Cometh the hour, cometh the man. Or the woman… The White House is casting about for a new Fed chairman. Three candidates have their mouths open, hoping to snag the hook: Janet Yellen, Larry Summers and Don Kohn.
Another day of piddly trading, with piddly losses for both stocks and gold. So let’s turn back to our thoughts. First, we looked at money. We saw that the US now operates on a type of money better suited to the Paleolithic Age. A credit-backed money system has never worked in the modern world… and none has ever survived a full credit cycle. The credits expand until the debt is far too heavy. Then, when interest rates rise, the cost of carrying the debt goes up until the system falls apart.
When we left you yesterday we were lamenting how the American working classes have lost ground. Today, the typical working stiff has a lower real income than he had in 1950.
Wait… Is that possible?
Yes. As we showed yesterday, he has to work longer today to pay for a family car and a house than did six decades ago. In 1950, he could support a family.
Amazing how much difference a few years make. We first visited China in the 1980s. It was an appalling dump. Few cars. Few roads. Almost no decent restaurants or hotels.
Now in Beijing you see large black luxury automobiles everywhere… and modern highways crisscrossing in front of huge hotels and apartment buildings.