David Galland here, back from a couple of weeks in the Argentine outback.
The primary purpose of the trip was to finalize the details on the construction of our house at La Estancia de Cafayate, my dear partner Doug Casey’s version of Galt’s Gulch. Given that July is deep in the Argentine winter – the equivalent of January in these parts – we were prepared for cold weather. What we got for the most part was beautiful sunny days with temperatures in the mid-70s, followed by cool evenings, many of which were so temperate we were able to dine out-of-doors.
While there, we met fellow travelers from Hong Kong, the Philippines via Monaco, Greece, Canada, and a wonderful family of LEC property owners from Arkansas, with whom we ended up hanging out with for several days (including sharing an amazing hike to a waterfall up a very steep mountain trail).
Though there was work to be done, there was time enough for games of golf, horseback rides, and leisurely conversations about this and that over long lunches (as often as not accompanied by a fine bottle of local wine) at one of the many cafés on the quaint plaza.
On the topic of leisurely dining, it strikes me that one’s life is greatly enhanced by living in what might be called a “café society.” By that I mean a place where, by tradition, the locals allocate a certain portion of each day to sipping favorite beverages and nibbling comestibles while parked at small tables out-of-doors.
I come to that conclusion based on observations of both a broader and of a more personal nature. The first is that I don’t believe I have ever seen a person rush his or her refreshments while sitting at a café table. This may be because there is some deep inner need fulfilled by dining outdoors – a corner of the reptilian brain that finds comfort by returning to more primitive times when most meals were taken in the open air.
Or perhaps it is that the very act of placing one’s bottom in a café chair is itself an act of specific purpose, much as is the act of sliding behind the wheel of a car, or plopping into a seat at movie theater… To wit, the mere act of sitting signifies that you are about to engage in an act of leisure. And, so seated, you relax.
In addition, I have always felt there is a sense of elegance – sophistication, even – inherent in café sitting. While this is a certainty when nestled among the afternoon crowd at Les Deux Magots, I don’t doubt that a hint of better air circulates among the tables even at the meanest workers’ café. As that time we spend in better society – and feel that we are deservedly there – rarely fails to improve our self-opinion, it is only natural that we feel elevated by the simple act of supping al fresco at one’s favorite café.
Also in the favor of café society is that, by custom and necessity, café tables tend to be small and usually round. This limits the nature of the food served to modest portions and excludes from culinary consideration large and sloppy dishes, the sort that when consumed leaves a body feeling sluggish and the mind heavy.
While I could go on extolling the virtues of the café society, I will leave off in favor of more serious topics. But before I do, a final comment. I am always reminded when in Cafayate that most of that which we concern ourselves with in the fast-forward cultures is little more than farce and fiction.
We Americans in particular need to spend a lot more time enjoying our time – as opposed to being glued to the ceaseless torrent of news, almost all of which is carefully conceived to scare, titillate, and obfuscate far more important issues. For instance, which café to lunch at, or which wine to order once the decision has been made.
Speaking of farce and fiction, the latest struggle in Congress over raising the debt ceiling could serve as a poster child.
Do you seriously think for even a second – yes, you, dear reader –that the U.S. is about to default on its many debts?
Of course, in time the U.S. government (along with many others) will default. However, they are highly unlikely to do so by decree or even through the sort of inaction now on display, but rather by continuing with the time-honored tradition of screwing debtors via the slow-roasting method of monetary inflation.
Yet everybody today seems to want to talk about the drama now being presented by the Congressional Players – a troupe of actors whose skills at pretense and artifice might very well qualify them for gilded trophies at awards banquets. But rather than glittering statuettes, these masters of the thespian arts settle for undeserved honorifics and the pole position at the public trough. Followed by lifelong pensions.
But to the heart of the current matter, do I think that the current impasse will lead to the dreaded government shutdown (oh, no, not THAT… anything but THAT)?
As a matter of fact, yes. It’s not like it hasn’t happened before – it has, as the direct result of a similar gridlock during the Clinton administration.
Do I think that such a shutdown will have any more lasting effect on the trajectory of the economy than what I had for breakfast this morning (raw oats with a dab of maple syrup, milk, a sprinkling of strawberries, and half of a banana, sliced)?
Absolutely not. Sorry to say, but the trajectory of the economy at this point is well established, and closely resembles that of a comet streaking through the night sky. What’s left of the solid matter of the nation’s accumulated private wealth is fast being burned off by an unstoppable inferno of government spending, inevitably leading to an earth-shaking crash.
I make this dire prediction not out of an aberrant psychology (I hope), or in an outburst of self-promotion for Casey Research because the big-picture scenario we have so long warned of is unfolding according to script, but rather due to certain fundamental truths about our current situation.
And that brings me to the five things you need to know about the U.S. economy (much of which also applies to the other large developed nations)…
Finally, it’s important to remember that, as far as we know, you only live once. In some ways the transition we are going to live through is going to be pretty exciting. Perilous, certainly, but exciting as well. If you take the right steps, you should come out much better than most.
But if you overly obsess about this stuff – or the latest disingenuous move by the politicians – it will drive you crazy. Thus, it’s better to take the steps necessary to get in sync with the way things are and then get on with your life.
Over my breakfast this morning, I started to read a client newsletter put out by old friends of mine who manage money.
Because I want to stay friends, and because I don’t want to cause them any embarrassment, I won’t name names – but there was something that I read in their newsletter that I felt worth sharing with you. It was an excerpt from an interview my friends did with the manager of one of the very largest bond mutual funds in these United States.
During that interview, the topic turned to interest rates. Here’s the question and the answer:
Do you think rates are likely to start rising immediately?
Well, I think we could have low rates for a long time. I mean rates could gradually move their way up, but I don’t think a lot. I do think we are going to have higher inflation going forward.
I think with all of the debt that we have, it’s in the government’s interest to inflate our way out of the debt problem; especially if we also cut the deficit, cut spending and increase taxes and do those kinds of things.
I think gradually, we would work our way out and higher inflation would help reduce the burden of the debt. Three percent or four percent inflation, I think, in my mind would kind of be a Goldilocks outcome.
The road back to full employment is really a long road. Even if we get 200k or 250k jobs per month, we’re still three years away. And that’s just recovering the jobs we lost, and not the additional 125-150k that the population growth should be normally getting as well to get employment back to where we were five years ago. So, it’s a long, long road.
The jobs situation is going to be pretty bad for a while, but we do think we are in an expansion phase, not just a recovery anymore. We’re now expanding and we think we will be growing at 2.5-3.5 percent for many years even with fiscal austerity, if we hopefully get that in place.
We still think we’re still in the expansion stage of the cycle that is very powerful and granted, there are a lot of headwinds to it, but I think that is pretty good for corporate bonds and is pretty good for keeping rates lower for longer.
And people wonder why many on Wall Street are viewed with the sort of disdain reserved for politicians and used car salesmen…
The above quote has one of the true elites of the bond mutual fund industry speaking out of one side of his mouth, that interest rates should stay “low for a long time,” but then quickly shifting his lips in order to say out of the other side, “We are going to have higher inflation going forward.”
And he speaks of higher inflation as if it’s a good thing, ignoring the very real pain such an inflation causes to pensioners and savers – a profile that includes a large swath of the nation’s elderly.
As much as anything, it is clear from some of his comments that he actually understands the scale of the problems the nation faces; but he’s not being paid to tell the truth, but rather to talk his book – and so he does. Meanwhile, the number of fund investors shifting assets from stocks into bonds – in a very real sense running from the frying pan straight into the fire – is soaring.
What a toad.
Okay, these two entries are admittedly politically one-sided, and if I had time to find a couple that made fun of the Republicrats, I would – but I don’t, so I won’t. This first one was sent along by long-time correspondent and penpal Dennis Miller:
This next one is from the always excellent LewRockwell.com.
(Click on image to enlarge)
The End of Sexism
Are you a sexist? Reason.com, one of my favorite websites, tells of a new study that says acknowledging there are different sexes brands you as a sexist.
The Great Debt Debate in Pictures
If you thought you knew what was going on behind the scenes in Washington, think again. Here’s the complete story… in pictures.
Bring Me the Special
A resident in a hotel breakfast room called over the headwaiter one morning and read from the menu. “I’d like one undercooked egg so that it’s runny, and one overcooked egg so that it’s tough and hard to eat. I’d also like grilled bacon which is a bit on the cold side, burnt toast, butter straight from the freezer so that it’s impossible to spread, and a pot of very weak, lukewarm coffee.”
“That’s a complicated order sir,” said the bewildered waiter. “It might be quite difficult.”
The guest replied sarcastically, “It can’t be that difficult because that’s exactly what you brought me yesterday!”
A bit of this and that to leave you with this weekend.
My new friends from Arkansas told me they like when I share music, something I have been fairly lax about in recent missives (but only because not much new has come my way.) To continue the tradition, here’s a song that I’ve been playing a bit too much: Pumped Up Kicks by Foster the People. Give it a try and see if it grows on you.
I have often commented that if you study something you love one hour a day, within six months, a year maybe, you’ll be a master at it. Doug Casey forwarded me this remarkable video about a guy who clearly put in his hours learning to do something he loves – in this case, riding a bike. Insanity or inspirational? You decide.
On the plane to Argentina I started Game of Thrones by George R.R. Martin. While I am just now finishing up the first of the series (I think there are four more books, with more on the way), I am swept away by the setting, the characters, the drama, the action, and so forth. It could end up being the modern era’s Lord of the Rings. If you are looking for a serious diversion over the summer, this is about as good as it gets. (I also understand that HBO’s series based on the book is also quite good. Josh, one of my new friends from Arkansas, told me that it was on par with the Deadwood series, which is saying something.)
Speaking of Lord of the Rings, in a number of sittings over the last month the family unit has watched the director’s cut of the Lord of the Rings. I was a fan of the theatrical release, but having watched the director’s cut I am amazed at how much better it is. As it includes a lot of additional footage – footage that in retrospect seems essential to a proper telling of Tolkien’s story – the director’s cut is much longer, but the caliber of the additional material makes the added length go unnoticed.
Good Times in Good Company
We have a couple of events coming up that you’ll want to mark the dates for:
When Money Dies, our next Casey Research Summit: Phoenix, October 1-3. The faculty is still being assembled for this look at the timing and the consequences of the end of the current monetary system, but you will be impressed. More details in the mail soon.
Discover Cafayate: La Estancia de Cafayate, Argentina, November 1-6. As usual, the next event to be held in Cafayate will feature a Casey Research conference along with lots of fun and interaction with fellow subscribers and like-minded people from around the world. You can ask to be added to the list to receive more information and an invite at LaEst.com.
And with that, I will sign off for the week by thanking you for reading, and for being a Casey Research subscriber.