Quantitative Easing, Inflation and Gold

Posted by PITHOCRATES - September 23rd, 2013

Economics 101

The FOMC makes Money out of Nothing to Buy the Bonds for their Quantitative Easing

The Federal Open Market Committee (FOMC) decided to keep their quantitative easing.  Their monthly $85 billion purchase of Treasury Securities and mortgage bonds.  To stimulate the economy.  Which hasn’t stimulated the economy.  But it has greatly expanded the money supply.

When people buy Treasury Securities and mortgage bonds they have to first work and save up the money.  Then when they buy these investments they no longer have that money.  It’s how we buy things.  We exchange money for things.  So we can have the money or the things.  But never both.

Unless you’re the federal government.  That has the power to print money.  When they make these monthly $85 million purchases of Treasury Securities and mortgage bonds they pay for them with an electronic transfer of money.  They add money to the account of the holders of the Treasury Securities and mortgage bonds.  And that’s it.  They subtract no money from their ledgers.  Because they ‘printed’ that money.  Just made it out of nothing.  Literally.

The Danger of a highly Inflated and Devalued Currency is that it loses its Purchasing Power and People lose Faith in It

The Secret Service protects our presidents.  Ironically, the president that created the Secret Service was assassinated.  Abraham Lincoln.  Who created it not to protect presidents.  But to combat a great threat to the country.  Counterfeiting.  The scourge of paper money.

During the American Revolutionary War the Continental Congress had no hard money (i.e., precious metals) to pay the Continental Army.  So they resorted to printing paper money.  Igniting massive inflation.  The more money they printed the greater the inflation.  And the greater they devalued the dollar.  Requiring more and more of them to buy what they once did.  Until no one would accept them in payment anymore.  Forcing the army to take what they needed from the people.  Leaving behind IOUs for the Congress to honor.  Once they figured out how to do that.

This is the danger of a highly inflated and devalued currency.  It loses its purchasing power.  Until it gets so weak that the people lose faith in it.  And refuse to accept it anymore.  Returning to the barter system instead.  Trading things that hold their value for other valuable things.  But the barter system has high search costs.  It takes a lot of time for people to find each other that can trade with each other.  Greatly reducing economic activity.  And crashing a nation’s economy.  Which is what Abraham Lincoln wanted to prevent.  And why a lot of America’s enemies have tried to flood the American economy with counterfeit bills.

The Hard-Money Prices remained Relatively Constant during the Inflationary Periods of the Revolutionary War

With the FOMC’s decision to continue their quantitative easing the stock market soared.  As investors were instead expecting a ‘tapering’.  A reduction in their purchases of Treasury Securities and mortgage bonds.  And if the government stopped creating this money out of nothing to buy bonds from these investors these investors could not continue to buy and sell in the market like they were doing.  Pocketing handsome profits in the process.  Which is why they were so happy to hear the FOMC would continue their currency devaluation to continue buying like they had been.

But this continued currency devaluation has a down side.  For it can’t go on forever.  There will come a point when it ignites inflation.  Causing prices to soar.  Requiring more and more dollars to buy what they once bought before.  So with this possibility on the horizon and with continued currency devaluation some people were taking steps to protect their assets.  Especially their cash.  For there is nothing worse than having a lot of cash when it’s losing its purchasing power at an alarming rate.  So they convert that cash into something that holds it value better.  Such as precious metals.  Which is why when the dollar tanked (after the FOMC decision) the price of gold surged.

So what’s the difference between gold and paper money?  Well, the government can’t print gold.  They can’t create gold out of nothing and add it to someone’s account.  So they can’t devalue gold.  And because of this gold will hold its value during inflationary periods.  Which was why during the Revolutionary War people sold things with two prices.  One was in paper Continental Dollars.  With these prices increasing sometimes daily.  And one in hard money (i.e., precious metals).  The hard money prices remained relatively constant.  Even during the inflationary periods of the Revolutionary War.

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The British have a New Heir to the Throne and we in America say God Save the King

Posted by PITHOCRATES - July 27th, 2013

Week in Review

Before the Americans declared their independence from Great Britain they tried to reconcile their differences with Great Britain.  For many believed Great Britain had the greatest form of government in the world.  A constitutional monarchy.  The form of government that vaulted the British Empire into a superpower.  And gave her people more rights and liberties than any nation in the world.

The Americans, rather, the British Americans, were proud to be British.  And would have remained proud members of the British Crown had it not been for the immense cost of the Seven Years’ War.  That the Parliament tried to pay for by taxing the American colonists.  For all the British Crown did to protect the Americans from the French and their Indian allies.  Not asking for much, really.  But the British taxpayers in Great Britain had representation in Parliament.  And had a say in that taxation.  But the British living in North America were not given that British right.  Which was the source of all the friction between the British Americans and Great Britain.  And what brought them to war.

Some of the fighting in the American Revolutionary War was brutal.  But the worst of it was between Patriot and Loyalist.  American against American.  In the civil war that raged in the South.  Which is why the United States and Great Britain resumed relations following the war.  There had plenty of issues but the post-war relationship was far better than any other nation that fought a civil war.  Why?  Because there is a Special Relationship between the British and the Americans.  We come from the same stock.  We share the same values.  And traditions.  The countries around the world that were once part of the British Empire are some of the most advanced nations in the world.  And their people have some of the greatest rights and liberties in the world today.  All because of our British past.

We may never bow to British Royalty again.  Because of our history.  But we can embrace the Royal Family.  Just as the British do.  For it is their tradition.  And a deep part of their glorious history.  As it is ours.  So we welcome the future king into the world.  We wish the best for him and the Royal Family.  And the British people.  Joining them in spirit when they shout God Save the King (see America’s embrace of the Royal Family demonstrates the enduring strength of the Special Relationship by Nile Gardiner posted 7/23/2013 on The Telegraph).

Despite the lukewarm and often insulting approach of the Obama administration towards Britain over the past four and a half years, the Special Relationship between the United States and Great Britain remains extraordinarily strong in terms of defence, intelligence, cultural and trade ties, and is uniquely important to the American people. No other nation in the world holds a place in American hearts as special as Great Britain. And Americans hold an overwhelmingly positive view of the British Royal Family. The most recent poll conducted in the United States on the British Monarchy – a CBS/New York Times poll back in April 2011 – showed that 71 percent of Americans believe the Royal family “is a good thing” for the British people, with only 15 percent against. In the same poll, the Queen held a 61 percent approval rating, at the time about 15 points higher than that of the US president.

There are defeatists who argue that Britain hardly matters anymore to the world’s superpower, and that the UK can only maintain influence in Washington through the lens of the EU. The huge US interest today in events thousands of miles away in London, and the tremendous support for the Royal Family suggests that the Special Relationship is far from dead. With good reason Americans admire the British for their uncompromising defence of tradition, their warrior spirit, and their willingness to uphold national sovereignty.

Britain matters.  And if the Eurozone collapsed as well as the EU they will matter more. Thanks to Margaret Thatcher.  Who reversed their slide into Socialism.  Unlike other European nations.  And of late, the United States.  Sadly.

President Obama insults our greatest friend and ally because Britain bucks the socializing of Europe.  Britain is often the lone rational voice in the European Parliament.  Currently that voice belongs to Daniel Hannan.  Who knows the history of Britain.  The United States.  And our Special Relationship.  Which is conservative.  Not liberal.  Which is why the Special Relationship is anathema to a liberal like President Obama.

God save the future king.  The queen.  The United States of America.  And our Special Relationship.

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FT172: “Damn the truth, promises and the Constitution,” said the politician. “I’m trying to get reelected.” —Old Pithy

Posted by PITHOCRATES - May 31st, 2013

Fundamental Truth

The People ratified the Constitution only because George Washington would be the First President

George Washington did not want to be president.  After winning the American Revolutionary War his place in history was set.  If the first government following the Constitutional Convention failed he didn’t want history to remember him for that.  Also, Washington was an old man.  Most Washington men were already dead at his age.  Something he was very conscious of.  And he wanted to live out his remaining days, however few he had, at Mount Vernon.  With Martha.  But America’s Cincinnatus would, reluctantly, answer the call of duty again.

The new Constitution was not very popular.  The old patriots of 1776 hated it.  With a passion.  While Washington, Alexander Hamilton and others who served in the Continental Army were generally for it.  Because they saw how the weak Continental Congress had almost lost the war.  Starving the Continental Army of the supplies they needed.  Unable even to provide it with shoes and clothing during the long cold winters at Valley Forge and Morristown.  And then there was the inflation.  Worthless Continental paper dollars that forced the Army to take what they needed to survive.  Giving the people they took from IOUs for the Continental Congress to honor later.

With the British defeated the Americans lost the common enemy that held the states together.  And they were soon back to looking after their own interests.  Charging tariffs to other states.  Even sending militias to fight over disputed land.  The nation was falling apart before it even became a nation.  The Philadelphia Convention addressed these problems.  And over a long, hot, humid and horsefly invested convention they wrote a new Constitution.  Few loved it.  But understood that it was probably the best they would ever get.  Ratifying it was another brutal battle.  And all throughout this process people reluctantly got on board.  Basically because of one thing.  The first president would be someone that all the people could trust with such great powers.  The man who gave up power when he could have been king.  George Washington.  So Cincinnatus laid down his plow once more.  And went to serve his nation.  Again.

The most Important Precedent Washington set was not Exceeding the Limits of the Constitution

This is how it used to be.  When our politicians were men of the enlightenment.  Disinterested men who went out of their way NOT to profit from the offices they held.  Men who would rather have been back home.  But reluctantly served.  Because the nation needed the best leaders during that formidable time.  That’s why Washington served a second term.  Not because he wanted to.  But if he didn’t Thomas Jefferson and Alexander Hamilton would have paralyzed the government with their constant fighting and seething hatred of each other.  So Washington stayed on.  Father to these children that couldn’t get along.  And father to a nation.

Washington was never happier than when he left office.  This man who could have been king.  Sacrificing all of his wants and desires.  And putting the nation first.  This old man that was cheating death.  Living beyond his years.  Who was used to giving orders in the army and having subordinates dutifully following them.  He hated the political process.  The deal making.  The special interests.  Those things modern politicians live for.  Because it is the pathway to wealth and power.  Which is why people serve today.  Who do not understand the meaning of selfless disinterest.  For they’re in it for number one.  And when they leave office they want to have more wealth than they know what to do with it.

Whereas Washington kept true to the Constitution.  And didn’t make arguments about it being a living document.  Or questioned the intent of the Founding Fathers.  For he was one of them.  He was there in Philadelphia in 1787.  He sat in the chair with that sun on it.  The one Benjamin Franklin studied for so long while sitting in that stuffy hall.  Wondering if the sun was rising.  Or setting.  After they signed the Constitution Franklin was certain the sun was rising for the new nation.  A nation of laws.  Where no man was above the law.  And the supreme law of the land was there in the Constitution.  Washington was the first president.  Setting the precedent for all that would follow.  And the most important precedent was not exceeding the limits of the Constitution.  For he knew a strong central government was necessary for the nation to have any hopes of surviving.  But he feared that once anyone exceeded the limits of the Constitution the whole experiment in self-government would come crashing down.

Life is so Good in an Aristocracy that Politicians will do Anything it takes to Win Reelection

What Thomas Jefferson feared most was consolidation.  Fears of a strong central government turning independent states into federal districts of the new government.  With growing powers to administer these lands from afar.  Turning the people living on these lands once again into subjects of a distant ruling power.  Who are there to serve.  To be obedient.  And revere this distant power.  Giving the duly elected president king-like powers.  Who would further consolidate his power.  This was Jefferson’s fear.  A fear Alexander Hamilton did not share.  Because he assumed all men in the government would be disinterested men of the enlightenment.  Like the Founding Fathers were.  But Jefferson knew you could not trust men to refrain from using power given to them.  So it was best not to give them that power in the first place.

Today you can see all of Jefferson’s fears come to pass.  A federal government larger and more powerful than even Alexander Hamilton could have imagined.  And a new fourth branch of government.  The IRS.  Powerful.  And fearsome.  Which appears to be helping the current administration to suppress the political opposition.  By harassing anyone espousing Jeffersonian principles.  Limited government.  States’ rights.  Constitutional limits.  Etc.  Which are also Tea Party principles.  That set of principles that launched a great grassroots movement that helped the Republicans win back the House of Representatives in 2010.  Something the Democrats were very conscious of.  And have since pilloried the Tea Party with every invective under the sun.  To delegitimize the Tea Party.  To prevent another 2010 from happening again.

President Obama is the most liberal president to ever occupy the White House.  And he won reelection.  Which isn’t easy for a liberal to do on a national stage.  Because only about 21% of the people call themselves liberal.  While 35% call themselves moderate.  And 40% call themselves conservative (see Conservatives Remain the Largest Ideological Group in U.S. posted 1/12/2012 on Gallup).  So liberals are in the minority.  Yet they hold majority power.  Which begs the question.  How do they win elections when the majority opposes their ideology?   Well, you don’t do it by acting like George Washington.  You know, with integrity.  But, instead, with rascality.  You don’t exactly tell the truth.  You make a lot of promises.  Even if you have no intention of keeping them.  And you use the awesome power of your office to attack your political enemies.  For it’s a different mindset today.  Whereas the Founding Fathers were trying to destroy an aristocracy today’s politicians are trying to build and maintain one.   And life is so good in an aristocracy that once you get in you never want to leave.  Which is why politicians will do anything it takes to win reelection.  Anything.  And if they were honest you’d hear them say so.  “Damn the truth, promises and the Constitution.  I’m trying to get reelected.”  But they’re not honest.  So you will never hear them say this.  You’ll just have to see it in their deeds.  And how unlike the Founding Fathers they are.

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From Journalism to Propaganda

Posted by PITHOCRATES - May 9th, 2013

Politics 101

Whenever an Unscrupulous Politician would look over His or Her Shoulder a Journalist would be There

It took 8 years to formally end the American Revolutionary War.  America was finally free from the arbitrary rule of a foreign government in a distant land.  The states could now govern themselves.  Without that distant government trying to tax them.  Regulate them.  Or oppress them.  Which is why there was fierce opposition to the new federal government.  Only 4 years had passed since the end of the war.  Memories were fresh.  They did not want to trade one distant oppressor for another.  It took a Bill of Rights to finally ratify the new Constitution.  And the very first amendment to the U.S. Constitution stated:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

In the First Amendment is the right of a free press.  Allowing our news media to report everything that happens without fear of governmental retribution.  Even if it pisses off those in government.  Especially if it pisses off those in government.  Just to let them know someone is watching them.  To keep them honest.  Transparent.  To let the people know the second they try to exceed the bounds of their constitutional authority.

It’s a noble profession.  Being the guardian of the people.  To speak truth to power.  To dare say that the king isn’t wearing any clothes.  Standing up to the powerful to protect the people.  Just like the Founding Fathers did.  When they stood up to the world’s greatest superpower.  The British Empire.  And so would the free press.  Who would not be intimidated by any government.  No.  They would get into their face.  And be on them like ugly on a pig.  For whenever an unscrupulous politician would look over his or her shoulder a journalist would be there.  Ready to report to the people all of their unscrupulous deeds.

The Mainstream Media wrongly blamed Radical Conservatism for Boston, Newtown, Aurora and Tucson

And how is that brave and noble profession doing today?  Don Henley wrote a song about it in 1982.  Dirty Laundry.  The title says a lot about how Henley felt about television journalism.

I make my living off the evening news
Just give me something-something I can use
People love it when you lose,
They love dirty laundry

Well, I coulda been an actor, but I wound up here
I just have to look good, I don’t have to be clear
Come and whisper in my ear
Give us dirty laundry

And little has changed since 1982.  Television news loves it when people lose.  And for these people reading the teleprompters on air nothing is better than when bad things happen to good people.

We got the bubble-headed-bleach-blonde who
Comes on at five
She can tell you ’bout the plane crash with a gleam
In her eye
It’s interesting when people die-
Give us dirty laundry

Unless those dead people are in Benghazi.  Or their deaths can be traced to radical Islam.  When they die for some reason it’s not interesting.   When those bombs went off at the Boston Marathon the news media was all over the place.  If you turned on a television there was someone standing somewhere in Boston telling us a lot of nothing.  Because no one learned anything yet to tell.  But they were offering up possible motives.  It was in Boston.  It was Patriots’ Day.  Close to the anniversary of the fiery end of the siege at Waco.  Close to the anniversary of the Oklahoma City bombing.  And it was tax day.  April 15.  It could mean only one thing.  The bomber had to be a radical conservative.  Just like they blamed the Newtown, Aurora and Tucson shootings on before they knew any of the facts.  But radical conservatives committed none of these crimes.

When they found out the bombers were a couple of radical Islamists, though, things changed.  Especially when we learned one of them had traveled to Dagestan, a hotbed of radical Islam.  Stayed there for 6 months.  The Russians had even warned us about this guy becoming radicalized.  Yet the FBI let him back into the country.  Didn’t pursue him.  And didn’t even tell the Boston police about him.  So they might take a closer look at him or his Islamist anti-American YouTube playlist before a big public event like the Boston Marathon.  Now the news hardly mentions these new developments.  For once they ruled out radical conservatives as the culprits they lost that gleam in their eye.

Today the Mainstream Media is nothing more than the Propaganda Arm of a Distant Powerful Government

Not only has television news degenerated into cheap tabloid journalism it also has become partisan.  Instead of speaking truth to power they have become an arm of the powerful.  President Obama blamed our troubles with radical Islam on George W. Bush.  Because he was mean.  So President Obama was going to be nice.  He changed the language to be kinder to Islam.  So as not to offend our Muslim friends.  When Nidal Hasan shouted “Allahu Akbar” like other radical Islamists do before they start killing innocent people President Obama called Hasan’s killing of 13 and wounding of 30 workplace violence.  For the president refused to blame anything on radical Islam.  In fact, after he killed Osama bin Laden he said the War on Terror was over.  Al Qaeda was on ropes.  And there were no more radical Islamists trying to kill Americans.  This was the campaign message of the 2012 election.  Osama bin Laden is dead.  And General Motors is alive.  Which the dutiful media reported without hesitation.  Even though radical Islam had just killed 4 in Benghazi.

So in the president’s eyes there is no radical Islam.  This is why the attack in Benghazi was a spontaneous uprising.  By people who walk around with RPGs in their back pockets.  Who were incited by a YouTube video.  Not an al Qaeda attack.  For the president won the War on Terror.  So it couldn’t be al Qaeda.  No.  The Muslim world now loves us.  Because George W. Bush is no longer president.  But since President Obama has been in office radical Islamists have been trying to kill us.  There was the underwear bomber.  The Times Square bomber.  And the Christmas tree lighting bomber.  All plots that failed.  Then there was Benghazi.  And, of course, the Boston Marathon bombings.  Proving that radical Islam is alive.  And that they still hate Americans.  No matter how much nicer President Obama is than President Bush.  And now three whistleblowers are testifying before Congress about Benghazi.  People who were there.  And they contradict what the Obama administration has said.  But other than Fox News no one is reporting this.  Instead, they report more sensational tabloid news.  While attacking and dismissing as partisan anyone that pursues the Benghazi story.

Dirty little secrets
Dirty little lies
We got our dirty little fingers in everybody’s pie
We love to cut you down to size
We love dirty laundry

We can do “The Innuendo”
We can dance and sing
When it’s said and done we haven’t told you a thing
We all know that crap is king
Give us dirty laundry!

Journalism was once an honored profession.  But journalists today have sold out and gone over to the dark side.  Instead of standing up to power they protect those in power.  Case in point Benghazi.  President Obama, Secretary Clinton and Secretary Rice blamed Benghazi on a spontaneous uprising in response to a YouTube video.  That according to the people there had nothing to do with the terrorist assault on the American mission.  So the Obama administration lied.  Few believed the lie back in September.  No one believes it now.  Yet the media doesn’t investigate why the administration lied.  Instead, they attack those who do and call them partisan.  Protecting the government.  Unwilling to report to the people a single unscrupulous deed government does.  Unless the unscrupulous one is a Republican.

The mainstream media stopped being objective journalists long ago.  And today is nothing more than the propaganda arm of a powerful government in a distant land.  That stifles the free press.  By cutting anyone down to size who dares to criticize the federal government.  Entertaining us instead of informing us.  And here we are, 8 months after Benghazi and they still haven’t told us a thing about that terrorist attack that killed 4 Americans.

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Cane Sugar, Crystallized Sugar, Sugar Trade, West Indies, Wealth and War

Posted by PITHOCRATES - May 7th, 2013

History 101

As Muslim displaced Christians from the Lands of the Roman Empire Sugar moved West

There is a war on sugar.  It’s making us fat.  And it’s making us sick.  Because it tastes so damn good.  We crave it.  And always have.  Since the first days we chewed on sugarcane.  Sucking out the juice.  Which was where that sweet delight was.  It was so good that the people in New Guinea (just north of Australia) learned how to plant it and raise it themselves.  Instead of just looking for it in the wild.  Around the eighth millennium BC.  From there it spread.  North.  To Southeast Asia.  Southern China.  And into India.  Where they took sugar to the next level.  They didn’t just chew on sugarcane to suck out the juice in India.  They refined it into a crystallized substance.  Around 350 AD.  Concentrating that sweetness.  And making it portable.  Then the Arabs entered the picture.

The Arabs took the Indian sugar-making technique and made it into big business.  They established plantations to grow it in tropical climes.  Where the two things that made sugarcane grow best—heat and water—were plentiful.  They built the first sugar mills to refine the cane.  Basically presses to squeeze out the juice.  Which they then boiled the water out of.  Leaving behind sugar crystals.  And added it to their foods.  As Muslim Arabs displaced Christians from the lands of the Roman Empire sugar moved west.  The Arabs introduced sugarcane plantations as far west as southern Spain.  When Christian Crusaders returned from fighting Muslims in the Holy Land they brought back crystallized sugar to Europe.  And they quickly fell in love with those white crystals.  By the late 13th century even England had grown a sweet-tooth.  Who would go on to consume so much of the stuff that they would rot their teeth away.

Then the Europeans entered the sugar business in the 15th century.  At first it was just the wealthy that enjoyed sugar.  Then it spread to the common people.  As demand grew they established new plantations to meet that demand.  In southern Spain.  The Atlantic island of Madeira.  The Canary Islands.  The Cape Verde islands off the west coast of Africa.  All had good growing climates for sugarcane.  And each plantation had its own processing plant.  For a ship’s hold full of crystallized sugar was far more valuable than a ship’s hold full of harvested sugarcane.  Making these plantations labor intensive endeavors.  And working the fields was backbreaking work.  To step up production required a larger labor force than was available.  And to meet that demand they turned to using African slaves.

Sugar was a Turning Point from an Agrarian World of Slaves and Indentured Servants to the Modern Industrial World

By the 16th century the Europeans were taking sugarcane across the Atlantic.  And African slaves.  The Portuguese, Spanish, Dutch, French and British brought sugarcane and slaves to Brazil, Cuba, Jamaica, Barbados, the Virgin Islands, Guadaloupe, Saint-Domingue (present day Haiti) and elsewhere in the Americas.  With the Caribbean Islands becoming the sugar capital of the world.  France’s Saint-Domingue being the single largest producer in the world.  Until their slave uprising.  It was France’s wealthiest possession in the Western Hemisphere.  And its loss changed French ambition in the New World.  For Napoleon had his eyes on rebuilding the French Empire in North America that was so rudely interrupted by France’s loss in the Seven Years’ War.  But with the loss of Saint-Domingue and all that sugar wealth Napoleon lost all interest in the New World.  And sold the Louisiana Territory to the United States.  To prepare for war with Britain.  Again.

The British and the French both had lucrative sugar plantations in the West Indies.  When the American Revolutionary War turned into a world war the British and French squared off once again.  Especially in the West Indies.  Where they wanted to protect their possessions producing that valuable sugar.  And take the other’s possessions.  So they could expand their holdings.  And their wealth from the sugar trade.  As well as put down any slave uprisings.  Such as would later happen in Saint-Domingue.  Some say the reason the British lost the American Revolutionary War was because they diverted too much of their military resources to the Caribbean.  But the French were diverting a lot of their military resources to the Caribbean, too.  Which is one reason why the war lasted 8 years.  As the French were more interested in taking the British possessions in the West Indies than American independence.  Their first efforts fighting alongside the Americans (Rhode Island in 1778.  Savannah, Georgia, in 1779) did not help the cause.  It was only when the French fleet could be spared from the action in the West Indies that they joined General Washington in trapping General Cornwallis at Yorktown in 1781.  With Cornwallis’ surrender effectively ending the war.  Even though they wouldn’t sign the final peace treaty until 1783.

By the end of the international slave trade Europeans sent approximately 10 million Africans to the New World.  Mostly to Brazil and the Caribbean.  To work in the sugar plantations.  Where slave ships left Africa.  They unloaded slaves in the New World.  Loaded the sugar these slaves grew.  Shipped the sugar back to the Old World.  Unloaded the sugar and loaded on finished goods.  Then sailed back to the African slave stations.  Where they traded their finished goods for more slaves.  There was big money in The Trade Triangle (trade from Africa to the New World to the Old World and back to Africa).  But sugar also helped to kick off the Industrial Revolution.  For the iron industry grew to make the machinery of the sugar mills.  As each plantation processed their sugarcane into crystallized sugar that was a lot of cast iron gears, sprockets, levers, axles, boilers, etc.  Basically a turning point from an agrarian world of slaves and indentured servants.  To the modern industrial world and wage-earners.

There is a Correlation between America’s Obesity Problem and the Switch from Cane Sugar to Corn Sugar

By the 19th century technology was making better sugar at lower costs.  The British designed a low-pressure boiler.  As water boils at a lower temperature when at lower pressure they were able to refine sugar with less energy.  Cutting production costs.  And waste.  As higher temperatures caramelized some of the sugar.  Though caramelized sugar can be delicious on crème brûlée you don’t want it when you’re producing crystallized sugar to sell.  Then the Americans improved this process by creating the multiple-effect evaporator.  A multi-stage device where the pressure is lower in each successive stage.  They use steam to boil water in the first stage.  This vapor then provides the energy to boil water in the next stage.  Which is at a lower pressure.  And, therefore, has a lower boiling point.  That vapor then boils water in the next stage which is at a lower pressure.  And so on.  Where one energy input creates a lot of useful work cost-efficiently.

With the advance in refining equipment refinery plants grew more complex.  And expensive.  So instead of building one on every plantation they built fewer but larger ones.  And shipped raw product to them.  Modern ships and economies of scale made this the new business model.  Companies grew and opened other refineries.  And expanded vertically.  Growing sugarcane as well as refining it.  One of the best at this was the American Sugar Refining Company.  That at one point controlled 98% of the sugar processing capacity in the United States.  Which earned it a spot on the original Dow Dozen.  The first 12 industrial stocks the Dow used in calculating their Dow Jones Industrial Average in 1896.  And remained a component of the Dow Jones Industrial Average until 1930.

Eventually the Americans couldn’t compete with foreign sugar producers any more.  They enlisted the help of Congress to impose tariffs on cane sugar imports.  Forcing Americans to pay more for their sugar.  Then they started making sugar out of government subsidized corn.  High-fructose corn syrup.  Which pretty much sweetens anything manufactured in the United States today.  That some say causes more health problems than cane sugar.  Including obesity.  Those in the high-fructose corn syrup business vehemently deny this.  But there is a correlation between America’s obesity problem and the switch from cane sugar to corn sugar.  Because of the different way the body metabolized corn sugar it did not satiate our appetite.  Leading us to over consume.  Such as with sugary drinks.  Which have gotten so large in size that New York City Mayor Bloomberg tried to make these large sizes illegal.  Because America’s over consumption of sugar was making us obese.  While Britain’s over consumption of cane sugar only rotted their teeth away.  It didn’t make them obese.  Which makes the case that corn sugar is less healthy than cane sugar.  Despite what the corn sugar lobby says.

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Deficits, Debt and Interest on the Debt 1988-2012

Posted by PITHOCRATES - March 26th, 2013

History 101

Congress printed so much Money that the Continental Dollar became Worthless

The American Revolutionary War lasted eight years.  And eight years of war ain’t cheap.  It took money to buy arms.  It took money to buy uniforms.  It took money to pay soldiers.  And paying for these for eight years required a lot of money.  Which the Americans didn’t have.  They were at war with Great Britain.  Who was their major trading partner.  And pretty much their only trading partner.  As the Americans were a British colony in the days of mercantilism.  Which meant the Americans sent raw materials to the mother country.  On British ships.  Through British ports.  Britain then transformed those raw materials into finished goods.  And exported them.  On British ships.  Through British ports.  Throughout the world.  And back to America.  Before the Revolution, that is.

Thankfully for the Americans there was a nation that hated the British.  And had been in a near perpetual state of war with them since about forever.  And they had just recently lost their North American territories to the British.  Which they wanted back.  So the French had other interests than American Independence.  But American Independence was a good opportunity to settle the score with their old nemesis.  And when the Americans defeated a British Army at Saratoga the French thought that just maybe the Americans could pull this off.  And if so they wanted to be in on the spoils of a British defeat.

So the French financed a large part of the American Revolutionary War.  But it wasn’t enough.  The Continental Army was poorly fed and poorly clothed.  Even leaving bloody footprints in the snow as the Continental Congress couldn’t put boots on their feet.  Nor could they pay them.  So they turned to printing money.  Unleashing a brutal inflation.  No one wanted the currency.  The inflation was so bad that it lost its value before they could spend it.  So no one wanted to accept the Continental paper dollar.  Giving rise to the expression ‘not worth a Continental’.  Everything had two prices.  A low price if you paid with hard currency (gold and silver coins).  And a very high price if you paid in Continental dollars.  They printed so much money that the money became worthless.  So the Continental Army just took what they needed from the people to keep their men from starving to death.  Leaving the people with an IOU.  That Congress would redeem one day.  Maybe.

The Percentage of Tax Receipts going to Pay the Interest on the Debt has fallen as the Federal Debt Rose

Today hard currency is a thing of the past.  It’s pure un-backed paper these days.  This paper money has no intrinsic value.  And you can’t exchange it for gold or silver that does.  But you sure can print it.  Well, the government can.  And they do.  They borrow and print money like there’s no tomorrow.  Allowing them to spend money they don’t have easier than ever before.  And it’s not just for feeding and clothing our soldiers.  But just about everything under the sun.  Causing the federal debt to soar.

Think of the growing federal debt like a credit card with a growing balance.  And these balances grow fast because each month they charge you interest on your past purchases.  And on your past interest charges.  Which is why if you let that credit card balance get too high it’ll grow beyond your ability to pay it off.  A lot of people who do find themselves filing a personal bankruptcy.  Because the interest charges just balloon their monthly payment.  With the interest in their credit cards consuming an ever larger portion of their paycheck.  As should the interest on the federal debt consume an ever larger portion of federal tax receipts.

Debt and Interest as Percentage of Receipts

(Sources: A History of Debt In The United States; Interest Expense on the Debt Outstanding; Historical Amount of Revenue by Source)

Interestingly, the percentage of federal tax receipts going to pay the interest on the debt has in general fallen as the federal debt rose.  Odd.  The more debt one has the greater the interest one pays.  That’s how it works on our credit cards.  When the debt was approximately $6.2 trillion in 1991 the percentage of total tax receipts going to pay the interest on the debt was 27.1%.  But when the debt soared to $16.1 trillion in 2012 the percentage of tax receipts going to the interest on the debt fell to 15%.  The federal debt grew to be 2.6 times what it was in 1991.  Yet it appears we are paying less interest in 2012 than in 1991.  Something doesn’t seem right.

Interest Rates will Rise as the Purchasing Power of the Dollar Falls, Raising Prices and the Cost of Borrowing

A couple of things could explain this.  And the first thing that comes to mind is tax revenue.  The reason why interest on the debt as a percentage of tax receipts has fallen while the federal debt grew is, perhaps, that tax revenues grew even greater.  So even though interest on the debt could be soaring along with the soaring federal debt the government could be awash in tax revenue.  And if the number you’re dividing by is larger than the number you’re dividing into it than you get a smaller percentage.  Simple arithmetic.  The driver of the federal debt is the annual deficits.  So let’s compare interest on the debt to the deficit.  To see if the interest on the debt rises with the deficit.

Interest on the Debt and the Deficit

(Sources: Interest Expense on the Debt Outstanding; Table 1.1—SUMMARY OF RECEIPTS, OUTLAYS, AND SURPLUSES OR DEFICITS (–): 1789–2017)

And it doesn’t.  In fact, the interest on the debt almost held constant when the deficit plunged into a surplus.  And when the deficit soared to a record high.  It seems like there was some other factor involved here.  Something actually keeping the interest on the debt down.  Even when the deficit soared after 2007.  What could do this?  Well, there is only one other thing to look at.  Interest rates.

Interest on the Debt the Deficit 10 Year Treasury

(Sources: Interest Expense on the Debt Outstanding; Table 1.1—SUMMARY OF RECEIPTS, OUTLAYS, AND SURPLUSES OR DEFICITS (–): 1789–2017; Market yield on U.S. Treasury securities at 10-year constant maturity, quoted on investment basis)

And we have our answer.  Interest on the debt has not kept pace with the debt because of bad monetary policy.  Keynesian economic policies introduced permanent inflation into the economy.  The Keynesians in government kept interest rates artificially low to stimulate economic activity.  Those low interest rates stimulated so much economic activity in the Nineties that it created a dot-com bubble.  And when it burst it created a painful recession in the early 2000s.  Also, President Clinton’s Policy Statement on Discrimination in Lending lowered lending standards in the Nineties setting the stage for a great housing bubble that burst into the subprime mortgage crisis in 2007.  And the Great Recession.

The Keynesians have been increasing the money supply (i.e., printing money) in a desperate attempt to pull the economy out of recession.  Which is why the market yield on a 10-year treasury has fallen as the deficit soared in the early 2000s.  And fell even more as the deficit soared even further after 2007.  With the yield falling to as low as 1.8% in 2012.  Even though the demand for so much borrowing should have raised interest rates.  Which would have happened had the government not been increasing the money supply.

And this is why interest on the debt as a percentage of receipts has fallen.  Despite record debt.  Some may look at this and think it’s a good thing.  As it lets the government borrow more money.  So they can give us more stuff.  But printing money causes inflation.  Which has been kept at bay for now thanks in large part to the Eurozone sovereign debt crisis.  As investors everywhere are desperate to find a safe harbor for their money during these uncertain times.  But that won’t last forever.  Eventually those interest rates will rise as the purchasing power of the dollar falls.  Raising prices.  And the cost of borrowing.  A lot.  Because of that record debt.  And when they start selling new treasuries at higher interest rates than the ones they’re replacing a very large portion of our tax receipts will go to pay the interest on the debt.  Just like when people charge too much on their credit cards.  Pushing the country closer to bankruptcy.  Just like people with overextended credit cards.  And like countries in the Eurozone.

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George Washington , Clinton, Cornwallis, Lord George Germain, Comte de Rochambeau, Comte de Grasse, Yorktown and Treaty of Paris

Posted by PITHOCRATES - June 28th, 2012

Politics 101

British Sea Power allowed the British to Remain in a Hostile Land for the Eight Years of the Revolutionary War

The American Revolutionary War began in April of 1775 with the Battles of Lexington and Concord.  For years following these battles George Washington yearned to meet the British in a grand battle and defeat them.  What he got instead was a lot of smaller battles that sent him in retreat.  For despite fighting on the far side of an ocean the British had a large professional army.  A vast merchant marine to supply them whatever they needed.  And the world’s preeminent navy.  The Royal Navy.

That sea power allowed the British to remain in a hostile land for the following 7 years.  Allowed them to remain in New York.  Allowed them to take the war to the South unopposed.  It allowed them to move armies.  And supply armies.  As well as control the world’s sea lanes to maintain their commerce.  The Royal Navy tipped the balance of power well to the side of the British.  And perhaps it was their undoing as well.  Trusting that their naval superiority would always be there.

British generals Clinton (superior in rank and resting comfortably in New York) and Cornwallis (junior in rank and chasing American armies in the South) did not see eye to eye.  Their boss, Lord George Germain, Secretary of State for the American Department, didn’t help matters.  It was his job to suppress the American rebellion.  But he didn’t understand the country.  Or the people.  Thinking of America in European terms.  He thought the Americans were no match for a professional European army assembled on the field of battle.  And he was right.  But the Americans didn’t fight the war like Europeans.  Which proved to be a great disadvantage for the British.

With the French Fleet heading to Chesapeake Bay Washington Scrapped his Plan to Attack New York

General Burgoyne had a grand strategy to cut off New England from the rest of the colonies.  A three-pronged attack that required General Howe (who preceded Clinton) coming up from New York.  Germain approved the plan.  And two of the three prongs proceeded accordingly.  East through the Mohawk Valley.  And south down the upper Hudson valley.  Howe was to come up the Lower Hudson valley and meet the other two prongs around Albany.  But Germain did not order Howe to do so.  So Howe didn’t.  Executing his own plans in Pennsylvania.  Which led to Burgoyne’s surrender at Saratoga (1777).  And the entry of France into the War (on the condition that the Americans would not make a separate peace with the British).  The Spanish later (allied to the French).  The Dutch, too.  And an armed neutrality of the other powers who did not want to partake in the war and would not submit to the advances of the Royal Navy on the high seas.  Making it difficult to blockade arms and supplies from reaching the Americans.

The first Franco-American actions proved disappointing.  In fact a lot of public sentiment turned against the French.  Especially after they abandoned an offensive action in Rhode Island.  Leaving the Americans to retreat again.  Then Cornwallis moved north.  Toward Virginia.  And there was another window for French cooperation after some action in the West Indies.  And there was a French Army in Newport, Rhode Island, commanded by Comte de Rochambeau, a veteran of the Seven Years’ War.  So he knew a thing or two about fighting the British.  These forces arrived after Clinton pulled his forces out and returned them to New York.  Which is where Washington wanted to attack with this Franco-American force.

Washington and Rochambeau drew up some plans.  The French fleet coming from the West Indies commanded by Comte de Grasse was to support the attack.  However, this was the battle Clinton was waiting for.  And he was ready for it.  Washington tested the New York defenses and found them formidable.  And there was a British fleet in New York Harbor.  Then he got a letter from De Grasse.  Rochambeau had left him some freedom in his orders.  Instead of going to New York he was heading to the Chesapeake Bay.  Where Cornwallis’ army was.  It wasn’t New York but it was still a British army.  And he would have a large French fleet in support.  Washington soon scrapped his New York plans.  And looked to Virginia instead.   

Cornwallis and Burgoyne lost their Armies because the British never Coordinated their Forces in a Unified Plan

Quickly and quietly the Franco-American force moved from around New York towards Virginia.  They were across the Delaware River before Clinton knew where they were going.  Or what they planned to do.  They kept Admiral Graves in the dark as well.  Who kept his British fleet around New York.  Waiting to support the army when the Americans and French launched their attack on New York.  By the time they figured out what Washington and the Franco-America force were up to it was too late.  The French fleet beat them to the Chesapeake Bay.  The superior French fleet repelled the smaller British fleet which returned to New York.  Leaving Cornwallis on his own.  As he faced an enemy that outnumbered him more than two to one.  A force that numbered 5,700 professional Continentals and 7,000 professional French troops.  As well as 3,100 militia.

Cornwallis was entrenched in Yorktown.  With Banastre Tarleton (of Waxhaw Massacre fame) across the York River in Gloucester.  As Cornwallis looked out at the gathering force against him laying siege to his army he saw the French on his right.  And the Americans on his left.  Their trenches slowly moving closer to his.  Across the York the French were closing in on Tarleton.  Soon the American artillery was within effective range.  And George Washington lit the first fuse.  It was over in less than a month.  And included a bayonet charge led by America’s first Secretary of the Treasury, Alexander Hamilton.  Recognizing the seriousness of Cornwallis’ position Clinton sent a fleet to help lift the siege.  But by the time it arrived Cornwallis had already surrendered.

Cornwallis lost his army for the same reason Burgoyne lost his army at Saratoga.  Lord Germain.  Who failed to coordinate his generals in the American Department.  While the Americans did.  For most of the war the British had the superior army and the superior navy.  Yet they could not win.  Because these superior forces were never coordinated together in a unified plan.  Opposition in Parliament forced Germain out of office after the fall of Yorktown.  And called for the resignation of the Prime Minister.  Lord North.  Which he gave.  A first for a British Prime Minister.  The new government would end the war with the Americans with the Treaty of Paris (1783).  Where the Americans did very well.  And conducted separate peace treaties with the Spanish and the Dutch.  As well as the French.  Which the French were not pleased with.  And they did not do as well as the Americans in the peace.  Worse, they would find themselves in their own revolution within a decade.  The American Revolution being a major cause of the French Revolution.  By saddling France with an enormous war debt.  And filling their people with the spirit of liberty.

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American Revolution, Vietnam, Civil War, Guerilla War, Fabian Strategy, Jackson, Arnold, Lafayette, Clinton, Cornwallis and Yorktown

Posted by PITHOCRATES - June 21st, 2012

Politics 101

In a Civil War where the Enemy was Everywhere and Holding Cities meant little the Only Way to Win was to Kill the Opposing Army

The American Revolutionary War was a lot like the Vietnam War.  Both involved a people on one side of the conflict torn apart by civil war.  Both were bloody.  Both involved a military superpower fighting on the far side of an ocean.  Both involved the French (the French role in Vietnam was in the decade which preceded the American’s two decades).  In both conflicts the French suffered politically at home and profited little for the blood and treasure they invested after the war.  In both the underdog used a Fabian strategy where they avoided major battles for their winning strategy was simply not to lose.  So they fought to extend the war to make it more costly (in both treasure and politics) for the other side to keep fighting.  Both involved poor military planning where decisions were based more on politics than military necessity.  In both the Americans and French were on the same side.  During the American Revolution they were both on the winning side.  In Vietnam they were both on the losing side (though the French stopped fighting before the Americans began fighting).  And, of course, both were wars contesting overseas colonies.

The fighting was cruel in Vietnam.  Especially against the civilians.  As the opposing sides fought through villages people suffered if they had shown the ‘wrong’ loyalties when the other side had controlled the village.  The North Vietnamese Army and the Viet Cong (the guerilla insurgents in South Vietnam) did some nasty things.  As did the South Vietnamese American allies.  Even some Americans did some nasty things.  There were few innocents.  Though the Americans were probably more innocent than most.  For when they did something nasty it became public.  Eventually.  And the Americans punished those responsible.

Both sides used killing as the primary strategy.  The Americans introduced the body count.  Measuring the success in military operations in the number of enemy dead.  The Viet Cong conscripted anyone who could fight.  Removing most young men from villages in areas they controlled.  Or they killed anyone who could fight against them.  Both sides tried to kill as many of the other as possible because in a civil war where the enemy was everywhere and holding cities and hills meant little the only way to win was to kill the opposing army.  So they couldn’t fight you anymore.

Neither the Patriots nor the Tories could claim the Moral High Ground in the Deep South

General George Washington quickly adopted a Fabian strategy in the American Revolutionary War because he had no choice.  He was fighting the world’s sole superpower.  And when the war broke out the Americans had no army or navy.  So until they did they fought a guerilla war.  Especially in the south.  Where Patriot partisans controlled the country.  And Tories loyal to the British held the cities.  And manned posts in the interior.  Under the command of British General Cornwallis.  Who reported to General Clinton comfortably ensconced in New York City.  Waiting for General Washington to launch an assault on New York.  Which would never come.

The civil war in the south was about as ugly as civil wars get.  And the ugly stuff was American on American ugliness.  Patriot against Tory.  The British charged that the partisans were killing innocents and neutrals.  And the Americans claimed the Tories were doing the same.  Neither side could really claim the moral high ground.  A young Andrew Jackson (hero of the Battle of New Orleans in the War of 1812 and America’s seventh president) even said, “In the long run, I am afraid the Whigs [the Patriots] did not lose many points in the game of hanging, shooting and flogging.” 

It was a merciless guerilla war in the South.  And they did kill wholesale.  Because that’s the only way to win a civil war.  You kill fighting men until there are not enough of them left to fight back.  And the fighting was not always honorable.  The British captured Jackson in a Waxhaw meetinghouse.  When a body of Tories dressed as locals advanced ahead of a body of Redcoats.  The trick worked.  They captured eleven.  And a British officer gave Jackson scars that would leave him a lasting hatred of the British for the rest of his life.  The officer demanded that Jackson clean his boots.  Jackson claimed he was a prisoner of war.  And that the British officer should treat him as such.  The officer saw him as a partisan traitor.  And brought his sword down on Jackson’s head for his insolence.  Jackson tried to shield his head with his left hand, leaving two deep scars.  One on his head.  The other on his hand.

The Grand Battle George Washington longed for was before him at Yorktown 

The changing fortunes of war in the South often changed the fighting spirit of those fighting the war.  On both sides.  British deserters joined the American lines.  And American deserters joined the British lines.  The Americans serving in the Continental Army were still hungry, thirsty and half-naked.  The Battle of Eutaw Springs was the last big battle in the Deep South.  And it almost ended in a route of the British.  Had not the hungry, thirsty and half-naked Americans stop their pursuit when they entered the abandoned British camp.  As they enjoyed the spoils of war the British returned.  And another 3 hours of bloody fighting continued.  In the sweltering heat of the Deep South.  By the time it was over the Americans lost.  The American casualties were just over 500 (about 25% of their force).  The British lost over 800 (about 40% of their force).  A costly victory for the British.  Despite this loss the Americans were in control of the lower south.

Up until this point Virginia had seen little of the ravages of war.  Lucky for them as Virginian governor Thomas Jefferson, though a brilliant thinker, was a pretty poor wartime governor.  Washington urged him to prepare some defenses.  But he didn’t.  General Cornwallis urged General Clinton to abandon New York and conquer Virginia.  An action he believed would win the war.  Clinton refused for awhile.  But finally agreed to send a force under America’s greatest traitor.  Benedict Arnold.  A new brigadier general in the British Army.  Who landed unopposed in Virginia.  And moved at will.  Tarleton’s cavalry came up from the south to join Arnold.  Entered Charlottesville.  Captured members of the Virginia legislature with Jefferson just escaping in the nick of time.  With the addition of British reinforcements in Virginia Washington sent a force under Lafayette to Virginia to help with their defenses.  A perfect storm was gathering for the British in Virginia.

Cornwallis himself entered Virginia.  And futilely gave chase to Lafayette.  Cornwallis wanted Clinton to commit a major force to the conquest of Virginia.  Clinton wanted the few thousand troops he sent to Virginia returned to New York.  Clinton ordered Cornwallis to hold a position on the Chesapeake with his reduced force.  Cornwallis thought that order was stupid and ordered a withdrawal of his own forces.  Clinton countermanded that order.  Insisting that he pick a place and defend it.  Cornwallis picked Yorktown.  With his back to the sea.  And hopefully the British fleet.  While he moved towards Yorktown the hunter became the hunted.  Lafayette harassed him all the way.  Worse, the French were also on their way.  And the French fleet would engage the British fleet and defeat them.  And a French force would join Washington who came down from New York.  Finally able to abandon his Fabian strategy.  The grand battle he longed for was before him at Yorktown.  Cornwallis was trapped.  And would surrender his Army.

With the surrender of a second British army the initiative went to the Americans.  To continue the war would cost far more British blood and treasure.  But that price was too high.  The British wanted out.  Conceding that the Americans were indeed independent of British rule.  The delaying Fabian strategy, though costly, had worked.  As they would again in another American war.  Where the Americans instead would be fighting on foreign land.  In a place called Vietnam.  Only the Americans would suffer the same fate the British did in the American Revolutionary War.  As a Fabian strategy can be a very effective strategy.  As long as time is on your side.

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Benedict Arnold, Fort Ticonderoga, Quebec, Battle on Lake Champlain, Freeman’s Farm, Bemis Heights, West Point and Major André

Posted by PITHOCRATES - June 14th, 2012

Politics 101

Arnold prevented a British Drive down the Hudson Valley to separate New England from the Rest of the Colonies

There was a fine line between Patriot and Loyalist.  And between Patriot and traitor.  For Benedict Arnold, at least.  Who went from Patriot to hero to traitor.  Some would argue that if it weren’t for Benedict Arnold we may not have won the American Revolutionary War.  And they may be right.  Yet at the same time he almost single-handedly lost the Revolutionary War. 

Benedict Arnold was both the best and the worst of Americans during the Revolution.  For he was a complex man.  And a flawed man.  After hostilities broke out at Lexington and Concord Arnold led his company from New Haven to Boston.  One of the first to answer the call of duty after that fateful day when a shot was fired that was heard ’round the world.  He was in it from the get-go.  A Patriot.  When it became apparent that the Americans lacked the artillery to attack the British in the fortified Boston they looked west.  To Fort Ticonderoga.  The Massachusetts Committee of Safety directed Arnold to raise a force and march on Fort Ticonderoga.  Capture it.  And bring back their cannon for action on the British fortifications at Boston.  The Connecticut Committee of Safety, not knowing of the orders given to Arnold, gave similar orders to Ethan Allen.  These two leaders met on the way to Ticonderoga.  Argued a little.  Then shared command.  Captured Ticonderoga.  Ethan Allen dragged the captured cannon back to Boston while Arnold went on and captured Crown Point.  Captured a British ship.  Sailed it to St. John.  And captured it.

Right from the beginning Arnold was what the Americans needed.  An aggressive leader who took the initiative.  And he would again.  But Arnold was also a prima donna.  He yearned for glory.  Shortly after Ticonderoga Congress decided on a Canadian campaign.  To conquer the British in Montreal and Quebec (City) so the Canadians could join the Americans as the fourteenth colony.  While a campaign was put together for Montreal Arnold persuaded General Washington for another campaign he would lead through Maine to Quebec.  Washington approved. 

Arnold’s Action around Saratoga brought the French into the War and Changed everything for Britain 

So Arnold gathered his force.  Including one Daniel Morgan.  And marched through the inhospitable wilderness of Maine in some unpleasant weather.  His men were wet, hungry, cold and miserable.  They made it to Quebec and assaulted the fortress in a January blizzard.  It did not go well.  Richard Montgomery, coming to join Arnold after conquering Montreal, was killed in the attack.  Arnold was wounded.  The Americans retreated.  First to Montreal.  Then all the way back to Ticonderoga.  Battling the British in a rearguard action.  While smallpox decimated the American ranks.  British General Carleton was in hot pursuit coming down to Lake Champlain.  Where Arnold would meet him.  He threw together a small makeshift squadron and met Carleton in battle on Lake Champlain.  Arnold lost his fleet.  But he delayed Carleton a month.  Unprepared for a winter campaign, Carleton retreated.  Thus Arnold prevented a British drive down the Hudson valley to separate New England from the rest of the colonies.

About a year later British General John Burgoyne launched a three-pronged attack consisting of a force attacking east from Oswego through the Mohawk valley.  A force attacking north up the Hudson River from New York.  And a force led by Burgoyne taking the same route Carleton had a year earlier.  Down through Lake Champlain and into the upper Hudson valley.  All three prongs to converge around Albany.  To cut off New England from the rest of the colonies.  The southern prong coming out of New York never materialized, though.  For General Howe was busy running around in Pennsylvania.  While the other two prongs got bogged down before reaching their objectives.  Burgoyne himself was having some trouble around a little town called Saratoga.  Burgoyne’s lines of communications were stretched dangerously long.  He was getting into trouble.  At the same time, though, political intrigue changed the American commander.  Horatio Gates replaced General Schuler.  Gates was content to trust his defenses and wait for the British assault.  Arnold saw the British were going to attempt to turn a weak American flank at Freeman’s Farm.  He argued with Gates to counter that move.  He finally gave in and agreed to send a force that included Daniel Morgan’s riflemen.  As that battle ebbed and flowed Arnold led a force against the British center. 

Arnold saved the day.  Had he received reinforcements he may have defeated the British army that day.  Instead Gates relieved Arnold of his command.  And marginalized him in his report to Congress.  At the subsequent battle at Bemis Heights Arnold, without a command, gathered some men and assaulted some British fortifications as the British retired behind them.  Breached the fortifications.  Sending the British in retreat all the way back to Saratoga.  Getting a horse shot out from underneath him in the process.  And taking another bullet in the leg.  Because of Arnold’s action around Saratoga Burgoyne had no choice but to ask for terms of surrender.  And he surrendered to General Horatio Gates.  Who got all the glory.  While his part in this victory was marginal at best.  But this victory was big.  It brought the French into the war.  Which changed everything for Britain.  Who now had a world war on their hands.  And the Spanish would later join that war against the British.  As allies to the French.  Then Catherine the Great of Russia led a drive for an armed neutrality of the other nations not taking sides in this new world war.  Which isolated Britain further.  Making it more difficult to interdict supplies going to the American rebels on neutral ships.

We remember Benedict Arnold not for the Hero he was but for the Traitor he Became

You could say that Benedict Arnold made this all possible.  By saving New England twice.  First by delaying Carleton on Lake Champlain.  Then winning the battles at Freeman’s Farm and Bemis Heights.  But did he get the glory?  No.  Some respected him.  General Washington did.  But the politics of the Congress were against him.  Which was a problem for a man like Arnold.  Who had a huge ego.  Was arrogant.  A bit of a hothead.  And had a gambling problem.  Put it all together and it caused this Patriot to become a traitor.  Because he was not given the proper respect for his glorious achievements.  And saving the American cause time and again.  If the American political elite would not give him the proper respect the British would.  And made a deal with him.  Money and security for the rest of his life for him and his family.  In exchange for information.  And control of the Hudson River via the forts of West Point. 

Arnold asked for and got command of West Point from General Washington.  And then started feeding the British inside information.  And began making plans for the handover of West Point to the British.  To finally sever New England from the rest of the colonies.  And it might have happened as planned if not for his British contact, Major André, being caught behind the American lines out of uniform with plans of how to capture the forts of West Point.  Arnold was to meet General Washington that day who by then knew of André’s capture.  Arnold did not.  But he found out just in time to escape to the British lines.  André was not so lucky.  For the Americans hanged him as a spy.

Arnold would return to America.  As a British general.  Landing in Virginia and leading an army of Loyalist Tories near the end of the war.  Doing some damage.  But he would never recapture past glories.  He would retire to England.  Pretty much a footnote in the British history of the American Revolutionary War.  For their investment in Arnold delivered little.  So Arnold would live out his remaining days a man with no real country.  He could never return to America.  And the British never really accepted him.  Americans and British alike lamented the death of Major André.  Who died because of Arnold.  A death he nevertheless faced with honor and courage.  But Arnold would suffer a worse fate.  Indifference.  He mattered to no one.  He had no honor.  Lived another 20 years or so.  Insignificant.  And died a traitor.  Which is the only thing we remember him for.  Not the hero he was.  But the traitor he became.

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Burgoyne, Saratoga, Daniel Morgan, Banastre Tarleton, Loyal Legion, Waxhaw Massacre, Camden, Horatio Gates, Cowpens and Yorktown

Posted by PITHOCRATES - June 7th, 2012

Politics 101

The Scotch-Irish and Germans in the South had a connection to the Stuart/Hanover King George III

It turns out the first British general to lose an army on the field of battle to the Americans was the only one with a coordinated plan.  General Burgoyne planned to separate and isolate New England with a coordinated three-prong attack.  He’d attack down Lake Champlain and the upper Hudson.  St. Leger would attack out of Oswego and head east along the Mohawk valley.  With Howe coming up the Hudson.  Bringing all three prongs together around Albany.  And it may have worked if Burgoyne had overall command of British forces in America.  But he didn’t.  For there was no one in charge of all British forces coordinating their resources in a unified plan.  So General Howe ran around Pennsylvania instead of going up the Hudson to meet Burgoyne at Albany.  Downriver from Saratoga.  Where Burgoyne surrendered his army.

Now Burgoyne wasn’t the greatest general the British had.  But he had about the only grand strategy to defeat the Americans.  For no one else tried to marshal Britain’s superior forces towards some strategic end.  Lucky for the Americans as it gave them the time to survive through Valley Forge.  Where they emerged as good as any European army.  Which rebuffed the British when they turned to the Middle States.  Cities they captured they eventually gave up and left for the Americans.  And returned to New York.  Where a large British force stayed ensconced throughout the American Revolutionary War.  While another British force tried their luck in the South.

Things could have been different in the South.  For there were a lot of Loyalists in the South.  Especially in the back country of North and South Carolina.  A great mutt of nationalities.  Including a lot of Scotch-Irish.  And Germans.  Who had a connection to King George III.  Who was the king of England and Wales.   As well as Scotland, Ireland and Hanover.  A German province.  And family.  Related to the British House of Stuart.  Yes, those Stuarts.  Who had ruled England for such a long time.  And still do to this day.  Thanks to their Hanoverian relations.  So there was hope in the South for Britain.  Made even more promising by the fact that these Scotch-Irish and Germans didn’t get along well with the local American governments.

Tarleton’s Waxhaw Massacre inflamed anti-British Sentiment and Turned a lot of Neutrals into Patriots

In truth once you moved away from the big cities the South was neither Loyalist nor Patriot.  It was both.  Depending on where in the South you were.  In fact there was a lot of bloody fighting in the South that the British had no part in.  This bloody fighting was between neighbors and families.  Which is why it was so bloody.  For civil wars are the cruelest of wars.  Because of the vengeance factor.  Whenever your enemy did unspeakable acts of atrocities to their former friends and family the retaliation was in kind.  Or worse.  It was an ideal environment to wage war in.  A little overwhelming force and coordination with the Loyalist side could have paid large dividends for the British.  Sort of like D-Day in World War II.  The Allies dropped paratroopers behind the beach defenses to support the beach invasions.  A multi-pronged British force could have done the same.  Attacked the coastal areas while the Loyalists kept the Patriots busy, preventing them from joining the action in the coastal areas. 

Instead the British won great battles.  And captured cities.  But the surrounding countryside was rife with partisan guerilla war.  The British did not bring a large enough force to subdue the countryside.  Or to protect the cities they won.  Where Patriot leaders like Francis Marion, Thomas Sumter, Andrew Pickens and Daniel Morgan rode freely, making hit and run raids at will.  While British Lieutenant Colonel Banastre Tarleton lead a cavalry unit made up of Loyalists Tories.  The Loyal Legion.  (Mel Gibson’s character in the movie The Patriot was a composite based on these Patriots.  And his enemy was based on Tarleton).  And waged a cruel war that won him no love from those who had remained neutral in the South.  Such as following the fall of Charleston.  Tarleton set out to try and subdue the countryside.  And met a force of some 300 Virginians commanded by Colonel Buford at Waxhaw Creek.  When they met Tarleton demanded Buford’s surrender.  He refused.  They fought.  Overwhelmed, the Americans raised the white flag.  Tarleton’s men then killed the surrendering Americans by bayonet.  Perhaps the cruelest act of the war.  And from this came the battle cry ‘Tarleton’s quarter’.  Meaning take no prisoners when fighting the British.   The British win at Waxhaw secured much of the south for them.  But the massacre inflamed anti-British sentiment.  Turning a lot of neutrals into Patriots.

For the most part both the British and the American regular soldiers fought according to accepted rules of warfare.  And committed no such atrocities like the Waxhaw Massacre.  In fact, it wasn’t even the British who committed this atrocity.  It was American Loyalists fighting for Tarleton.  Part of that civil war in the South.  Which grew ugly.  The British and their Tory American allies were like Vikings.  Doing a lot of pillaging.  And not being very nice to the Patriot ladies.  While their men were away they not only looted their homes but stole the possessions they were wearing at gun and sword point.  And who knows what else.  Acts perpetrated on no orders.  But by the free-for-all in a land consumed by civil war.  And once again the crueler the war the more it inspired people to continue the fight.  While their men were away continuing the good fight their women were at home.  Securing supplies for their Patriot men.  And getting them to those fighting the good fight.  Brave women these Patriot women.  And heroes.

General Daniel Morgan’s Victory at the Battle of Cowpens was the Turning Point of the War

The ‘hero’ of Saratoga came south to take command of American forces.  Horatio Gates.  Who came in to take command just prior to the surrender at Saratoga.  Where the battle was truly won by future traitor Benedict Arnold.  And Daniel Morgan’s riflemen.  Who would leave the military soon thereafter.  After a long and distinguished career.  But those in Congress gave the credit to Gates.  As they did the Southern Department.  Something General Washington was not in favor of.  And for good reason.  For Gates displayed a certain incompetence that put his army in danger.  And suffered one of the greatest American defeats at the Battle of Camden.  In the general route that followed Gates got on a horse and fled from the battlefield.  And did not stop fleeing until he reached Charlotte.  Some 60 miles away.

General Nathaniel Greene replaced General Gates in the Southern Department.  He was who Washington wanted for the position in the first place.  And Morgan emerged from retirement to join the department under Greene.  Where they and those other Patriot partisans were causing all sorts of trouble for the British in the South.  General Morgan was proving to be quite the problem so General Cornwallis detached Tarleton and his Loyal Legion to handle the Morgan problem.  And caught up to him at Cowpens.  Suffering one of the greatest British defeats of the war.  (The final battle in The Patriot is based on the Battle of Cowpens.  Though in real life Tarleton survived and returned to England, forever haunted by this great defeat).  Which proved to be the turning point of the war.  Setting the stage for another British army to surrender.

The failed British Strategy in the South allowed a revitalized American army to push the British across Virginia.  To the coast.  Where they were hoping to get support from the Royal Navy.  Only to see the French navy.  For the French had joined the American cause after the victory as Saratoga.  And were now joining forces with the Americans under General Washington.  At a little place called Yorktown.  Where Cornwallis found his back to the water.  And the French navy.  While surrounded on land by a Franco-American force.  And for the second time in the American Revolutionary War a large British army surrendered on the field of battle to an American general.  Only this time “northern laurels” didn’t turn into “southern willows” as they had for Gates.  The victory at Yorktown was only the prelude to an American win in the Revolutionary War.  And the birth of a new nation.

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