THE ECONOMIST'S TWO HANDS
Re: Tom Bethell's The Fed Has Lost Power:
Generally, the reason that 30-year rates are higher than two-year rates is because of a cushion for inflation. (Duh. You know that.) The inverted yield curve means that the market is telling the fed that its recent market manipulation to drive interest rates higher is wrong.
The Fed cannot set the market 30-year rates, for example. It can only manipulate the money supply by (i) raising or lowering the interest rate at the discount window or (ii) buying or selling treasuries in the market. The market, however, is dominant on the price of credit. Fed magicians try to hit a target rate through the amounts that the raise or lower the discount window rate. If the yield curve is inverted, this means that the market thinks that the cushion for inflation is negative because it didn't add anything to the long rate, but reduced it. This gives greater credibility to the theory that we are not in an inflation right now, despite the gold indicator.
While I'm no economist, I have always considered gold to be an excellent (and long overlooked) indicator of inflation. Despite what the last paragraph says, I find it difficult to believe that after millennia it's no longer right. But I cannot explain the discrepancy between the inverted yield curve and the current price of gold.
-- David I. Held
Vice President, Bank of America, Compliance Risk Management
Tom Bethell asks who is he to argue with Steve Forbes on what the price of gold should be. Before conceding too much financial insight to Mr. Forbes, it should be pointed out that last year (May 9, 2005), Steve lead off in his "Fact And Comment" column in Forbes magazine by saying, "The Oil Bubble is about to burst. Don't be surprised to see oil at $30 to $35 a barrel within 12 months."
Well, he missed that one. Today, one year later, the price of oil is about $70 a barrel.
My humble opinion: Gold will have its ups and downs, but it's a winner in the long run. Why? Because the amount of debt and unfunded liabilities of the government is so massive that to maintain the economic order -- and hence social peace -- it will require monetary policy to become ever looser. This spells inflation which means higher prices for tangible assets, including gold.
-- Peter Skurkiss
I find your observations as to the money supply an interesting one. But riddle me this one, sir, why did the Fed just a couple of weeks ago stop publishing the M3 money supply data?
With the dollar no longer pegged to a standard and no appreciable data to track the total dollars floating in the world markets now; it is anybody's guess as to what that value is. So essentially, your dashboard is missing the speedometer.
If I were a funds manager I would be very afraid we're not driving off a cliff.
-- John McGinnis
Well I'll be damned.
Bethell knows what he's talking about, his analysis makes sense, and he has a bit of insight.
I've been a student of the Fed since my early days in grad school in the '70s, and rarely do I see public commentary of this high quality.
He must be an economist.
Tell him good work.
-- Jim Klein
San Francisco, California
Re: Robert T. McLean's Change Is Slow at Turtle Bay:
I do believe it is important that special reports have depth to their viewpoints. Robert McLean's report published on the next UN Secretary-General seems full of recycled media comment from the recent past.
I did a Google search on the candidates and was vastly impressed with the substance and track record of the internationally acclaimed peace builder Jayantha Dhanapala who was the Global Security Institute's first recipient of the "Alan Cranston Peace Award" in 2002; and was also honoured with a "Lifetime Achievement Award" by the Centre for Non-Proliferation Studies of the Monterey Institute for International Studies in USA, to name just a few.. He serves on the boards of several international bodies such as the International Weapons of Mass Destruction Commission; the Governing Board of the Stockholm International Peace Research Institute; the International Advisory Group of the ICRC; the UN University; and serves as the Honorary President of the International Peace Bureau. He has also authored several books and articles on disarmament. Above all he seems to have been one of the few UN insiders who have a track record of delivery and impact despite the monolithic inefficiencies and systematic failure of the UN his track record as UN under-secretary-general for disarmament is still the most effective to date. His groundbreaking gender mainstreaming initiatives was another UN first.
My question: is the media missing something here by not doing its homework and looking beyond the obvious? To me the big issue is: can an insider reform the UN? The argument goes that you need someone who knows the systems (warts and all!) who can clean it up. If that premise holds, then Dhanapala is a clear front runner. If it's an outsider, no clear option appears. This is not a case of Hobson's choice, but the best man and the right place at the right time. The man's professionalism is best seen by the quality and substance of his website.
-- S. de Silva
Re: Jed Babbin's Guess Who's Coming to Dinner:
We could reduce China's ability to finance their military buildup to the extent that we contribute to it. We could initiate a "national security tariff" of 100 percent on all Chinese goods imported into the U.S. and at the same time encourage others around the world, more friendly to us, to consider supplying those items. Prices could increase on all items across the board for a while, but then would drop as their production lines would become more efficient. I can see us doing no less with the menace that China poses to us and its smarmy denials to the contrary. Must we always be fools for a buck and "free" trade? Just a thought.
-- Gene Hauber
Thank you for this piece. I can't imagine having Kerry or Gore sitting in "W's" chair at this point in time.
-- Martin N. Tirrell
Lisbon, New Hampshire
Jed Babbin replies:
Many thanks. And neither can I, except in my worst nightmares.
Re: Christopher Orlet's The Long Death of Multiculturalism:
Every time that I hear "our diversity is our strength," or variations of that phrase, I get a real serious gag reflex. I would seriously suggest that being an advocate for diversity or multiculturalism uber alles should be a capital offense, with a mandatory minimum of life without parole.
I would even suggest that, as has been stated before many times by some really successful politicians, if you are a hyphenated American, you are not a complete, 100 percent American. Heck, I even resent the question on all kinds of forms that ask for your race. I just want to say American and the rest is none of your business.
For the life of me, I can not understand why Bush wants to divide Americans by tolerating a permanent underclass that does not want, and absolutely will not assimilate. They won't adopt the English language. They DEMAND that the government deal with them in their old or non-English language. If you don't read and speak English, then you should not vote. If you don't want to be an American then don't come here. If you want to demonstrate carrying the flag of another country, then go back to that country.
My attitude has nothing to do with any race or any heritage. I long ago adopted the idea that Americans come in white, black, brown, and red hues, that Americans have cultural ties to virtually every country in the world. Heaven knows that all four roots of my ancestry came to what is now America from other parts of the world. I have enjoyed researching my genealogy for three decades now. Make no mistake, however, I am an American -- 100 percent.
If we can somehow flush all the multiculturalists and one worlders out of our system, we can become the great country that we once were. It cannot come soon enough for me.
REMEMBER THE ALAMO -- BUSH WON'T
-- Ken Shreve
I agree with many of the observations made by Mr. Macomber and several readers as to what a political and intellectual giant Newt is. Truly, this is a man of enormous intellect and political complexity. I have been privileged to be mesmerized by several of his speeches (sans text) live. His books, both fiction and non-fiction, are the works of a nimble mind in action.
At times however, his policy wonkishness/professorial manor, gives me a bit of the Al Gore chill but his ideas are far too solid to be tarnished by a comparison to Gore's fever swamp tirades. His recent tango with Hillary has been a bit annoying, but I'm hoping there is a good reason for this. While I agree with some readers that Newt would make a better inside man, I'm convinced that his ego is too high octane for him to play the role of a Rove or even a Mehlman. He is a leader and not an advisor.
That said, other readers are correct that Newt has stumbled politically when up against Bill Clinton's slickness or a cheap shot from some leftist media hack, but then again, ankle biters have a habit of doing that to those superior to them. One reader, Mr. Mellinger in particular, raises some very interesting insights into Newt that are indeed worth mulling over. To answer his question on the Contract, I think it contained 10 points, but other than the breath of its sweeping overtones, I can't recall specifics. Newt has often said that they accomplished 70 percent of the Contract but that's a hard figure to quantify. Mr. Mellinger insightfully points out where the Contract lost steam and how that happened. Even Newt fell prey to the sirens song of power that wafts over D.C. One point in the Contract that I specifically recall not getting done was term limits. After its inclusion, it silently went away without a whisper of discussion. Human nature being what it is, it's indeed hard, nay, next to impossible, to hand over the baton of power once you've finally seized it. The tax code and the permanent political class are fixtures in D.C. to be sure. But that was the level of statesmanship I always hoped Newt was able to demonstrate. Dare we ask this from a mere mortal?
-- A. DiPentima
REMEMBER THE CONTRACT FONDLY
Re: George Mellinger's letter (under "The Speaker, Reconsidered") in Reader Mail's Advisor in Chief:
This guy has a bad memory. I was watching C-Span everyday in wonder at how fast the House brought each item to the floor for a vote in the first 100 days. And it was a lot more than two or three passing. I remember at least seven passing the house. The one most disappointing was the term limits item not passing. However, they did pass term limits for committee chairmanships. The Senate is where most of the stuff died, remember? Almost all legislation dies in the Senate because they are all "little presidents."
Kind of interesting how Mellinger says all the other things are what caused the House turnover from Dem to Republican. I am sure that had something to do with it, but he didn't mention the anti-gun issue. That was much bigger among folks that didn't protest or complain about Clinton.
Mellinger has a pre-occupation with Clinton and still wanting him impeached and removed from office. I hated Clinton and still do, but you have to get over it.
There is no politician, including Ronald Reagan, I agree with 100 percent of the time. Not even close. I would love to hear how time has deluded Mellinger's memories of what Reagan did? Reagan was my favorite president of my lifetime, but he gave in over and over again with Congress, especially in his second term. Sure he made great speeches at the Berlin Wall.
He had things most people agreed about to fight like communism. Funny how communism still exists in the most populated country on the planet and shows no signs of slowing down. They have more missiles than ever. A big blue water navy is emerging. That wasn't much of a victory. And they are working with Iran and North Korea against us. I think we can rest assured the Russians were never going to use Nukes, but the Chinese believe a war like that is winnable.
And of course as a conservative I loved his small government agenda. I am sure with a Republican Congress he would have vetoed some of he spending bills. But, I digress. I do know Gingrich is a whole lot more intelligent than Mr. Mellinger because of this statement: "I would vote for anybody but Lyin' John Kerry before I'd vote for Newt." So, Hillary anyone???
-- Kendall Eskew
Re: Ben Stein's On This Good Friday:
Great article as usual.
It galls me that Cardinal Mahony supports this nonsense -- basically a kooky march for illegal immigration. But when it come to supporting Pope Benedict XVI or the unborn, or the tough love teachings of the Catholic Church -- he will have to get back with you
Thanks, you're the best.
-- Kristi Heft
A LITTLE PICK-ME-UP
Re: Ben Stein's Greetings From Rancho Mirage:
I was going through my email today and I got this message from one of the Chiefs here on the base where I live and work.
I am a civilian living and working on a military base in the Middle East and I couldn't agree with Mr. Stein more.
I am probably what Mr. Stein would think of as a typical liberal. I vote Democrat and I whine about President Bush's policies. I have been like that for my entire adult life and I still am. One thing that has changed though is my deep respect and admiration for our armed forces. Since I've been deployed here, I've met many people but one person in particular sticks in my mind and I would just like to share a little of his story.
His name was Tracy -- just like mine. He was about the same age if not younger than me; about in his early 30s or late 20s. He had been up in Iraq for 18 months and he'd gotten shot. He was at our base in a less dangerous Middle Eastern country to recuperate from his wounds. We would talk about his desire to see his child that his wife had had since he'd been away; about his desire to get in the swimming pool on base which was prohibited by the doctor as his wounds could become infected; but mostly he talked about his desire to get back up North (Iraq) so he could be with the rest of his troops.
That was when I had only been here for a month or two. I have now been here for seven months and I have been amazed many times with the fortitude and resolve these folks have. Whether they believe in the war or not they go to work every day and serve meals, or put in plumbing, or enter data into a computer, or fly a C-130 aircraft and all of it they do because they feel it's their duty to help our country.
After being here for almost a year now I've realized that I too have fortitude. I've missed my son's 14th birthday and my daughter's 7th birthday. I make only about 50,000.00 dollars per annum in my job here but I feel good every day about the work I am doing to at least help the troops in any way I can. All Americans can do their part. Anyone can get a job working for six months or a year, anyone can send a package full of deodorant and soap to anywhere in the AOR. No matter what our politics say we can all lend a helping hand. I feel proud that I am.
Thank you very much for hearing my point of view and thank you to Mr. Stein for his eloquence and his support; even if he is a Republican!
-- Tracy Martin
Being the mother of a Marine presently serving in Iraq in the Anbar Province, I want to thank you for the wonderful essay about the military and how important they are to our country. Bravo for you! Only wish my words could be written as eloquently as yours!
My son's decision to be commissioned as an officer in the USMC when he graduated from Texas A&M was not what his father and I would have chosen for him. He did this all on his own!
Are we proud of him? You betcha!
Are we worried and have trouble sleeping at night? You got that right!
Do we think that his life is worth the hateful rhetoric we are hearing on the pretense that it is freedom of expression? We are having our doubts!
However, reading your "Greetings from Rancho Mirage" makes me realize that there are people out there, with notoriety, who do appreciate and put value on the sacrifices that the military members and their families are making.
It is worth it -- isn't it?
Thank you and may God bless you and what you do for the rational thinking people of our country!
-- Ann Essary
I just read one of the nicest letters I have ever read...and it was from this email, more specifically, Ben Stein.
I simply wanted to pass along my "Thanks" and trust I will place it prominently in my office for my section (of military flight engineers) to read and appreciate. We can all use a positive word occasionally.
-- Gary W. Babcock, CMSgt, IL ANG
Chief Flight Engineer, 169th Airlift Squadron
It would be egocentric of me if I thought for one minute that I could speak on behalf of everyone in uniform. However, my wife and I have both spent the past 15 years in uniform and from us -- thank you for your kind words and taking notice.
-- Mark A. James
Thanks so much for the great article regarding service life from a retired CWO USMC from 1960-1984. I will surely pass this along to my military tree.
Semper Fi and thank you.
-- BJ Singer
I just want you to know that you made one career soldier very happy with your kind words of support. After 27 years of service to my country, having endured condescending patronage in the form of "we support the troops but...." even from my own family. It is very refreshing to hear your point of view. I promptly sent a copy of your remarks to my daughter, a cadet at the Coast Guard Academy, my husband, a 24-year veteran of the U.S. Army, and a number of friends and acquaintances also serving in various capacities in the armed forces. Thanks for taking the time to think about and pray for our troops all over the world. They are certainly doing important business. I am chilling currently in school but will be making my way to Iraq this summer.
Thanks again for your patriotic spirit.
-- Mary K. Whitworth, COL, QM
Naval War College, Section 6
Thanks for shown your support to our troops. Sometimes the public does not agree with what the military is doing at this time (Iraq and Afghanistan), and sometimes they express themselves in ways that are, in my opinion less than desirable. And that is fine, because that's what we stand for; we are here to defend the constitution of the United States. A lot of times we stand behind the United States flag and behind the constitution because of all the rights it provides for us the American citizen. But Mr. Stein, as you know, they are a lot of us that will never stand behind that flag. We will uphold and defend the Constitution of the United States at all costs, we will stand in front of that flag and protect the flag and all it stands for, and we will do it with honor and pride. Because is what we chose to do. Thanks for supporting our troops.
-- SSG Pagan, U.S. Army
Thank you for that wonderful message. I am glad to know that we are still being supported by other hard working Americans like yourself! Thank you! That was a delightful moral booster for a bunch of people that I work with. I am going to continue to forward you message on the other service members in hopes they will do the same...Have a wonderful day!
-- A1C Lisa M. Zoellick, USAF
-- David E. Mendelson, MAJ
Thanks, Ben. You are paid in advance.
Re: Pete Chagnon's letter ("The Church of Man") in Reader Mail's Advisor in Chief, Paul Dorrell's letter (under "Enlightening the Senses") in Reader Mail's Heard Loud and Clear, and Ben Stein's On This Good Friday
I welcome the dialog that Pete Chagnon offers; however, I am not aware of following any liturgy. Ben Stein is a good writer and entertainer -- even a good person -- but not really a good thinker in my book, and he seems to be having his way with readers of The American Spectator.
It was not my intent to offend anyone's Catholic sensibilities, though I'm not a fan of Catholicism. I guess you might say that many Catholics aren't great fans of Catholicism, since their actions belie their creed.
My position on patriotism is that it's fine if no one gets hurt, or if less people are hurt than would be otherwise. Historically, lots of people have been hurt by patriotism, so I hope there are better ways to handle international conflicts.
I'm no expert Israel or the Middle East, but the militarization of the region obviously was not the intent of Israel's founders. Frankly, if I were a Jew living today in Israel, there would be little to keep me from moving my kibbutz to somewhere more hospitable -- on a different continent.
-- Paul Dorell
Highland Park, Illinois
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