Thursday, June 11, 2020

The June 2020 Covid Conundrum

Is anyone else feeling as confused as I am about our current situation?
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Sunday, May 31, 2020

A Constitutional Moment in History

This Corona virus episode is really disturbing on several fronts. I have tried to evoke one of them with this cartoon.

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Tuesday, May 26, 2020

Gold Has Retained Purchasing Power over the past 100 Years

As it happens, I am rereading the masters thesis of my economist father, Edward C. Harwood. He went on later to found the American Institute for Economic Research.

In his thesis, he cites the example of a car factory (this is 1931) that produces 100 cars a week. He gives the value at market of the weekly production at 100 pounds of gold.

In those days, the dollar was calibrated at $20.67 per ounce of gold. That puts the dollar value of the 100 cars at 100 pounds of gold x 16 ounces x $20.67 = $33,072, or $330.72 (in 1931) per vehicle.

Using today's dollar exchange rate with gold, we get the following:

100 x 16 x $1,713 = $2,740,800, which is $27,408 per vehicle.

The average price for a car in the US in 2019 is $36,718 according to Kelley Blue Book. I find that incredibly high, but according to a few articles I have read, this is indeed the average price of a light vehicle. One writer chocks the high price up to high demand and easy credit terms. This is possible, especially when you look at the demand for the bigger SUVs and light trucks.

But my fundamental point is that one can still buy a decent car for about 16 ounces of gold. Here's a 1929 Ford versus a 2020 Subaru.

By Richard Smith - Flickr, CC BY 2.0,

2020 Subaru - same price!

I wish that we could still buy a car for 330.72 dollars! But you certainly can still buy a car for 16 ounces of gold.

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Saturday, May 16, 2020

Congress Sees No Limit to Its Credit

Last night Congress voted to pass another trillion dollar "stimulus" bill. Apparently, they believe the government has no credit limit.

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Thursday, May 14, 2020

What Could Possibly Be Worse Than A Virus?

A few years ago, I ran a series of Unintended Consequences. One more comes to mind.

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Sunday, April 19, 2020

My Cartoon on the Covid-19 Economic Situation

The economic effects of the shut-down of the world's economies have yet to be felt, but we will soon see them materialize. This cartoon may be a little early, but I believe it's an accurate portrayal of our state of mind in the coming months.

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Thursday, April 16, 2020

What Does This Crisis Mean for the Economy's Future?

Recently, someone asked me three questions:
  • Who is going to pay for the government's handouts once this virus episode and economic standstill have passed?
  • What kind of price inflation might we be looking at over the coming months?
  • What should a person be doing today?
It inspired me to write an article that Seeking Alpha decided to publish. It is here.

I hope you will find it of interest.

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Thursday, April 09, 2020

Thoughts at a Crossroads

I’m becoming more and more skeptical of the human capacity to organize political society in a way that doesn’t end in catastrophe sooner or later.

Example: Both Republicans and Democrats plunged into this opportunity to lavish mirage-credit on the public. And as we know from experience: (1) corruption appears on such largesse like flies on a dungheap; and (2) mirage-credit must ultimately evaporate, taking with it all that depends upon it.

Taking this line of thinking a bit further, perhaps even towards more sardonicism:

I suspect that we humans are in a Catch-22: We don’t have enough enemies from the outside, so in order to test ourselves, societies “need” to make enemies of each other. That usually happens when (NB: not if) something disrupts supply and order, which, if violent enough, can cause shortages, anxiety, distrust, and fear for survival.

If we are to judge by known history, this ALWAYS happens. I hope we will not head down that path, at least not before I croak – that sounds selfish, and I guess it is. I've been lucky as a Baby-boomer. Maybe every generation must live through a period of strife and want, in which case mine is coming.

On a different but related subject, what is the main difference you see between the following two photos?

By Unknown author or not provided - U.S. National Archives and Records Administration, Public Domain,

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Saturday, February 22, 2020

What Up With France?

You may be planning to travel to Europe this summer and you're wondering what's going on in France. Is the situation bad? And if so, can problems be solved?

The short answers I would give are: Very bad, and no.

Why can't these problems be solved, at least not in any definitive manner? My reasoning is simple: Mr. Macron is not Mrs. Thatcher, and France is not England.

By Benh LIEU SONG - File:Tour_Eiffel_Wikimedia_Commons.jpg
Facts as I perceive them:

France has more than flirted with socialism throughout its post-revolution history. During the most recent 100 years, socialist presidents were in power 1924-31, 1947-54, 1981-1995, and 2012-2017. That’s 1/3 of the time. With voting results close to 50-50 each cycle, that’s a lot of socialists.

The current retirement system was set up after WWII. Communist pressure inside the country, led by the “resistance” against the Nazis, forced De Gaulle into compromises that have set the country on a six-lane highway towards the left. Gradually over the ensuing seven decades, socialist regulations and “fixes” took hold in one domain after the other.

Private pension plans have become increasingly fragile, probably though a combination of bad internal management and weak national monetary policy. They have been bailed out/fused together over the years. For example, I know someone who receives a basic state pension and two other supplemental private pensions that have changed names about three times over the past ten years.
Meanwhile, the nationalized system is approaching bankruptcy, just as is the case almost everywhere it is tried including the US. With pressure from the EU, France is trying to reduce its deficit/debt, which is a good thing. However, France is still basically a socialist country, so when they try to reduce the budget and/or increase taxes to solve the budget problems, they can’t reduce benefits without the public going nuts.
You have noticed the “yellow vest” crisis, which came about because of a minor gasoline tax hike. Minor perhaps, but this was the “last straw” for many people since it is the outcome of years of tax increases and service reductions. (Example: Healthcare used to be tolerably good. Today, it is embarrassingly poor: a year’s wait to consult certain specialists; people waiting 12 hours to see a doctor in emergency rooms; rampant overcrowding and under-staffing; suicides among health workers.)

Today, Macron has decided to pool all national and private retirement pension set-ups into one large system that is complicated, misunderstood and poorly explained. As a result, every single benefit group is howling: the unions, the lawyers, the nurses, the federal bureaucrats, the railroad workers, the energy sector, the transportation sector, retirees. – even the ballet dancers and concert musicians. So even though the unionized sector of the population is small, popular anger against these reforms is high.

Macron has a majority in France’s equivalent of Congress, so the reforms might pass, especially because they can dispose of a silver bullet called the "49-3." This is a fast-track code section that can be used in case of need, but it tends to cause irritation and suspicion.
Everyone is getting exhausted by the constant strikes and demonstrations, which are hurting not only commuters and city dwellers but also many commercial entities that depend on peaceful coexistence. The French are survivors so they manage to scrape by, and strangely enough they still cling to their love of what they call “solidarité,” which is essentially the redistribution of wealth through public benefits. They don’t see that this redistribution, combined with obligatorily high taxes and rigid labor laws, is destroying their economic model.
I believe it will destroy Europe, but we’ll just have to wait and see. It might even destroy Western Civilization as we know it if it catches on in the US.

Francophiles watch the news every day to see if we can discern a clue about how this will end. Recently, the French “Congress” has started debating the pension reforms on the floor, but the opposition has filed more than 41,000 amendments, making the process slow if not impossible. Meanwhile, subway and train strikes continue to render ordinary life most difficult. Yet somehow life seems to go on.

What a paradox is this beautiful country: so smart is so many ways, and so dumb in others. And when I think it's very possible the US will go down the same rabbit hole....


Monday, December 23, 2019

Pelosi's Gift to America

As we celebrate the 2019 Christmas holiday, let's all give thanks to Pelosi et al. for one of the funniest demonstrations of Congressional incompetence we've seen in a lifetime.

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