” Gentlemen, this is the West, so print the legend.”
Dr. Weiss,
Thank you for your historical perspective, sometimes it is hard to see just how far we’ve come down the debt path and how destructive it may be. I especially liked the poem, An American Creed, it fits so well with today’s environment of both sides of the isle promising to do so much for me as long as control is turned over to them. Both parties are simply opposite sides of the same coin.
Thank You
It’s a story that repeats over and over again since the invention of money. Andrew Dickson White’s, “Fiat Money Inflation in France” is a classic example.
What strikes me is that this is not intellectually hard to understand. It’s teachable in grade school. I’ve reluctantly come to the conclusion that humans have a dual nature: creative genius and stupid ape.
Thanks for sharing.
Raymond
Very interesting article.
Too verbose. Cut to the chase!
What a history, and determination and foresight your dad God bliss his soul had
Why can’t we take all the billions of interest collected on loans to private sector borrowers as government income? This would actually be proper as the thousands of private local banks that fund these loans do so with FRNs created out of thin air.
That is, these local banks do not loan their own money . Therefore it is the people of the country that are actually taking the risk, and carrying these loans; NOT the local banks.
For the local banks to take this interest is nothing other than legalized theft!
I have many details worked out.
Mike L. is a great loss to this web site.
Dr. Weiss,
I enjoyed your article, You were very privileged to live in and environment that allowed you to access to that mature thinking ,wen you were a very young man. I sort of envy you. You brought a lot of history to us, that we should digest and profit from. Thank for your dedications your business & your reader,
Sincerely,
ct
I have always had the most respect for your values and reports. This story going back
to your father and the others hss been very valuable to my opinions. I am 86 years young
and don’t know which way to travel economically and listening to you makes me want
to run and hide. However there is no place to hide anymore.
Question – what will happen to Apple when the IPhone dies and is replaced with the
new product that will use the picture of the IPhone in the air in front of you I understand
Apple along with a group of 100 engineers are rushingn to come up with a product to
compete with this newest of products. You may know what it is called – the death of
the IPhone. The inventor has all the patents needed and is mobilizing all of the
needed parts to commence manufacturing within the next three to four years. He is
on the Internet explaining how his product will work and wonder if you have been
following this. I would like to know his company name as soon as it becomes
available. I assume he will have an IPO to raise capital but would like to get in
on the ground floor. Your comments would be interesting.
Keep up the good advice.
Willard Hogg
Abolish the FED and return to a SILVER backed dollar as specified by the US Constitution. Gold can be used together with SILVER to supplement the SILVER backing. Abolish the “legal tender” law and abolish fiat “funny”money!
The president has a lot less to do with what happens under his watch than people think. Bubbles may be blown up under one president and pop under the watch of another president. Deficit spending is always going to end badly at some point. It makes absolutely no sense for the individual to spend money that he does not have. It also makes absolutely no sense for a government to spend money it does not have. Sacrificing the future for the present is a bad exchange.
If I remember right, President Ike inadvertently lay the ground for both US inflation, and increased deficits. He thought pushing for a huge network of super-highways would only bring good. Unforeseen by him was that a large network of super-highways enabled massive numbers of city workers to move to live in the suburbs while still commenting back to the cities to work daily, and unforeseen by him was that his huge network of super-highways enabled the middle-class city dwellers to all flee to the country side leaving the cities with only the left behind super-poor. When vast numbers of middle-class, as well as upper-poor, moved to the suburbs, huge numbers of commuters drove their cars back and forth to the cities to work on their jobs in the cities. This huge migration to the suburbs in two decades burn up practically all of the domestic cheap and easy to extract US oil reserves by the 1970. The US started to import ever increasing amounts of oil from OPEC and the middle-east. When the oil shocks hit the US during the 1970’s, that were stated by the conflicts in the middle-east, middle-east oil countries started to nationalized oil production in their countries. The US had to pay more for foreign oil after the US exhausted its own easy-to-get oil pools, and after the middle-east oil countries became less friendly towards the US. Price of oil increased causing high inflation. Around at the same time, the US got into a protracted war in Vietnam which caused inflationary pressure, as wars tend to cause inflation. After the cities lost a lot of their middle-class base after people moved to the suburbs facilitated by the super-highways (aka limited-access-highways, aka Autobahn-like highways,) many cities lost a great part of their tax base, pushing cities towards insolvency. People having super-highways to drive their cars on tended to ride railroads less, resulting in railroad companies to falter. For example, during those time, New York City became almost insolvent, and one of the railroads serving the city to be insolvent, so that the city, and the railroad to raise money helped Trump to buy the old, but large Commodore Hotel at bargain a price, with almost no money down at front of 25 thousand dollars. This deal help launch Trump to a wildly successful career. Having to pay for a lot of imported oil, support wars, and saddled with left behind poor, the US completely went off the gold standard. Silver coins became copper clad coins with less and less to no silver content. Unfunded wars; super-highways that drained domestic oil reserves at high rates, and that drained cities of their middle-class people; and trickle-down-economics that help the rich dodge taxes, and that trashed regulations that free the super-rich and their companies to ripoff the populace with abandon, all weaken the economy, increase deficits, and promoted inflation caused mainly by high imported oil prices. Until recently, when the US developed oil fracking/horizontal drilling technology, OPEC was calling the shots on inflation, and not the US.