The Triumph of Snail Mail?
Although I write a lot about e-newsletters and social media communications I’m always on the lookout for merging them with old school direct mail. I was prepared to skip this WSJ article on direct mail because at first glance it pertained to retailers. Then the article told of an insurance broker using humorous postcards (including the one above) to great effect and I stopped skimming. The broker told the WSJ that when he stopped sending postcards clients complained — many of them collected the cards as “cubical art.” When he resumed his postcard campaign, he scored a $270,000 new account.
This reminds me of the days when computers replaced handwritten correspondence and press-on labels — I opened the printed envelopes first. But now the novelty of a handwritten address gets my attention. Same with email — the novelty has worn off and most of us are filtering, unsubscribing and otherwise purging senders from our busy lives.
The article offered this as best practice for snail mail:
The idea is to send something that’s more appealing than “junk” mail and potentially more noticeable than an email message, says Eric Anderson, a professor of marketing at Northwestern University’s Kellogg School of Management. That allows business owners “to offer a personal touch the larger firms may not be able to have,” he says.
How well do you know your tribe?
I’m all for using whatever works for your audience, your tribe. I recently read Crush It! by Gary Vaynerchuk, known to many as the Wine Library TV guy. He’s crushing it on social media, especially video, and shares both his philosophy and tactics in the book. I picked up a thing or two from Gary myself (once I slim down I might even try some video!).
On the other end of the spectrum, one of my clients’ tribe is not web savvy, so she takes extra pains to label hot spots on her website (“click here”) instead of relying on them to mouse over without a prompt. She recently discontinued her printed newsletter, started a blog and sends an email with each blog post. I, on the other hand, don’t want to clog my subscribers’ inboxes with each blog update — a monthly newsletter with links to the past month’s posts works for my tribe.
Let’s start a productive conversation. I shared my content recycling strategy here – what’s yours? Here’s a little something on email’s dominance over social media – is this the case for your business? Please share your experience combining any and all forms of business communications/channels/media.
PIMCO’s Ring of Fire
Scroll down for writing prompts, bloggers & newsletter writers.
In my occasional series of publicly (and respectfully) editing business writing, this time I offer unsolicited advice to PIMCO, a leading global investment management firm, which publishes respected and widely-read newsletters.
Today I read The Ring of Fire, written Mr William H. Gross, a founder of PIMCO who oversees the management of more than $800b of fixed income securities (among many other things). It started off well enough with a personal reflection on his long and distinguished career and the careers of others, but I’d have shortened this part by a couple of paragraphs.
Then the segue:
There have been numerous changeups and curveballs in the financial markets over the past 15 months or so. Liquidation, reliquidation and the substituting of the government wallet for the invisible hand of the private sector describe the events from 30,000 feet. Now that a semblance of stability has been imparted to the economy and its markets, the attempted detoxification and deleveraging of the private sector is underway. Having survived due to a steady two-trillion-dollar-plus dose of government “Red Bull,” Adderal or simply black coffee, the global private sector is now expected by some to detox and resume a normal cyclical schedule where animal spirits and the willingness to take risk move front and center. But there is a problem. While corporations may be heading in that direction due to steep yield curves and government check writing that have partially repaired their balance sheets, their consumer customers remain fully levered and undercapitalized with little hope of escaping rehab as long as unemployment is at 10-20% levels worldwide. “Build it and they will come” is an old saw more applicable to Kevin Costner’s Field of Dreams than today’s economy. “Say’s Law” proclaiming that supply creates its own demand is hardly applicable to a modern day credit-oriented society where credit cards are maxed out, 25% of homes are underwater, and job and income creation are nearly invisible.
OK, before you look at my table of edits below, ask yourself “What does he want me to know? What should I expect next?” Myself, I didn’t predict that he’d head into a global economic analysis since the segue focused exclusively on America. This isn’t fiction, or even narrative nonfiction, Mr Gross, this is business writing. Point the headlights where you intend to steer the vehicle.
Surgical edits to what WAS written
| Instead of | I’d write |
| There have been numerous changeups and curveballs in the financial markets over the past 15 months or so. | The financial markets threw us a number of changups and curveballs these past 15 months or so. (drop the passive voice) |
| Liquidation, reliquidation and the substituting of the government wallet for the invisible hand of the private sector describe the events from 30,000 feet. | The invisible hand of the market has been replaced by the government wallet and we’ve seen liquidation and reliquidation. (the sentence is more active now and that cliche– ’30,000 feet’– removed) |
| Now that a semblance of stability has been imparted to the economy and its markets, the attempted detoxification and deleveraging of the private sector is underway. | Now that the economy and its markets have achieved some semblance of stability, the private sector’s detoxification and liquidation is underway. (isn’t that more clear?) |
| Having survived due to a steady two-trillion-dollar-plus dose of government “Red Bull,” Adderal or simply black coffee, the global private sector is now expected by some to detox and resume a normal cyclical schedule where animal spirits and the willingness to take risk move front and center. But there is a problem. | However, there is a problem in the thinking that the private sector can resume a normal cyclical schedule after two-trillion-dollar doses of government “Red Bull,” Adderal or plain black coffee. It just doesn’t work that way. Here’s why: (and then go into bullets) |
I’ll say this, the article is full of writing prompts
My editing scalpel safely retired to the autoclave, I took some points from Mr Gross’ article to help bloggers and newsletter writers in search of a juicy topic.
- The PIMCO Ring of Fire includes the US, Japan and six European countries whose public debt is most likely to reach 90% of GDP (with an ensuing 1% fall in growth). If you look at the graph (a nice one) you’ll see that the countries identified as less likely than those in the Ring of Fire to stumble are Sweden, Germany, the Netherlands, Canada, Norway, Finland, Denmark and Australia. Mr Gross says these countries are “considered to be most conservative and potentially more solvent, with the potential for higher growth.” If you’re a Forex trader advisor or investor, does this have any bearing on your recommendations or holdings?
- Mr Gross argues for tilting growth-focused (and currency) assets toward countries like China, India and Brazil. What’s your position and why, advisors and investors?
- If you want to avoid developing economies, Mr Gross says look north to Canada, our more conservative neighbor (I wrote about this here). He also says to avoid the UK. How does this inform your investment strategy?
- Last year Denmark (one of the countries farthest from the Ring of Fire) was named “The happiest country on Earth” by social scientists at Blue Zones Project . ABC ‘s 20/20 story homed in on the social egalitarianism of Danes, who don’t derive great personal status from their job choices. “Denmark is what is called a ‘post consumerist’ society. People have nice things, but shopping and consuming is not a top priority. Even the advertising is often understated. Along with less emphasis on ‘stuff,’ and a strong social fabric, Danes also display an amazing level of trust in each other, and their government.” Comment on what this might foretell about the path of American deleveraging– do the Danes lead you to believe the deleveraging Mr Gross describes might not be all that bad after all?
- While we’re on the subject, Danes pay some of the highest taxes in the world — between 50 percent and 70 percent of their incomes. In exchange, the government covers all health care and education, and spends more on children and the elderly than any country in the world per capita. What say ye about health insurance reform, Americans?
- In the most recent study of happiness, directed by University of Michigan political scientist Ronald Inglehart and administered from Stockholm, “the survey found that freedom of choice, gender equality, and increased tolerance are responsible for a considerable rise in overall world happiness. The results shatter the more simplistic and traditionally accepted notion that wealth is the determining factor, says Inglehart.” Is it possible that we Americans can learn to see ourselves — and each other — differently after this shared economic hardship?
January Book Lust
This month we have a fiction entry in Book Lust by writer Barrie Abalard, who reviews the latest book in the series that inspired the Golden Globe winning “Dexter” TV series.
Want to review a book for February? Please let me know.
In the continuing discussion about e-readers I asked a hedge fund manager who follows technology to weigh in on the Kindle versus Nook choice for my birthday. He goes by “Dasan” online. 
Here’s what he says.
Happy Birthday, Tamela – I know you’ve been considering whether to buy a Nook or a Kindle. I’ve got some ideas for you.
First, the most important thing is your decision to buy an e-reader in the first place. In 20 years or less, printed-paper books will be as common as a scroll of wizardly runes is today. People will look back and wonder why books didn’t migrate to digital delivery before music and movies did. But today the question remains – to Nook or to Kindle?
You say you’re leaning toward buying the Nook because it runs on Android and you are bullish on where Android’s headed. Sorry, but you’re missing the whole point of e-readers. The point of the e-reader is to “disappear” in your hands and let you drift into that trance-like state of reading. When I’m reading Dune for the 5th time on my Kindle, I don’t even know what an operating system is. You love libraries and bookstores; that would seem to make a Nook the obvious choice, with its physical stores. Barnes & Noble has promised to let you use your nook to read books for free in their stores. Before you get too excited about that, you better look at their financial statements. Did you know that they are in the process of closing all of their B. Dalton bookstores? I wonder how long they can keep their physical stores. I loved record stores – can you find one for me? Buy a Kindle, and you don’t buy an e-reader, you buy access to the entire Amazon bookstore. But the Nook sure has a piece of hardware, with a great color second screen and that wonderful rubber backing! The decision is obvious – buy one of each!
Thanks, Dasan. Sounds like I can’t lose. I’ll let you know whether the Birthday Fairy brought me either of these.
Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System—and Themselves
by Andrew Ross-Sorkin, reviewed by Jim Gobetz
The book chronicles the events leading up to and surrounding the recent economic turmoil It is the third book on the topic I have read and by far the most exhaustive and detailed. Mr. Ross-Sorkin has unparalleled access to the key players in the events and a very flowing and easy to read writing style. He describes the characters in an unbiased manner and I came away feeling that he was quite neutral on everybody. This is a fair contrast to “The Sellout” by Charles Gasparino whose opinions of the players are obvious.
The book was good to great from cover to cover, but I am somewhat reticent to recommend it to anyone who is really not a total economy wonk like I am. The casual observer is likely to get bogged down in the details as there are literally hundreds of players and their interactions read like those of the Plantagenet’s. If you are really keen to get inside the events of 2007-2009 you won’t find better access, Mr. Ross-Sorkin has interviewed all of the key and nearly all of the ancillary players many times in his role with the NY Times. I follow the market and the political events that relate to it like a stalker, yet still I learned quite a few new things and gained new insight into the minds of the rainmakers that led us in and out (hopefully) of the debacle.
So for the fanatics, go for it, it’s a joyride through a subject you can’t get enough of. For those of a more relaxed interest, you’ll have to decide if you’re interested enough for 800 pages or so on this particular topic.
Bonus: my friend Matt Davio interviews Mr Sorkin.
Mobs, Messiahs, and Markets: Surviving the Public Spectacle in Finance and Politics
by William Bonner and Lila Rajiva, reviewed by Jim Gobetz
This book attempts to link the three title entities into a treatise on the human condition from which they sprang. Unfortunately the book is like a roller coaster, looping back and forth, and in and out of the topics in a way that was in my opinion uncoordinated. I am not a writer of books but I suspect a failure on the part of the editor is greatly responsible. Each chapter is interesting in and of itself but taken as a whole it makes no conclusions. The authors are at times strident and appear to be approaching a point which is never made, or they make a point that is unsupported in the context of the chapter but is in another chapter.
I have the feeling that if the book had been organized in a better fashion I might be writing a positive or even very positive review, but as is I cannot recommend it. Sadly, while the title elicits interest the text fails to deliver.
Think Twice: Harnessing the Power of Counterintuition
by Michael Mauboussin, reviewed by Derek Hernquist
Michael Mauboussin’s previous book, More Than You Know, was a collection of essays he had written under the title “The Consilient Observer”. I loved it for its discussion of the odd ways in which we process information and make decisions. Think Twice moves his work from an investor-heavy descriptions to more general prescriptions, contributing to the recent wave of books from Gladwell, Ariely, etc. on social movements.
It’s an engaging read, with countless examples of fascinating behavioral experiments. Those familiar with studies by Kahneman, Tversky, Asch, etc. will recognize many, but he also offers examples from the real world lab. Why do only 12% of Germans consent to organ donation, yet 100% of Austrians do? Because in Germany, one must opt-in, while in Austria one must opt-out…a simple difference in the way choices are presented makes a world of difference. Other examples of suboptimal decision-making abound, from Harrah’s Casino thinking high rollers are their best customers(they’re not) to a music lab giving listeners a chance to think independently about a selection of new songs(they couldn’t).
I find Mauboussin’s examples both enlightening and entertaining, but it’s this “Cliffs Notes” approach to behavioral study that defines both the strengths and weaknesses of this book. Experts in the field of psychology will already be familiar with many examples, and find the prescriptions for improving our decision-making skills too simplistic to be make a difference. For me, however, his work has been instrumental in building a constant awareness of context where snap (attribute-based) judgment had resided…a major help in accepting the potential of markets to go where the mood takes them regardless of my opinion.
Personally, I love these books and find them appropriate for 95% of the population, particularly investors, business executives, marketers, and political operatives. Both the results and implications of dozens of studies are laid out in simple form, giving the reader a vivid memory on which to construct his or her personal decision-making process. If Mauboussin’s name is new to you and you are fascinated by how we make choices, I think you’ll love Think Twice.
How God Changes Your Brain: Breakthrough Findings from a Leading Neuroscientist
b
y Andrew Newberg M.D.& Mark Robert Waldman, reviewed by Wray Herbert(Washington Post’s Book World)
Gus was not a “meditation type of guy.” He was more of a Joe Sixpack, a Philadelphia mechanic not much interested in religion. He hauled himself into Andrew Newberg’s clinic for one reason: His memory was failing. Newberg, a neuroscientist and memory expert, has a special interest in spirituality; he has scanned the brains of worshipers ranging from Franciscan nuns to Pentecostals speaking in tongues. So why was he bothering with Gus? Well, Newberg explains in “How God Changes Your Brain,” his studies (with coauthor Mark Robert Waldman) had convinced him of a link between spirituality and cognitive health: The neurochemical changes that he observed during meditation and prayer appeared to improve brain function.
But Newberg had studied mostly devotees with years of spiritual training; he wanted to see whether a novice might benefit, too. So Gus learned the basics of Kirtan Kriya meditation. Rooted in 16th-century India, Kirtan Kriya involves conscious regulation of breathing as well as repetitive movements and sounds. Gus picked it up right away, practicing 12 minutes a day for eight weeks. That’s a blip compared to what many students of meditation do. Even so, Newberg writes, Gus had greater clarity of mind, empathy and emotional equilibrium. What’s more, his working memory improved as much as 50 percent on some tests. Gus’s case may be inspiring to readers worried about the mental decline that comes with aging. But those looking for the loftier answers promised in the book’s title may come away unsatisfied, and a bit confused. At times Newberg seems to be writing about a broad notion of spirituality, while at other times he focuses on rituals — the mantras and mudras and prayer beads — without any spiritual content or commitment. He doesn’t want to leave anyone (even atheists) outside the tent, so his definition of God is whatever any individual’s neurons are conjuring up at the moment — or the next moment or the next, because God is “constantly changing and evolving.” Inclusiveness is all well and good, but loose theology doesn’t necessarily make for rigorous testing. The second half of “How God Changes Your Brain” is a how-to book. There are lists upon lists here, and even lists within lists: eight best ways to maintain a healthy brain, including five essential reasons for yawning; nine steps for dealing with anger; six strategies for improving communication and six more for creative problem-solving. You get the idea. Aging baby boomers are hungering for good science writing on both brain health and spirituality. Happily, there are excellent books on this important topic, notably Sharon Begley’s “Train Your Mind, Change Your Brain” and Daniel Goleman’s “Social Intelligence.” Start with them. Unhappily, this bloviating volume will leave most readers still seeking.
The Moral Underground: How Ordinary Americans Subvert an Unfair Economy
by Lisa Dodson, reviewed by Publishers Weekly
In this fascinating exploration of economic civil disobedience, Dodson (Don’t Call Us Out by Name) introduces readers to teachers, supervisors, health-care professionals and managers who bend the rules—and even break the law—to support those in need. Dodson shares stories of individuals like Linda, a health-care supervisor who has, against hospital policy, “driven an employee to court on work time” and allows her low-wage employees to manipulate the schedule so they can attend to child-care needs. The author interviews Cora, a restaurant manager, who came up with a “double talk system,” in which she keeps two sets of time sheets so that workers can attend to family issues and who says, “helping women meet their kids or do what they have to do is more important” than her chain restaurant’s rules. Dodson’s study is gripping and her argument is persuasive: we should not have to put compassionate Americans in a position where they have to choose between following rules and helping those who are trying to help themselves.
Dexter by Design (how timely, after Sunday’s Golden Globe awards)
by Jeff Lindsay, reviewed by Barrie Abalard
Summary: A good read for Dexter fans, but not Lindsay’s best. If you’ve never read any of the “Dexter” novels, start with book one, Darkly Dreaming Dexter, in order to read this one (book four) in context. If you’ve only watched the Showtime TV series, be aware that the plots of the series and the plots of the books diverge greatly. Three and a half out of five stars.
I discovered Jeff Lindsay’s “Dexter” novels about six months before the Showtime series began. During that six months, when most of the world didn’t know the books existed, I was practically stopping strangers to rave about Lindsay’s writing and characterization. My family grew thoroughly sick of my Dexter talk. And then… the series began, with the first season repeated on one of the broadcast networks (CBS, I believe), and suddenly everyone knew what, and who, I was talking about.
Thus, Dexter by Design was a book I waited for with great impatience. And it mostly satisfies. Mostly. But it doesn’t get near the admittedly high bar Lindsay set for himself with books one and two (Darkly Dreaming Dexter and Dearly Devoted Dexter) and the slightly less spectacular but still excellent book three, Dexter in the Dark.
I believe a large part of the problem with the book’s momentum—it takes a while to get off the ground—lies in the beginning. Dexter and Rita, his new wife, are honeymooning in Paris. While Lindsay wraps up the honeymoon intro fairly well, setting the stage for the rest of the book, the story would have been stronger if he’d opened with Dexter doing his thing in Miami, as usual, and then working in remembrances of his honeymoon. I think the horror that serves as the end to the honeymoon scenes would work better if it were teased out over the first fifth of the book or so.
I also found Lindsay’s writing in the first chapter a bit irritating, before the book settles down into the sardonic commentary that is his (and Dexter’s) forte. The observations about Paris and art strike me as too floridly written, and not consistent with Lindsay’s usual clean style. I was annoyed, frankly, waiting for the real action to begin.
But, it’s not a huge quibble if you are a “Dexter” fan, which I am. Once the story returns to Miami, where Dexter works as a blood spatter analyst for the police crime lab and moonlights by taking out evil folks with his sociopathic relish, the story regains its footing. The tale is one of viciousness as well as absurdity, with some surprise turns that keep the momentum going. Unfortunately, the ending is a bit weak, as well as completely unsurprising, which disappointed me.
Lindsay’s first two books knocked my socks off. The third one, Dexter in the Dark, was only a shade less amazing. Lindsay takes chances with his main character that, in the first three books, made me gasp with surprise and pleasure as he spun plots that eventually resolved in a satisfying way. If you’re a fan of the popular homicidal character and haven’t read Dexter by Design, by all means do so, as long as you’ve read the first three books beforehand. But be prepared for that twinge of disappointment here and there.
I’ve written a series of stories with repeating characters myself, so I know it’s difficult to tell the tales and reveal new aspects of the main characters over the course of several storylines. It takes mastery of the art of fiction and a polished, smooth style, both of which Lindsay has (and I don’t, but I’m working on it). I’ll wait to read book five before I throw in the towel on Lindsay and his “Dexter” series.
Where’s the News in Your Newsletter?
My inbox is clogged with so-called newsletters from people who must have made a resolution to “communicate more” or “do more marketing” in 2010.
Most of them are, in a word, crap.
In two words, self serving.
In three words, not worth reading.
Win a lifetime gift certificate for my services
If you can find the “news” in this “newsletter” I’ll work for you for the rest of my life for free!
(Redacted) brings proven, practical solutions to business challenges with a clear focus on the bottom line. We represent (verbal diahrrea). Our Practice Areas include:
CONSULTING and TRAINING (8 bullets)
COACHING (4 bullets)
If you’ve read this far you’re one in a million.
CAREER TRANSITION (2 bullets)
SALES PERFORMANCE AND REVENUE GROWTH (5 bullets)
(Redacted) mission is to assist organizations in developing and sustaining inclusive environments where all employees can do their best work (blah blah blah).
We work with organizations (yada yada yada).
If you’ve read this far you’re one in a billion.
An advertisement lodged into a newsletter template
This is best described as an awful ad or an internal document designed to remind the staff who they are and what they do. Releasing it to the public is a sure way to lose subscribers or gain a reputation with your service provider as a spammer.
Afraid you’ll run afoul of federal CAN-SPAM regs?
Anything I can do to help? 704-907-2811
Best advice: ask yourself, “Would I read this if it came from someone else?” The sender of this advertisement would surely have to answer “No.”
Repaying the Debt with Alchemy/Science
John Hodgman has quite a gig going with his “You’re Welcome” series on The Daily Show. This one’s terrific — our debt ceiling is now a “debt convertible.”
“Also like a convertible our economy is expensive, impractical and only seats a couple of wealthy jerks.”
Stewart asks Hodgman what we should do about the $800b we owe China and, following on my commentary on gold, Hodgman suggests turning the lead from the children’s toys and pet food China sends us into gold (as the two are just a couple of electrons apart).
Alchemy? Heck no, science!
One minor problem: the US isn’t churning out the math and science minds it used to.
| The Daily Show With Jon Stewart | Mon – Thurs 11p / 10c |
| You’re Welcome – Debt Ceiling | |
Sharing Deep, Sharing Wide
One of my clients called last week to say, “I love your newsletter but I want your blog delivered to my email too.”
No need. Every blog post for the preceding month is referenced in my monthly newsletter (along with some original content). Why do I do this? My readers have lives of their own and I need to make it easy for them to access my information (duh).
The good people at ShareThis have a little application that can be inserted into blogs and websites. It enables readers to share what they’re reading via email and social media platforms in a couple of clicks/keystrokes. This gives ShareThis a unique vantage point from which to watch sharing behavior.
And what do they know? 46% of shared information reaches its new destination via email, in spite of social networking sites in the aggregate edging email out.
Tweets and Retweets
I owe a great deal of my traffic flow to Twitter, where I actively participate in financial, economic and marketing conversations and share what I’ve written as it’s appropriate. At least a third of my blog traffic is Twitter generated, so I was surprised to read ShareThis stats on this beloved service:
We found that Twitter is the least engaging share platform with users visiting an average of 1.66 pages when they click through to a site, while users coming in off e-mail were the most engaged, visiting 2.95 pages (emphasis mine), and Facebook trailing closely behind 2.76 page views. Of course this varies by vertical and site, but if you think about your own habits, it makes sense. Getting an emailed link from a friend may cause you to pay more attention than the more random discovery that you get on Twitter as you consume quick opinions. We think there is tremendous potential for Twitter to increase its engagement when and if better filters are applied – the type of filters that Facebook has built in from the start.
My best recommendation, even if you devote time to build your presence on Twitter, Facebook, LinkedIn and other sites, re-distribute your messages with a regular e-newsletter. A belt & suspenders approach to being heard.
Because You Can’t Spell Gold without G-O-D
The goddess Juno Moneto from whose name "mint" and "money" are derived
In our current frenzy for certainty in an uncertain world, gold is back in the news. Time for a little context on the current gold rush, starting with a tale from antiquity:
A man who wanted riches dutifully installed a money god in his home altar. He prayed to it for hours every day. His knees ached and his forehead bore a bruise from his repeated prostrations. He persisted in the fanatical belief that he was on the true path to prosperity despite the daily worsening of his situation. One day he flew into a rage with the god for all the time he’d wasted, picked up the little clay god and smashed it on the altar board, revealing a cache of gold coins.
The moral? I’ve heard a few including:
- We must slay our conceptions to achieve a breakthrough
- Praying for money brings us to rage and despair
- Money can be hidden in plain sight
- Go deep inside religion/a spiritual path to find true prosperity
The Wizard of Oz: an American tale of gold?
The last time I gave gold any thought was business school ten years ago when my micro-economics prof told us that some people considered The Wizard of Oz to be an allegorical story about America and the gold standard. BBC News summed up this story, reminding us that Judy Garland’s ruby slippers were a departure from the silver slippers of Baum’s original tale, which some believe represented the promise of a dual gold-silver standard.
Baum published the book in 1900, just after the US emerged from a period of deflation and depression. Prices had fallen by about 22% over the previous 16 years, causing huge debt.
Farmers were among those badly affected, and the Populist political party was set up to represent their interests and those of industrial labourers.
The US was then operating on the gold standard – a monetary system which valued the dollar according to the quantity of gold. The Populists wanted silver, along with gold, to be used for money. This would have increased the US money supply, raised price levels and reduced farmers’ debt burdens.
CHARACTER SYMBOLISM
Dorothy: Everyman American
Scarecrow: Farmer
Tin Woodman: Industrial worker
Lion: William Jennings Bryan, politician who backed silver cause
Wizard of Oz: US presidents of late 19th Century
Wicked Witch: A malign Nature, destroyed by the farmers’ most precious commodity, water. Or simply the American West
Winged Monkeys: Native Americans or Chinese railroad workers, exploited by West
Oz: An abbreviation of ‘ounce’ or, as Baum claimed, taken from the O-Z of a filing cabinet?
Emerald City: Greenback paper money, exposed as fraud
Munchkins: Ordinary citizens
A post-Depression history of gold prices
With a new gold rush in the news I wanted some historical context, which I plucked selectively from USAGold.
April 5, 1933: President Roosevelt, acting under the sweeping authority passed to him by Congress on March 9, invoked his authority to make it unlawful to own or hold gold coins, gold bullion, or gold certificates. The export of Gold for purposes of payment was also outlawed, except under license from the Treasury.
January 31, 1934: President Roosevelt fixed the weight of the Dollar at 15.715 grains of Gold “nine-tenths fine”. The Dollar was thereby devalued from $20.67 to one troy ounce of Gold to $35.00 to one troy ounce of Gold – or 40.94%. The Treasury, which had become the possessors of all the nation’s Gold on the previous day, saw the value of their Gold holdings increase by $US 2.81 Billion. The Treasury now “owned” the Gold, and no one else inside the U.S. was allowed to own any Gold except by the express permission of the Treasury.
Bretton Woods in July 1944: The new ratio of $US 35 was adopted and the U.S. Dollar was made the world’s Reserve Currency. The now international ratio of 35 U.S. Dollars to one troy ounce of Gold lasted until August 15, 1971.
January 1961: Shortly after President Kennedy was Inaugurated and newly-appointed Undersecretary of the Treasury Robert Roosa suggested that the U.S. and Europe should pool their Gold resources to prevent the private market price of Gold from exceeding the mandated rate of $US 35 per ounce. Acting on this suggestion, the Central Banks of the U.S., Britain, West Germany, France, Switzerland, Italy, Belgium, the Netherlands, and Luxembourg set up the “London Gold Pool” in early 1961.
The Pool came unstuck when the French, under Charles de Gaulle, reneged and began to send the Dollars earned by exporting to the U.S. back and demanding Gold rather than Treasury debt paper in return. Under the terms of the Bretton Woods Agreement signed in 1944, France was legally entitled to do this. The drain on U.S. Gold became acute, and the London Gold Pool folded in spring of 1968.
January 1975: After 42 years, it again became “legal” for individual Americans to own Gold. Anticipating the demand, the U.S. Treasury in particular and many other Central Banks sold large quantities of Gold, taking large paper profits in the process.
July 1979: Paul Volcker was appointed as Fed Chairman while gold continued to surge, hitting $400 in October. While this was happening, Mr Volcker was attending a conference in Belgrade. There the assessment was made that the global financial system was on the verge of collapse. When Mr Volcker returned to the U.S. from Belgrade, he took a momentous step. He announced that the Fed was swiching its policy from controlling interest rates to controlling the money supply.
I worked at a jewelry store in 1980 and learned how to spot-price our gold merchandise because it was a waste of time to affix labels to the inventory. U.S. interest rates skyrocketed. As they rose, the dollar first slowed it’s descent, then stopped falling, and then began to rise. Both the public and the investment community which had stampeded into Gold was lured back into paper by this huge rise in interest rates – and by the prospect of a higher U.S. Dollar. The threat of financial meltdown was averted, but at a cost. The U.S. Prime rate hit 20% in April 1980 and stayed there (with a brief dive in mid-1980) until the end of 1981. There was a rush out of Gold and back to Dollars.
Once interest rates began to come down, in early/mid 1982, the choice of where to put the Dollars faced investors once more. The initial solution was just as it had been in the 1970s. The Dow took off – rising from 776 to almost 1100 between mid August 1982 and late January 1983. Gold fell $105 in the last four trading days of February 1983. As it fell, the Dow broke above the 1100 point level for the first time. The long bull market in stocks, and the long stagnation of Gold, had begun.
Post-meltdown gold rush
Fast forward to 2010 with stories about home parties where a jeweler brings in scales to buy party goers’ jewelery. What gives? As investor Jim Gobetz said to me, “Gold is traditionally (at least in the age of fiat currencies) a hedge against inflation.” Problem is, in certain circles, the fear mongering is unavoidable, deafening and self-serving. Take Glenn Beck’s hucksterism, as exposed on The Daily Show:
| The Daily Show With Jon Stewart | Mon – Thurs 11p / 10c | |
| Beck – Not So Mellow Gold | ||
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If you prefer something more buttoned down, PBS’s NewsHour did a thorough job examining the current gold rush.
Gold as a sure thing
Gold investor Bob Chapman recently said “Gold and silver are the only real way to protect against financial calamity and offer possibilities for profit simultaneously.”
Really? If so, why are gold promoters letting the rest of us in on the security? Because they want to sell us something and make money on our insecurities. If gold really offered true protection, guys like Beck and Chapman would be hoarding — not promoting.
In The Secret Life of Money, I learned a lot about the history of money, including its many forms, from seashells and porpoise teeth to tobacco and beaver skins, to, of course, gold. Author Tad Crawford tells stories of how belief in the value of something transcends rationality, and sometimes, practicality.
For example, the Yap people of Micronesia used giant limestone discs for currency. These discs were so difficult to transport that eventually people left them in place with the communal understanding of who truly possessed the “wealth.” So isn’t gold similarly “accepted” as valuable despite its impracticalities as a currency? Do we really expect to carry bullion around? And do we want to carry a beaker of acid with us every day to test the purity of coins and bullion exchanged for goods and services? If we all believe gold is the only ultimate thing with intrinsic and everlasting value, then it is. It’s our belief that matters.
Crawford’s book discusses at great length the connection between money and the divine, from the ancients who minted coins with faces of divinities (see Juno Moneta at the top of the post) to the practice of stamping “In God We Trust” on American currencies since 1864. ”If the phrase means nothing, perhaps we should put ‘In the Federal Reserve We Trust’…In times of recession and depression, this slogan offers a way to understand why money fails us. Money, although a secular tool, requires our belief in the richness of a divine power.”
I think times like these serve the purpose of reminding us of how uncertain life really is. We middle-class Americans thought we’d somehow transcended subsistence issues like food and shelter, but the meltdown has driven record numbers of Americans onto food stamps and out of their homes. We thrash about for something certain and land on gold — the modern analog of a Micronesian Yap’s limestone.
Security is a head game — as JM Keynes reminded us, “In the long run, we’re all dead.”
Weighing in on the gold rush with some spiritual advice is Baha’u'llah, the Prophet-Founder of the Baha’i Faith:
Busy not thyself with this world, for with fire We test the gold, and with gold We test Our servants.
