It seems likely, to us at least, that money-printing by the Fed will push up the stock market. But it also seems likely that people will wonder a) how long it will last and b) what will happen when it ends.
Anticipating the next phase is likely to touch off panic attacks...which could have grim consequences for speculators.
In any event, we're not speculators. So, we're out. We're bargain hunters. We're real asset accumulators. We're lots of things...but we're not believers in the miraculous powers of the Fed to turn stones into bread...and we're not speculators on the uncertain and unpredictable consequences of Fed money-pumping.
Wednesday speculators were spooked by the latest news from the Fed. Many Fed governors are getting nervous. They're wondering whether this policy of QE Forever is really working. They're nervous about what unforeseen consequences it might have. And they're worried about how they ever get out of it.
The market, driven by the expectation of more and more QE, will not take a cut-off lightly. We saw on Wednesday that even a hint of it - merely a slight motion of the Fed's hand towards the faucet - was enough to send shivers up their spines.
And yesterday, the market continued its jitters...but calmed somewhat. The Dow went down a few points; gold held steady.
But enough of that...let's turn back to something more serious. We're reading a good book, "Furies," by Lauro Martines. It is the story - as told by eyewitnesses - of the European wars between 1450 and 1700. What makes it important from our standpoint is that it helps us understand the role of leadership in human affairs.
In a word: it is disastrous.
Which is not to say that Europeans suffered bad leadership in the 15th, 16th and 17th century. Au contraire, the problem was good leadership. Gustavus Adolphus, the Duke of Marlborough, Blaise d Monluc. All were good leaders. The trouble is, good leaders are usually bad.
Or, the curse is leadership, period.
The Renaissance is regarded as a period of enlightenment...when rays of rational thinking, science, art and cultural growth spread out over Europe.
The warmth and light fell first upon major centers of learning - principally in Northern Italy - and then penetrated into almost every doorway.
This may be true. But the period was hardly one in which standards of living and the quality of life rose evenly and gently. Instead, it was a time of almost unbelievably brutal warfare which caused suffering on a scale not seen again until the wars of the 20th century.
War is a luxury to some. It is a business to others. To most Europeans between 1450 and 1700 it was a nightmare. The typical peasant - which is what most people were during the period -could barely support himself and his family. The return on investment in agriculture was low. A setback - unseasonable weather, for example - could cause whole communities to starve.
There were other setbacks, too. The Bubonic Plague struck Europe in the middle of the 14th century. It carried off about a third of the population - rich and poor alike. Thereafter, it came back in waves...along with other epidemics and diseases such as typhus and syphilis. Weakened by bad harvests, people fell to the ground quickly when they got sick.
But there was still another major cause of death, destruction and misery - leadership. As hard as it was to raise enough food to support a family it frequently became impossible when groups of armed, murderous, often-starving men invaded. But this is what often happened. While most people fought with the elements for their survival, a few fought each other for profit, status and power. These were the leaders of men...many of whom are still revered today for their military achievements.
Europe had been settled by tribes. They spoke different languages. They had different customs. They worshipped different gods.
What they shared were frontiers and ambitions, and often, bloodlust. Leaders were those who had managed to exert their power over an area...and over a group. They now formed Europe's aristocracy...an aristocracy whose metier was fighting. They then jostled up against other leaders...all of them warlike...and competed with them for more power and more wealth.
Enterprising local aristocrats - called 'enterprisers' - would form their own armies and sell their services to richer, more powerful aristocrats. These would join together with still more powerful aristocrats - kings and dukes - and go to war. An 'army' might have soldiers from all over - Serbs, French, English, Irish, Florentine, Spanish, Catalan. These soldiers were regarded as the "scum of the earth," by practically everyone. They were men who were frequently on the run...or on the lam. Vagabonds, bums, murderers, mental defectives -- they were usually illiterate and impoverished. Often, they joined the army because it promised food. Sometimes they were tricked or dragooned into service by roving press gangs.
These soldiers were rough men by every measure. Then, they were made rougher by their own 'enterprisers' who would cheat them regularly - failing to provide food and pay as promised.
You can imagine what happened when a hungry, unpaid group of these ruffians marched into a defenseless, isolated village. In the best of cases, they demanded food...got it...billeted themselves in houses and barns...and left. Then, their food gone, villagers could try to figure out how to stay alive.
But events often took a much worse turn.
In 1624, Saint-Nicolas-de-Port had 1,659 households. By 1639, the number had plunged to a mere 45.
Frequently, towns were attacked by one side. And then by the other. And then by the first again...and sometimes by a third or fourth group that had entered the melee. The ordinary people were beaten, raped...and killed. If they survived the direct assaults, they then had to survive without food and often without shelter.
The soldiers themselves - unpaid and unfed - were probably as miserable as the peasants. They died with such regularity - mostly from disease and starvation - that when a young man went off to join the army his family believed that they would never see him again. Most often, they never did.
Naturally, the peasants hated soldiers of all types and took their revenge on them when they could. Armed peasants would attack groups of soldiers camped near their towns and massacre them. They would have done better to fall upon the leaders.
The Duke of Marlborough is celebrated for his famous victory at Blenheim, made possible by a march from Bedburg to the Danube. How was it possible to feed and supply such an army over that distance? It was not. His men "lived off the land."
The land, however, was not so rich that it could support the people living on it already plus an army that numbered as many as 19,000. And the 250-mile trek, across the Rhine, through Mainz and Heidelberg, was accomplished in May, not in September. Which meant that the summer harvests had not yet been made and the people of the region were already down to their last resources. What did the leader of the English forces do to feed his army in Bavaria? He authorized "free plunder." Remarkably, a woman, disguised as a soldier, Mrs. Christian Davies, recorded what happened:
"We miserably plundered the poor inhabitants...We spared nothing, killing, burning or otherwise destroying whatever we could [not] carry off. The bells of the churches we broke to pieces that we might bring them away with us. ...men's and women's clothes, some velvet, and about a hundred Dutch caps...plundered from a shop..."
Eight decades earlier, another English leader, the Duke of Buckingham, was responsible for yet another misadventure. He landed on the tiny Island of Re, near La Rochelle, with a force of about 10,000 to 12,000 men and horses. They were meant to besiege and capture the citadel of St. Martin. However, he had neglected his logistics. He had little to feed his men. His backers in London were repeatedly sent desperate pleas for food. But London dithered. Finally, the troops were so weakened by sickness and hunger...and by a reckless assault on the citadel itself in which it became clear that their scaling ladders were too short to reach the top of the walls...that they were forced to retreat. The French took advantage of the situation. They attacked as the English ran for their ships. Few of them got back to England safely. The Duke was assassinated a little later by an enraged lieutenant. Good riddance.
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.