Intelligence Lost

Being gainfully unemployed and what feels like terminally unemployable has provided me ample time to read, think, and ponder the state of America and the world. Lately I've been struck by how common sense formerly was common among political and cultural leaders in centuries past in America. I've posted some quotes from Thomas Jefferson, whom most already knew was an exceptional character in American history. I've also posted a little bit on Andrew Jackson as well. However, the more I read the more I'm confronted with the fact that a conscious recognition of the danger of banking, particular central banking, and it's effects on the economy was commonplace in our history.

Today, we continue to be told that the banking industry must be propped up at all costs. Intuitively I believe most Americans don't agree but the propaganda is so overwhelming that it is hard for most to put their finger on what about this message doesn't seem right. I suppose that 100 years of obfuscation, propaganda, and control of the study of economics in the academic community on behalf of the Federal Reserve has worked marvelously to keep the average citizen from being able to identify what is wrong with the message specifically.

I'm posting a few more quotes for consideration along this theme: that economic common sense was indeed common among cultural, intellectual, and political leaders in America prior to the 20th Century. Sadly, our leaders today are either too corrupt, too lazy, too complacent, or too stupid to understand either the cause of the situation we are now in, or the solution.

"For three hundred years our history has been marked by the alternations of 'prosperity' and 'distress' which are produced by the booms and their collapse. When the collapse comes, the people who are left long on goods and land [and stocks] always make a great outcry and start a political agitation. Their favorite device always is to try to inflate the currency and raise prices again until they can unload...No scheme has ever been devised by them has ever made a collapsed boom go up again."
William Graham Sumner, Yale Professor, 1896

Ponder Mr. Sumner's comment in light of the reality that insider selling verses insider buying in publicly traded stocks in December of 2009 was 82 to 1. Or in light of the famous threat by then Secretary of Treasury Hank Paulson that if Congress did not provide $700 million of taxpayer money to be used to prop the banking sector up our entire economy would grind to a halt. Or in light of the increase of the U.S. monetary base by the Federal Reserve by 250% in less than 18 months...I could go on but you get the point.

In 1857 America faced a stock market bust and bank-run crisis with those left holding the bag calling on President James Buchanan to intervene. Unlike Bush or Barry O his response was to allow the market to determine who survived and who failed and wrote in his first annual address, "It is apparent that our existing misfortunes have proceeded solely from our extravagant and vicious system of paper currency and bank credits." For the next six months the money supply shrunk , government did not intervene, banks and other bad actors failed, and the economy recovered in less than 1 year.

I have a hunch that the "Dow 10,000" hats will be donned many times over the next 10 years. The only time I'll be excited is when it is on the way up from Dow 3500.