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On this day, 273 year ago, one of America’s most visionary founding fathers – Thomas Jefferson – was born. To celebrate his birthday, we are sharing a small sample of some of his most prophetic quotes which are perhaps more relevant today than they have ever been in the history of the United States.

On liberty – Thomas Jefferson letter to Isaac Tiffany, April 4, 1819

Rightful liberty is unobstructed action according to our will, within the limits drawn around us by the equal rights of others. I do not add ‘within the limits of the law’; because law is often but the tyrant’s will, and always so when it violates the right of an individual.

On banks as the biggest threat to liberty – Thomas Jefferson letter to John Taylor, May 28, 1816

If the American People ever allow the banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers occupied. The issuing power of money should be taken from the bankers and restored to Congress and the people to whom it belongs. I sincerely believe the banking institutions having the issuing power of money are more dangerous to liberty than standing armies.

On the dominion of banks – Thomas Jefferson letter to James Monroe, January 1, 1815

The dominion which the banking institutions have obtained over the minds of our citizens…must be broken, or it will break us.

On central banks – Thomas Jefferson letter to Albert Gallatin, June 22, 1803

This institution (Bank of the U.S.) is one of the most deadly hostility existing against the principles and form of our Constitution… an institution like this, penetrating by its branches every part of the Union, acting by command and in phalanx, may, in a  critical moment, upset the government.”

More on central banks – Thomas Jefferson letter to Albert Gallatin, June 19, 1802

The monopoly of a single bank is certainly an evil.

On printing money – Thomas Jefferson letter to John Taylor, May 28, 1816

The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

On the threat of banks – Thomas Jefferson letter to John Taylor, May 28, 1816

The system of banks which we have both equally and ever reprobated, I contemplate as a blot in all our (state) constitutions, which, if not corrected, will end in their destruction.”

On member of Congress owning stocks – Thomas Jefferson letter to Gallatin, June 22, 1803

My wish was to see both Houses of Congress cleansed of all persons interested in the bank or public stocks; and that a pure legislature being given us, I should always be ready to acquiesce under their deliberations, even if contrary to my own opinions; for I subscribe to the principle, that the will of the majority, honestly expressed, should give law.”

On the “bank mania” and “moneyed aristocracy” – Thomas Jefferson letter to J.B. Stuart, May 10, 1817

The bank mania is one of the most threatening of these imitations. It is raising on a monied aristocracy in our country which has already set the government at defiance, and although forced at length to yield a little on this first essay of their strength, their principles are unyielded and unyielding.

On the threat from moneyed corporations – Thomas Jefferson letter to George Logan, November 12, 1816.

I hope we shall take warning from the example and crush in its birth the aristocracy of our monied corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.”

On paper money and precious metals- Thomas Jefferson letter to John Eppes, 1813

The trifling economy of paper, as a cheaper medium, or its convenience for transmission, weighs nothing in opposition to the advantages of the precious metals… it is liable to be abused, has been, is, and forever will be abused, in every country in which it  is permitted.

And, a just as critical recpirocal letter by John Adams to Thomas Jefferson, August 25, 1878

All the perplexities, confusion and distress in America arise, not from defects in their Constitution or Confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit and circulation. ”

On the need for a “little rebellion now and then” – Thomas Jefferson to James Madison, Paris, January 30, 1787

I hold it that a little rebellion now and then is a good thing, and as necessary in the political world as storms in the physical. Unsuccesful rebellions indeed generally establish the incroachments on the rights of the people which have produced them. An observation of this truth should render honest republican governors so mild in their punishment of rebellions, as not to discourage them too much. It is a medecine necessary for the sound health of government.

* * *

And while it may not be his birthday, here are two  bonus quote from James Madison, from June 28, 1787:

A standing military force, with an overgrown Executive will not long be safe companions to liberty. The means of defence agst. foreign danger, have been always the instruments of tyranny at home. Among the Romans it was a standing maxim to excite a war, whenever a revolt was apprehended. Throughout all Europe, the armies kept up under the pretext of defending, have enslaved the people.

And on the encroaching power of unchecked government – June 7, 1788

Since the general civilization of mankind, I believe there are more instances of the abridgment of the freedom of the people by gradual and silent encroachments of those in power, than by violent and sudden usurpations.

h/t @RudyHavenstin

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A different kind of fiction-peddling…

 

 

Source: Investors.com

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Submitted by Bill Bonner of Bonner & Partners (annotated by Acting-Man.com's Pater Tenebrarum),

A Return to Gold

“What if you were appointed to head the Fed? In your first week on the job, what would you do?”

The question was not exactly serious. Neither was the answer.

“We’d call in sick.”

 

Sorry boys and girls, you’ll have to start without us…

 

Drought, old age, traffic congestion, meanness, purple drink, bad taste, rap, suburbs, cancer, government, Hillary Clinton, restaurant music, shorts, Facebook, obesity – there are a lot of things wrong in the world. And most of them are not easily put right.

But there are some problems that could be solved overnight. Economic and financial problems, for example, solve themselves… if you let them. Almost all the macro-money wounds suffered by the modern world are self-inflicted.

Central banks and treasury departments around the world keep shooting themselves in the foot. But rather than stop manipulating the system… they buy another pair of shoes.

 

If we were miraculously appointed by President Trump to run the Fed, our first act would be to put the gun down. We would announce that, henceforth, anyone waiting for the next rate hike would have to wait a long time.

Because we wouldn’t be making any rate hikes… or rate cuts either. Instead, interest rates would have to take care of themselves. Lenders and borrowers would set their own rates.

But what about if banks got into trouble? Ah… we’d take care of that too. We’d point out that the Fed would no longer lend to them in an emergency. Our announcement: “To any bank that runs out of money: Drop dead.”

 

Advice to insolvent banks from the hypothetical Bonner Fed

 

Then, we would put the entire Fed balance sheet – the more than $4 trillion in dodgy bonds it bought over the last eight years – up for sale. And we would send layoff notices to the entire staff…telling them to clean out their desks, admonishing them that henceforth they would have to seek honest employment or try to land a job on Wall Street.

Had we the power, we would take one further step: We would declare that Americans could use whatever currency they wanted, that the dollar would once again be exchangeable for a fixed quantity of gold, and that the U.S. Treasury would accept any major currency – including bitcoin – in payment of taxes.

See how easy it would be? All of the heavy lifting could be accomplished before lunchtime on our first Monday on the job. Then we would slip out the back of the Eccles Building… with luck, just before posse caught up to us.

 

The posse (John Law chapter)

 

Solid Dollar

And yet, those simple changes would eliminate most of the money troubles facing the U.S. With no further gas coming in, the debt bubble would deflate. Bad investments, bad business, and overpriced assets would all lose air… and disappear.

The dollar would be solid again. It would represent real value, not counterfeit wealth. Borrowing would be based on real savings, not just more hollow credits. And – with only scarce capital to work with (rather than an unlimited supply of phony-baloney credit) – investors and entrepreneurs would be careful about what they did with their investments.

They would put capital to work only in projects that increased the real value of America’s assets, rather than those that merely shifted wealth from Main Street to Wall Street.

 

Honest money: an 1882 gold quarter

 

Admittedly, this would be a lot for the American people to take in. Most people have no idea how the money system works. The credit dollar is all they know. And they still have faith that the big heads at the Fed know what they are doing.

The newspapers and pundits would howl in alarm. Respectable economists would choke on their indignation. Lynch mobs would form. They would call our program “radical” and “irresponsible,” unaware that today’s system is the most radical, experimental, and irresponsible in history.

Our proposals would take the country back to a traditional and sensible money system. People would decide for themselves what kind of money they wanted to use… whether to save it… or spend it… and what price to put on it if they wanted to lend it out. Would it work?

We don’t know, but we’d like to see someone give it a try.

 

A certificate for sound money, and quite a bit of it too. Our benevolent modern-day social engineers would be appalled: not only is this a certificate for gold, it is one for 10,000 smackers worth of the stuff! Only über-turrsts could possibly have use for such a thing…it clearly embodies way too much freedom and responsibility for the average tax serf. If you’re not convinced, ask Larry Summers, and if that doesn’t help, think about the children!

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JPMorgan Trading Desk activity was on the slow side today as the equity rally extended for another day as the SPX hit fresh YTD highs. Since hitting a low at 1810 on 2/11 the SPX has since rallied ~270 points or ~15% and is now up ~1.8% YTD.

Earnings Tues night/Wed morning were either better-than-feared (CSX) or outright strong (JPM and to a lesser extent ADTN) and that, combined w/the solid China trade numbers, helped power another day of gains (the US retail sales numbers fell short but that didn’t influence trading a whole lot). The Beige Book (out at 2pmET) didn’t really change the narrative (and actually contained some possible headwinds in the form of upside wage pressures).

But as JPM notes, investors remain reluctant about chasing a tape so far off its lows (the inexorable nature of the rally has provided few entry points and it still feels like people are being grudgingly forced in from the sidelines to participate in a rally that remains decidedly unloved).

The bigger picture remains unchanged w/the multi-week advance a function of misplaced sentiment and positioning matching up w/a set of global fundamentals that proved much more stable than investors feared at the Feb nadir.

 

The Fed-induced USD sell-off, oil rally (helped by the USD, anticipation of a production freeze, and a sig. cutback in US output), and (mild) economic green shoots (esp. China’s Mar data) all helped but the velocity of the move (15% in two months) wouldn’t have occurred absent the abject despondency and deafening recession calls from Jan and Feb.

Investors continue to try to numerically justify the price action.

In Jan and Feb the consensus thinking was assuming a shallow US recession, ~$115 in EPS, and a 15x multiple in order defend pressing the SPX below 1850 (15x $115 would have placed the SPX around 1725-1750).

 

With the index now threatening 2100 growth is seen staying within its post-crisis average (~2%-ish GDP) w/~$122-123 in EPS and a 17-18x multiple (18x $123 would get the SPX north of 2200).

 

Some are even beginning to look to ’17 where the (admittedly inchoate) consensus is calling for ~$130-132 in EPS (on that number the PE looks reasonable at ~16x).

 

However, just as investors had to stretch reality to explain a sub-1850/1800 SPX in Feb, the same is true up at 2075-2100 (although $122-123 and 17-18x is more plausible than $115 and 15x).

 

Even assuming the USD weakness, oil strength, and better-than-feared Q1 reports, it’s hard to get the ’16 EPS number more than few dollars above $120 and investors should be careful about estimates looking out more than 1.5 years (at this time in ’15 investors were penciling in EPS north of $130 for ’16).

The macro landscape remains a lot more boring than investors give it credit for and just as psychology proved excessively bearish in early Q1, the same may now be occurring on the upside.

 

The USD is something to keep an eye on – its weeks-long plunge on back of a trio of dovish Fed messages (3/16 FOMC meeting, 3/29 Yellen speech, and 4/6 FOMC minutes) has underwritten a lot of the recent SPX rally (by relieving pressure on China’s CNY and spurring a commodity lift) but it is showing signs of firming now (the DXY rose ~85-90bp Wed) and if this persists it could become a headwind.

Source: JPMorgan

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As The National Federation of Independent Business explains, the Small Business Economic Trends report shows that in March, small business owners felt less optimistic about the economy. The index declined by 0.3 points to 92.6, its lowest monthly reading in two years.

 

The index has turned “decidedly south”, NFIB points out, since December 2014, when it was at a high of 100 points. Four of the 10 components of the monthly index posted gains, however the numbers were still cause for concern. For instance, despite a 4% increase in the number of business owners expecting the economy to improve, the net percentage for March was still negative, at -17%.

Small business owners surveyed in March cited “weak sales and a poor economy” as the top reason they believe “the current period is a bad time to expand.” However, the second-most frequent reason cited was “the political climate,” as this election season continues to create regulatory uncertainty for small businesses.

Additionally, the NFIB found that “owners remain very pessimistic about the economy” in part because this view is “unfortunately reinforced by Fed Chair Yellen’s back peddling on the timing of the next rate hike.”

 

Commenting on the results, NFIB Chief Economist Bill Dunkelberg cautioned that the small business sector is currently “underperforming, doing little more than operating in maintenance mode.” Although there has been “slow economic growth,” he warned that “there is no exuberance, no optimism and not much hope, the numbers make it clear.”

Dunkelberg concluded of the March index results, “Small business owners remain extremely pessimistic about the economy, and rightfully so. Cost-increasing regulations seem to multiply overnight and there is no clear end in sight.”

Slamming everyone…

There is no cheerleader for the economy who convincingly promises improvement. There is little hope that government will constructively address the problems that concern consumers and small businesses.

 

The most likely prospects to assume the presidency don’t appear to be connected to reality. There is no prospect that the avalanche of resource-wasting regulations will abate much less be reversed.

 

The “experts” at the Federal Reserve only raise uncertainty with their pronouncements and seem detached from the real economy, focused instead on financial markets.

Simply put he notes,

"The Fed continues to confuse and confound."

Clearly, small business owners are either:

1. "Peddling Fiction", or

 

2. Struggling with economic and political uncertainty that appears unlikely to ease in the short-term.

As a reminder (from The NFIB's website):

NFIB is America’s leading small business association, promoting and protecting the right of our members to own, operate and grow their businesses. If you’re an independent business owner, join NFIB today to enjoy exclusive member discounts, business networking opportunities in your local area, free HR support for your business and much more!

Basically the representative of every small business in the US.

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