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As far as we know, only one American vice president ever made a contribution to public life worth remembering. That was Charles Dawes, vice president under Calvin Coolidge.
Mr. Dawes was a Chicago banker who was also a songwriter. He wrote the tune for what became a popular song - 'It's all in the game.'
Oh. And he also won the Nobel Prize for coming with a plan - the Dawes Plan - for ending the reparations arguments following WWI. As with so many Nobel Prizes, the committee probably acted too hastily. The Dawes Plan never worked.
Dawes operated in a different world. The US dollar was still as good as gold. And any money that wasn't backed by gold was suspect. Said Dawes after composing his song:
"I know that I will be the target of my punter friends. They will say that if all the notes in my bank are as bad as my musical ones, they are not worth the paper they were written on."
Banks issued money back then - bank notes. Sometimes the banks were good for the money. Sometimes they weren't. But at least customers knew where they stood. If a bank failed, they'd lose money.
Now it's not so simple. Banks no longer issue their own notes. Now, we all use dollars. But what are the dollars worth? Are they as going to be the cause of tears and suffering?
Yesterday, stocks rose 108 points on the Dow. Gold up $3.
And tomorrow, Barack Obama issues his State of the Union address. We are tempted to send him some ideas:
"My Fellow Americans," we would begin. "I've got good news. And I've got bad news.
"The good news is that we've eliminated the paperwork associated with the Food Stamp program.
"The bad news is that we've eliminated the program too. Well, that could be good news too, depending on how you look at it. I don't know how the US federal government got into the business of feeding people, but now it's getting out.
"And the good news is that the troops are coming home from Iraq, Afghanistan and 100 different other countries. We have so many troops overseas, we've lost track of them; for the life of me, I can't figure out what they were supposed to be doing over there.
"The bad news is that they probably wouldn't be able to find jobs in America today.
"But the good news is that we're doing something about that too. I'm eliminating all the labor legislation and all the nonsense regulations that keep people from hiring. You want a job? Get in line behind all those Hispanics waiting on a street corner. You want a job done? Find yourself a good worker.
"Oh...and here's some more good news. The US isn't going broke. Not on my watch.
"Why...I'm proposing a balanced federal budget. What was the matter with George W. Bush, anyway? It's not that hard. You just figure out how much you've got to spend and you don't spend a penny more. Simple arithmetic. The budget deficit for this year? Zero."
Of course, if we were delivering a State of the Union address, we'd probably be impeached before we got to the end of it. The nation wouldn't accept a president that didn't go along with the game.
What's the game? Well, the US government has a mission. Its mission is survival. And as the years go by, more and more people want the government to survive. Because more and more people have a stake in it.
Like the 43 million people who get food stamps. Or the thousands who get rich on military contracts. Or the millions of retirees who are counting on Social Security. Not that we begrudge these people their ill-gotten gains. Not at all. They're just playing the game too.
But over time, the game comes to be more and more expensive. More votes to buy. More people to pay off. More favors to pass out. More and more deficits. More and more debt. More and more interest to pay on the debt. Then, you have to borrow just to cover past borrowings.
And eventually, you can't continue. Lenders balk. You run out of money. Game over.
*** "House prices expected to decline for a fifth successive year," says the Financial Times.
Foreclosures are rising and will continue to rise until March of 2012, according to the projections in the FT, wiping out possibly trillions more in household wealth. Sales are at a 13-year low.
Houses are Americans' most important asset. And the average house is down about 25% since 2006. But that's in terms of dollars. In terms of gold, the loss is over 60%.
Hey, it's a Great Correction. After such a big run-up in housing prices in the bubble years, what would you expect? Housing prices are bound to run down.
So much the better. Americans are having a hard time making ends meet; they'll need cheaper housing. Their incomes are falling in real terms. Measured by the official core CPI, incomes are about flat for the last 10 years. Measured by raw cost of living numbers, household incomes are going down by about 3% to 5% per year.
But look what has happened in terms of real money. The average US household has lost about 70% of its purchasing power.
You're probably thinking: "Who cares what happens in terms of gold? Gold is in a bull market...it's fickle...it could go up...it could go down. So what?
But some of the world's most important commodities - including oil and food - are priced in real terms. Oil has soared in terms of dollars. But in terms of gold it has barely moved. Food prices go up and down. People may pay a lot more for their wheat and corn in dollars. But if you have gold, almost nothing is more expensive.
The point is, gold is real money. It is not a fiction. It is worth as much today as it was when Charles Dawes was humming tunes. And gold is telling us that the average US family is getting poorer.
Meanwhile, the feds keep pretending that the problem is not enough paper money. People don't have enough money to spend? No problem. We'll print up some more Ben Franklins and more Andrew Jacksons.
The average lumpenconsumer might not be able to tell the difference. But gold knows. And gold tells.
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.