Wednesday, May 31, 2017

A Brief Look at the Fall of the Roman Empire and Comparisons to America

This is simply priceless.

Just after the market open (9:45 am ET), Chicago PMI was reported at 55.2

U.S. Midwest factory activity index retreats in May - Chicago PMI
NEW YORK U.S. Midwest manufacturing activity fell more than forecast in May from its strongest level in more than two years, an index jointly developed by MNI Indicators and ISM-Chicago released on Wednesday showed.

A couple of hours later (after the Dow was down 87 points):
Updated: Chicago PMI Increases in May
Earlier, the Chicago PMI was reported at 55.2. That has now been corrected to 59.4. This was above the consensus forecast.

So, not only do US (and, by way of inference, all other equity markets, globally) equity markets have the backstopping mechanism of central banks buying stocks, and the Plunge Protection Team at work, but now routine data releases are changed when they don't exactly fit the narrative.

Fake news, fake money, fake boobs, fake everything. Better check your pulse. It may be fake and you are actually dead.

These's only one way to report on finances anymore, with tongue planted firmly in cheek.

A major reset is coming. The sustainability of the current construct probably has a pretty short shelf life. However, in financial and historical terms, that could be months, years or decades. The fall of the Roman Empire was a slow-motion wreck that took over 300 years, roughly from 117 AD to 476.

Wikipedia has an interesting opening line on the Fall of the Western Roman Empire:
The Fall of the Western Roman Empire (also called Fall of the Roman Empire or Fall of Rome) was the process of decline in the Western Roman Empire in which it failed to enforce its rule, and its vast territory was divided into several successor polities.
-emphasis Money Daily

Note the wording, "failed to enforce its rule..." which would coincide roughly with the greatest fiasco related to the most recent election campaign, wherein FBI director James Comey laid out specific crimes by Hillary Clinton, but concluded that "no reasonable prosecutor would bring charges." Add to that the short meeting between former president Bill Clinton and then-Attorney General Loretta Lynch on the tarmac of the Phoenix airport just a few days prior to Comey's televised statement and you have a textbook case of "failing to enforce its rule."

So, the fall of the American empire may be in its earliest days. You can breath a sigh of relief now.

Well, maybe not.

Looking at the decline of Rome another way would be to examine its currency, which was gold and silver. The devaluation of the currency predates the earlier given date of the beginning of the fall at 117, when Emperor Nero fiddled with the silver content in the denarius, reducing it from 100% silver to 85%, during his reign from 54-68 AD. By the time Emperor Severus ruled (193-211 AD), the coinage was down to 50% silver. Eventually, Roman coins would contain less than 1% silver or none at all.

From that perspective, we could be almost at an end. These days, life moves faster than it did in Roman times. Romans didn't have instant communications, computers, cell phones or any of the "essentials" which we today take for granted. Consequently, technology has made it possible for everything outside of nature (animals, climate, insects, geology, etc.) to move at a much faster pace.

Thus noted, the American empire may be collapsing much faster than mainstream economists are willing to admit. The US Mint stamped its last gold coin in 1932. It stopped 90% silver coinage in 1964. Nixon took the US off the gold standard in 1971. Since then, our money has had no backing beyond the "full faith and credit" of the federal government, which, as many are now aware, has overextended its credit, causing a severe loss of faith by its loyal subjects (eh, that would be us, homey).

It's probably close to a majority of people living today in the United States which are clueless concerning the value of their currency, which is basically the paper upon which is printed numbers, words, pictures of dead presidents, and other indicia of America's greatness. Anybody born in 1971 would be 46 or 47 now; anybody born after that date would be, obviously, younger. All of those people have been living in a world of fiat currency, backed by absolutely nothing except empty promises from a federal government which can't balance its own books.

Making matters worse, US currency (or legal tender, to be correct) may be technically unconstitutional. The arguments concerning the constitutionality of the Federal Reserve to print paper money - granted that right by Congress in 1913 - are vague, various, contentious, and too deep for this limited discussion. But, a great many people have and some still do believe that money not backed by gold or silver or some other base commodity is, well, garbage.

104 years of the Federal Reserve ruining our economy has devalued the US dollar by 98%. So, where are we headed?

On the other hand, perhaps modernity consists of allowing such counterfeiting and fakery by central bankers and the tacit approval of the populace. In other words, don't rock the boat, keep with the status quo; the modern mores and normalcy bias will prevail. In that regard, Americans are a pretty complacent bunch, like the traders, movers, and shakers of Wall Street. We all go along to get along, or, in the words of a Russian during the Soviet era, "we pretend to work, and the government pretends to pay us."

We're deep down the rabbit hole, folks, and it appears that we're going deeper.

BTW: No "window dressing" on the final day of the month. Also, hat tip to Zero Hedge for inspiring this article.

At the Close, 5/31/17:
Dow: 21,008.65, -20.82 (-0.10%)
NASDAQ: 6,198.52, -4.67 (-0.08%)
S&P 500: 2,411.80, -1.11 (-0.05%)
NYSE Composite: 11,598.03, -3.28 (-0.03%)

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