The Dow fell 93 points yesterday. Gold fell $19 an ounce – closing below $1,300 an ounce. Nothing serious. But…
Markets continued their summer trading behavior last week. Up a little, down a little… meandering… strolling… not in a hurry to get anywhere. The end of the week found the Dow about where it began… and gold a bit lower. But here at the Diary, we make tracks. We are using these lazy, hazy days of summer to steal a march on our fellow investors. And our fellow humans!
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.