Denninger And Charles Schwab Explain Why The Fed Is Corroding The Culture

Denninger points to a recent op-ed by Charles Schwab

The most striking quote to OS was this:

The Fed's super-loose policy has driven down the security and spending power of savers, particularly those in retirement who played by the rules during their working years and now depend on the earnings from their savings for a decent quality of life. As a result, savers and investors are being forced to take more risk with their money as they hunt for higher yields.

'The ones who played by the rules' for all those decades--the ones who stayed married, raised the kids, worked and worked and worked, often serving in the military (and sending their kids off to do the same), attended and supported their churches and synagogues, saved and scrimped and delayed gratification so they wouldn't be a burden to their kids in adulthood, to have something to spend on the grandkids, maybe even pay school tuition so the grandkids wouldn't have to go to public schools--those folks.

Those folks have been treated shabbily. They kept their money in CD's and Treasury securities, or in muni bonds, for safety of principal, for the insurance on their accounts. Now, not only have their income streams from the principal saved over the years dried up, but the value of those dollars themselves are now being deliberately eroded.

So, what does this mean for the culture? OS believes it breeds cynicism, and erodes hope. Virtue is its own reward, to be certain. Those folks who live virtuous lives have better lives than those who don't--such as meth addicts, to cite an extreme example. But if the end result of all that virtue and saving and investing is a worrisome old age of borderline poverty, it becomes more difficult to make the argument for virtue, thrift, ambition, self-improvement, etc. If the banksters always win, and are the only ones who prosper, the social glue of shared values begins to melt away.

OS listens to hip-hop urban radio a few times a week, not because he likes it, but because he wants to listen in on what is being said. It's not pretty. It is dark music and darker poetry, focused on raw materialism and hedonism, usually degrading to women, and always focused on short-term gratification. The sub-message seems always to be: What the hey, there is no future, and virtue is for chumps. Live for today, and for yourself.

Visit the neighborhoods from which this music emerges, and it is obvious the glue of shared values melted away long ago.

Unless we wish that cultural rot to spread, we would do well to pay attention. And we'd better be prepared to talk once again of virtue as its own reward. It will be a tough sell in this climate.

And, if you don't believe OS, or Charles, or Karl--then maybe Robert Reich will tell you what you need to hear. Same message, from a far different part of the ideological spectrum.

Ten Reasons For Optimism In The United States

It's been an ugly, pretty discouraging month in some ways.

OS pleads guilty: He got caught up in it this week, the political
rope-a-dope, beating his fists endlessly into the pillow of the politicians' cynicism, ending up frustrated and exhausted, just as planned. The moment of insight came today on the golf course--when the mind was clear, humming a tune, enjoying the sunshine, the ball seemed to launch itself off the club. Greenside bunker? No problem! Putts rolled like they had eyes. Freddie Couples would be envious of some of those shots.

Then, distraction arrived, and thoughts of the world off the course interposed. The drive was a nasty pull hook into the ravine: No need to even search, it was gone.

The rest of the hole was seriously ugly...

Damn! Those guys need to give it a rest. Didn't pay green fees for them, by golly!

So, to chase the ghosts away, ten great things about living here that the politicians, bankers and other sociopaths can't do much about.

1. We're not Mexico, yet.

2. Baseball season is in spring training, and the season begins in April. Since the 1860's, in good times and bad, baseball has always been played, from the local sandlot to the majors. Not even crooks like Pete Rose and Mark McGwire have been able to destroy it.

3. It's a big, big country, with large parts of it still pretty much in the same condition as when the European settlers first arrived. Geography conspires on the side of freedom and prosperity. You can fit the entire UK into Illinois.

4. Churches, of all stripes and flavors, still dot the landscape throughout most of the country. People there, for all their failings and quirks, talk to one another and look out for each other and the people around them. Most churches are small and Protestant of some flavor, and the idea of freedom is larded throughout their theology.

5. Golf. Lots of it here, from humble county courses to places like Torrey Pines. It provides a quiet haven where people can think and talk. It runs on rules that assume honorable behavior from everyone.

6. Americans, for the most part, in most places, are outgoing and friendly. Wherever you go, you can make a friend if you give someone the opportunity.

7. This country, in addition to being huge, is breathtakingly beautiful, coast to coast. Not even the politicians can take away the sunrises and sunsets over the beaches that line the coasts, or the turning colors of the hardwood trees in the fall. That's God's bidness.

8. Americans know how to cook! Great food grows in abundance here, and great cuisine emerges from all parts of the country.

9. Jack Daniels. Same as it ever was.

10. America is generous. When calamity strikes somewhere else, checkbooks are pulled out, and volunteers saddle up. We git-'er-done like nobody else. And then we go home.

OK, that's better.

Back to that spring training game...