Butler Shaffer on the decline of Western Civilization

What I was saying – and what I have been saying for many decades – is that Western Civilization should be spoken of in the past tense; that its life-affirming conditions have been destroyed by the content of our thinking.  I have written elsewhere that civilizations are created by individuals; they are destroyed by collectives.

~ Butler Shaffer, "'The Death of Western Civilization' - Continued," LewRockwell.com Blog, November 14, 2015

Yogi Berra on the value of going to funerals

You should always go to other people's funerals. Otherwise they won't come to yours.

~ Yogi Berra

(Baseball legend Yogi Berra died September 22nd at the age of 90.)

Lew Rockwell on the religion of environmentalism

Like socialism, environmentalism combines an atheistic religion with virulent statism. But it ups the ante. Marxism at least professed a concern with human beings; environmentalism harks back to a godless, manless, and mindless Garden of Eden.

~ Lew Rockwell, An Anti-environmentalist Manifesto, 1990

Alexis de Tocqueville on the destiny of two great powers: America and Russia (1840)

Today, two great nations of the earth seem to be advancing toward the same destination from different starting points: the Russians and the Anglo-Americans.

Both have grown unobserved and, while men's attention has been preoccupied elsewhere, they have climbed up into the leading rank of nations and the world has learned of both their birth and their greatness at almost the same moment.

All other nations appear to have reached almost the upper limits of their natural development and have nothing left to do except preserve what they have, whereas these two nations are growing: all the others have either halted or are advancing by a great exertion of effort, whereas these two progress rapidly and comfortably on a seemingly unending course as far as we can see.

Americans struggle against obstacles placed there by nature; Russians are in conflict with men.  The former fight the wilderness and barbarity; the latter, civilization with all its weaponry: thus, American victories are achieved with the plowshare, Russia's with the soldier's sword.

To achieve their aim, the former rely upon self-interest and allow free scope to the unguided strength and common sense of individuals.

The latter focus the whole power of society upon a single man.

The former deploy freedom as their main mode of action; the latter, slavish obedience.

The point of departure is different, their paths are diverse, but each of them seems destined by some secret providential design to hold in their hands the fate of half the world at some date in the future.

~ Alexis de Tocqueville, Democracy in America, 1840

MarketWatch's David Weidner: "gold always has been a sucker's bet" (2015)

Gold has always been the favorite commodity of a fringe crowd that doesn’t trust governments, central banks, politicians and the financial system. This part of the gold market drives a lot of the buying and selling; it whips up a lot of frenzy. I don’t have any hard evidence, but I’d argue that gold’s value is inflated by people who aren’t investing in a commodity but in a belief system that may or may not include black helicopters and a U.S. invasion of Texas.

The sad part is that gold always has been a sucker’s bet. It’s supposed to protect against inflation. It doesn’t. It’s supposed to retain its value. It doesn’t. For those reasons, gold is supposed to be the ultimate currency. It’s not.

As fund manager and blogger Barry Ritholtz said of gold’s fundamentals: “It has none.”

~ David Weidner, "Why gold is falling and won’t get up again," MarketWatch, July 21, 2015

WSJ's Jason Zweig on holding gold: "an act of faith" (2015)

It is time to call owning gold what it is: an act of faith. As the Epistle to the Hebrews defined it forevermore, “Faith is the substance of things hoped for, the evidence of things not seen.” Own gold if you feel you must, but admit honestly that you are relying on hope and imagination.

Recognize, too, that gold bugs—the people who believe in owning the yellow metal no matter what—often resemble the subjects of a laboratory experiment on the psychology of cognitive dissonance.

When you are in the grip of cognitive dissonance, anything that could be regarded as evidence that you might be wrong becomes proof that you must be right. If, for instance, massive money-printing by central banks hasn’t ignited apocalyptic inflation, that doesn’t mean it won’t. That means it is more likely than ever to happen—someday.

[...] So, if buying gold is an act of faith, how much money should you put on the line?

Laurens Swinkels, a senior researcher at Norges Bank Investment Management in Oslo, reckons that the total market value of the world’s financial assets at the end of 2014 was about $102.7 trillion. The World Gold Council estimates that the world’s total quantity of gold held for investment was about $1.4 trillion as of late 2014. So, if you held the same proportion of gold as the world’s investors as a whole, you would allocate 1.3% of your investment portfolio to it.

Anything much above that is more than an act of faith; it is a leap in the dark. Not even gold’s glitter can change that.

~ Jason Zweig, "Let's Be Honest About Gold: It's a Pet Rock," The Wall Street Journal, July 17, 2015

Paul Brodsky on the value of gold: "It's intrinsically worthless" (2015)

It’s intrinsically worthless or intrinsically priceless.  You can build a financial model to value it, but every input is going to be your imagination.

~ Paul Brodsky, a former hedge-fund manager who now is a strategist at Macro Allocation, an investment-research and consulting firm in New York, quoted in "Let's Be Honest About Gold: It's a Pet Rock," WSJ, July 17, 2015

Portfolio manager George Zivic: "not a single motivating reason to own gold" (2015)

The Fed's decision to restock the rate toolkit has got the gold market very nervous.  We have already seen that gold did not perform as a safe-haven investment. There is not a single motivating reason to own gold.

~ George Zivic, a New York-based portfolio manager at OppenheimerFunds Inc., which oversees $235 billion, BloombergBusiness, July 20, 2015

Abraham Heschel on perspective

When I was young, I admired clever people.  Now that I am old, I admire kind people.

~ Abraham Heschel, rabbi

Ralph Raico on politics and foreign policy

There is no reason to suppose that our leaders are any more competent in international affairs than they are in domestic affairs. The process by which they are elected – now absurdly and almost surrealistically reduced to mindless thirty-second television commercials – is practically guaranteed to produce political leaders who are liars or fools or both.

~ Ralph Raico, The Case for an American First Policy as appearing in Sheldon Richman, Editor, The Failure of America’s Foreign Wars

Jim Cramer: "The long national nightmare for banks is over"

We're beginning to get a sense that the long national nightmare for banks is over.

~ Jim Cramer, CNBC

(Comment made after Wells Fargo and JPMorgan Chase reported better than expected earnings.)

Phil Duffy on Big Government

We are building a skyscraper of legislation on the shifting sands of judicial opinion.

~ Philip Duffy

Jim Cramer on how it's different this time than 2007-2008

So, considering all of those negatives, how come I'm not yelling "fire?" How come I’m not revisiting 2007 and 2008?  One simple reason: we do not have systematic risk. We aren't about to fall apart at the seams. Our banking system is well capitalized, perhaps the best it’s ever been. The consumer is healthiest than any time in my lifetime, thanks to a strong job market, lower energy prices, and an aversion to debt because of the Great Recession.

[...]

It was unnatural that we kept climbing with nary a reversal for so long. This selloff is a normal correction based on legitimate worries that could impact a big swath of the market. We’ve had these kinds of downdrafts all the time, but the bottom line is, if I were the kind of guy that shouts “fire” in a crowded theater with every reversal like this then this show wouldn’t be worth watching. It certainly wouldn’t be on for ten years. Instead I have three simple, but painful words for this particular moment: stay the course. You see we’ll get through this one. And after ten years, I think it’s safe to say, we always do.

~ Jim Cramer, CNBC's Mad Money, March 10, 2015

John Rubino on negative interest rates

Interest rates are the price of money, and as such they tell investors, entrepreneurs and consumers what to do. Low interest rates generally say “buy, build, consume, take risks” while high rates say “save, sell, conserve, wait.” But zero or negative rates? Are they just an extreme version of low rates or is there a qualitative difference? Everyone has a theory about this but in the absence of historical precedent, we’ll have to wait and see.

~ John Rubino, "Lowest Interest Rates EVER," DollarCollapse.com, February 24, 2015

Ron Kruszewski: "Inflation would be welcome"

Today, inflation would be welcome and it's nowhere in sight.

~ Ron Kruszewski, CEO of Stifel Financial, as appeared on CNBC, February 24, 2015

Guido Hülsmann on how money printing is not the source of wealth

The classical economists had rejected the notion that overall monetary spending — in current jargon: aggregate demand — is a driving force of economic growth. The true causes of the wealth of nations are non-monetary factors such as the division of labor and the accumulation of capital through savings. Money comes into play as an intermediary of exchange and as a store of value. Money prices are also fundamental for business accounting and economic calculation. But money delivers all these benefits irrespective of its quantity. A small money stock provides them just as well as a bigger one. It is therefore not possible to pull a society out of poverty, or to make it more affluent, by increasing the money stock. By contrast, such objectives can be achieved through technological progress, through increased frugality, and through a greater division of labor. They can be achieved through the liberalization of trade and the encouragement of savings.

~ Jörg Guido Hülsmann, "Why the Austrian Understanding of Money and Banks Is So Important," Mises.org, February 18, 2015

Will Durant on the importance of trade

The crossroads of trade are the meeting place of ideas, the attrition ground of rival customs and beliefs; diversities beget conflict, comparison, thought; superstitions cancel one another, and reason begins.

~ Will Durant, The Life of Greece, Volume II of The Story of Civilization (1939)

Bruce Krasting on central bank omiscience and the abandoment of the euro peg by the Swiss National Bank

The entire world has signed onto the notion that Central Banks are all powerful. We now have evidence that they are not. Anyone who continues to believes in the All Powerful CB after today is a fool.

~ Bruce Krasting, "End of CB Power - SNB Folds," BruceKrasting.com, January 15, 2015

Jim Grant recommends 3-year call options on the Swiss franc

We venture that the SNB will sooner or later be forced to permit the franc to appreciate and thus to enrich the holders of low-priced, three-year call options on the Swiss/euro exchange rate. It's a long shot, to be sure--the options are cheap for a reason--but we judge that the prospective reward is worth the obvious risk.

~ Jim Grant, September 14, 2014

(Today the Swiss National Bank announced it will no longer defend the euro by inflating its own currency, sending the Swiss franc up 19% and 20% against the U.S. dollar and euro respectively.  The Swissie effectively retraced 63% of its 3 1/2 year bear market against the dollar... in one day.)