This is Your Chance

We watch the news. Suddenly, a grim chill…like a winter cold…grabs ahold of us: are we the bad guys, now? And what is the connection between bad behavior and bad money?

There are probably plenty of reasons…and, as always, much more to the story…but this is a financial service, so we stick close to the money. The real reason behind America’s debt-drenched, indentured middle class, we believe, is the change in the money system. That 1971 switcheroo gradually distorted not just finance and economics, but politics, habits, culture…and our thoughts too.

You can see the hinge-point clearly in the chart Dan presented yesterday (see below). After decades of stability, in the early ‘70s the trend line of price inflation broke to the upside. Our guess is that now, all are aligned — politics and finance. The politicians need more inflation and debt to hold onto power. Wall Street, too, gets richer as debt and inflation increase. And households now depend on more debt and inflation just to make ends meet.

Source: CONSUMER PRICE INDEX (CPI) in the US since 1950

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And we have seen how so many other things changed. Since 1971 America transitioned from a nation of proud, mostly honest, savers and asset owning capitalists…to a sad race, deep in debt, and depending on the kindness of strange lenders for their cars, their houses, their retirements, their healthcare…even their food. Pew Research:

The numbers vary from month to month. But in May 2025, the most recent month with available figures, 41.7 million people in 22.4 million households received SNAP benefits. That works out to nearly 1 in every 8 people in the country.

Where do these nice people — the ones in the government and lending institutions — get their money? Do they get it honestly, taking in deposits from willing savers and paying respectable interest? Not at all. That’s the curious thing about it. They simply conjure it up, out of thin air. And declare it ‘money.’ Then, when the Fed gives out this make-believe credit, the financial and political elite (politicians, insiders, banks, mortgage lenders, finance companies, Wall Street) are the first snouts in the trough.

The federal government and Wall Street get credit at wholesale rates — often far below the true cost of borrowing real savings. Following the mortgage finance crisis of 2008, for example, the Fed’s lending rate was actually below the level of inflation for most of the next 15 years. Then, the finance industry makes money by lending it out at retail rates. Between the Fed’s 4%…and the average credit card APR this week, 27%…is a substantial profit margin.

Naturally, the new money caused prices to rise. The cost of ‘participation’ in modern American society rose to about $140,000 of household income per year, which Michael Green believes to be the real poverty line. But three out of every four households earn less than that, creating an atmosphere of frustration and discontent. This is what led to the surprise success of people who would have previously been unelectable kooks — notably, Donald Trump and Zohran Mamdani.

The unifying theme of these two clowns is that our troubles are not the fault of our own laws, regulations, ruling elites…and certainly, they have nothing to do with our credit money system. Un uh. No connection. Instead, they are the fault of others. The MAGA crowd blames foreigners and woke liberals. The enemy are ‘rich’ capitalists for the Mamdanistas. Both groups insist, too, that the problems can be overcome by more forceful leadership…with even more giveaways, laws, regulations, and interference with the vernacular economy.

Between childcare, healthcare, autos, houses, internet services and college tuition, more Americans have a hard row to hoe. We don’t know why it works this way, but with widespread discontent comes a wider acceptance of scuzzy behavior.

The administration, for example, has become a ‘sickening moral slum,’ says George Will. Officials, from POTUS on down offer to smite our enemies…but seem disinclined to do so in a dignified, or even legal, way. Civilians are murdered, with no due process of law — even those who survived a first strike and cling, helpless, to flotsam and jetsam, are shown no mercy.

The first ‘tap’ was probably criminal. The second was undoubtedly despicable. The Constitution was suspended. Habeas corpus was ignored. Due process was given the heave-ho. What heinous crime had they committed to deserve such treatment? Nobody knows. Maybe none at all.

Meanwhile…for some, mercy floweth like water under a leaky roof, rotting the framework of the republic, the Washington Post:

Ex-Honduras president, convicted of drug trafficking, freed on Trump pardon

USA Today:

NY man pardoned by Trump for tax fraud…

A former nursing home executive from Rockland County was spared most of a three-year prison sentence in November after President Trump pardoned him for a $39 million tax fraud conviction.

The New York Times:

Trump Frees Fraudster Just Days Into Seven-Year Prison Sentence

David Gentile had been found guilty for his role in what prosecutors described as a $1.6 billion scheme that defrauded thousands of investors.

Corruption. Cheating. Violence. During the Eisenhower years, that behavior would have disqualified you for any position of public trust. You couldn’t even get a job as a registrar of wills in a podunk county. But now it’s expectable…even acceptable.

More to come…