In a college English class once, my teacher announced, "For your assignment, I want you to describe yourself in ten words or less."
I wrote, "Succinct."
A husband and wife were sharing a bottle of wine when the husband said, "I bet you can't tell me something which will make me happy and sad at the same time".
The wife thought for a few moments, then said, "Your dick is bigger than your brother's".
A man was walking in the city, when he was accosted by a particularly dirty and shabby-looking bum who asked him for a couple of dollars for dinner.
The man took out his wallet, extracted two dollars and asked, "If I gave you this money, will you take it and buy whiskey?"
"No, I stopped drinking years ago," the bum said.
"Will you use it to gamble?"
"I don't gamble. I need everything I can get just to stay alive."
"Will you spend the money on greens fees at a golf course?"
"Are you NUTS! I haven't played golf in 20 years!"
The man said, "Well, I'm not going to give you two dollars. Instead, I'm going to take you to my home for a terrific dinner cooked by my wife."
The bum was astounded. "Won't your wife be furious with you for doing that? I know I'm dirty, and I probably smell pretty bad."
The man replied, "That's OK. I just want her to see what a man looks like who's given up drinking, gambling, and golf."
A 55-year old man, who was born on May 5th, has been married
5 years, has 5 children, makes $55,555.55 a year, and who's lucky number is 5, receives a phone call from a friend. This friend informs the man that a horse named Lucky 5 will be running in the fifth race at the local track that evening, August 5.
Excitedly, the man withdraws $5,555.55 cash from his bank account, goes to the races and bets on Lucky 5.
Yup! Sure enough... the horse comes in fifth.
A very large, old, building was being torn down in Chicago to make room for a new skyscraper. Due to its proximity to other buildings it could not be imploded and had to be dismantled floor by floor.
While working on the 49th floor, two construction workers found a skeleton in a small closet behind the elevator shaft. They decided that they should call the police.
When the police arrived they directed them to the closet and showed them the skeleton fully clothed and standing upright. They said, "This could be Jimmy Hoffa or somebody really important."
Two days went by and the construction workers couldn't stand it any more; they had to know who they had found.
They called the police and said, "We are the two guys who found the skeleton in the closet and we want to know if it was Jimmy Hoffa or somebody important."
The police said, "It's not Jimmy Hoffa, but it was somebody kind of important."
"Well, who was it?"
"The 1956 National Hide-and-Seek Champion."
John Law, the Hero of His Time by Douglas French
Central banks around the world are ramping up money production to revive their economies. What should investors do? It's easy, according to Jeff Kilburg, founder and CEO of Killir Kapital Management. His advice is to buy. Buy what?
Almost anything.
"Analysts? They can go on vacation at least until after Christmas," Kilburg says. "You can buy anything except the U.S. dollar."
Are Bernanke, Draghi, and Shirakawa going where no central banker has gone before? Is buying massive amounts of government debt with money from nowhere with the goal of stimulating a flagging economy a new idea? Not hardly. It's just a bad idea. And an ancient one, at that.
The current breed of central banker is dry and academic. They are pensive and contemplative when thrust under the bright lights their position puts them under.
Banque Générale's John Law (1671-1729) would be much more suited to central banker rock star status. Law was a dashing, gambling womanizer -- with a murderous past. Skilled at math and full of ideas, the son of a Scottish goldsmith had a plan to cure what ailed any economy.
Law was tall, handsome, well built, and athletic. In addition, according to author and historian John T. Flynn, the Scotsman "was a facile talker and a superb salesman."
A Ben Bernanke with looks and personality. Can you imagine?
Growing up in Scotland in the late 17th century, the country's lack of physical specie (gold and silver coins) made an indelible impression on the young Law. Later, as he traveled the Continent on the run from the English authorities, who had charged him with the murder of Beau Wilson, Law studied banking systems by day.
He came "to believe that paper money," write Bill Bonner and Addison Wiggin in Financial Reckoning Day Fallout, because of its portability -- and availability -- would facilitate trade in the country far better than gold and silver, the traditional specie."
Law's idea was to back paper money with land. How any note holders would redeem the paper for land was, of course, unclear.
Bonner and Wiggin devote a lively chapter of Fallout to Law, his money system, and the Mississippi Bubble it engendered.
Louis XIV died in 1715 and the French crown went to his successor Louis XV, who was all of 5 years old. This put John Law's kindred spirit Philip II, the Duc d'Orleans, in control of the royal finances as the king's uncle.
Like today's democratically elected presidents, Louis IV had spent his kingdom into financial ruin fighting wars and building palaces. The Duc d'Orleans, who was now regent of France wanted a solution and he knew just the man for the job.
Although Law started small with his privately owned Banque Générale, within a year, all royal revenues were to be paid in the Banque's notes, and these notes were to be cashed on sight at government offices, making these offices essentially branches of Law's bank.
"For the first time in modern history, paper money was being introduced and officially sanctioned by a government," write Wiggin and Bonner.
While today Bernanke magically expands the Fed's balance sheet and buys government bonds and agency paper, John Law created shares in the Compagnie des Indes that could be purchased only with billets d'etat (government bonds).
Law's reputation continued to rise and by the end of 1718, the state took over Law's bank, which became the Banque Royale. A nomadic gambler just three years before, Law suddenly had immense power, controlling the monopoly on coining money, the collection of tax revenues, as well as tobacco and salt revenues.
With the state now controlling the bank, it was time create more money, and by 1719, the money supply was increased by 16 times. The new money surged into Law's company shares along with real estate and everything else. "The crazy phase began," write Bonner and Wiggin. "Shares traded in the free market on the rue Quincampoix shot to 10 times the issue price, and higher."
With demand for shares soaring, Law and his friend the Duc gunned the money supply again, creating another 2.7 billion new bank notes.
Compagnie des Indes generated no income. It had no assets other than monopoly trading rights over the Mississippi River and France's land claim. But there was nothing being traded. Bernard Cantillon supervised the prospecting party that sailed to Louisiana, finding not the treasure that Law's propaganda claimed, but instead disease and hostile natives.
It is suspected that he tipped his brother Richard off to the emptiness of Law's propaganda about riches in the new world, allowing the Irish banker to cash out early and make a fortune.
The company share price continued to climb until peaking on Jan. 8, 1720, at 10,100 livres. For the first time, France's middle and lower classes got in on the action and the authors describe waiters making 30 million livres and beggars making 70 million.
While the men were making millions, French women were wondering how they could gain Law's attention. "Law is so run after that he has no rest, night or day," wrote the Duchess d'Orleans. "A duchess kissed his hands before everyone, and if a duchess kissed his hands, what parts of him would ordinary ladies kiss?"
Neither Greenspan nor Bernanke ever had it so good.
People in the know started liquidating shares and bank notes, converting the paper into silver and jewelry. Law and the Duc did all they could to stem the tide, declaring that bank notes were more valuable than gold and silver and, as a final straw, forbidding the use and ownership of gold coins valued at more than 500 livres.
Finally, another round of money printing was tried, but the shares and bank notes collapsed. A panic ensured. The Banque Royale had to close its doors, the share price collapsed, and dramatic scenes took place in the rue Quincampoix. In the frantic crowds, a number of people died. It was said, "You can die of hunger with 100 million in paper money in your pocket."
Law was run out of France, "disgraced and in debt to the tune of 6.7 million livres." It would turn out that Law had converted much of his wealth into paintings by the great masters. But when he died, he appeared to be "but a shadow of his former self... reduced to an aging trembler with a pronounced tic."
Ordinary folks were devastated by Law's system. He was the target of ridicule and the word banque was avoided for centuries.
However, the modern central banking world's embrace of quantitative easing and easy money has softened the view of Law. Most articles about Law refer to him as a financial genius. The authors of Financial Reckoning Day Fallout write that J. Shield Nicholson suggests that Law "may have been an excellent financier; just as Napoleon was a great soldier despite Waterloo."
Today's Law, Ben Bernanke, was recognized as Time magazine's 2009 "Person of the Year." The Atlantic magazine recently referred to him on their cover as simply, "THE HERO".
But Bernanke is no hero to everyday people. His money printing has pushed up stock prices, but the average household income has fallen to 1995 levels, while prices continue to march upward: the average cost of gas in '95, $1.13; today, $4.13; a new car in '95, $15,500; today, $30,748; a new home in '95, $113,150; today, $263,200; tuition, room and board at a four-year university in '95: $10,330; today, $21,189.
While the hoi polloi suffer, stock speculators may think central bank policies are gravy. But the gravy train will eventually crash. Just like John Law, modern central bankers will meet their Waterloo.
"The creative mind plays with the objects it loves." -Carl Jung
http://www.goodnet.org/articles/674