The Absurdity of Fake Money

Week 19 of the Quarantine

SAN MARTIN, ARGENTINA – Just when you think you’ve seen it all… it turns out:

You ain’t seen nuthin’ yet.

Why? Because counterfeit money allows people to do counterfeit things… which get wackier and wackier as the trend runs its course.

But first… let us update you on life in the Calchaquí Valley, where we’ve been stranded for more than four months.

Then, we’ll return to the remarkable events north of the Rio Grande…

Mystery of the Butchered Cow

One of our pastajeros (a man who keeps his cows in our high pastures) came to see us on Thursday night.

He had ridden over the mountains… about 10 hours in the saddle… to see us.

He explained that someone had killed and butchered one of his cows. He thought he knew who… and he expected your editor to do something about it.

In the old days, a proper ranch boss would have put a pistol in his belt, gotten a few of his cowboys together, and rode up to confront the suspects. He would have sorted it out, one way or the other.

But now, the originarios up in the valley are a protected species. They don’t pay rent. They don’t respect our rights. They burn down our houses and break down our corrals.

But they can’t be touched. Unless you can prove that one of them has committed a crime, you can’t do anything.

The old man who came to the house was in the same position we are. He knew his cow had been butchered… but he couldn’t prove who did it.

So, we took him down to the police station and he told his story.

The police now have a long list of complaints against the originarios. They’re sick of hearing about it. But without evidence against a specific person, they say they are powerless, too…

Fire Near the South Wall

When we returned to the house, we noticed smoke rising near the south wall. The brush was alight… and the molle trees along the stone wall were on fire.

It hasn’t rained for five months. Everything is dry tinder. The molle have a loose bark that lights up easily. And while there was no danger to the house, we didn’t want to lose the trees.

So, we called for all hands to carry buckets of water from the canal… and throw it on the fire.

José, one of the ranch hands, rides up with guardamontes

After about 20 minutes of this bucket brigade, Pedro had a good idea. He dug a hasty channel down from the upper canal… and directed the water along the wall… and to the trees.

With this stream running strong, we could scoop up the water and toss it onto the trees quickly. Then, young Agustín climbed the trees and doused the still-burning limbs.

Thus, was the fire brought under control…

Fire under control

…so we could turn back to the cattle.

The herd was now in the corral, with the cowboys running, roping, and herding the cows… in a great cloud of dust… as they separated the calves from their mothers.

Separating the cows

When the animals were finally separated, we took up our positions on the chute and resumed testing each cow. By the afternoon, that too was completed… with 311 cows pregnant and 110 that were “empty.”

This week, we’ll drive the barren cows… along with the old ones and the young steers… over the pass and down into the valley. Stay tuned.

Counterfeit Bargain

Meanwhile, back in the world of counterfeit money… ABC reports on Kanye West’s bid for the White House:

“The maximum increase would be everybody that has a baby gets a million dollars or something in that range,” said West.

West also said that marijuana “should be free.”

Why not? When you can print all the money you want… why not spend it any old way you choose?

You’ll recall from last week that trillions in new, fake money are making it possible for people to do a lot of wild and crazy things.

Like lottery winners and mental defectives, they’re indulging their fantasies.

Two years ago, for example, you could have gotten a mortgage at a rate just under 5%. That was remarkable enough. The inflation rate was running over 2%… so the real rate was about 3%, which is fairly normal.

And it was a bargain for homeowners. They got the upside of higher inflation (which would have greatly reduced real mortgage payments) for nothing.

But as good a deal as that was, now there’s an even better one on offer. Last week, mortgage rates dipped even lower… The Wall Street Journal:

30-Year Mortgage Rate Reaches Lowest Level Ever: 2.98%

The average rate on a 30-year fixed mortgage fell to 2.98%, mortgage-finance giant Freddie Mac said Thursday, its lowest level in almost 50 years of record keeping. It is the third consecutive week and the seventh time this year that rates on America’s most popular home loan have hit a fresh low.

What is remarkable (and counterfeit) about that is that on the very same day we got an inflation update from Bloomberg:

The median weekly earnings of full-time workers in America jumped more than 10% in second quarter from a year earlier, the U.S. Bureau of Labor Statistics reported today.

The data marks the largest increase in the four decades that the agency has tracked it but is skewed by a more sobering reality: massive job losses among lower-wage workers.

And here’s MarketWatch:

Consumer prices rose in June at the highest yearly rate since 2012, reflecting a U.S. economy that’s running hotter than anytime since the Great Recession.

The increase in the cost of living rose to a 12-month pace of 2.9% from 2.8%, marking the highest level in more than six years, the government said Thursday. A year ago the 12-month rate stood at just 1.6%.

Basic Math

It is not at all remarkable that consumer prices are rising. The Federal Reserve is “printing” money like a house-a-fire.

What is remarkable is that there is no fear of it.

In the fantasy world of fake money, neither the stock market… nor the bond market… nor Congress… nor the economic cognoscenti… seem to have any idea of what is going on.

It is as if they had forgotten basic math. If inflation is running at 2.9%… and you’re lending money for 30 years at 2.98%… you are getting effectively a zero rate of return.

You’d have to be blind, deaf, and dumb not to notice that inflation is likely to go higher – much higher.

The economy is not going to recover anytime soon. You can’t just flick a switch, after all. So, you’re going to have to print up more counterfeit money just to keep the jig up.

Republicans are expected to unveil another “stimulus” program this week… with another $2 trillion price tag. The Democrats already have their $3 trillion plan on the table.

And their candidate – Joe Biden, now with a large lead in the polls – is promising to add another $7 trillion.

None of this would be possible… not the Lockdown… not the Bailouts… not the Stimulus… not 2.98% mortgages… not the big spending promises… not the $1 million that Kanye wants to give to people who have babies…

…without counterfeit money.

In short, the fake money has turned us into a race of damned fools.

Regards,

Bill