Go Ahead, Fed, Make My Day

The Bernanke Cloven meets today.  I'll bet Ben doesn't know he is serving me, personally. He will continue the unacknowledged QE3 and further promise to keep interest rates low -- effectively zero -- for at least three more years. The two  moves are different approaches to the same scam, creating money out of thin air and pretending it is wealth.

And that helps me make a decision on spending some savings on a new capital asset. Why?  Because up until now I've always had to calculate interest on money I think I want to spend -- interest paid or interest earned.

Let's assume my little adventure costs $10,000, just to ease the arithmetic.  The money would come from a "risk-free" account paying one-tenth of 1 per cent or $10 per year or 83 and one-third cents per month. Poor as I am, I can safely ignore that.

Over my adult years, interest available to Joe Sixpack ranged from about 4 per cent up to an amazing 10-or-15 per cent  as the Carter debacle wound down. About ten years ago, $10,000 commanded something like 5 per cent, sometimes 6, depending on how carefully you shopped around for your CDs and other "safe" investments. That meant that the first cost of spending $10,000 was the $500 or  $600 interest you lost. Call it $50 a month. Or call it a box of high-grade .45 ACP every week.

In  any case, call it significant because, even at that late date in our economic history , Americans retained some faith that their government was attempting to manage our currency  in a grown-up manner.


Up until approximately that point, we generally agreed that money was supposed to be worth something. We operated as though there should be some rational correspondence between the value of the dollar you hold today and the same dollar in your pocket one year from today. Misadventures such as Jimmy Carter  and the savings-and-loan fiasco were viewed as aberrations. If that meant things like letting the seventh-largest bank in the country go bust, so be it.

The surest evidence that your savings represented actual wealth was the fact that people would pay for the use of it.

No more. The United States dollar is a deathbed case as a store of value. An apt comparison is a duplex in the heart of defeated Detroit. Neither commands a dime for its use, and a fresh coat of paint won't change that.

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So, if everything else seems right, I'll spend because it seems stupendously foolish not to.

Meanwhile I'll listen raptly to the Great Debate as we choose our leaders for 2013 and beyond. The suspense is mortal. Was His Ineptness born feloniously in Kenya or merely ineptly in Hawaii? Did Mitt insult both the Brits and the Palestinians?  Should we ban high-capacity  magazines or gay marriage?