On Tuesday, a historic milestone was achieved as the Dow Jones Industrial Average (DJIA) surpassed the 30,000-point mark for the first time in history. President Trump marked this occasion, referring to the number as “sacred.”
This milestone was celebrated mainly by affluent Americans who have benefitted substantially from their investments in stocks and other assets over the past forty years of inflationary monetary policies, which have elevated their wealth into a realm of reverence.
However, a significant portion of the population, through no fault of their own, has been left out of these divine rewards. As the holiday season approaches, many wonder if they will receive any relief from their financial woes. Questions arise about whether Washington will extend a helping hand to struggling families this Christmas. Could a second round of $1,200 stimulus checks be on the horizon, or will Congress act more like Ebenezer Scrooge than Mr. Fezziwig?
As 2020 draws to a close, these questions become increasingly pertinent. After months of enduring lockdowns and restrictions imposed by local and state authorities, Americans are in desperate need of economic relief. To give to others, they must first receive assistance from Uncle Sam.
A recent Franklin Templeton-Gallup survey indicated that 16% of Americans intend to spend more on holiday gifts this year, while that number jumps to 22% for those expecting another round of stimulus checks.
It seems that holiday spending has become reliant on government intervention. Yet, it’s important to remember that government expenditure is fundamentally linked to the creation of money, and this, in turn, relies on the dollar maintaining its value.
And therein lies the paradox. As more money is printed, the value of the dollar diminishes. We will explore the implications of this for your financial well-being shortly, but first, let’s delve into an insightful analogy.
Eternal Punishment
The story of Sisyphus, the clever king of Corinth, serves as a fitting metaphor. Having cheated death twice, Sisyphus was ultimately punished by Zeus to eternally roll a boulder up a hill in Hades. Each time he reached the summit, the boulder rolled back down, forcing him to start anew.
Odysseus, the hero in Homer’s Odyssey, once witnessed Sisyphus in relentless labor. He recounted:
“Then I witnessed the torture of Sisyphus, as he wrestled with a huge rock with both hands. Bracing himself and thrusting with hands and feet he pushed the boulder uphill to the top. But every time, as he was about to send it toppling over the crest, its sheer weight turned it back, and once again towards the plain the pitiless rock rolled down. So once more he had to wrestle with the thing and push it up, while the sweat poured from his limbs and the dust rose high above his head.”
The futility of Sisyphus’s task was not just in the physical effort required but also in the endless repetition of an unachievable goal. The agony of pointless toil far exceeds any pain from physical exertion, especially when there is no fulfillment in completing a difficult task.
Consider corporate lawyers, who often generate little real value despite their hefty salaries. Their work encompasses long hours filled with tedious tasks with no end in sight, leading many to become overweight and disassociated.
Similarly, many government employees find themselves stuck in meaningless tasks, awaiting a comfortable retirement that often turns into a fulfilling yet aimless existence. These scenarios highlight the larger point…
The Sisyphean Folly of Printing Press Money
We are caught in this Sisyphean folly when it comes to printing press money. Every decade, extreme monetary and fiscal policies lead to irregular distortions in the economy and financial markets. When these distortions become unsustainable, a crisis inevitably follows.
The solutions proposed by the Federal Reserve and Congress consistently revolve around injecting credit into the economy. Yet, each rescue package demands increasingly larger amounts of credit, leading directly to a subsequent crisis.
This pattern has played out repeatedly—from Black Monday in 1987, the savings and loan crisis in the early ’90s, the Asian financial crisis in ’97, the dot-com bubble, the Great Recession of ’08-09, and now the turmoil of 2020.
The fingerprints of central planners are evident throughout this timeline. Despite their persistent efforts to manage the uncontrollable, each attempt results in more chaos.
Historically, governments have sought to stimulate economies by debasing currencies, often leading to complete financial and moral collapse. Such reckless attempts to bend economic laws to accommodate political agendas are inherently doomed.
This folly would be amusing if it weren’t so damaging. Thanks to governmental missteps, we now face the absurd reality where people expect printed money to fund their holiday celebrations.
How individuals earn their livelihoods is a serious matter. When government mandates lead to economic stagnation, then compensating through printed money adds insult to injury and has profound consequences.
The systematic devaluation of the dollar has been underway for 107 years, starting with the Federal Reserve Act of 1913. This decline intensified after President Nixon severed the gold standard in 1971.
The $3.1 trillion deficit in 2020, aimed at obscuring the economic fallout from government-imposed lockdowns, represents an unprecedented level of dollar debasement.
What does this mean for you and your financial future?
Bear in mind that your savings symbolize not just money but also the time and sacrifices you invested to earn it. When the Fed inflates away your wealth, it effectively steals not only your financial resources but your very life.
Albert Camus, in his 1942 essay The Myth of Sisyphus, suggests that the struggle towards heights can fill a person’s heart with meaning, concluding that one must envision Sisyphus as happy.
We’re not entirely convinced. Yet, like Sisyphus, we continue to push forward.
Sincerely,
MN Gordon
for Economic Prism
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