Here’s some great news for all of our pot-smoking Daily Reckoning readers! A recently-concluded study by researchers at the University of Alabama at Birmingham determined that one marijuana joint per week for 49 years does no harm to lungs!
But even though five decades of pot-smoking causes no meaningful lung damage; it can cause plenty of damage to one’s potato chip budget. What’s more, a large percentage of the folks participating in this study could no longer recall what a lung was. “It’s that marijuana-inhaling thing, right?” one participant responded when pressed to describe a lung’s purpose.
The important take-away here is that 50 years of cannabis inhalation is not necessarily healthy, just because a five-decade pothead is still able to draw smoke through a bong. For the sake of metaphor, we’ll call 50 years of pot-smoking a “bad habit.” Like most long-term bad habits, the consequences unfold unevenly and sporadically. And often the consequences unfold so slowly that you barely notice them at all.
The US Treasury has been printing paper dollars, backed by nothing but paper and ink, for more than 40 years. That’s a bad habit. And yet, the greenback is still with us and it is still the reserve currency. So it looks like this particular bad habit has produced no harm. And that is absolutely true, provided you don’t mind paying $4.33 for the same Big Mac that cost 50 cents in 1971.
That’s right, the price of a Big Mac has soared 866% since the year President Nixon severed the dollar’s convertibility into gold. Your California editor ate a Big Mac yesterday and it was very good, but not 866% better than the Big Mac he used to eat after his Little League games in 1971.
“We live in a technological golden age,” asserts Jim Grant, editor of Grant’s Interest Rate Observer, “but in a monetary and fiscal Dark Age…Science and technology may hurtle forward, but money and banking race backward.”
The proof of Grant’s assertion: A 1971-vintage dollar has lost an astonishing 88.5% of its value. That’s a bad habit. Revoking Constitutional rights is also a bad habit. So is fanning class warfare. So is militarizing local police departments. So is expanding the role of government in the private sector. So is manipulating interest rates in the name of “monetary policy.”
Incredibly, all of these bad habits are unfolding at the same time. Right now. Right before our eyes. And yet, our national “lung function” feels entirely normal. So does our eyesight and our hearing and every other vital sign. We feel completely healthy…even as we are becoming terminally ill.
But these bad habits — these incremental changes for the worse — produce their bad consequences so slowly that almost no one will notice them…until it is too late to prevent them. No one knows, of course, the exact date that “too late” might arrive. But according to the research of Peter Turchin, the US is drawing near to an ominous timeframe.
Specifically, Turchin says the United States is approaching a period of violent upheaval. He bases his prediction on a field of study called, “cliodynamics,” which identifies significant behavioral patterns in a nation’s history. US behavior, according to Turchin, operates on a 50-year pattern.
Turchin did not pull the 50-year number out of the air. He compiled copious historical data about major violent incidents in US history between 1780 and 2010 and concluded that a cycle of violence repeats itself every 50 years in America.
“Circa 1870, the North fought the South in the Civil War,” livescience.com explains. “Half a century later, around 1920, worker unrest, racial tensions and anti-Communist sentiment caused another nationwide upsurge of violence. Then, 50 years later, the Vietnam War and Civil Rights Movement triggered a third peak in violent political, social and racial conflict.
“Why 50-year cycles?” livescience.com asks. “After a period of sustained violence, [Turchin explains], citizens begin to ‘yearn for the return of stability and an end to fighting.’…The prevailing social mood swings toward stifling the violence at all costs, and those who directly experienced the civil violence maintain the peace for about a human generation — 20 or 30 years. But the stability doesn’t last. Eventually, ‘the conflict-scarred generation dies off or retires, and a new cohort arises.’…As a result, periods of intense conflict tend to recur with a period of roughly two generations (40-60 years).”
“My model suggests,” says Turchin, “that the next [peak in violence] will be worse than the one in 1970 because demographic variables such as wages, standards of living and a number of measures of intra-elite confrontation are all much worse this time…After the last eight years or so, notice how the discourse in our political class has become fragmented. It’s really unprecedented for the last 100 years. So basically by all measures, there are social pressures for instability that are much worse than 50 years ago.”
But there’s a silver lining to all this: After the next worse-then-ever peak in civil upheaval, we are supposed to get a 50-year break until the next one. For some folks, that’ll mean 50 years of hassle-free pot-smoking.
Eric Fryfor The Daily Reckoning
Eric J. Fry, Agora Financial's Editorial Director, has been a specialist in international equities for nearly two decades. He was a professional portfolio manager for more than 10 years, specializing in international investment strategies and short-selling. Following his successes in professional money management, Mr. Fry joined the Wall Street-based publishing operations of James Grant, editor of the prestigious Grant's Interest Rate Observer. Working alongside Grant, Mr. Fry produced Grant's International and Apogee Research, institutional research products dedicated to international investment opportunities and short selling.
Mr. Fry subsequently joined Agora Inc., as Editorial Director. In this role, Mr. Fry supervises the editorial and research processes of numerous investment letters and services. Mr. Fry also publishes investment insights and commentary under his own byline as Editor of The Daily Reckoning. Mr. Fry authored the first comprehensive guide to investing internationally with American Depository Receipts. His views and investment insights have appeared in numerous publications including Time, Barron's, Wall Street Journal, International Herald Tribune, Business Week, USA Today, Los Angeles Times and Money.
Sixty year olds burning a doob and shooting the
tube; in Spandex no doubt. That’s quite a visual.
Can you picture boomers after a pot fest eating
Twinkies in a Smart Car while cruising the strip?
“And that is absolutely true, provided you don’t mind paying $4.33 for the same Big Mac that cost 50 cents in 1971.”
… and provided you work the same number of hours in 2012 as you did in 1971 to pay for that big mac. but I’m guessing we now work few hours for that big mac than we did then ….
“The US Treasury has been printing paper dollars, backed by nothing but paper and ink, for more than 40 years.”
yeah, but other nations inhaled more than we did.
Clear as mud on the “cycle” theory. The civil war wasn’t fought in 1870. Or were they refering to the Franco/Prussian War?? Things will eventually blow-up, no arguement there. But suggesting it follows some sort of biorthym is nothing short of laughable.
The actual increase in price of the Big Mac is much more. The quality of the ingrediants have been reduced and the volume of meat as well. Therefore, the actual price change since 1971 is more like 1500%.
See the article entitled “a Matter of Trust – Part Two” on today’s financial sense.com.
There is a chart from the Fed that shows this:
“The GDP of the U.S. was $1.1 trillion in 1971, with consumer spending only accounting for 62% and capital investment accounting for 16%. Today, GDP is $15.6 trillion with consumer spending accounting for 71% and capital investment only 12%. Trade surpluses of the early 1970s are now $600 billion annual deficits. Total debt to GDP has surged from 155% in 1971 to 350% today. The illusion of prosperity has been built on a mountain of debt with an avalanche imminent.”
Not only that, but Wall Street and various international banks during the same period managed to create over a quadrillion dollars in unregulated derivatives, driven not by government interference but the complete opposite. Given that, why should one still wonder about the fact that it is not governments but private corporations that control the world?
This great documentary illustrates this very issue is a very tangible way…
“End of the Road How Money Became Worthless”
Paper Money vs. Gold Money http://pair.offshore.ai/38yearcycle/
Watch Film Online for free… http://100thmonkeyfilms.com/endoftheroad/
Make Way for the Gold Price "Zero Hour"
After a six month rally, the Nipponese index dropped 7.3%. Is it a turning point or a small correction?
After rising 3% out of the gate after Thursday’s bloodbath, the Japanese index embarked on a wild ride.
The American Association of Petroleum Geologists was nice enough to schedule its 2013 annual convention at my hometown of Pittsburgh…
Given a choice, Bernanke will likely strangle the currency (your money)... in favor of “strengthening” the economy.
If the Maker Movement Is So Great, Where’s Our Flying Car?
IRS scandals and the dangers of dissenting opinion in America.