“I felt the ghosts”, said our 91-year-old mother on Epiphany Sunday. “They were all around us.”
For the first time in a quarter of a century, she had gone back to the little country church, in rural Maryland, where generations of the family were christened... married... and buried.
“You probably don’t feel them the way I do”, she explained. “But I’m much closer to them. At my age, I’m somewhere between the living and the dead. I’m on the banks of the river, with a toe in the water. Some mornings, I’m sometimes not sure which side of the river I’m on. I regard it as a minor miracle every time I wake up. I look at the clock and see if it is still running.
“You know, I have many more friends and relatives among the dead than the living. Your father. My father. My mother. All my aunts and uncles and all my cousins... except one.
“They were all there. Uncle Edward in the back pew, as always. And all Uncle Earnest’s family in the middle... where the floor joists cracked. They were big people. And those were the days before air-conditioning, when heavy people suffered the summer heat and fanned themselves with the programme.
"And there was poor cousin Martha. She died very young. Hanged herself in the barn after a love affair with a married man. Uncle David, who went broke during the Depression. And my mother, in her white wedding dress. Ellen, Paul, Lillian, Sophia, Norman, Charlotte – they’re all there.”
Spectres don’t take up much space. Otherwise, the little church couldn’t have held so many of them.
“I don’t know why people are afraid of ghosts. They’re our friends and relatives. And I’m looking forward to seeing more of them. Beside, ghosts know something we don’t. In the fever of life, we make mistakes. Later on, we realise it.”
I’m not sure what she meant. In their pure spirit state, maybe ghosts don’t have to worry about the polish on their shoes or the starch in their shirts. Maybe the vanity drops away along with the flesh. Then, like the gods, they look down at the living with a mixture of pity and amusement; wondering what dumb thing we’ll get up to next.
One time, about 20 years ago, our old friend, Lord Rees-Mogg came to that same church. He came for the marriage of a mutual friend. My mother saw him there. Perhaps she felt his presence on Sunday.
“Who was that gentleman”, she had asked two decades ago. “He looked so distinguished.”
“He is distinguished”, I replied.
Lord Rees-Mogg was the editor of The Times. He was chairman of the Arts Council and vice chairman of the BBC’s Board of Governors. It was he who had defended Mick Jagger, accused of drug crimes, with a famous editorial, “Who breaks a butterfly on a whee?l”, quoted from Alexander Pope. It was he also who was the chairman of Fleet Street Publications, of which I am the principal owner.
I first met William in the early ‘80s when he came to Washington to give a speech to a group of conservative Congressmen.
“I stand before you as a very gloomy economist”, he began, “but as an antiquarian bookseller, things have never looked so bright.”
The gist of his speech was that the free-spending, big borrowing ways of the Reagan administration were going to lead to trouble, most likely in the form of consumer price inflation. The economy would weaken, he guessed, but things of real value – such as old books – would go up in price.
Receive Bill Bonner's free daily email 'The Daily Reckoning' straight to your inbox
This seemed like a very solid line of thinking. It was what a lot of serious people thought. But the ‘80s and ‘90s were a hard time for an economist with his eye on the past. There was no precedent for it. Instead of rising, consumer price inflation in America went down for the next two decades. Things of real value were generally upstaged by things of no value at all, such as the dotcom dreams of feverish internet hustlers and packages of derivatives backed by non-recourse debt on overpriced houses owned by people who couldn’t pay their mortgages.
We mortals never know how things will turn out. That is for the ghosts and the gods to know. Now that William is among them – he died just after Christmas – he won’t make another clunker forecast.
America was exporting her inflation in the ‘80s and ‘90s. Still is. Dollar bills and credits that would have otherwise driven up consumer prices in the USA accumulated in banks and mattresses all over the world. And now the US Fed, America’s central bank, is adding $85bn per month to the world’s monetary base. It has already brought the Fed’s holdings from $800bn in 2008 to $2.84trn today.
At the present rate, it will boost the Fed’s assets to over $4trn in scarcely more than a year. This easy money from the central bank allows the central government to continue making promises it can’t keep. Over the last ten years, US government debt has grown 3,000 times faster than the real, productive economy. And Professor Niall Ferguson puts the total of US government debts and unfunded commitments at $238trn – making it the biggest bubble in history.
William was not always right; but he was righter than most. And he was probably right about the trouble coming in the US, after all. He had an advantage. In our joint Pickering and Chatto enterprise, he published the experiences and the thoughts of the spooks themselves. Among these tomes were three thick volumes of The History of Financial Disasters, another three volumes of The Case for Gold, and three more on Great Bubbles.
In these 2,700-plus pages, there is not a single dead economist with a kind word for zero interest rate policy or for pumping up the base money supply five times in as many years. And every dead economist with any real experience of hyperinflation – such as Carl Helferrich at Weimar Germany’s central bank or John Law at the Bank of France – would rather pluck out his own eye than risk doing it again.
• Lord Rees-Mogg was widely described in the obituaries as a fuddy duddy, a Georgian Whig who has somehow survived to the 21st century. The morticians missed the point. William was not against progress or opposed to modernity. If he seemed to eschew the latest fads – in thought and fashion – it was because he knew that most innovations are mistakes, evolutionary dead-ends many of which have been tested already... and have failed. If you want to make real progress, you have to listen to the shades.
Of course, one generation is entitled to believe that it can succeed where its parents couldn’t. And maybe today’s central bankers will pull it off; maybe they have more self-discipline and less vanity than mortals in the past. Or, maybe the disaster just hasn’t caught up to them yet. Zimbabwe’s inflation rate was only 7.3% in 1988. Ten years later it was 48%. Ten more years and the whole system had disintegrated. It was no longer possible to track consumer price inflation; there weren’t any consumer items for sale.
The ghosts don’t necessarily know what will work, but at least they know what didn't. Lord Rees-Mogg listened to them. And now, may he enjoy his rest, and get a good laugh when today’s experimental money system finally blows up.
• Don't miss Bill's next Daily Reckoning. To receive the next article straight into your inbox as soon as he's written it,
sign up to the email list here
Information in The Daily Reckoning is for general information only and is not intended to be relied upon by individual readers in making (or not making) specific investment decisions. Appropriate independent advice should be obtained before making any such decision. Your capital is at risk when you invest in shares - you can lose some or all of your money, so never risk more than you can afford to lose. Always seek personal advice if you are unsure about the suitability of any investment. The Daily Reckoning is an unregulated product published by Fleet Street Publications Ltd. Customer services: 020 7633 3600. Fleet Street Publications Ltd is authorised and regulated by the Financial Services Authority. http://www.fsa.gov.uk/register/home.do FSA number: 1152 34
FREE - MoneyWeek's daily investment email
Our free daily email, Money Morning, is an informative and enjoyable analysis of what's going on in the markets. Written by our Editor, John Stepek, and guest contributors.
Sign up FREE to Money Morning here.