We got an odd call from a good friend over the weekend.
Actually, we got two odd calls.
The first was about how midterm elections work. She was confused about something she heard on the news.
We set her straight.
The second – and this was weird coming from a friend who can only be dubbed an “extreme moderate” – was about the progress on the wall being built on the Mexican border.
“Where’d Trump get the money for that?” she asked. “I thought Congress didn’t give him the money.”
Oh boy. We spent the next 20 minutes doing some myth-busting. As we hung up the phone, we repeated a line we said several times during our call.
“You need to turn off the Today show,” we seemed to chant.
You see, nothing that our friend had heard was wrong. It just wasn’t the whole story. She got the sound bites – the stuff that sells – and the rest was conveniently left on the cutting room floor.
The wall, as we told her, isn’t really a wall.
In fact, Trump is merely finishing the border upgrades that Bush and Obama started. But instead of calling it a fence, as was formerly done, the media is having quite a field day calling it a wall.
The story of this fence project is so old, in fact, that it’s a topic we chatted about with John McCain more than a decade ago.
And yet here it is, making headlines today… and selling ad space for tomorrow.
But we’re wading into mucky territory.
Our aim isn’t to get political.
None of it matters… nor should it.
Instead, our point is to show the dangers of a headline-driven culture… a culture that watches a 30-second segment about the nation’s power figures… then sips its coffee as the same “news” outlet takes five minutes to reveal the winner of its ugly dog contest.
It’s why we tip our hat again this morning to an unlikely man… a man we normally wouldn’t see eye to eye with.
But we’ll stand by the comments we made about Paul Volcker yesterday.
His remarks about seeing “a hell of a mess in every direction” are spot on.
The Scary Truth
It’s Volcker’s editorial published by Bloomberg that gets our attention this morning.
It does some magnificent myth-busting.
He takes square aim at what may just be the most influential number within the American economy… and yet few folks know it exists.
It’s surely not as intellectually numbing as an ugly dog contest (isn’t that the goal of the morning news outlets?), but it’s far, far more important.
It’s the Federal Reserve’s 2% inflation target.
Volcker says it’s junk.
“I puzzle about the rationale. A 2% target, or limit, was not in my textbooks years ago. I know of no theoretical justification,” he wrote last week.
“It’s difficult to be both a target and a limit at the same time. And a 2% inflation rate, successfully maintained, would mean the price level doubles in little more than a generation.”
Put another way – a way that may get more attention – it means the value of the American dollar falls by half in little more than a generation.
What’s craziest of all is what we fear will never make it into the headlines. It’s where Volcker tells us this oh-so-arbitrary 2% figure comes from.
It’s the leftovers from an economic (and political) experiment in New Zealand.
The country was suffering from years of high inflation and no growth and needed a politically expedient rallying cry.
A newly elected government tossed the 2% figure in the air… and it stuck.
Volcker tells the rest of the tale.
“The central bank head, Donald Brash, became a kind of traveling salesman,” the former Fed chief writes. “He had a lot of customers. After all, those regression models calculated by staff trained in econometrics have to be fed numbers, not principles.”
In other words, the Federal Reserve’s current target is the result of ego, politics and the laziness of government employees.
When the Truth Hurts
Sometimes we wish we didn’t know the truth.
But, stealing a line from the realm of law enforcement, the only time the truth can hurt you is when you tell it too late.
It’s that idea that begs us to remind readers of an idea we hit on often – perhaps too often.
Know-How is critical to a man’s success and health. And therefore it’s critical to a nation’s success and health.
But we fear we’re witnessing the death of Know-How… and the death of the truth.
The effects are obvious.
Folks are killing each other.
The markets are selling off, and nobody knows why.
The country has gone nuts about politics.
And good friends are calling us, desperate to know what the hell is really going on.
We’re confident that we’ll get the truth. But, alas, we fear it may come too late.
Don’t fall into the mainstream trap.
Make Know-How a top priority.
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