The Great Depression Online




Great Depression Online Archive Issue:

The Traits of Success

Great Depression Online
Monterey, CA
August 06, 2010

Inside This Issue You Will Discover…

*** Greetings from Monterey
*** The Stuff of a Complete Loon
*** The Traits of Success
*** And More

“Cannery Row in Monterey in California is a poem, a stink, a grating noise, a quality of light, a tone, a habit, a nostalgia, a dream.” -- John Steinbeck, Cannery Row

Greetings from Monterey

We are wrapping up our family vacation in California’s original capital – Monterey, California.  Here is where John D Sloat, Commodore in the U.S. Navy, first raised the U.S. flag over the Monterey Custom House, claiming California for the United States following the Battle of Monterey during the Mexican-American War in 1846.

It’s a good thing for Monterey that, when the U.S. took control of California, the state capital was moved to Sacramento.  It would be a shame if this scenic coastal landscape were overrun by bureaucrats…trampling about, drafting up laws on what type of light bulb must be used or how often wood can be burned in the fireplace.

Instead Monterey still preserves its small town charm.  In fact, you can still picture the depression era sardine canneries pulling in their daily haul, and the workers hustling about to clean, cook, and can the fish, as encapsulated by John Steinbeck in Cannery Row.  While the flophouses have been replaced by gift shops and the canneries by restaurants, the historical character’s still intact.

~~~~~~How To Prepare?~~~~~~

The shocking 1990 collapse of the Japanese Market.  The extraordinary U.S. economic boom of the ‘90s and early 2000s.  The devastating global recession that began in 2008.  These impacted everyone’s lives, investments, and fortunes.  The signs of their arrival were visible years and years in advance.  And yet…Almost No One Predicted Them.

The mainstream media didn’t.  The top economists didn’t.  The great financial advisers didn’t.  But One Man Did.

What’s coming Next?  When will it happen?  What should you do to Prepare for it?

Click Here for the Answers 

~~~~~~~~~~~~~~~~~~~~~~~~~

The sardines, of course, are long gone.  For as Ed Ricketts, operator of the Pacific Biological Laboratories from 1928 to 1948 concluded, following his investigation of where the sardines had gone, “They’re in the cans.”

The Stuff of a Complete Loon

Last week the inflation vs. deflation debate showed up at the Federal Reserve.  It appears the tepid recovery is now weakening.  And, perhaps, the economy has another bout of deflation to trudge through.

James Bullard, president of the Federal Reserve Bank of St. Louis, wants to do something a little tricky to prevent a backslide into recession…

He wants to buy government debt.

The question to ask about the Federal Reserve buying government debt is not why they are doing it but, rather, how they go about it.  Namely, where does the Federal Reserve get the money to buy government debt?

The answer, regrettably, is so unconscionable it’ll make an honest man choke on his morning coffee…  The Federal Reserve just makes a notation in its ledger and – out of thin air – magically has the money to buy Treasuries.

Just several years ago, such measures would have been unthinkable…the stuff of a complete loon.  But that was before the Federal Reserve bought up $300 billion worth of Treasury securities in 2009.

This expansion of the money supply is, by definition, inflationary.  And that’s what wakes Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, up in the middle of the night with the cold sweats. 

“Hoenig fears keeping rates too low for too long could lead to excessive risk-taking by investors and feed new speculative bubbles in the prices of stocks, bonds and commodities,” reports AP.  “He’s also expressed concern that low rates could eventually unleash inflation.”

Will it be James Bullard or Thomas Hoenig who’s right?  Alas, in their own way, they’ll both be right…and we’ll be whipsawed by deflation followed by inflation.

The Traits of Success

We’ve got a long drive ahead of us…so we’ll leave you with a little Steinbeck, Cannery Row…

“‘It has always seemed strange to me,’ said Doc.  ‘The things we admire in men, kindness and generosity, openness, honesty, understanding, and feeling are the concomitants of failure in our system.  And those traits we detest, sharpness, greed, acquisitiveness, meanness, egotism, and self-interest are the traits of success.  And while men admire the quality of the first they love the produce of the second.’”

Sincerely,

M.N. Gordon
Great Depression Online

P.S.  “We’ve seen the greatest credit bubble and greatest real estate bubble in modern history, which means we have inflated asset values and, more importantly, way too much debt in our system,” warned financial author and publisher Harry Dent recently to Moneynews.com.

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