The proportion of personal income received in the form of interest, dividends, and rent – the income, broadly speaking, of the well-to-do – was about twice as great as in the years following the Second World War. This highly unequal income distribution meant that the economy was dependent on a high level of investment or a high level of luxury consumer spending or both. The rich cannot buy great quantities of bread. This high bracket spending and investment was especially susceptible, one may assume, to the crushing news from the stock market in October 1929."
John Kenneth Galbraith, The Great Crash of 1929
"The convention that gives the dollar an over-riding value as an international currency no longer has its initial basis, namely the possession by America of the great majority of the gold in the world...
For all these reasons, France is in favor of the system being changed. We therefore believe it to be necessary for international exchanges to be established, as was the case before the world’s great misfortunes, on an unquestionable monetary basis, that does not carry the mark of any particular country.
What basis? Indeed, we cannot see that, in this respect, there can be any other criterion, any other standard, than gold.
Oh, yes. Gold, which never changes its nature, which can be shaped into bars, ingots or coins, which has no nationality and which is eternally and universally-accepted as the unalterable fiduciary value par excellence. Moreover, despite everything that could be imagined, said, written, done, as huge events happened, it is a fact that there is still today no currency that can compare, either by a direct or an indirect relationship, real or imagined, with gold."
Charles De Gaulle, press conference, Palais de l’Élysée, February 4, 1965
"Indeed, one can be deceived in many ways; one can be deceived in believing what is untrue, but on the other hand, one is also deceived in not believing what is true."
Søren Kierkegaard, Kjerlighedens Gjerninger, SKS vol.9, 1847
"It begins with a highly complex financial system, whose very complexity makes it difficult for anyone to know what might be going wrong; by definition, the multiple parts of the financial system are linked, which means that trouble in one institution, city, or region can travel easily and quickly to others. Buoyant growth in the economy makes the financials system more fragile, in part due to the demand for capital and in part due to the tendency of some institutions to take on more risk than is prudent.
Leaders in government and the financials sector implement policies that advertently or inadvertently increase the exposure to risk of crisis.
An economic shock hits the financials system. The mood of the market swings from optimism to pessimism, create a self-reinforcing downward spiral."
Robert Bruner and Sean Carr, The Panic of 1907
"For these are a rebellious people, deceitful children, unwilling to listen to the commandments of the Lord. They say to their seers,‘Do not see!’ and to the prophets,‘Say nothing of what is right! Tell us only things that please us — prophesy illusions."
Isaiah 30:8-10
Stocks were continuing their swoon from last week as the day began.
VIX opened at an elevated level.
But as the day wore on, and the rest of the world went to bed, the markets gathered themselves together an moved higher.
VIX fell, giving back almost all of its increase.
Gold rallied.
Silver initially slumped with stocks but managed to bounce back to pretty much unchanged.
Bitcoin continues waffling around, showing no particular conviction except for a measured profit-taking.
As a reminder I am still in the 'quiet period' for this latest episode, Trump 2.0. I try to remain on the sidelines for the first 100 days of a new administration, which should be over at the end of April.
But fair warning, I don't like politicians. I did not care for Biden — or Obama, Bush, and Clintons all. We in the West seem to be plagued by an increasingly poor set of options in leadership.
The economy's destruction may be one of Trump's greatest hits, outside of the realm of constitutional governance, which for some time has been in dire circumstance indeed.
The steady erosion of the Bill of Rights, under the guise of the selfish aims of a foreign government, is a most discouraging trend.
Have a pleasant evening.
