GUALFIN, Argentina – There’s trouble up here in the mountains.

We’ve come back to the ranch to see if there is anything we can do about it.

Trouble on the Ranch

To bring you up-to-date, former Argentine president Cristina Fernández de Kirchner granted certain “indigenous peoples” – or originarios – the right to claim title to their traditional lands.

To whom and to what this legislation was meant to apply is a matter of dispute.

Everyone is pretty much agreed that it doesn’t apply to the capital, Buenos Aires. Whatever indigenous peoples once lived where the city now stands were exterminated a long time ago.

And if a survivor can be found, it will be a cold day in Hell before the porteños (residents of the city) give him title to their skyscrapers, apartments, restaurants, and palaces.

You may as well ask New Yorkers to hand over their city to the Delaware Indians or Dakota farmers to give title to their farms to the Sioux. 

There is wide agreement, too, that it may apply to certain remote areas where indigenous people still live… in much the same way as they always did… over which Westernized laws have never exercised complete dominion.

Somewhere in between is our ranch – where an uninterrupted chain of title leads from the first conquistador in the valley in the 17th century all the way to today, and says your editor is the owner.

Nevertheless, egged on and financed by the previous government, and intent on upsetting 400 years of law and local custom, a group of originario activists invaded the ranch.

The whole idea of originarios is a bit of a stretch. No people are indigenous to the Americas. And in our valley, as in Europe and everywhere else, one people came and another went; one invaded and one was subjugated.

There were Tiahuanaco, Diaguita, Quechua, and Inca here. The last invaders, the Spanish, arrived only a hundred years or so after the Inca had taken over. Now, there is a mix of people of uncertain provenance, including the owner.

So, when a group calling itself the Diaguita Community tried to take over our ranch, we called the cops. The gendarmes ran them off. A judge later issued an order: They were not to bother us again.

But the trouble didn’t stop. And we’re here this week, leaving a daughter to nurse our still-invalid wife.

Stay tuned…

Talking Nonsense

Meanwhile, let us turn to some mountains far to the north… and to Jackson Hole, Wyoming.

There, at the end of last week, gathered the men and women who decide the world’s monetary policy and supervise its banking system.

And there, the financial press sat on the edge of their chairs to hear what Fed chair Janet Louise Yellen would say.

She hadn’t spoken publicly in the last two months.

Ms. Yellen once had such a bright future. She was a spectacular student – at Fort Hamilton High School in Brooklyn, then at Brown, and then at Yale.

She always got the highest marks and the greatest accolades. She had such a promising future. Everyone said so.

It was such a great opportunity, too.

With over $13 trillion in bonds now yielding less than nothing (thought to be impossible for the last 5,000 years)…

…with the economy struggling to make any headway – despite worldwide stimulus on an epic scale (Friday brought news that U.S. GDP grew at an annualized rate of just 1.1% in the second quarter)…

…with the median household wage down about 20% (when adjusted properly for inflation) since Yellen joined President Clinton’s Council of Economic Advisors and began helping to shape economic policies…

…and with Republican presidential nominee Donald Trump speaking directly to the plain people of the United States of America and telling them that the system is rigged against them!

Ms. Yellen has not said publicly who she will vote for in November, but we’ll bet dollars to donuts it is a certain HRC. The last thing she wants is a loose cannon in the White House.  

Who knows what Donald Trump might do to the Fed if he were elected?

At a minimum, he may ask what they think they are doing in the Eccles Building… and how they are spending our money.

Fed Fear

Ron Paul famously led an effort in Congress to “Audit the Fed.” But he never even got close.

Most members of Congress were sufficiently awed by… or afraid of… the brains at the Fed that wouldn’t support him.

But Trump?

Good lord!

Ms. Yellen must have felt the pressure. She must have sensed the opportunity. She had the world’s financial press hanging on her every word.

Shouldn’t she say something? Shouldn’t she at least try to explain how things got where they are?

Shouldn’t she blame economist Milton Friedman? After all, it was Freidman – the high priest of monetarism – who advised President Nixon to take the U.S. off the gold standard.

Or Alan Greenspan; he was the one that began backstopping the stock market?

Or Ben Bernanke, with his idiotic “Great Moderation” theory just months before the biggest financial crisis 75 years?

And shouldn’t she propose a solution?

Central Banker Booby Prize

But wait…

She didn’t have a solution. And she didn’t know why things were so out-of-whack.

What could she do?

One thing she certainly couldn’t do was announce a return to “normalcy.” That would almost surely trigger a stock crash and a depression… and earn her the Central Banker Booby Prize.


All she could do was what she did: more blah-blah.

Yellen said the case for raising rates had “strengthened in recent months.” She cited the “continued solid performance of the labor market” as a reason for optimism. She didn’t mention that the “labor market picture” she’s looking at – based on the government’s own figures – are heavily photoshopped, screening out the long-term unemployed and adding in fictitious jobs based on various theories and models.

And what happens to those nice (though largely fictitious) jobs numbers after you raise rates?

Isn’t that the real problem?

Having created a world where businesses and consumers barely have their heads above water… even with the EZ-iest borrowing costs in history, what will happen to them when rates rise?

She certainly wasn’t going to bring that up!

What else could she do? 

Poor Janet Yellen. Just look at her: talking nonsense.




Market Insight


Business and consumers may still be hurting.

But ultra-easy monetary policy from the Fed has coincided with a bonanza for stock and bond holders.

Today’s chart tracks the performance of the long-term Treasury bonds, as measured by the iShares 20+ Year Treasury Bond ETF (TLT), and the S&P 500.

And it goes back to the start of December 2008, just after the Fed kicked off its first QE program.

As you can see, since then, the S&P 500 is up 221%. And long-term Treasury bonds are up 73%.

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We kick off the week with some great feedback on Bill’s two-part series about how it all ends. (Catch up here and here.)

I thoroughly enjoyed your Diary today, as I do every day. And what a thrill that it contained a “shout out” to all the residents of Oklahoma.

I thought it worth a moment of my time to clarify that a few of us Oklahoma citizens willing to forego the opulent lifestyle that running a meth lab can, no doubt, provide (what with the utopic possibility of a doublewide in Muskogee) actually managed to obtain a college education prior to the advent of the Internet.

Obviously, this miracle was accomplished by long hours spent in the university stacks, researching from microfiche, and photocopying articles for research papers, but we somehow managed.

Furthermore, although it is no Loyola or John Hopkins, the University of Oklahoma has been operating since 1890, if you can imagine. One small correction you may want to make before you send your foreword for your friend’s book, however, is your incorrect spelling of “Okee.” It’s spelled “Okie.”

Keep up the good work.

– Dwight C.

Occasionally, reading your Diary becomes the reward I give myself. All I’d like to do is raise my hat – or as Francophiles like yourself would say, “chapeau” – to you, a master of style and content, especially your piece titled: “How Does It All End? Part II.”

– Adib R.

Meanwhile, the controversy over Bill’s generous use of ellipses – those sets of dots “…” he sprinkles through the Diary – continues to rage. (Catch up in Mailbag here and here.)

I would love to be reminded of correct usage of the ellipsis. Language needs those who police it to ensure that its evolution stays within reasonable limits. While so many are mashing the pedal to the floor on the information highway, “Mr. Newton” is issuing tickets to keep people safe. I know this because he has personally issued *me* a few tickets. He is my uncle.

– C. Long

I bet [Diary reader] N. Miller is an English teacher.

There is a joke of two English teachers taking a road trip through the mountains.

The brakes burn out on the vehicle.

The driver shouts, “I think were done for!”

The passenger relies, “Never end a sentence with a preposition.”

– Jack M.

In Case You Missed It…

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To find out how you can access this company’s name, watch Teeka’s presentation now.