Although the booming stock market has convinced many people that economic recovery is well in hand and progressing more or less on schedule, there are signs of serious problems remaining. Chief among these is the fact that, while the stock market has recovered and more, reaching its highest level ever, there don’t seem to be too many actual people benefiting from this so-called “recovery.”
The fact is, there doesn’t appear to be anything behind the stock market rise other than the fact that people keep pouring money in. When it goes up and people make a profit, the money is reinvested in the market instead of productive capacity, and when it goes down, the government provides more easy money to invest in the market, as it is giving greater returns than investment in productive capacity. It’s a Catch-22 situation.
|18th Century investment in nothing|
We even see this in the “virtual currency” phenomenon. Things like the “Bitcoin” have nothing behind them, but people speculate in them in the hope that the price of these virtual (i.e., fictional) commodities will go up in “value.” It is a scenario straight out of Charles Mackay’s book, Extraordinary Popular Delusions and the Madness of Crowds (1841).
To restore sanity, this is what the network has been doing this week:
• CESJ’s new student intern, Leda S., has been making great advances in coming to an understanding of the Just Third Way, and how certain specifics fit into the “big picture.” Leda will be focusing primarily on helping CESJ get the most out of the “social media” such as Twitter, Facebook, LinkedIn, and other venues.
• Mark the annual “Rally at the Fed” on your calendar for the middle of April. This year’s could be a pivotal event, as the Federal Reserve did not begin operation until November of 1914, making this year the “real” centennial of the central banking system of the United States.
|Bryan: "No cross of gold!"|
• Many of the financial troubles of states and municipalities in the U.S., as well as those of some countries, such as Greece, have been blamed on an overburdened public pension and welfare system. This past week we found an article from 1892 demonstrating that this is not a new problem, and appears to have contributed to the financial meltdown called “The Panic of 1893,” which precipitated the Great Depression of 1893-1898. The brief article, from the Meriden, Connecticut Morning Record of Wednesday, December 29, 1892, reads in its entirety: “Drained by Pension Payments. WASHINGTON, Dec. 27. — The treasury department is gradually recovering the gold it lost by the recent heavy shipments abroad. The heavy disbursements, however, have reduced the net cash to $26,500,000. Pension payments continue to be the chief source or drain, $12,655,000 having been paid out on this account this month. Pension payments will reach $14,000,000 before the month is out. This rate, if continued, will make the pension payments $168,000,000 per annum.”
|Stock Market Panic, 1893|
• The gold drain noted in the short article above was caused by a drastic drop in the price of silver. This resulted in foreign creditors demanding payment in gold of loans and interest they had previously reinvested. This built up a huge “hidden liability” on American business. The gold drain affected the ability of commercial banks to make loans, which was the direct cause of the Panic that followed hard on the heels of the bankruptcy of the Philadelphia and Reading Railroad on February 23, 1893, less than two months after this item appeared in the newspaper. This was because gold was the asset-backed reserve currency into which all other forms of money could be converted on demand. The lack of an elastic asset-backed reserve currency was one of the reasons for establishing the Federal Reserve 20 years later.
• Bob Brantley has been investigating historically black colleges and universities with an eye toward getting them “on board” with Justice University. Frankly, any institution of higher learning must be concerned with the drift away from true education and the rapidly escalating cost.
|A 4¢ first class commemorative stamp in 1962|
• A serious problem with getting people to understand the Just Third Way and Capital Homesteading is the fact that many people do not understand fundamental concepts of private property, or of banking, finance, money, or credit.
• The launch of the new CESJ website has met with a very positive reception. Some work still needs to be done, but the basic structure and most of the information is there and available as a valuable resource for students and researchers of the Just Third Way.
• We have arranged for a specific date for a series of meetings in Pennsylvania in mid-March, that had been postponed from mid-February in DC due to inclement weather.
• Guy S. in Iowa reported that increasing numbers of people are responding to outreach by the CESJ core group in the social media. CESJ’s new intern (above) will be focusing on making this effort more effective.
• Norman Kurland will be speaking at a conference in Harlem, New York, on Friday, March 7, 2014. Norm will go to New York on Thursday, March 6, and spend the whole day on Friday. Norm will make his presentation and meet people. Norm’s participation was arranged by Rev. Virgil Wood.
• Gary R. in California reported that he has been getting questions and comments from “georgists,” as followers of Henry George are called, but has not been able to respond adequately to them. CESJ’s Director of Research is working on a book that, in part, should help Gary respond to georgist claims.
• Someone shared with us a very short video (less than a minute and a half) that is the earliest known film of any pope, combined with the earliest known voice recording of a pope. Not coincidentally, both are of Pope Leo XIII, whom some regard as the “founder” of the social justice movement with the publication of the encyclical Rerum Novarum in 1891, five years before this video was filmed. The video itself does not mention social justice (or much of anything, not in less than 90 seconds), but it is an interesting look at a significant historical figure. Henry George, for example, believed that Rerum Novarum was specifically directed at him to refute his doctrines. Leo XIII’s achievement was not to be the first to “do” social justice, but to recast the concept as something concrete, with a specific means and goals. Pius XI later refined Leo XIII’s thought and subjected it to a rigorous analysis in Quadragesimo Anno (1931) and Divini Redemptoris (1937).
|Pius XI Postage Stamp|
• As of this morning, we have had visitors from 59 different countries and 55 states and provinces in the United States and Canada to this blog over the past two months. Most visitors are from the United States, the United Kingdom, the Philippines, Australia, and Canada. The most popular postings this past week were “Aristotle on Private Property,” “Thomas Hobbes on Private Property,” “What is a ‘Bill of Exchange’?,” “Raw Judicial Power, I: ‘The Beginning of the Quarrel’,” and “The Fulton Sheen Guy.”
Those are the happenings for this week, at least that we know about. If you have an accomplishment that you think should be listed, send us a note about it at mgreaney [at] cesj [dot] org, and we’ll see that it gets into the next “issue.” If you have a short (250-400 word) comment on a specific posting, please enter your comments in the blog — do not send them to us to post for you. All comments are moderated anyway, so we’ll see it before it goes up.