Chuck’s Back!

August 17, 2021

* Chuck talks about the brazen takedown of Gold… 

* And Chuck has a special Treat for us today… a guest commentary! 

Good Day… And a Tom Terrific Tuesday to you!  Well, my friends, and dear readers, it has been quite an ordeal for me to get back into the saddle and write to you once again…  In 2010, I was near my demise, and afterward, my oncologist told me that I had defeated death… Well, I had to recall my inner strength, and call on the Good Lord once again, as I had to defeat death once again…  Seems that getting vaccinated for both Covid, and pneumonia wasn’t good enough for someone with a compromised immune system like mine… Let’s just say… I learned the hard way… But, here I am, still kicking, and screaming about stuff, just not as loud as I used to…  I’m still very weak, but getting stronger each day, and just not of the frame of mind to get in to markets right now…

So….  Besides the dastardly, overt, brazen, take down of Gold & Silver over a week ago, I rarely checked what was going on while in an isolation hospital room for over 6 days, during my “vacation”…  I found this take down to be something to behold… The price manipulators were basically saying, “We don’t have the metals to deliver on these short contracts, so we’re going to drive the price down, and there’s nothing you can do about it, so that we can cover the short contracts at a profit, and move on, nenernernerner”….

Sunday night I arrived home to my little house by the river, and saw an email that had the TV segment from 1971 (50 years ago) when then President Richard Nixon interrupted Bonanza to announce that he was removing the Gold backing from the dollar… As I’ve always reminded you, this removal was supposed to be only “temporary”…   What the removal did serve was the ability of the U.S. to run up debts to today’s near $30 Trillion…   The Gold backing was like an anchor, if you will, that kept mindless deficit spending in check, and kept inflation low, and for the most part, made the dollar “worthy”….    But all that was taken away, by Nixon….  Of course he just happened to be the man in charge that had to deal with all of LBJ’s “great society” and guns and butter deficits on Vietnam… 

Nixon could have NOT removed the Gold backing, and instead announced debt reduction plans… But he took the easier of the two roads, that has led us to near ruins, fiscally…

And that’s all I have to say about that!

The Currencies and metals have done their best to recover from the brazen take down of a week ago, and so it was that while Chuck was away, the currencies and metals did not rally, as you usually do in his absence.    I’ll be getting back into the normal stuff I talk about some time soon, but for now, I’m still just happy to be here, and have a fog in my brain…   So… I did what I always used to do when ever I had a problem with writing… I asked my good friend, and former boss, Frank Trotter to lend a hand, and Frank being the friend he is, graciously accepted…   And so the rest of the Pfennig today is a piece that Frank wrote for me for this letter today…  I’m as excited as a young school girl that he accepted my invitation, and with no further ado… here’s Frank!

Edwards, Colorado – Heees baaack – well, not so fast.  Like early August football practice, the JV and C teams show up first and this year is no exception.  Chuck is sitting it out for a couple more days – and he can explain that later but here’s a big hint – suffice to say without a vaccine he probably would not be stepping back in.  So, for today you are stuck with me.  My playlist is rolling “I woke up in a car” by Something Corporate – look it up and turn it up loud.

I’m not going to focus on the current goings on in congress or the economy right now.  Chuck is better at that anyway.  All I’ll say is I don’t recognize the world today and I don’t get the math and arithmetic that either party has used for the past 5-years.  Nuff of that.

A few months back Chuck mentioned toll roads in the midst of one of his musings in the Daily Pfennig.  The next day I got into the car to roll downhill 7,000 feet on one of my Colorado to Saint Louis commutes.  We make the 14-hour drive one way or the other 4-8 times a year and between podcasts and music there are long stretches where I just need to keep it on the road and there is plenty of time and space to think.

It’s a common topic in my libertarian crowd to say that all roads should be toll roads – with construction / maintenance / improvements paid for exclusively by users.  It is without question a wonderful principal.  Mostly East Coast and some plains state residents are familiar with a version of this, although as usual once a good idea is proposed, by the time it’s implemented it’s far different than the principal.  As I passed through the first 8-miles of Interstate Highway opened in 1956 in Kansas I decided to look a little further into how this could happen on a much larger scale than we have today.

First up, and many of you can probably relate to this, our little subdivision consists of 8 homes.  We maintain the road and while there is no toll and we don’t restrict access it’s definitely paid for by the homeowners.  Even within that small sample size and level of complexity it’s often hard to reach decisions.  Should we do an overlay this year or just seal it?  Lot 5’s lawn company always parks just off the road breaking down the side – should they be charged more?  Moving up first to a city, then a county, then state and national levels increases both the complexity and rent seeking behavior massively.

Almost exactly 100 years ago – in 1919 – a group of military vehicles including what was then a massive tow truck left Washington DC with a young Capt. Dwight D Eisenhauer on board to drive across the USA.  Recall at that time very few cars existed, around 7-million, and most of those were in use in rural areas and by commercial operators.  The caravan dawdled at times to promote the auto and oil industry and show off the military after World War I, but still it took 62-days to drive across the USA due to extremely poor road conditions and mechanical failures of equipment.  In contrast in June 2014 and individual biked across the USA in just over 14-days.

Combine Eisenhauer’s experience in 1919 with his observations about the autobahn in WWII Germany and we get the US Interstate system – shockingly built entirely during my lifetime with a little room to spare.  Eisenhauer’s plan originally envisioned toll roads, but the final legislation did not allow that to occur.  The final plan promoted by the auto and oil industry, was to provide free (unless one counts taxes of course) driving access to the county, a goal that has certainly been accomplished.  All of us do benefit from this system, and I do appreciate how easy it is to get around the country.  In 2019 dollars it is claimed that the total cost to build the Interstate System was about $550-billion, although it is likely much higher if fully costed.

So how do we pay for this today and what would a toll road system look like? 

All Interstates are currently owned by the state through which they pass, although they are required to meet federal standards.  It turns out that around 70% of the construction and maintenance of the system is paid for by user fees at the national, state, and local level.  Mostly these are fuel taxes – at the Federal level these are currently $0.184 / gallon for gas and $0.244 / gallon for diesel, with state fuel taxes running on average $0.2915 with a high of $0.586 in Pennsylvania and a low of $0.0895 in Alaska (of course).  The rest come from general funds or other special taxes and bond issues (which eventually need taxes to be paid off).

So, we kind-of sort-of have a user fee system in place already without many toll’s involved.  No doubt as with any government sponsored program there are murky corners where money goes astray and is wasted – as a micro example I keep looking for the manufacturer of the mileage signs that now are spaced at 0.1 mile to invest in the crony political scam – but I digress.

Flipping the whole system to tolls right now seems far from the political objective of either party.  After all it’s their job, both sides, to collect campaign contributions and speaking engagements not make things right.  And of course, the average person in the average car doesn’t realize that they just paid around fifty-cents for that last 30-miles at the gas pump versus a stop at the toll booth.  Somewhat hidden fees are better PR.

One of the most intriguing developments recently is value priced toll express lanes that vary the charge with traffic volume.  Complaints that those with less financial resources can’t afford it are real, but they seem to be the right answer for alleviating traffic jams in dense areas.  Over time this could be expanded to heavily used parts of the Interstate System leaving the great plains to remain fuel funded.

Ultimately the complete toll solution would require selling the Interstates as-is to private operators.  This could be done with a list of standard requirements or allow for the operator to compete for business based on quality and convenience of the road.  Both approaches are fraught with potential problems but since they aren’t happening soon, we can take a rest on that evaluation.

I’ll sign off today somewhat more relaxed that user-fees do mostly pay for our Interstate System, but routed through a labyrinth of national, state, and local governments.  Out here in our neighborhood where I-70 is closed due to mudslides after last year’s big fire in Glenwood Canyon, there’s a big debate about improving and paving some of the back country roads as workarounds.  Like our neighborhood association there is plenty of controversy to come.  Flip on “Holiday” from the “Bullet in a Bible Album” by Green Day as you pen your comments, keep it up loud.

Onward and upward,

Frank Trotter


Chuck again…  I’ll leave you today with the market prices roundup, some data, and a couple of other notes that have crossed my mind this morning…   

Market Prices 8/17/2021: American Style: A$ .7290, kiwi .6927,  C$ .7928, euro 1.1757, sterling 1.3777, Swiss $1.0963, European Style: rand 14.8186, krone 8.8341, SEK 8.6676, forint 298.58,  zloty 3.8785,  koruna 21. 6545, RUB 73.30, yen 109.47, sing 1.3597, HKD 7.7923, INR 74.20, China 6.4746, peso 19.93, BRL 5.2511, BBDXY 1,148.40, Dollar Index  92.79,  Oil $ 66.99, 10-year 1.24%, Silver $23.86, Platinum $1,026.00, Palladium $2,654.00, Copper $4.19, and Gold… $1,786.40

And the data cupboard yesterday had Retail Sales in July in negative territory at -.3%….   July’s  Jobs numbers blew the forecasts out of the water, but the Bureau of Labor Statistic (BLS) couldn’t keep their hands out of the cookie jar, adding 243,000 jobs out of thin air to the total…  But even taking the 243,000 jobs away from the 943,000 jobs reported still left 700,0000 jobs created in July, and that took the stuffing out of those calling for more stimmy checks…     The U.S. economy is reflating folks…  and that reflating will bring about higher inflation… mark my words on that one!

That’s it for today… And tomorrow, as I have to show up at my PCP early tomorrow morning… But I’ll be back on Thursday, and hopefully, the brain fog has lifted and I don’t have to call on anyone else to help me get through the letter…    My little d, Delaney Grace turned 14 while we were on vacation, and she sang the National Anthem at Roger Dean Stadium before a Palm Beach Redbirds baseball game… I swell up with enormous pride when she sings the National Anthem…   Darling daughter, Dawn, will be celebrating her birthday this weekend.  And in my time in the solation room, I forgot that one of my best friends in the world, celebrated his birthday too… So, happy belated birthday Mike Karvas!  The Allman Brothers take us to the finish line today with their song: Dreams….   I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler