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There are wealthy people, and very wealthy people, and people who have so much money they don’t know what to do with it. Literally, they don’t know. I don’t mean business — these people are often good at business and investing. But, that just makes more money. I mean spending it, just on fun stuff. Like people in every age, I am a little appalled at what wealthy people spend their money on. It’s OK with me if they have a little fun for their money, but they seem to have so little fun for so much money. It was this very wealthy class that made possible the art of the Renaissance, or the music of Mozart. Often, this was royalty — and their support of artists was not only a personal interest, but also a kind of national ambition. The Vanderbilt family, which was the wealthiest family of the late 19th century (due to their control of the railroad business), felt a real obligation to use that wealth for something like National Artistic Ambition. The Vanderbilts built Grand Central and the original Penn Station in New York, among their many ambitious undertakings. The Breakers in Newport, RI was a rather absurd project for a summer beach house that only got used 10 weeks a year. But, it stands today as an extraordinary and wonderful accomplishment, somewhat ridiculous as personal lifestyle adornment but actually in line with royalty in Europe at the time. (Today, you can rent nearby Rosecliff and Marble House for your weddings and events.) Andrew Mellon, one of the wealthiest men of the 1920s, built the National Portrait Gallery in Washington DC, with his own money, even as Franklin Roosevelt was trying to take it from him. If the very wealthy of the late 19th century were

Today we have a well-known documentary by Bill Still. Still wants to get us out from under the slavery of The Bankers. His solution is basically Government Money. But, government money is not much of a solution either. Government Money resulted in the hyperinflation of the 1780s, which is why one of the principles of the Constitution was that government would be out of the money business. I admit that it is not an easy problem to solve. For us today, I concur with the Free Banking people that a distributed system would be best, including numerous competing issuers of gold-based currency. We actually have something very much like this today, with many gold-based payment platforms including Lode, Kinesis, Glint, the United Precious Metals Association, and others. Monopoly Money — either private central banks, or governments — tends to work out badly.

Hillsdale College now has a Laffer Center. Maybe Art Laffer himself endowed it. This is splendid good news. They put together a whole eight-episode lesson series, with Art Laffer, to describe “supply side economics,” the branch of economics we practice here. I haven’t watched it yet. But, the books that Laffer, Steve Moore, Larry Kudlow and Brian Domitrovic have done over the years have been very good, so there is no reason to expect otherwise here. Watch the eight-episode series on Supply-Side Economics, with Art Laffer. I still hope that Hillsdale College will branch out and start some new colleges, in the Hillsdale Model — at least, the curriculum. They should make an effort to slim down their operational model, more in line with Thales College. September 6, 2020: Build Your Own College #14: Hillsdale College Hillsdale has now become quite competitive. I think that only about 20% of applicants are accepted. This means that they have enough applicants to fill four other Hillsdale Colleges. They could just do a joint application. Students would apply, and then Hillsdale would tell them which of five colleges, in descending order of competitiveness, they qualify for — a little like General Motors’ car model lineup of the 1950s. The most qualified students would go to “Cadillac,” and the least-qualified students, but still interested in getting a Hillsdale-style education, would go to “Chevrolet.” You can buy a college campus these days for almost nothing — maybe less than $5 million, for a campus that could cost $100m to build new, in construction costs alone. A professor from Hillsdale told me that they have been offered college campuses basically for free, if they would take it over. He said that they have trouble finding qualified professors. I believe him, but nevertheless, there are so many

Economists today are very concerned about the “neutral rate of interest.” But, at the same time, they admit that nobody knows what it is. Here’s Wikipedia. It would take some time to express where this concept comes from. Maybe we’ll get to that in time. But, let’s start with some basic observations. Was there ever a time when interest rates were not manipulated by the Federal Reserve, or other central banks in a similar fashion? Yes, of course. Although you could argue that interest rates were not quite set by the unmolested market in those days, it certainly was a lot closer than what we have today. Currencies were, of course, fixed to gold. This also was the primary source of money supply activity, just as I described as common to any Currency Option One system in Gold: The Final Standard. read Gold: The Final Standard What we see, in those periods, is a lot of variation in interest rates in the short term, and a lot of stability in the longer term. There was no “neutral rate of interest” for the short term. It was wildly variable from day to day. This was a rate for a single institution, the Bank of England, not a market rate. And, it is only monthly; and for loans and discounts typically of about 90 days, not overnight. Here are Call Money Rates in the US, before the Federal Reserve, with more of a distributed banking system. Again, this is monthly data, not daily. Here is a little closer look at the 1880 to 1910 period, which is a good representation of “normalcy” during that era. Again, it is all over the place. Now remember, long term bond yields were very, very, extremely stable during this time, for good credits and in gold.

(This item appeared at Forbes.com on May 21, 2024.) The idea of “Sound Money” — this means using gold and silver as money — has been persistently popular among the States for over a decade. Beginning with Utah in 2011, one State after another has removed barriers and impediments to using gold and silver, and digital or other alternatives based on gold and silver, in a monetary role. With over 40 States now having passed some kind of Sound Money legislation, it is now time to take on the Federal government. Representative Alex Mooney (R), of West Virginia, recently introduced the Monetary Metals Tax Neutrality Act, HR 8279, into the US House. The bill aims to repeat, at the Federal level, what has already been accomplished in many States. Article I Section 10 of the US Constitution reads: “No State shall … emit Bills of Credit; make any thing but gold and silver Coin a Tender in Payment of Debts …” The term “Bills of Credit” refers to paper money, which States often used to pay debts in the past, often resulting in terrible inflation and even, in the 1780s, hyperinflation. Today, most people have no clear idea of what the Federal Reserve, and the US Treasury, is actually doing with their money, but they suspect that more monetary inflation is a likely outcome. The principle of allowing the free use of an alternative — we all know there is only one that has been proven to work — gains widespread popular support, among Republicans and Democrats alike. The main difficulty is related to taxes on gold and silver, primarily sales taxes and capital gains taxes. This is related to the categorization of gold and silver as a “collectible,” rather than as a currency like Canadian dollars or euros, which

Several people recommended to me Mike Maloney’s Hidden Secrets of Money documentary. I haven’t watched it yet, but here it is: Watch: Hidden Secrets of Money Also, this book, Pirate Money.

This item is titled “Japan 2023” because I wrote it in August 2023 for my institutional clients. Nevertheless, it has a lot of useful background material on what has been going on in Japan for the past couple decades. This is all a good foundation as, I think, we will witness a period of consequences for Japan going forward from here, over a period of about five years. read Japan 2023 in pdf format In the last twenty years, Japan’s government could have sallied forth and fixed a lot of the problems that have been accumulating over the years. Mostly, this has been intensifying welfare/social security/healthcare burdens, on a weakening economic base. Despite the tendency of governments to adopt an “austerity” response here, which mostly means Higher Taxes, the solution is rather, tax reform which results in lower tax rates, although the revenue/GDP ratio may remain unchanged. But, a much healthier economy would lead to rising GDP, and thus more tax revenue. On the spending side, the main problem, just as in the US and most other developed countries, is legacy social programs, including needs-based welfare, public pensions (Social Security) and healthcare systems that are much too expensive and burdensome. A much better solution has been found by governments such as Singapore, which relies primarily upon Provident Fund systems. These are basically private accounts with mandatory contributions, similar to Payroll Taxes but you get the money in an account owned by you. Singapore has no Public Pension (Social Security) system, but relies on a Provident Fund system that amounts to a mandatory 401(k)-type program. Over a lifetime, even people of modest income can amass quite a lot of assets. There are still needs-based welfare systems for seniors who find that these private accounts prove insufficient. But, the number of such

The USD/JPY rate had an important technical breakdown recently, breaking the 150/USD level that had been defended for some time earlier, and represents a major milestone going back to the 1980s. In the last few days, the Bank of Japan has engaged in large-scale yen-buying intervention, showing just how jittery they are about this. This takes place in context of intensifying expectations that the Bank of Japan will, in time, be pressed into basically buying the government’s bonds, either to keep interest rates down, or to directly finance ongoing deficits. However, the BoJ has not actually been very expansionary with its Base Money supply over the past several years. The “money printing” theme might be real for the future, but the present and recent past does not reveal much base money expansion. The general tone is that the BoJ’s ability to avoid money-printing is coming to an end — which would indeed be a big deal. Here is how it looked as of the end of April. These are Assets, including Total Assets in Green, Government Securities in Blue, and Loans and Discounts in Orange. Liabilities include Current Account balances in Orange, and Currency in Circulation in Blue. The Ministry of Finance’s account is in light blue, and Other balances (I think these are mostly securities brokerages) are in green. So, we can see that Base Money has actually been pretty flat after peaking in 2022. There was a sharp contraction in late 2022, which came about with a big drop in Loans and Discounts, while Securities holdings continued higher. Here are month-end figures, to April 30. We see that Bank Reserves have had a pretty big jump higher in March and April, making new highs at the end of April. After months of flatlining, the Monetary Base is indeed

We saw, in The Magic Formula (now in FREE pdf form), that China didn’t start on its path to becoming a world economic power until it got its currency under control in the mid-1990s — Stable Money. Read The Magic Formula (2019) China also had Low Taxes, with tax revenue/GDP generally under 20%. Russia also has a pretty good tax regime, with its 13% Flat Tax income tax system. However, this is combined with a 20% VAT and a 30% combined Payroll Tax rate, producing a rather heavy tax burden overall. This taxation system is, I would say, quite efficient, using simple taxes at (relatively) low rates and a broad base. Nevertheless, the combination is quite heavy. The ruble currency, however, has been quite unreliable in the past, similar to China before 1995. If Russia is to become a Great Power, it needs a better currency. There are clear steps, recently, toward making gold-based payments systems available in Russia, as an alternative to the unreliable ruble. Maybe, in the not-so-distant future, the ruble will be once again based on gold, as it was in the past. January 29, 2023: Gold Ruble 3.0 How Russia Can Go To A Gold Ruble series With it now difficult to even trade RUB and USD between each other, I think that any USDRUB charts are a little suspect, and easily manipulated. Let’s look instead at a more significant cross rate, RUB and CNY: Well, that has an interesting look to it! This is a pretty good track record of reliability, on this basis, over the past decade. Nevertheless, the RUB still has a bit of a tendency to decline in value. Again, I reiterate that central banks should ignore everything related to interest rates, or various “money supply” indicators in a Monetarist format, and