Coolidge's Error

Nick Carraway: You can't repeat the past
Jay Gatsby: Can't repeat the past? Why, of course you can.
--The Great Gatsby

These pages have argued that Calvin Coolidge may have been the best president of the Twentieth Century. He was not perfect, however. His gravest mistake involved presiding over a Federal Reserve that made credit too easy for too long while the Twenties roared.

At several points during the 1920s, the Fed eased credit conditions despite the booming economy. When they finally tried to tighten credit in 1928, stock and real estate markets did not respond. Instead they continued their upward spiral. In late 1929, of course, these markets finally came crashing down, ending one of the largest speculative benders in US history.

It is easy to draw parallels to today's situation. Despite information suggesting that the economy is on solid footing, the Fed maintains an ultra low interest rate policy. Stock markets are ringing all time highs almost daily. Speculators bid crypto constructs like Bitcoin to astronomical levels.

Stated differently, we are repeating Coolidge's error.

Animal Spirits

"Don't you see, dear. Some children wish for things they couldn't possibly use--like real locomotives or B-29s."
--Kris Kringle (Miracle on 34th Street)

Courtesy of the WSJ.

Nothing seems to awaken animal spirits like flat screen TVs on sale during the holiday season.

Tax Cuts, Deficits, and Debt

I have a mansion, forget the price
Ain't never been there, they tell me it's nice
I live in hotels, tear out the walls
I have accountants pay for it all
--Joe Walsh

Tax cuts do not cause deficits and debt. Deficits are caused by spending beyond one's means. Resources must be borrowed to make up the difference.

To reduce deficits and debt, get rid of the cause.

Cut spending.

Shopping on Margin

"I'm tapped out, Marv. American Express has got a hit man looking for me."
--Bud Fox (Wall Street)

As the holiday shopping season begins, let's check in on consumer credit position. As a % of disposable income, credit-instilled leverage has never been higher.

Nothing like shopping on margin...

Inconsistent Time Horizons

It may seem to you that I'm acting confused
When you're close to me
If I tend to look dazed I've read it someplace
I've got cause to be
--Tina Turner

Buy-and-hold investors often argue that one has to be in it for the long haul. That you can't time the markets.

Many of these 'long term' investors chide bears who predict market declines but, because no decline has occurred recently, those bears must obviously wrong.

See the inconsistency?

Dilbert's Rules for Writing

Staring at the blank page before you
Open up the dirty window
Let the sun illuminate the words
That you could not find
--Natasha Bedingfield

Scott Adams, creator of the Dilbert comic strip series, claims that he became a better writer after taking a one day course in 'business writing.' To realize improvement, he suggests using the following tricks.

Simplicity rules (see?). Simple writing persuades. A good argument in a few sentences is better than a great argument delivered over many pages. Academics, even those from business disciplines, have yet to catch on here.

Writing can be simplified by pruning words. The example he uses, that of deleting 'very' from sentences, was a lesson from my first boss, He argued that words like 'very' and 'really' read like you are trying to sell the reader on an idea using emotional tags rather than on the merits of the idea itself. Take the 'sell words' out.

Grab the reader in the first sentence. Rewrite the beginning until you are satisfied that it will arouse curiosity.

Write short sentences. Multiple thoughts in one sentence confuse and fatigue readers.

Use active rather than passive voice. Focus on verbs. Action-oriented verbs convey more effectively. For example, "I wrote this sentence" engages human brains far more than "This sentence was written by me."

These practices apply to writing contexts beyond the business realm, of course.

On the Contrary

I have a picture
Pinned to my wall
An image of you and me
We're laughing and loving it all
--Thompson Twins

Last two time consumers expressed such a low level of concern about the US economy? 1999 and 2007.

This, my friends, is what is known as a contrarian indicator.

Grateful for Markets

Neal Page: Honey, I'd like you to meet a friend of mine.
Susan Page: Hello, Mr Griffith.
Del Griffith: Hello, Mrs Page.
--Planes, Trains & Automobiles

Richard Ebeling shares the story surrounding the first Thanksgiving--a story that these pages have recounted before.

Am grateful for our Creator's gifts of markets and spontaneous order that have led to this bountiful harvest.

Big Business and Government

Say that you'll never, never, never need it
One headline, why believe it?
Everybody wants to rule the world
--Tears for Fears

Ron Paul and Chris Rossini discuss several myths surrounding big business and government. These myths include:

Big business loves free markets and is shackled by regulation.

Republicans love free markets.

The fact is that big business loves hampered markets where regulatory barriers protect its franchise by keeping entrepreneurial competition out. Moreover, going back to Lincoln, the Republican Party was founded on hampered markets. In particular, the Party of Lincoln favored corporate welfare in the form of tariffs, central bank control of money and credit, and government sponsored 'internal improvement' projects.

If you believe official narrative that regulation of big business is good for the people, then you are being played.

Red Century, Red Blood

Take my arm, take my leg
Oh, baby don't you take my head
--The Rolling Stones

The 100th anniversary of the Bolshevik Revolution finds several mainstream media outlets including NYT waxing poetically about the 'Red Century.' Its association with the color red is more than a little ironic. No ideology has exacted a bloodier toll on human existence than communism.

As noted here, the killing capacity of the Marxist-Leninist movement, which commonly promoted itself as a champion of 'the people,' tests the bounds of human comprehension. The number of deaths associated with various threads of this ideology might surpass 100 million.

Recount after recount of life behind the iron curtain reinforces the extent of human cruelty in everyday terms.

None of this should be surprising. Even cursory examination of Marx and Engels and other early works that laid the conceptual foundation for communism suggests that an extreme amount of force is necessary to reshape the lives of individuals--who are naturally endowed with freedom--into the unnaturally collectivist communist ideal.

A Harvard undergrad, whose parents fled the chaos the communism wrought on Eastern Europe, captured the essence:

"Communism cannot be separated from oppression; in fact, it depends on it."

Here's hoping that the world's sentence to a century of communism is not extended.