Category Archives: Economics

No surprise to me

Posted on by

After gold being below $1700 in March and now near $1900/ounce we have this:

Bitcoin, ethereum plunge as sell-off smashes crypto sector:

Bitcoin and ether tumbled on Wednesday to 3-1/2 month lows, on track to post their largest one-day loss since March last year, in the wake of China’s move a day ago to ban financial and payment institutions from providing cryptocurrency services.

At one point during the meltdown, nearly $1 trillion was wiped off the cryptocurrency’s market capitalization.

…

“Bitcoin’s sharp price drop should come as no shock to the market,” said Gavin Smith, chief executive officer of crypto consortium Panxora.

“Any asset which has risen as much as bitcoin over the past year can be expected to have pullbacks as some investors withdraw profits, like we’re currently seeing. While often a brilliant investment opportunity, traders must remember that Bitcoin is still an emerging asset class and will continue to experience large price swings,” he added.

It’s only a brilliant investment opportunity if you don’t have any moral qualms about “fleecing the sheep” and have good timing.

This is no surprise to me and apparently not Tam either.

Quote of the day—Tal Bachman

Posted on by

Wokism is now the official state religion of the United States of America.

By constitutional standards, this means something has gone wrong. The United States isn’t supposed to have a state religion. The First Amendment specifically prohibits the establishment of a state religion. Yet it now has one, and its name is Wokism.

Tal Bachman
May 7, 2021
We Have Met the Enemy, part II
[And as everyone should well know Theocracies are some of the most dangerous forms of government known. Combined with socialism/communism, as this one is, and the deadliness is indisputable.

Take appropriate action.—Joe]

Quote of the day—Scott Adams @ScottAdamsSays

Posted on by

Either national debt is not a real problem or our government knows there is an asteroid the size of Mars heading directly towards Earth so it doesn’t matter.

I have to believe one of those things is true. Otherwise we are governed by morons.

Scott Adams @ScottAdamsSays
Tweeted on May 12, 2021
[There are many more than those three options. The most obvious and likely are:

  • Our politicians are evil.
  • Our politicians are evil and/or morons.
  • Our politicians believe what morons and/or evil people tell them.

Prepare accordingly.—Joe]

Quote of the day—J.D. Tuccille

Posted on by

There really are limits to how much governments can spend without inflicting pain on the people suffering under their mismanagement. Not that the people elected to Congress and the White House have shown any signs of comprehension or concern.

Given that these are people capable of running for public office without feeling any apparent sense of shame, is it possible that they’re just too stupid to understand our reports? you can imagine CBO economists asking one another as they tossed around the idea for the recent infographic. Does anybody have any crayons?

J.D. Tuccille
May 5, 2021
Looming Budget Catastrophe in Pictures So Simple Even Congress Can Understand
[There is at least one other alternative not mentioned in the article or by the Congressional Budget Office (CBO). That alternative is that the economic destruction of our country is intentional.—Joe]

He left out a profession

Posted on by

I am quite perplexed. The first thing I thought of when I thought of the “most durable professions” isn’t even on the list:

Durable Trades: Professions That Have Stood the Test of Time for Hundreds of Years:

The top 10 durable professions, according to Groves, are:

  1. Shepherd (rancher, livestock farmer, dairyman)
  2. Farmer
  3. Midwife
  4. Gardener (arborist, vinedresser, landscaper, flower farmer)
  5. Woodworker (cabinetmaker, finish carpenter)
  6. Carpenter (a builder of structures)
  7. Painter (siding contractor, wall covering specialist)
  8. Cook (chef, caterer, restauranteur)
  9. Brewer (winemaker, distiller)
  10. Innkeeper (hotelier)

Groves follows up the top 20 list with dozens of professions that received “honorable mentions.” The author cautions that his research focused on historical data rather than projecting which professions might be important in the future. Still, the longevity of professions that made the list are certain to give the readers pause before writing off trades in favor of more modern professions.

Even if he did purposefully (it had to be on purpose, right? Who could forget it?) ignore the world’s oldest profession, it’s still an interesting list.

Existential threat to Bitcoin

Posted on by

I don’t trust the stability of Bitcoin. I trust it even less than fiat U.S. dollars. I see mining bitcoin as wasting electricity to produce… well, what does “mining” actually turn those gigawatt hours into? Isn’t it simply faith in it’s value by some subset of the worlds population? What if people start losing their faith? Doesn’t the value of Bitcoin decrease exponentially with this loss of faith? Once some sufficiently large number of people lose faith isn’t there a high likelihood of an avalanche of people losing faith? Isn’t it likely Bitcoin will go down in the history books as another Tulip bulb or Mississippi bubble?

There is also the risk of one or more countries declaring it illegal and reducing it’s trading value to near zero in that country.

It turns out there are far more subtle yet greater or equal threats to it’s value: Bitcoin’s Greatest Feature Is Also Its Existential Threat: The cryptocurrency depends on the integrity of the blockchain. But China’s censors, the FBI, or powerful corporations could fragment it into oblivion.

Quote of the day—Zuckerman, Chung, and Farrell

Posted on by

Wall Street is sifting through the aftermath of the biggest single-firm meltdown since the financial crisis. Mr. Hwang alone lost approximately $8 billion in 10 days, a person familiar with the matter said, in what traders and investors say was one of the fastest losses of such a large sum they had ever seen.

The firm’s implosion has rippled through the financial world, eroding tens of billions of dollars from the shares of media conglomerates and investment banks.

Gregory Zuckerman, Juliet Chung, and Maureen Farrell
April 1, 2021
[I”m reminded of Understanding Complexity  by Scott E. Page and similar content in RIckards’ books The Death of Money: The Coming Collapse of the International Monetary System and The New Great Depression: Winners and Losers in a Post-Pandemic World

The hidden interconnectedness of entities, the unpredictable tipping points,the emergent behavior, etc. The fragility of a critical component of all modern human society could be exposed and shattered in less than a week.

I doubt that this event is “the big one” but it reminds us there could be, and probably is, such a big one hidden in the non-linear, mostly opaque, complex, world financial system. And it probably is just a matter of time before the system implodes.—Joe]

Quote of the day—James Rickards

Posted on by

The Federal Reserve does not understand that money creation can be an irreversible process. At a certain point, confidence in money can be lost, and there is no way to reconstitute it; an entirely new system must rise in its place. A new international monetary system will rise from the ashes of the old dollar system, just as the dollar system rose from the ashes of the British Commonwealth at Bretton Woods in 1944, even before the flames of the Second World War had been extinguished.

…

When the inevitable crash came, the losses were not apportioned to those responsible—the banks and bondholders—but were passed on to the public through federal finance. From 2009 to 2012, the U.S. Treasury ran a $5 trillion cumulative deficit, and the Federal Reserve printed $1.2 trillion of new money. Similar deficit and money-printing programs were launched around the world, as derivatives creation by banks continued unabated. Only a portion of the private debt defaults were written off.
The bankers’ jobs and bonuses were preserved, but nothing was achieved for the benefit of citizens. A private debt problem had been replaced with public debt larger than the private debt had ever been. These debts are unpayable in real terms, and defaults will soon follow. The defaults by smaller nations like Greece, Cyprus, and Argentina will be through nonpayment of bonds and losses for bank depositors. Defaults for larger nations such as the United States will come from across-the-board inflation that will steal from savers, depositors, and bondholders alike.

James Rickards
2014
The Death of Money: The Coming Collapse of the International Monetary System
[I mentioned this book a month ago and said, after consuming about 25% of it, that it is a good book. I have finished the book and I stand by that assertion.—Joe]

Quote of the day—Egon von Greyerz

Posted on by

In the coming bear market for currencies and bull market for precious metals, gold and silver will not just maintain purchasing power but massively outperform and become the must have investment.

But above all, do not buy gold and silver for speculative purposes. Gold and silver is your insurance against the coming end of a monetary era when all currencies and bubble assets will implode.

Egon von Greyerz
March 24, 2021
WHY BUY GOLD WHEN THERE IS BITCOIN & TESLA
[I’ve been hearing hints of the coming collapse for 20 years now. And “it has to happen soon” since 2008.

And, of course, if you dig just the tiniest bit most people, including this guy, advocating precious metals just so happen to have some precious metals they would love to sell to you.

They may still be right. But I’m very skeptical of those who have some direct gain from people taking their advice.

And everyone who claims gold will “preserve your wealth” seem to gloss over, at best, that Roosevelt banned the private ownership of gold by executive order and got away with it. So, what’s the path to wealth preservation when your wealth is tied up in contraband?—Joe]

Quote of the day—James Rickards

Posted on by

Once the cattle (that’s us) have been herded into the digital slaughterhouse, we will be told to “use it or lose it” when it comes to our own money. In other words, either we spend the money, or the government will take it away.

Of course, the spending can be channeled into politically correct causes by excluding unpopular vendors such as gun dealers or conservative social media platforms from the payment system. This represents total domination of human behavior through world money + digital currencies + confiscation.

This is not speculation anymore; it’s happening in front of our eyes. The Great Reset is coming fast. The future is here.

The only solution is to use a non-digital, non-bank store of wealth that cannot be traced or manipulated. Given the planned dollar devaluation, it’s one more reason to own physical gold and silver.

Get it while you still can.

James Rickards
February 22, 2021
The Great Reset Is Here
[While I can see his claim is more than plausible, I’m not certain it’s as dire and certain as Rickards says it is. But, he’s far more qualified than I am to make that judgement.

I’m currently listening to his book The New Great Depression: Winners and Losers in a Post-Pandemic World which was published January 12th of this year. I suspect he will make his case for the QOTD conclusions in the latter portions of the book which I have not yet reached.—Joe]

Three paths, seven signs, and five investments

Posted on by

James Rickards’s book, The Death of Money: The Coming Collapse of the International Monetary System, gives the signposts as to when the collapse of the dollar is eminent and which of three different paths the collapse will take. The three paths are:

The first is world money, the SDR; the second is a gold standard; and the third is social disorder. Each of these outcomes can be foreseen, and each presents an asset-allocation strategy best able to preserve wealth.

In the book he goes into detail on all three.

The signposts are (slightly edited for brevity):

  1. The first sign is the price of gold. Although the price of gold is manipulated by central banks, any disorderly price movements are a signal that the manipulation scheme is disintegrating, despite efforts at leasing, unallocated sales, and futures sales. A rapid price rise from the $1,500-per-ounce level to the $2,500-per-ounce level will not be a bubble but rather a sign that a physical buying panic has commenced and that official shorting operations are not producing the desired dampening effect. Conversely, if gold moves to the $800-per-ounce level or lower, this is a good sign of severe deflation, potentially devastating to leveraged investors in all asset classes.
  2. Gold’s continued acquisition by central banks. Purchases by China in particular are a second sign of the dollar’s demise. The announcement by China in late 2014 or early 2015 that it has acquired over 4,000 tonnes of gold will be a landmark in this larger trend and a harbinger of inflation.
  3. IMF governance reforms. This third sign will mean larger voting power for China, and U.S. legislation to convert committed U.S. lines of credit into so-called quotas at the IMF. Any changes in the SDR currency-basket composition that reduce the dollar’s share will be a dollar inflation early warning. … The acceleration of the baseline SDR-as-world-money plan.
  4. The failure of regulatory reform. A fourth sign will be bank lobbyists’ defeat of efforts by U.S. regulators and Congress to limit the size of big banks, reduce bank asset concentration, or curtail investment banking activities. … Absent reform, the scale and interconnectedness of bank positions will continue to grow from very high levels and at rates much faster than the real economy. The result will be another systemic and unanticipated failure, larger than the Fed’s capacity to contain it.
  5. System crashes. A fifth sign will be more frequent episodes like the May 6, 2010, flash crash in which the Dow Jones Index fell 1,000 points in minutes; the August 1, 2012, Knight Trading computer debacle, which wiped out Knight’s capital; and the August 22, 2013, closure of the NASDAQ Stock Market. From a systems analysis perspective, these events are best understood as emergent properties of complex systems. These debacles are not the direct result of banker greed, but they are the maligned ghost in the machine of high-speed, highly automated, high-volume trading. Such events should not be dismissed as anomalies; they should be expected. An increasing tempo to such events could indicate either that trading systems are going wobbly, moving to disequilibrium.
  6. The end of QE and Abenomics. The sixth sign will be a sustained reduction in U.S. or Japanese asset purchases, giving deflation a second wind, suppressing asset prices and growth. This happened in the United States when QE1 and QE2 were ended, and again in 2012 when the Bank of Japan reneged on a promised easing. However, as asset purchases are curtailed, a new increase should be expected within a year as deflationary effects develop.
  7. A Chinese collapse. The seventh sign will be financial disintegration in China as the wealth-management-product Ponzi scheme collapses. China’s degree of financial interconnectedness with the rest of the world is lower than that of the major U.S. and European banks, so a collapse in China would be mainly a local affair, in which the Communist Party will use reserves held by its sovereign wealth funds to assuage savers and recapitalize banks. However, the aftermath will include a resumption of Chinese efforts to cap or even devalue the yuan in foreign exchange markets to promote exports, create jobs, and restore wealth lost in the collapse. In the short run, this will prove deflationary as underpriced Chinese goods once again flood into global supply chains. In the longer run, Chinese deflation will be met with U.S. and Japanese inflation, as both countries print money to offset any appreciation in the yen or the dollar. At that point, the currency wars will be reignited, never really having gone away.

He goes on to point out:

Not all of these seven signs may come to pass. The appearance of some signs may negate or delay others. They will not come in any particular order. When any one sign does appear, investors should be alert to the specific consequences described and the investment implications.

And what I think is the most important section of the book are in the section Five Investments. This is his advice as to how to preserve your wealth in the coming collapse. Part of the reason for posting this is because a short time back one of my daughters said she wanted to discuss where to invest some money. I said I would be glad to discuss it with her, even though I did not consider myself an expert (by a LONG SHOT!). Before any discussion took place she proudly invested in Game Stop at, lets say, an unhealthy price.

Let the following be suggestions for my other daughters and the perhaps the first who invested before getting advise from her father.

Again, I have edited for brevity. Read the book for more elaboration on why he makes these recommendations:

  1. Gold. An allocation to gold of 10 to 20 percent of investable assets has much to commend it. The allocation should take physical form as coins or bullion in order to avoid the early terminations and cash settlements that are likely to affect paper gold markets in the future. Secure logistics, easily accessed by the investor, should be considered, but bank storage should be avoided, because gold stored in banks will not be accessible when most needed.
  2. Land. This investment includes undeveloped land in prime locations or land with agricultural potential, but it does not include land with structures. As with gold, land will perform well in an inflationary environment until nominal interest rates exceed inflation. Land’s nominal value may decline in deflation, but development costs decline more rapidly. This means that the land can be developed cheaply at the bottom of a deflationary phase and provide large returns in the inflation that is likely to follow.
  3. Fine art. This includes museum-quality paintings and drawings but is not intended to include the broader range of collectibles such as automobiles, wine, or memorabilia. Fine art offers gold’s return profile in both inflation and deflation, without being subject to the manipulation that affects gold. Central banks are not concerned with disorderly price increases in the art market and do not intervene to stop them.
  4. Alternative funds. This includes hedge funds and private equity funds with specified strategies. Hedge fund strategies that are robust to inflation, deflation, and disorder include long-short equity, global macro, and hard-asset strategies that target natural resources, precious metals, water, or energy. Private equity strategies should likewise involve hard assets, energy, transportation, and natural resources.
  5. Cash. This seems a surprising choice in a world threatened with runaway inflation and crashing currencies. But cash has a place, at least for the time being, because it is an excellent deflation hedge and has embedded optionality, which gives the holder an ability to pivot into other investments on a moment’s notice. A cash component in a portfolio also reduces overall portfolio volatility, the opposite of leverage.

Rickards further advises:

On the whole, a portfolio of 20 percent gold, 20 percent land, 10 percent fine art, 20 percent alternative funds, and 30 percent cash should offer an optimal combination of wealth preservation under conditions of inflation, deflation, and social unrest, while providing high risk-adjusted returns and reasonable liquidity. But no portfolio intended to achieve these goals works for the “buy-and-hold” investor. This portfolio must be actively managed. As indications and warnings become more pronounced, and as greater visibility is offered on certain outcomes, the portfolio must be modified in sensible ways.

The book was written in 2014. That is at least close to seven years ago. Before investing substantial assets please become informed using more recent and diversified sources and use your best judgment.

Quote of the day—James Rickards

Posted on by

Global markets today seem irresistible to central bankers with plans for better times. Planning is the central bankers’ baleful vanity, since, for them, markets are a test tube in which to try out their interventionist theories.

Central bankers control the price of money and therefore indirectly influence every market in the world. Given this immense power, the ideal central banker would be humble, cautious, and deferential to market signals. Instead, modern central bankers are both bold and arrogant in their efforts to bend markets to their will. Top-down central planning, dictating resource allocation and industrial output based on supposedly superior knowledge of needs and wants, is an impulse that has infected political players throughout history. It is both ironic and tragic that Western central banks have embraced central planning with gusto in the early twenty-first century, not long after the Soviet Union and Communist China abandoned it in the late twentieth. The Soviet Union and Communist China engaged in extreme central planning over the world’s two largest countries and one-third of the earth’s population for more than one hundred years combined. The result was a conspicuous and dismal failure. Today’s central planners, especially the Federal Reserve, will encounter the same failure in time. The open issues are, when and at what cost to society?

The impulse toward central planning often springs from the perceived need to solve a problem with a top-down solution. For Russian Communists in 1917, it was the problem of the czar and a feudal society. For Chinese Communists in 1949, it was local corruption and foreign imperialism. For the central planners at central banks today, the problem is deflation and low nominal growth. The problems are real, but the top-down solutions are illusory, the product of hubris and false ideologies.

James Rickards
2014
The Death of Money: The Coming Collapse of the International Monetary System
[See also Book Review: ‘The Death of Money’ by James Rickards which concludes with:

Rickards book is packed with cutting edge analysis and rational perspectives on pretty much every topic the world citizen has to know about. As of this moment, there is no other book offering explanations and solutions to the most pressing problems the world is facing, making “The Death of Money” an absolute must read.

I’m only about 25% into the book and find it fascinating. I found the market intelligence and financial war sections particularly interesting. Rickards and others worked with the CIA to design and implement a system which could have predicted the 9/11 attack a few days before it happened based on the shorting of airline stocks by people in the social networks of the hijackers. It also has other uses related to insider trading.

“An absolute must read”? I probably wouldn’t go that far, at least not based on what I have read so far. But it’s highly recommended.—Joe]

Quote of the day—John Rubino

Posted on by

If you’re over 40 you’ve lived through at least three epic financial bubbles: junk bonds in the 1980s, tech stocks in the 1990s, and housing in the 2000s. Each was spectacular in its own way, and each threatened to take down the whole financial system when it burst.

But they pale next to what’s happening today. Where those past bubbles were sector-specific, which is to say the mania and resulting carnage occurred mostly within one asset class, today’s bubble is spread across, well, pretty much everything – hence the term “everything bubble.”

When this one pops there won’t be a lot of hiding places.

John Rubino
February 8, 2021
Is This The Biggest Financial Bubble Ever? Hell Yes It Is
[I wrote about complex systems and emergent behavior last night. Our financial markets are another example of emergent behavior. The rule sets are large and complex but behavior still emerges that some may claim can only be explained by a conspiracy. But, again, no conspiracy need exist.

There is a financial bubble about to pop. Simultaneously there is a growing mass delusion about the existence of millions of “extremists” who must be “canceled” or even killed. And there is a pandemic (real or imagined, it doesn’t matter much in the context here) that are all contributing to epic shear forces in our society.

Prepare accordingly. It’s going to be a bumpy ride.—Joe]

Quote of the day—Brandon Smith

Posted on by

Conservatives and moderates MUST start to physically separate from the political left. We must remove ourselves from the blood sucking parasites that have attached themselves to us. This allows us to remain free to think and speak as we like, and it takes all power away from leftists to hurt us by disrupting our means of making a living.

Secession is a more extreme measure, but it WILL become necessary if leftists refuse to accept that we are no longer participating in their games of fear and subterfuge. Leftists are collectivist by nature, and collectivists see people as property. Walking away is not an option in their minds. So, though we might successfully separate, this would only be the beginning of the battle.

The important thing is to first make sure that conservatives KNOW that there are places they can go where their civil rights are valued and defended. If conservatives feel completely isolated and alone, many will give up, go dark and pray they are not discovered. This is unacceptable.

Brandon Smith
January 20, 2021
Biden’s Presidency Will Be A Catalyst For Secession – And Perhaps Civil War
[See also my previous QOTD from this same article with particular attention to the “scapegoat Olympics” comment.—Joe]

Quote of the day—Janet Yellen

Posted on by

Would I say there will never, ever be another financial crisis? … Probably that would be going too far. But I do think we’re much safer, and I hope that it will not be in our lifetimes, and I don’t believe it will be.

Janet Yellen
Federal Reserve Chair
June 27, 2017
Yellen: I Don’t See a Financial Crisis Occurring ‘In Our Lifetimes’
[I wonder, given the current state of things, if she would like to update that assessment. Or is that that she has a rather low expectation of our lifetimes?—Joe]

Quote of the day—Jim Quinn

Posted on by

They believe they have contained the spark with their fraudulent election victory; installation of an empty senile vassal as their conduit for the great reset; having their media mouthpieces propagate the falsity of a right wing white supremacist insurrection at the Capital; crushing dissent by censoring the truth through totalitarian social media conglomerates; proceeding with an impeachment farce based on Trump telling his supporters to peacefully protest the fraudulent election outcome; and threatening to destroy the lives of all vocal Trump supporters.

I am highly doubtful they have contained the spark. I believe there are smoldering embers just waiting to be stirred into a conflagration which will engulf the entire world in a fiery purging of the existing social order, which has exhausted itself and needs to be cleansed.

Jim Quinn
January 25, 2021
FOURTH TURNING DETONATION
[That is a plausible assessment.

So when and how will this conflagration happen?

I’m not seeing it happen unless there is a major trigger like hyperinflation or door-to-door gun confiscation, that sort of thing.—Joe]

Quote of the day—Brandon Smith

Posted on by

What we are witnessing right now is the final phase of a collapse scenario that was more than a decade in the making, and Biden is about to help finish the job.

Biden will no doubt seek to hyperinflate the dollar in the name of offsetting the losses and keep things afloat for a short time, but the real agenda will be to trigger price spikes in goods as well as eventually killing the dollar altogether. No amount of stimulus will stop the crash that has already been set in motion; the bailout measures from this point on are Kabuki theater, a show put on for the masses to make us believe that the government and the banks “did everything they could” to save us. The elites have no intention of stalling or stopping the collapse; their “great reset” demands it.

One’s initial assumption would be that Biden would then take the blame for the economic crisis, but it appears that the establishment is going to set up a Herbert Hoover narrative and lay all the blame squarely on Trump and conservatives. In the past I have noted that Trump’s trajectory was very similar to Herbert Hoover’s, in that he was a business mogul and Republican that pushed for corporate tax cut policies and also extensive tariff’s.

Brandon Smith
January 20, 2021
Biden’s Presidency Will Be A Catalyst For Secession – And Perhaps Civil War
[I’ve been listening to the book When Money Dies: The Nightmare Of The Weimar Hyper Inflation. There are a bunch of takeaways which I think are relevant to our current situation. The ones I have taken note of so far include:

  • The government was, in a sense, without options because of increasing obligations which they could not pay for. The option of defaulting was “too terrible to confront” and they could avoid the confrontation in the short term by printing more money. Our situation more than parallels theirs.
  • The volume of paper became so large people carried their money in baskets and wheelbarrows. People would have their baskets and wheelbarrows stolen and the thieves would leave the money behind.
  • Things moved quickly. A cup of coffee was priced at 5,000 Marks when you sat
    down on the table but was 8,000 Marks after you drank it and went to pay for
    it.
  • One of the things that slowed the increase in the currency supply was the physical creation of the paper bills*. Our digital money will not have these restrictions on the rate of increase.
  • Some people did well in this environment. Among these were people in businesses where their costs were upfront and product sales were much later.
  • People in union jobs with effective striking power producing essential goods were able to avoid the worst of the situation.
  • People in the services industries, include doctors, lawyers, etc. did poorly.
  • People in government jobs and on pensions were the worst hit. They had nothing to barter with and no effective ability to go on strike.
  • Certain areas (I’m thinking these were something like an equivalent of our counties) issued their own currencies with exchange rates based on a quantity of grain or fuel.
  • The masses of the people, including well respected economists, did not understand why it was happening. They needed someone or something to blame. Jews became the “winners” in the scapegoat Olympics.

We live in interesting times.—Joe]

* The capacity of the infrastructure for producing and distributing the currency was exceeded. With the denomination of the bills increasing at an exponential rate even the limits on things like the speed of the design of the bills was exceeded. The ability to produce and delivery the paper to the printers, get it through the printing presses, and distribute it to the banks exceeded the truck transportation capacity.

Quote of the day—John

Posted on by

The main idea of MMT is that since government creates money there are exactly no limits to how much money government can create.  Back when money was backed by gold (say, with one ounce of gold being worth $20) there was a physical limit – by definition you couldn’t have more $20 gold coins than you had ounces of gold.  MMT says, “Hey, since Nixon took the world off of the gold standard, we’ve been making up this money stuff anyway.  So let’s go all in.”  This is not exactly like a drunken 21 year old with Mom and Dad’s credit card in Las Vegas.  Not exactly.  The credit card has a credit limit.

John
January 20, 2021

The Post That Gave The World Bikini Economics: Why MMT Is A Bad Idea.
[It would appear that the U.S. is in the process of testing MMT.

We live in interesting times.—Joe]

Ghosts of the Constitution, past, present, and future

Posted on by

Yesterday I posed this quote from someone:

The constitution is the conservative equivalent of a gun-free zone.

I followed up with this deliberately very open ended question:

Now, can we use that insight and turn it into what needs to be done next?

The comments indicated everyone took a much narrower view of things than I had. One even took bizarre break from reality saying that my post meant I, “decided to go full-on Brownshirt/Blackshirt/Silvershirt” regarding the election. What? I wasn’t even talking about the election. How did they get there? Did they think they were able to read my mind through the Internet? That was really weird.

Here is what actually happened.

When I read the quote it was like first few nanoseconds of the big bang. Out of nothing there exploded a whole universe. It was like how some people describe their first LSD experience. I’ve never used LSD so I wouldn’t know for certain but that is my best analogy for how it affected me.

There were three comments (here, here, and here) which accurately touched an extremely small fraction of that universe that I saw unfold. And it was all about the past and the present. I was hoping for something more about the future as I was pretty sure I had explored enough of the past and present and satisfied myself that there wasn’t a whole lot more to be learned from those domains. I could be wrong about that so I present that part of my expanding universe for comments, corrections, and additional observations.

But what I really want is for people to think about and suggest a solution to the problem that can be implemented in the near future.

The Past

The authors of the constitution could have set up a separate branch of government which had the job of enforcing the adherence to the original intent. If not this then at least explicitly given the Federal courts some independent enforcement capability and protection from court packing. This may not have been practical or even possible but an attempt in this direction might have made some difference.

This attempts to address the issue, as McChuck, in the comments said, “The Constitution failed because it had no “OR ELSE” clause.”

At numerous critical times there were fairly clear cut issues before the courts which probably, at least a simple majority of people decided the Constitution was inadequate for the present circumstances. And rather than go the long route and get an amendment to the constitution through the process the courts allowed a short cut. This short cut was then used for things not nearly so clear cut. The short cut became a super highway with no restrictions.

I haven’t done the research but a couple very early, reasonably well known examples of such “clear cut issues” were the Lewis and Clark expedition and the Louisiana Purchase. Where does the constitution allow that in it’s enumerated powers?

There are probably hundreds if not thousands of case where little short cuts were taken over the centuries and they enabled all kinds of criminal trespass on the constitution.

What if, instead of politicians and judges instead of giving these short cuts a blind eye, they had handled it differently? What if they had said, “I think this is a good idea. I think this is within to domain of proper government power. BUT, it is also outside of the powers granted to the government”? Let’s, as rapidly as is practical, push through a narrowly scoped constitutional amendment to address this “clear cut issue”. This would have at least attempted to prevent the short cut from becoming a superhighway.

But the politicians of the time didn’t see, didn’t care, or wanted the superhighway and neither of those things happened.

The Present

The U.S. government debt is almost $28 trillion with $159 trillion in unfunded liabilities and constantly going up. Had the original intent of the U.S. constitution been adhered to that could not have happened. The superhighway of criminal trespass on the constitution is is a superhighway to disaster.

The criminal trespass on our personal liberties are just as gargantuan as the economic disaster. The First, Second, and Fourth enumerated rights in the Bill of Rights may have the most lanes of the superhighway over them but all of them, with the possible exception of the Third Amendment, have been paved over with at least a bike path clearly marked where there was once a tall fence with no gate and a NO TRESPASSING sign on it.

People who believe the constitution should be respected according to original intent started talking with each other. The Internet made it far easier to connect with others of a similar mindset. They realize, “Not only is the government infringing upon our rights, the courts aren’t coming to our aid.”

The criminals see the Internet chatter and see erosion of their voting base as more people come up to speed on the situation. The criminals shadow ban people. They freeze their accounts for a day or a week. Then they start completely banning people.

This couple was completely banned by Facebook and they have little* to no idea what it was about. A few weeks later they were both banned within minutes of each other from Instagram. All they posted on Instagram were family pictures. No explain was given. No appeal was possible.

Other people have received some clues. And it’s over the tiniest of stuff:

They are making every post of mine with #DontCaliforniaMyTexas as hate speech and deleting it. I got one day in jail for it

In the last week it was the President of the United States who permanently banned from Twitter. Shortly after POTUS moved to Parler, Apple, Google, and Amazon in a matter of just a few days deplatformed their apps and then the entire site. Poof! Gone! The company is possibly permanently destroyed.

Yesterday morning AR15.com was booted from GoDaddy (see also here). They are now back up on AWS Amazon. I wonder how long that will last as AWS Amazon was the host for Parler.

The political left is saying, “It’s time..” and “Cleansing the movement…” is next.

“Maybe they are being hyper sensitive to people of any political persuasion”, you suggest. It doesn’t look like that to me and others:

Big Tech did not remove House Speaker Nancy Pelosi’s accounts when she called for “uprisings” against the Trump administration. Facebook and Twitter did not target Alexandria Ocasio-Cortez when she claimed that allegedly marginalized groups have “no choice but to riot.” These platforms did not act against Kamala Harris when she said the riots “should not” stop.

This week, Joe Biden condemned the Capitol rioters, saying, “What we witnessed yesterday was not dissent, it was not disorder, it was not protest. It was chaos. They weren’t protesters, don’t dare call them protesters. They were a riotous mob, insurrectionists, domestic terrorists. It’s that basic, it’s that simple.”

Yet he refused to speak in those terms when Black Lives Matter and antifa militants were throwing Molotov cocktails at federal buildings, setting up “autonomous zones,” and burning down cities. Instead, he condemned Trump for holding up a Bible at a church — without mentioning the fact that that very church had been set on fire the night before.

What makes you think it will end with social media? What if the political left pulls your Internet connection for some flimsy excuse, or none at all? You think that would be going too far because Internet is essentially a requirement of life these days? Really? You think that would stop them? Do you think I am extrapolating way out into never-never land? “That can’t happen here?”

What if banks refused to do business with you. Wouldn’t that be worse than pulling your Internet connection? Guess what…The Obama administration was telling banks, “If you do business with risky customers, such as gun manufactures or dealers, you will suffer the consequences.” It was called Operation Choke Point.

What about other services such as FedEx, UPS, USPS, your water, waste disposal, and electricity? They didn’t “censor” you, you can still print a newsletter or hold a sign up on the street corner, right? And as long as it wasn’t a government entity refusing you service it’s entirely legit, right?

It used to be motels, restaurants, gasoline stations, etc. could, and did, refuse service to people based on their own criteria. There was a Federal law passed which prohibited such discrimination when it was based on the grounds of “race, color, religion, or national origin.” But it doesn’t protect you if you happen to be one of those nasty people who believe the constitution means what it says.

Do not be surprised if there aren’t soon “blacklists” that result in a surprising number of restrictions on what we normally consider public services. Don’t think so? Today Senator Chuck Schumer called for authorities to add the Capitol rioters to a national no-fly list.

The net result of this? Individual constitutionalists are, metaphorically, standing on some random street corner holding up homemade signs saying, “Repent! The End is Near!” Thousands of criminals occasionally glance at the “Gun-free zone” sign as they zoom by on the nearby superhighway at 100+ MPH and snicker.

The comparisons to the early days of what is described in Gulag Archipelago are eerie. Have a chat with someone with Venezuela, or East Germany sometime.

The Future

This is where I was/am hoping to get some discussion. How can we regain a limited government and our personal liberties?

An armed rebellion? Maybe. But I’m not seeing that as a high probability path. I could see that bringing down the government. But I don’t see that as necessarily building a consensus for the resurrections of limited government rising from the ashes. And your going to start your own cancel culture with a scoped rifle? And how does that work out? You shoot every politician with a ‘D’ beside their name? Then what? Hold another election with the same people voting (and/or cheating) as last time?

And at what point to you start shooting? Are you justified in shooting if you get booted off Facebook or Twitter? And who would you shoot if you somehow managed to convince yourself it was justified? Who do you shoot if some anonymous bureaucrat told your bank to stop doing business with you?

What’s the path to victory here? I am a details oriented guy and as I dig into the details I’m not seeing a viable path.

There is the Lyle option, as I like to think of it. A (supposed) return to Protestant values. This is, perhaps, due to the Second Coming—this isn’t entirely clear to me. I largely dismiss this, not just because I don’t believe in the existence of god(s) but because if the constitution was originally divinely inspired then why did it go so terrible wrong and how can we expect to be better the second time around?

The best I have been able to come up with is that we are probably headed for a Minsky Moment and/or a currency crisis in the somewhat near future. This could be a worldwide event and it could involve the collapse of our currency and perhaps our government. Perhaps out of the ashes of the collapse a more constrained government will have more appeal and will rise.

I see this second option as more probable of success, but still improbable, because the government size proved to be its own downfall rather than being brought down by individualist rebels. Clear and positive proof of big government failure is probably required to convince a majority of people to try small government again.

What I don’t see is a high probability of success path that can be traversed by a few people on the street corners with their handmade signs.

Please discuss.

* Barron recently told me, “I may have been tagged because I didn’t use the complete spelling of my last name.” Yet I know people who have been using completely, and pretty obviously, fake names for their Facebook accounts for years.

Quote of the day—Egon von Greyerz

Posted on by

It is quite ominous that 100 years after Weimar, the world is standing on the cusp of a  similar debt and currency collapse with hyperinflation as a consequence.

100 years ago it was primarily the problem of one country whose debt the world could afford to write off. Well they had no choice since it was worthless anyway.

But this time it is a global problem with every country in the same situation. There will be no one to save individual countries or the global financial system. Yes, all major central banks will print endless amounts of money. But that will only exacerbate the situation.

A debt problem can never be solved with more debt. And a dying currency cannot be resurrected.

So the world is in for a major shock in the next few years. The problems will be at all levels – financial, social, political and geopolitical.

Egon von Greyerz
December 2020
Gold Vs Bitcoin & The Death Of Money
[Chet and I used to discuss this sort of thing for hours back in the 2009 to 2010 timeframe. It was impossible for us to put a due date on the implosion we imagined we saw coming. One could claim that since it hasn’t happened yet that we were wrong about it happening at all.

Perhaps.

Still, it seems to be impossible that the national debt can ever be paid off. And from a political standpoint I doubt it can even be reduced. And that has to have consequences, doesn’t it? I keep seeing a reset of some sort in the future. And no matter how the reset goes down I see rough times for a lot of people.

We live in interesting times.—Joe]