Category: Economics – Monetary Policy

The Tricks – BONUS POST

[Please note: The word “Featured” on the left side above was NOT inserted by this blogger, but apparently was inserted by WordPress, and it cannot be removed. NO post in this blog is sponsored.]

BREAKING NEWS: The media are distributing a reality-show franchise, Reaganomics on Steroids, a GOP Production. Here’s the theme song.

THE TRICKS

sung to the tunes of “The Twist” and “Let’s Twist Again” with apologies to the Estate of Chubby Checker and to whomever else the rights may concern.

BUDget gaming, with accounting tricks.

Biden deFAMing, we get our kicks.

Reinforce the Trump brand, even more in ’26.

Ha, ha, tricks, gravy, ACA tricks. (round-and-turn-around)

Yeah, just trust our tricks. (We’re down and out.)

Come on, settle this, our last licks.

While Trump’s sleeping, and payroll’s ground down.

Yeah, profiteering leaping. Enforcers ain’t around.

The Dems we’re gonna nix, nix, nix, until we wear the House down.

Ha, ha, tricks, gravy, ACA tricks. (round-and-turn-around)

Yeah, just trust our tricks. (We’re down and out.)

Come on, settle this, our last licks.

Yeah, we all SEETHE, at the Dems’ wish list. USA NEEDS, a military mix.

We put poor Americans in hock. We don’t tax the rich.

Ha, ha, tricks, gravy, ACA tricks. (round-and-turn-around)

Yeah, just trust our tricks. (We’re down and out.)

Come on, settle this, our last licks.

AND THE SEQUEL:

Can’t resist again, like we did last summer.

Yeah, still we dish it out, like we did last year.

Don’t let foreigners, steal our Hummers.

Yeah, it’s tricks again, fixing time is here.

Defunding and defunding back and forth, we GO again.

Make them know we’re tough you KNOW, and then,

can’t resist again, like we did last summer.

Come on, still we dish it out, like we did last year. (tricks)

Can’t resist again, like we did last summer.

Yeah, still we dish it out like we did last year.

Don’t let foreigners, steal our Hummers.

Come on, it’s tricks again, fixing time is here.

Defunding and defunding back and forth we GO again.

Make them know we’re tough you KNOW, and then,

come on, can’t resist again, like we did last summer.

Yeah, still we dish it out like we did last year.

Come on, can’t resist again, like we did last summer.

Come on, it’s tricks again, fixing time is here.

Martin Van Buren

[Please note: The word “Featured” on the left side above was NOT inserted by this blogger, but apparently was inserted by WordPress, and it cannot be removed. NO post in this blog is sponsored.]

WARNING: VERY LONG POST

The Book of the Week is “Martin Van Buren, America’s First Politician” by James M. Bradley, published in 2024.

In this hodgepodge of a volume, the author recounted many of the historical events to which Van Buren was witness in his lifetime. Throughout, the reader can see the evolution of American politics, and how some bad situations have become reversed, and others have stayed the same or gotten worse.

Van Buren was born in December 1782 in Kinderhook, New York State, now a part of Columbia county, a couple of hours’ drive north of New York City. For most of his teenage years, he was apprenticed to an attorney. His preliminary training was spent in a version of “night court” in a tavern– the courthouse of his generation.

Republicans were the “bleeding heart liberals” of the 1800’s, while the Federalists were the free-market capitalists who believed the country should be governed by a centralized authority. Van Buren began his political career as a Republican. Nevertheless, he accumulated great wealth while practicing law. There were wealthy politicians who bought the votes of the lawmakers to make themselves richer. He became one of them through the decades. Back in the day, there were no campaign finance laws, so no one was required to disclose any information on campaign donations.

Van Buren was elected New York State senator, and began his first term in November 1812. The governor of New York State appointed him to be that state’s attorney general in early 1815. Politics were fickle, so his job security was poor. At the same time, he was allowed to finish his term as senator before starting the attorney general job. By December 1821, the Republicans were the only political party in the United States.

In the last half of the 1820’s, Congress frequently succeeded in opposing president John Quincy Adams’ initiatives. For months, senator Van Buren and his cronies fought against one initiative Adams managed to push through: funding for a diplomatic trip to Panama, to make nice with various countries in South America. Adams and his vice president Henry Clay (of the Whig party he founded in the mid-1830’s) had wasted resources on this project that ended up a bust anyway, because a few of the key diplomats passed away. Meanwhile, Van Buren had been building a bipartisan coalition to oppose his political enemies on hot-button issues such as race and slavery.

In the early 1800’s, ninety percent of federal revenue came from tariffs, as a federal income tax wouldn’t be levied until 1913. Various parties were hurt or helped by those tariffs. New York City’s business stakeholders, as did the southern states of Virginia, North Carolina, South Carolina and Alabama, mostly agricultural, were hurt. Commercial entities located around the Erie Canal, and states in New England began to favor tariffs as they built new factories. At the dawn of the 1830’s, the federal government was able to purchase its own Treasury bills and pay off its debt entirely.

At the same time, President Andrew Jackson, claiming it was an anti-corruption measure, imposed a policy of mandatory turnover of federal office holders every four years. Only about ten percent of the workforce was affected, but drawbacks included: disruption of corporate culture and loss of institutional memory in the workplace, so that new hires had to re-invent the wheel, and the replacement-workers would likely be inexperienced. Jackson later named his party the Democrats.

In 1836, Van Buren ran for president as a Democrat. He was the only candidate on the ballot at the Convention in Baltimore. Separate states were allowed to push various Whig-party candidates, and they did, so they all became spoilers of one another.

Then then-philosophy had been to leave the economy alone, and not grant bailouts. President Jackson’s Democrats blamed the banks on hard times. But after the president himself enacted banking legislation, that wouldn’t fly. A financial crisis hit the fan in 1837. Van Buren’s presidency was the first in which ordinary Americans blamed the bad economy on the federal government.

President Van Buren proposed an Independent Treasury– a federal entity that would simply be a conduit for collecting federal revenue and paying bills. It should be unconnected to commercial and savings banks, which were proft-seeking and had to answer to shareholders. It should not be subjected to political meddling.

Nonetheless, the politicians were greedy hypocrites all, of both parties. Ordinary Americans of course, were brainwashed by propaganda, and didn’t know the half of it. The legislation for the Independent Treasury was finally passed in June 1840.

By the late 1830’s, America’s government consisted of a two-party system. The party that was out of power trashed the one in power. But, presidential candidates didn’t travel around campaigning. They promoted themselves by writing letters that got published in various newspapers (which were partisan). Whig candidate William Henry Harrison broke tradition by traveling around the country, smearing Democrat Van Buren.

Read the book to learn much, much, much more about Van Buren’s life and times.

The Trading Game

[Please note: The word “Featured” on the left side above was NOT inserted by this blogger, but apparently was inserted by WordPress, and it cannot be removed. NO post in this blog is sponsored.]

The Book of the Week is “The Trading Game, A Confession” by Gary Stevenson, published in 2024. This blogger highly encourages the reader to peruse the entire “Wall Street” and Economics categories of this blog in order to gain a better understanding of financial matters and economics.

In March 2007, the 1987-born author began working on the Fixed Income Trading Floor at the Short Term Interest Rates Trading Desk in the Foreign Exchange section of Citibank in its London branch. He had grown up in a tough, poor neighborhood in East London. He beat the odds for someone of his demographic group, considering the fierce competition in both getting accepted to a prestigious university and getting a job in currency trading.

Stevenson nurtured an aspiration to make lots of money. Fortunately, his talent and hard work in mathematics allowed him to score high on standardized exams. He attended the London School of Economics where he rubbed shoulders with mostly male, wealthy elitists whose fathers gave them a leg up in life, and whose futures were almost guaranteed to be bright. At school, when he won a game involving hypothetical securities trading, Stevenson’s life turned around. For, he won an internship which turned into a career.

After a few lucky breaks and bold moves on his part, the author was just hitting his stride in work-experience when he happened to be at the right place at the right time to earn extremely large financial gains from a triple-whammy disaster. In March of 2011, about twenty thousand people died in Japan due to an earthquake, tsunami and nuclear meltdown of three power plants. Amidst the resulting financial turmoil and previous turmoil of the 2008 worldwide financial crises, Stevenson made a percentage of the millions upon millions of dollars he earned in currency trading for Citibank.

Stevenson alone in his department had been correct in gaming the situation. Everyone else had been wrong and they lost money. Nevertheless, he was still emotionally troubled. He bore two major similarities with Alan Turing– another genius: social dysfunctionality, and indifference to how he looked and what he wore.

Stevenson was one of the proverbial three kinds of people (geniuses in the minority)– the kind who knew what was happening and made things happen. The vast majority account for the other two kinds of people– brainwashed, unwashed masses who watched what was happening, and then still wondered what happened.

In the early 2010’s, the author came to the realization that there would NEVER be economic recovery of any financially-struggling countries in the European Union while the Swiss National Bank kept interest rates at or below zero. The other traders in his department optimistically kept repeating that interest rates HAD to rise sooner or later, because they had bet wrong.

But, the tiny percentage of the super-wealthy, super-powerful people of the world sought to maintain the then-status quo, because it made THEM even richer, and the poor, poorer, as the cliche goes. The income inequality of the world would eventually result in a slave-based economy (as existed in ancient times) all over again.

Read the book to learn much more of Stevenson’s personal and professional life, and his times. As is well known, the United States is one of the major economic superpowers of the world, and its politics are part and parcel of that. Here’s a little ditty on its momentary political situation.

LET THE BEST TEAM WIN

sung to the tune of “Let the River Run” with apologies to Carly Simon, BMG Gold Songs C’est Music and Tcf Music Pub Inc.

[Spoken: We’re all on edge,
waiting for the savior,
gaping with alarm
at the immature behavior.]

Let the best team win.
Let’s all peaceFULly watch the changes.
Come the new, new Washington.

Brilliant ideas rise.
The media lies, about, and smears them.
And celebs get themselves in your face.

It’s asking for the taking,
blaming, deep-faking.
Oh, Americans are aching.
We’re all on edge,
waiting for the savior,
gaping with alarm
at the immature behavior.

Through the hate and all.
It’s who we are:
Place a trail of desire
on the White House lawn.

It’s asking for the taking.
Just hold on now.
Democratic convention will be a show
you’ve never even seen in political history.

Oh, Americans are aching.
We’re all on edge,
waiting for the savior,
gaping with alarm
at the immature behavior.

It’s asking for the taking,
blaming, deep-faking.
Oh, Americans are aching.
We’re all on edge,
waiting for the savior,
gaping with alarm
at the immature behavior.

Let the best team win.
Let’s all peaceFULly watch the changes [watch the changes]
Come the new, new Washington.

The Death of Money / Dealings – BONUS POST

The first Bonus Book of the Week is “The Death of Money, The Coming Collapse of the International Monetary System” by James Rickards, published in 2014. This was an all-over-the-map hodgepodge of generalizations on global financial trends, economic theory and what the author claimed was the devastation those trends could lead to, as of the book’s writing.

Prior to 9/11, the CIA possessed no expertise in the nefarious goings-on in the securities industry that could presage the occurrence of a terrorist attack. America’s law enforcement and security agencies had plenty of data, but inter-agency rivalry inhibited information-sharing and creativity– that would have allowed them to “connect the dots” in getting more specific information.

Prior to 9/11, American intelligence did detect irregular trading patterns in the stocks of the two airlines whose planes were targeted in the attacks. A tiny percentage of those trades were illegal because they were made by insiders– by the terrorists who knew those airlines’ share prices would soon plummet; the remaining percentage of anomalous trading was done by those who noticed the unusual activity (but not the reason for it) and jumped on the bandwagon.

After the attacks, threat-detection software was created for monitoring not just stock trading, but also currency and precious metals trading. The author wrote that a recently trendy means for bringing down an enemy-nation is: doing serious economic and financial harm rather than physical harm. Assaults on a nation’s technology and infrastructure such as the money-handling parts of cyberspace, aviation, dams and utilities, instead of targeting a country’s military and weapons or people of a specific ethnic group, is becoming the new normal.

The author remarked that China’s institutions are actually at risk for attacks, because the country’s government, economically, owns a large chunk of the means of production and arguably, labor; not to mention, capital. Wealthy Chinese business owners and executives have a co-dependent relationship with (corrupt) government officials. Besides, there are: “cross ownership, family ties, front companies, and straw man stockholders.”

The author warned the reader that a global financial crisis is likely in the offing due to prevailing circumstances in the economic heavy hitters of the world (like, the United States and China); among those circumstances: misallocation of investment funds; employers’ power to minimize benefits and compensation; red ink and the ever-widening, (allegedly alarming) gap between rich and poor. Financial panic is correlated with social unrest. That can lead to revolution.

The magnitude and accelerating frequency of financial bailouts of the last twenty-five years just shows how fragile the economic systems of the world are. In the United States, excessive deregulation fueled out-of-control greed, etc., etc., etc. In Europe, the group of nations that agreed to adopt one currency (the euro) thought the other nations would help mitigate their own economic problems, when in reality– they were putting all their eggs in one basket. In effect, they had to get permission from the others to make significant changes to their economic policies; they were forced into unhealthy co-dependent relationships.

Read the book to get the lowdown on: all the different groups of nations which were trying to diminish the U.S. dollar’s hegemony (hint: BRICS, BELL, GIIPS, SCO, GCC) at the book’s writing; the United States’ economic system explained for laypeople (via a Venn diagram, along with how the author defined “money” and “death”– both buried in the middle of the book); and everything you ever wanted to know about the value of gold, among other factors in the American dollar’s declining power in the world.

The second Bonus Book of the Week is “Dealings, A Political and Financial Life” by Felix Rohatyn, published in 2010. This bragfest described the life of the typical alpha male who rode a fabulous career in the securities industry, starting in the 1950’s.

The aforementioned first Bonus Book described the trends indicative of a dire future global financial situation. Many such untoward events have already occurred in the last couple of centuries (!), and keep happening. Every time, the seeds of financial disaster are sown decades prior to when it hits the fan.

The selective memory and cherry-picking of data of participants and victims (not to mention propagandists!) cause readers to perceive that those kinds of events are unprecedented, or are becoming more frequent. Excuse the cliche, THERE IS NOTHING NEW UNDER THE SUN (For more info, see this blog’s posts: Serpent on the Rock, A Fighting Chance, Since Yesterday, Why I Left Goldman Sachs, The Zeroes and Dot Bomb).

Rohatyn described a few major stressful economic near-disasters that he was asked to help remedy. One situation was early 1970’s Wall Street, which was a house of cards about to collapse. Another was the near-bankruptcy of New York City in the mid-1970’s.

The late 1950’s saw the city becoming a bloated, bureaucratic civil-service gravy train, due to the increasing power of unions. The costs of generous contracts (along with other sociological factors) was eroding the city’s tax base. Local politicians stayed in power by staying friendly with the unions. One hand washed the other.

At the dawn of the 1970’s, the city needed more and more short-term loans from banks. Creative accounting allowed the debt explosion to continue. The city got subsidies from the state and federal governments, but only at the end of its fiscal year, so its deficit ballooned annually before then. The city got generous borrowing terms because it was in the state’s and fed’s best interest (excuse the pun) to deregulate the lending banks, as they were political patrons, too. Eventually, push came to shove.

In June 1975, Rohatyn was appointed to a bipartisan (truly bipartisan!) committee to help New York State governor Hugh Carey draft a bailout plan for the city, three weeks before the date on which the city would be forced into bankruptcy. Fortunately, Carey possessed the right temperament for saving the world.

Read the book to learn more about how the author helped impose some adult supervision in various, serious economic episodes in his career, and more about his career itself.