Restoring Sound Money To America

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George Washington’s crossing of the Delaware River

The U.S. Constitution states:

Article 1, Section 8

1. The Congress shall have Power …

5. To coin Money, regulate the value thereof, and of foreign coin….

6. To provide for the punishment of counterfeiting … current coin of the United States.

Article 1, Section 10

  1. No state shall … emit Bills of Credit and make any Thing but gold and silver Coin a Tender in Payment of Debts.

The intent of the Framers could not have been clearer. The Constitution clearly and unequivocally brought into existence a monetary system based on gold coins and silver coins being the official money of the United States.

Sound Money

Notice that the states are prohibited from issuing “bills of credit.” What are “bills of credit.” That was the term used during that time for paper money. The Constitution expressly prohibited the states from publishing paper money and making anything but gold and silver coins official legal money.

What about the federal government? The Constitution didn’t expressly prohibit it from emitting “bills of credit” like it did with the states. Does that mean that the federal government was empowered to make paper money the official money of the United States?

No, it does not mean that. In the case of the federal government, its powers are limited to those enumerated in the Constitution. If a power isn’t enumerated, then the federal government is automatically prohibited from exercising it.

Therefore, it was unnecessary for the Framers to provide for an express prohibition on the federal government to make paper money the official legal tender of the nation. All that was necessary was to ensure that the Constitution did not empower the federal government to issue paper money.

The powers relating to money that are delegated to the federal government, which are stated above, expressly make it clear that gold coins and silver coins, not paper, were to be the official money of the country. That is reflected by the power given the federal government to “coin money.” At the risk of belaboring the obvious, one does not “coin” paper. Paper is published or “emitted.” It is not coined. Coins are coined.

The provision on counterfeiting also expressly confirms that the official money of the United States was to be gold coins and silver coins. The Framers didn’t provide for punishment for counterfeiting paper money because there was no paper money. They provided for punishment for counterfeiting “current coin of the United States.”

Add up all of these provision and there is but one conclusion that anyone can logically and reasonably draw: The Constitution established a monetary system in which gold and silver coins were to be the official money of the United States.

The power to borrow

That’s not to say, of course, that federal officials could not borrow money. The Constitution did give them that power:

Article1, Section 8

1. The Congress shall have Power …

2. To borrow money on the credit of the United States.

When the federal government borrows money, it issues debt instruments to lenders, consisting of bills, notes, or bonds. But everyone understood that federal debt instruments were not money but instead simply promises to pay money. The money that they promised to pay was the gold and silver coins, which were the official money of the country.

And in fact, that was the monetary system of the United States for more than a century, one in which gold coins and silver coins were the official money of the American people.

It is often said that the “gold standard” was a system in which paper money was “backed by gold.” Nothing could be further from the truth. There was no paper money. The “gold standard” was a system where gold coins, along with silver coins, were the official money of the country.

Monetary debauchery and destruction

It all came to an end in the 1930s, when the (D) Franklin Roosevelt regime ordered all Americans to deliver their gold coins to the federal government. Anyone who failed to do so would be prosecuted for a federal felony offense and severely punished through incarceration and fine if convicted.

In exchange, people were handed federal debt instruments, ones that promised to pay money. But since the money was now illegal, the debt instruments were promises to pay nothing. That’s reflected by the Federal Reserve Notes that people now use to pay for things.

Roosevelt’s actions were among the most abhorrent in the history of the United States. In one fell swoop, he and his regime destroyed what had been the finest and soundest monetary system in the history of the world, one that contributed mightily to the tremendous increase in prosperity and standards of living in the 19th century.

What is also amazing is that Roosevelt did it without even the semblance of a constitutional amendment. To change a system that the Constitution established requires a constitutional amendment. That is an arduous and difficult process, which is what the Framers wanted. Roosevelt circumvented that process by simply getting Congress to nationalize people’s gold.

The result of Roosevelt’s illegal and immoral actions regarding money and the Constitution? Moral, economic, and monetary debauchery, which has entailed almost 90 years of plundering and looting people through monetary debasement and devaluation to finance the ever-burgeoning expenses of America’s welfare-warfare state way of life.

The solution

The solution to all this monetary mayhem is doing what the Framers did: Separate private banking from the state entirely, in the same way that they separated church and state. This means terminate all government involvement in banking, including by ending the private Federal Reserve Bank. And while we’re at it, nationalize the sovereign city, District Of Columbia which would end London and Vatican maritime law control over America.  No doubt they won’t go down without a fight however, this is the jump start necessary towards restoring any chance for freedom, peace, and prosperity to our land.

Source: Adapted from an article by Jacob Hornberger, reposted in ZeroHedge

CAR on California October Housing: Sales Up 1.9% YoY, Inventory Down 18%

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The CAR reported: California housing market holds steady in October, C.A.R. reports

(Bill McBride) Shrinking inventory subdued California home sales and held home sales and prices steady in October, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. 

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 404,240 units in October, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2019 if sales maintained the October pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

October’s sales figure was up 0.1 percent from the 404,030 level in September and up 1.9 percent from home sales in October 2018 of a revised 396,720. 

“The California housing market continued to see gradual improvement in recent months as the current mortgage environment remains favorable to those who want to buy a home. With interest rates remaining historically low for the foreseeable future, motivated buyers finding that homes are slightly more affordable may seize the opportunity and resume their home search,” said 2020 C.A.R. President Jeanne Radsick, a second-generation REALTOR® from Bakersfield, Calif. “Additionally, the condominium loan policies that went into effect mid-October could help buyers for whom single-family homes are out of reach.” 
…
After 15 straight months of year-over-year increases, active listings fell for the fourth straight month, dropping 18.0 percent from year ago. The decline was the largest since May 2013.

The Unsold Inventory Index (UII), which is a ratio of inventory over sales, was 3.0 months in October, down from 3.6 in both September 2019 and October 2018. It was the lowest level since June 2018. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.

Source: by Bill McBride | Calculated Risk

Rail Recession: U.S. Carloads Continue Collapse As Manufacturing Slows

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Nowhere is the slowdown in the U.S. economy more obvious than in places like Class 8 Heavy Duty Truck orders and rail traffic. We already wrote about how Class 8 orders continued to fall in October and new data the American Association of Railroads (AAR) now shows that last week’s rail traffic and intermodal container usage both plunged.

The AAR reported total carloads for the week ended Nov. 9 came in at 248,905, down 5.1% compared with the same week in 2018. U.S. weekly intermodal volume was 266,364 containers and trailers, down 6.7% compared to 2018, according to Railway Age. 

One of the 10 carload segments that posted an increase YOY was grain, which was barely up 342 carloads to 21,855. Coal was down 9,577 carloads, to 75,180; miscellaneous carloads were down 843 carloads, to 10,944; and petroleum and petroleum products were down 741 carloads, to 12,617.

So far in 2019, railroads have reported total volume of 11,337,628 carloads, which is down 4.3% from the year prior. The year’s 11,988,234 intermodal units are down 4.6% for the year and total combined traffic was down 4.4% to 23,325,862 carloads. 

The numbers for North America in total were also lower. 

North American rail volume for the week ending November 9, 2019, on 12 reporting U.S., Canadian and Mexican railroads totaled 352,176 carloads, down 4.8% compared with the same week last year, and 352,712 intermodal units, down 6.5% compared with last year. Total combined weekly rail traffic in North America was 704,888 carloads and intermodal units, down 5.6%. North American rail volume for the first 45 weeks of 2019 was 31,852,518 carloads and intermodal units, down 3.4% compared with 2018.

Canadian rail traffic also crashed, down 5.5% with intermodal units down 5.9%. For the year, however, Canada has been the one North American country to edge out a gain on the year, with its cumulative traffic coming in at 6,824,664 carloads, up 0.4% on the year.

Mexican railroads were able to buck the broader trend, posting a slight increase in carloads for the week. 

Mexican railroads saw a slight uptick, as it reported 20,097 carloads for the week, up 2.8% compared with the same week last year, and 17,987 intermodal units, down 5.5%. Cumulative volume on Mexican railroads for the first 45 weeks of 2019 was 1,701,992 carloads and intermodal containers and trailers, down 2.7% from the same point last year.

We noted this rail recession in the U.S. in early October, citing the manufacturing collapse in the U.S., much of which is being blamed on the trade war, as the main culprit. 

What’s quite clear is that we’re not yet at a trough. Trains have not yet bottomed,” said Ben Hartford, an analyst with Robert W. Baird & Co. “We need to have some clarity in trade policy.”

We noted in October that the manufacturing recession is more widespread than the mid-cycle slowdowns in 2012 and 2015/16. The slowdown has been concentrated in manufacturing for well over a year, driven by a downturn in business investments in 2019. 

We noted last month that there is an indication that the downturn has spilled over into service sector output and employment.

Now, “there are no pockets of growth,” said Bloomberg Intelligence analyst Lee Klaskow, who said a “railroad recession” could be imminent in a recent report. “There’s really nothing that’s tapping me on the shoulder saying, ‘Hey look at me. I’m going to be your next growth engine.'”

Source: ZeroHedge

“It’s Cozy” – Los Angeles Imports Are Paying $800/Month To ‘Live In Coffins

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First it was the unaffordability of ‘real’ homes (combined with massive student loan debt) that spoiled the living-the-Dream narrative for America’s young people.

Remember this 350-square foot studio in NYC that cost $645,000?

Then it was a shift to “tiny homes” – which became popular with millennials since their standard of living has collapsed.

But while they could virtue signal with solar panels and wind power systems, an eco-friendly bathroom, and a kitchen with everything needed to make avocado and toast, living in with post-industrial feel using an old shipping container for $37,000 was too much for many…

So ‘podlife’ sprung up on the coasts – as the housing affordability crisis deepened on the West Coast, a new style of living, one that reminds millennials of their college dormitory days, sprang up in cities across California.

But, residents were upset by having to adhere to house rules, one being that lights go out at 10 pm each night, and no guests are allowed inside.

And so, as AFP reports, young Americans flocking to LA and NYC are now resorting to “Capsule Living” as the only affordable option…

Inspired by the famous hotels in Japan, each room contains up to six capsules, described by residents as “cozy,” containing a single bed, a bar for hanging clothes, a few compartments for storing shoes and other items and an air vent.

By most standards, the coffin-like accommodation is still not cheap – $750 per month plus taxes. That works out at around $800 and there are still rules… women and men sleep apart, and having sex is not an option.

For Dana Cuff, an architect and professor at the University of California, Los Angeles (UCLA), this type of community presents only a short-term solution.

“We basically need to be developing a huge range of options for the kinds of housing that are available,” she said.

“To me, co-living pods… are symptoms of this deep need for a much greater range of housing alternatives.”

Alejandro Chupina, 27, left home as a teenager because his parents did not support his career as an actor and musician.

“We have so many different amenities… for what we’re paying, I feel like we’re getting way more, in different ways,” said the young man with a handlebar mustache, who can recite the musical “Hamilton” by heart.

We give the final word to Kay Wilson, who packed up her life in a hurry and moved to Los Angeles… only to find that what she paid in Pennsylvania for a nice studio apartment would only get her a 2.9-square-meter box in California.

“I sold all my belongings and I moved here to be in this pod… I’m finding comfort in being uncomfortable,”

The American Dream indeed…

Source: ZeroHedge

Fed Will Not Disclose Which Banks Are Receiving Repo Cash For At Least Two Years

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If you want to know which investment houses have been getting the infamous “repo” loans from the Federal Reserve Bank of New York in recent weeks, as GATA has wanted to know, you’ll have to wait two years, according to a letter received from the bank today in response GATA’s request for the information.

The delay, the New York Fed’s letter says, is authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Perhaps more interestingly, the New York Fed’s letter, signed by Corporate Secretary Shawn Elizabeth Phillips, contends that the bank is exempt from the federal Freedom of Information Act but tries to comply with its spirit.

Such a claim of exemption was not made by the Federal Reserve’s Board of Governors during GATA’s FOIA lawsuit against it in 2011, in which GATA sought access to the board’s gold-related documents. GATA technically won the case when U.S. District Judge Ellen Segal Huvelle ruled that one such document was illegally withheld and ordered the board to disclose it to GATA and pay the organization court costs of $2,670:

What kind of system of government is it when every week an entity created by ordinary legislation can create enormous amounts of a nation’s currency and disburse it to unidentified parties without any oversight by the people’s elected representatives, news organizations, and ordinary citizens? It sure doesn’t sound like “the land of the free and the home of the brave.”

  The New York Fed’s response to GATA can be read below (pdf link):

Source: by Chris Powell of GATA| ZeroHedge

San Francisco Bay Area Home Prices Continue Slide, Peak Is likely In

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Mainstream financial media drummed up a narrative in 1H19 about how this summer’s tech IPOs would lead to overnight millionaires across the Bay Area, and in return, would produce the next leg up in the region’s real estate market.

The economic narrative never gained traction, partly because of the IPO market imploded. New issues like Lyft and Uber have seen shares nearly halved in the last six months, leaving many investors underwater.

As for the IPO market pumping out overnight millionaires, well, that remains to be seen as the Bay Area real estate market continues to deteriorate, with expectations of a further plunge in 1H20.

The Bay Area median sales price in September for an existing home, across nine-counties including Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma, plunged 4.7% YoY to $810,000, according to real estate data firm CoreLogic.

Bay Area home prices are some of the most expensive in the country and might have put in a cyclical peak in 2019.

“I think the immediate trigger a year ago was the run-up in mortgage rates,” said Dr. Frank Nothaft, a chief economist at CoreLogic.

“Mortgage rates got posted about 5% a year ago, and that put up a chill on all potential buyers in the market place. When mortgage rates go up, that means the monthly mortgage payment is just taking that much bigger of a bite from family income.”

San Jose-based realtor Holly Barr told NBC Bay Area that prices have been slipping for more than a year. Barr noted that price growth has stalled in the last several years, likely marking the top of the market.

“If you look at the trend over the last two years, it’s definitely come down,” she said.

The region has seen YoY sale price declines in the last several months as the slowdown continues to worsen. This recent period of waning demand comes after seven years of rapid price growth.

Agents overwhelmingly said buyers have been on the sidelines waiting for the right deal. Many wanted to avoid a bidding war and needed prices to correct further before they entered offers.

Some buyers were concerned about a late 2020 recession, trade war uncertainties, and the threat of a corporate debt bubble implosion.

The S&P CoreLogic Case-Shiller San Francisco Home Price Index has likely peaked in a double top fashion.

The Federal Reserve usually embarks on an interest rate cut cycle in preparation for macroeconomic headwinds developing in the economy that eventually damages the housing market.

As shown below, the Case-Shiller San Francisco Home Price Index tends to fall in a cut cycle.

Bay Area home prices will continue to weaken through 1H20. At what point do millennial homeowners, most of whom bought the top of the market, panic sell into a down market? 

Source: ZeroHedge

Young First-Time Buyers Are Vanishing From US Housing Market

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Seeing as most young Americans are saddled with student-loan debt, underemployment and other economic blights, few have any money left for important large purchases like a home. At this point, it’s beginning to look like millennials will be remembered as the first rentier generation in the country’s history.

To wit, according to data from the National Association of Realtors, the median age of first-time home buyers has increased to 33 in 2019, the highest median age since they started collecting the data back in 1981. Meanwhile, the median age for all buyers hit a fresh record high of 47, climbing for the third straight year, and well above the median age of 31 in 1981.

Though the median age for first timers only increased by one year, BBG reports that it reflects a variety of factors impacting those who are searching for a home.

For one, since the housing-market collapse ten years ago, construction of affordable housing has never recovered. Low housing stock, coupled with low interest rates, has stoked higher prices, especially in more affordable markets from the coasts to the middle of the country. This made circumstances ideal for older Americans with more assets to borrow against and cash on hand. But younger Americans who don’t have enough saved for a down payment lost out.

“Housing affordability is so difficult today, especially when coupled with rising rents and student loan debt, that they’re finding different ways to enter home ownership,” said Jessica Lautz, vice president of demographics and behavioral insights at the Realtors group in Washington.

That’s not all: the percentage of first-time buyers who are married has declined as more single people buy homes to share with girlfriends, boyfriends or roommates. As the average ages of home buyers increases, average incomes have also risen. The median income of purchasers rose to $93,200 in 2018 as the disappearance of affordable housing pushes low-income buyers out of the market.

Factoring in the expansion of economic inequality, young buyers who do manage to buy their own homes typically receive a small gift from their relatives to help cover the down payment first.

Source: ZeroHedge