In 1987 Thomas Sowell wrote A Conflict of Visions: Ideological Origins of Political Struggles. In this book, he said, “Visions rest ultimately on some sense of the nature of man… Those who see the potentialities of human nature as extending far beyond what is currently manifested have a social vision quite different from those who see human beings as tragically limited creatures whose selfish and dangerous impulses can be contained only by social contrivances, which themselves produce unhappy side effects. William Godwin and Adam Smith are two of the clearest and most consistent exemplars of these respective social visions—the unconstrained and the constrained.”
In short, some people see humans as the highest moral authority in all existence. Humans are perfectible and subject to no higher authority. Other people see humans as subject to a higher authority, by whose light they are imperfect and imperfectible. Sowell acknowledges that some people have combinations of these views, but most people predominantly fall into one camp or the other.
If people are the highest moral authority in existence, no action is inherently wrong. Might effectively makes right, so the most powerful person or organization gets to set the rules. Clearly, this is the rule of life accepted by America’s Democratic Party. The Republican Party is a mixed bag, with many members in each camp.
The problem is that the Constitution, upon which both parties draw for authority (depending on what is being asserted or defended) is itself a mixed bag. Its system of checks and balances is strongly dependent on the constrained view of man, while its resting of ultimate authority in the people leans unconstrained (though less so than most historical forms of government).
There is no easy fix for this dilemma. The question is ultimately one of supreme authority. And wars over ultimate authority are typically the most barbaric. The Thirty Years War in Europe is a good example; its viciousness was and is legendary. Communists—some of the most vigorous advocates of human deity—have killed more than just about any other group in asserting their authority. And Muslim conquests often resulted in mountains of human heads as subjugation and forced conversion took place.
So the virulence of the constrained/unconstrained conflict in America is, in this sense, not surprising. There can be no easy solution. Those who accept the unconstrained view of human nature are not bound by rationalism or reason, which appeal to higher authority for their power. This makes a negotiated truce difficult. The unconstrained view demands unconditional surrender to its often completely irrational demands.
Meanwhile those of a constrained persuasion often sink to fighting fire with fire after being horribly and relentlessly abused by their literally unconstrained opponents. It can get very messy, and one side often becomes impossible to differentiate from the other.
All of this is to say that efforts to bring reason and civility to the process should be applauded and valued. Total war is more horrible than most people can imagine. Of course, it takes a constrained view of life to appreciate that fact, but we suspect most of our readers are at least open to that interpretation of reality.
In that light, the publications below appeal to reason, logic, reality, truth, civility, and esteeming those with opposing viewpoints. The authors are certainly constrained in their point of view. They effectively believe that, with apologies to Jim Croce, “You don’t tug on Superman’s cape, You don’t spit into the wind, You don’t pull the mask off the old Lone Ranger, And you don’t mess around with…” Well, Slim might be a tough customer, but there really is someone infinitely higher than him.
Key Takeaways:
- Strong hands are buying gold
- Trouble in the bubble?
- Man of steel or feet of clay?
- Some guidance for volatile markets
The McAlvany Weekly Commentary: Jeffrey Christian: There’s A Lot Of Upside To Gold
Many of David’s guests on the Commentary over the years began their careers on Wall Street and then became disillusioned with what they experienced there. Indeed, David and his father, Don, had similar experiences. The upshot is that such persons are well acquainted with both conventional wisdom and its less hidebound counterparts. This week’s guest, Jeff Christian is also such a person. He spent time at J. Aron and Goldman Sachs before founding CPM Group, an independent commodities research and consulting company that also compiles econometric data and provides unique financial advice on such things as setting up hedges and using options for wealthy clients. Though he still provides services for Goldman Sachs, he focuses on the commodity space and produces yearbooks on gold, silver, and platinum each year—books that the McAlvany Financial Group uses constantly. His company predicted the extended period of very low interest rates, and he gives some perspective on today’s rates. He also tells us the true cause of recessions (it’s not usually monetary policy). And given his expertise in the precious metals markets, he also gives some detailed insights into the nature and extent of gold buying by various entities, including central banks and private investors, over the past several years and recently.
Credit Bubble Bulletin: In a Jumble
This week’s CBB begins with analysis of the extreme gyrations in markets worldwide: “‘Bubbles go to unimaginable extremes, and then double (quadruple for this cycle).’ ‘Call a Bubble’s demise at your own peril.’ Maxims notwithstanding, has history’s greatest Bubble reached a critical juncture? Only time will tell, of course. But I’ll tell you, today’s environment looks about as I would expect the craziest of endgames to play out.” Given that Doug is one of the preeminent authorities (if not the preeminent authority) on bubble dynamics in the world today, this is a highly significant statement. He goes on to describe some of the developments troubling markets, many of them cued by the yen’s recent strength. That strength has triggered a massive unwind of highly levered yen carry trades, which in turn is driving de-leveraging at the periphery of world markets. He also covers the de-risking/de-leveraging going on in semiconductors and tech stocks.
Hard Asset Insights: Man of Steel
Building on his insightful interview of Danielle DiMartino Booth last week, Morgan begins by discussing the relationship between US deficits and the unemployment rate. That relationship has changed since 2014, and the change is meaningful in the extreme. He then discusses the pressure on Fed chief Jay Powell to lower rates, even from within the Fed. That pressure would increase even more if Donald Trump were elected president, as both he and J.D. Vance advocate a weaker dollar. In short, “HAI expects Powell to begin easing policy, perhaps more significantly than the market currently expects. The pressure on him to do so is impossible to ignore, and mounting quickly. He would have to possess a genuinely heroic streak and be a true ‘man of steel’ to stick gallantly with his higher-for-longer policy, come what may, in steadfast service to his inflation mandate.” Morgan very respectfully disagrees with Danielle over this point, and backs his point of view with one fact after another. Danielle believes Powell will keep rates high in order to discipline spendthrift lawmakers, which Morgan would love to see but is skeptical will happen.
Golden Rule Radio: Future Market Insights
Tory, Miles, and Rob begin the program by noting that everything is down—metals, equities, the dollar, even Miles’ optimism index (asserts Tory, tongue in cheek). At program time, Rob expected further weakness in equities, and that that weakness would drag gold down as well. Miles takes a specific look at charts for the Dow and gold, then superimposes them on one another to show their similar direction but different paths since last October. He then discusses factors affecting the Fed’s ability to cut interest rates this year, concluding that it will be difficult to do so. Cuts will need to be implemented earlier than most people believe, and political considerations make pre-election decreases inadvisable. Tory takes a few minutes to explore what might happen to the gold price under a Trump presidency, and then expands that analysis to look at what might happen with a Democratic victory. Then Miles takes a close look at silver, expecting it to have a little more downside before resuming its upward trend. He explains silver’s greater volatility as, “whatever gold does, silver does better.”
Photo: Bundesarchiv, Bild 102-04062A / Georg Pahl / CC-BY-SA 3.0
