Guest Post: Mass Delusion - American Style

Tyler Durden's picture

Submitted by Jim Quinn of The Burning Platform

Mass Delusion - American Style

“Men, it has been well said, think in herds; it will be seen that
they go mad in herds, while they only recover their senses slowly, and
one by one.” – Charles Mackay - 
Extraordinary Popular Delusions and the Madness of Crowds


The American public thinks they are rugged individualists, who come
to conclusions based upon sound reason and a rational thought process.
The truth is that the vast majority of Americans act like a herd of
cattle or a horde of lemmings. Throughout history there have been many
instances of mass delusion. They include the South Sea Company bubble,
Mississippi Company bubble, Dutch Tulip bubble, and Salem witch trials.
It appears that mass delusion has replaced baseball as the
national past-time in America. In the space of the last 15 years the
American public have fallen for the three whopper delusions:

  1. Buy stocks for the long run
  2. Homes are always a great investment
  3. Globalization will benefit all Americans

Bill Bonner and Lila Rajiva ponder why people have always acted in a herd like manner in their outstanding book Mobs, Messiahs and Markets:

“Of course, we doubt if many public
prescriptions are really intended to solve problems. People certainly
believe they are when they propose them. But, like so much of what goes
on in a public spectacle, its favorite slogans, too, are delusional –
more in the nature of placebos than propositions. People repeat them
like Hail Marys because it makes them feel better. Most of our beliefs
about the economy – and everything else – are of this nature. They are
forms of self medication, superstitious lip service we pay to the powers
of the dark, like touching wood….or throwing salt over your shoulder.
“Stocks for the long run,” “Globalization is good.” We repeat slogans to
ourselves, because everyone else does. It is not so much bad luck we
want to avoid as being on our own. Why it is that losing your life
savings should be less painful if you have lost it in the company of one
million other losers, we don’t know. But mankind is first of all a herd
animal and fears nothing more than not being part of the herd.”

Stocks for the Long Run

The book Stocks for the Long Run was
written by Jeremy Siegel in the mid-1990′s. The premise is that if you
just buy and hold stocks over a 20 to 30 year period, you will always
make money. This was exactly what the Wall Street witch doctors ordered.
They pounded this message into the brains of every American incessantly
in their advertising campaigns, literature and propaganda. It became an
unquestioned truth. Just one problem. It isn’t the truth. Valuations
matter. The Dow Jones was at the same level in 1982 as it was in 1966.
On an inflation adjusted basis, the Dow did not get back to the 1966
level until 1990. That is 24 years of no return in the stock market. The
American public ignored the true facts and piled into equities during
the late 1990s. The result was one of the greatest examples of mass
delusion in history. The internet bubble drove the NASDAQ market to a
peak of 5,048 in March 2000. Today it sits at 2,180. Ten years after the
bubble burst, the NASDAQ is still down 57% from its peak.

Delusional Americans all over the country believed in the new
internet paradigm. Fools thought “bricks and mortar” retailers were
dead. Morons quit their jobs so they could get rich day trading. Wall
Street hucksters took advantage of this hysteria by attaching .COM to
every ridiculous IPO they shilled to the American public. Wall Street
knew these companies were pieces of crap, but they churned out the IPOs
as quickly as possible while the getting was good. The Wall Street
oligarchs made billions and the delusional American public got screwed.
You would think that average Americans would have learned their lesson
after this experience. They did not. They continued to buy into the Wall
Street lies about stocks being a sure path to riches. The fact is that
the S&P 500 is currently at the same level it was in March 1998. On
an inflation adjusted basis, it is 25% below the level of 1998. You
don’t hear this information on CNBC because the oligarchs that control
the media need the delusion to continue in order to harvest more riches
from the ignorant masses.

Chart forS&P 500 INDEX,RTH (^GSPC)

Home Sweet Home

“The continuing shortages of housing inventory are driving the price gains. There is no evidence of bubbles popping.”David Lereah – Chief Economist for National Association of Realtors – 2005

“We’ve never had a decline in house prices on a nationwide basis.
So, what I think what is more likely is that house prices will slow,
maybe stabilize, might slow consumption spending a bit. I don’t think
it’s gonna drive the economy too far from its full employment path,
Ben Bernanke – 2005

“House prices have risen by nearly 25 percent over the past two
years. Although speculative activity has increased in some areas, at a
national level these price increases largely reflect strong economic
fundamentals.” -
Ben Bernanke – 2005

Why was it that two supposedly brilliant, highly trained economists,
with countless degrees and high paying positions could be so very wrong?
Were they just mistaken or were they purposefully encouraging a
national delusion? With the bursting of the internet bubble in 2000 –
2002, Americans immediately proceeded to the next bubble. Alan Greenspan
was an almost God like figure in the early 2000s. He had “saved” the
economy countless times during his 15 year reign of terror at
the Federal Reserve. When he spoke, the American people listened. After
the internet bubble and 9/11, he proceeded to reduce interest rates to
1% for an extended period of time. He then gave the all clear sign to
Americans to take out adjustable rate mortgages. Lastly, Mr. Free
Markets decided that banks and mortgage brokers could police themselves.
The result was the greatest housing bubble in US history and a near
collapse of the worldwide financial system.

Sane economists like Robert Shiller saw it for what it was. He calmly
pointed out that home prices had pretty much tracked inflation for over
100 years. A 100% increase in home prices over the course of 3 years
was irrationally exuberant. He was scorned and ridiculed by the delusion
propagators at the NAR, the cheerleaders on CNBC, the Wall Street money
changers, the Federal Reserve stuffed suits, and the corrupt
politicians in Washington DC. The usual drivel about positive
demographics, low interest rates, strong income growth, and limited land
to develop were spewed out by the corporate media complex. The
beneficiaries of this mass delusion were the Wall Street banks that
created mortgage products and derivatives faster than Obama spreads our
wealth around.

Mass delusion is always encouraged by those who benefit most from the
mass delusion. David Lereah has admitted that he lied about the housing
bubble because he was employed by realtors. Realtors made millions in
commissions. Appraisers made millions in fees by inflating appraisals.
Mortgage brokers made millions by encouraging people to lie on mortgage
applications. Wall Street whores made billions by creating toxic
packages of mortgages and selling them to Irish nuns, old ladies
and clueless municipal administrators. The ratings agencies made
hundreds of millions in fees for slapping  AAA ratings on toxic
derivatives. Politicians got rich from political “contributions”
from Fannie Mae, Freddie Mac, Wall Street, and the NAR. Any reasonable
human being could look at the chart above and see that this would end
badly, but Americans wanted to be deluded. They choose to believe. The
housing market has now been falling for five years, with another five
years to go. Ben Bernanke has reduced interest rates to zero. I wonder
how that will work out.    

Who Benefited from Globalization?

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” – Mark Twain

From the time that Bill Clinton signed the NAFTA agreement in 1994,
globalization has been touted by those in power as beneficial to all
Americans. How could free markets and free trade be a bad thing?
Corporate America, Wall Street, and the mainstream corporate media have
blared the propaganda of globalization benefits from their loudspeakers.
In theory, globalization appears to be a positive concept. It describes
a process by which regional economies, societies, and cultures have
become integrated through a global network of communication,
transportation, and trade. The truth is that globalization is not
inherently good or inherently bad. The idea is that each country has its
own strengths and weaknesses. Each country will take advantage of their
strengths and rely on other countries to help mitigate their
weaknesses. This will result in increased trade, a larger world market,
and economic progress for all. One small problem. Trade is not really
free. Every country on earth protects various industries. Every country
on earth manipulates their currency in order to get an edge. Every
country on earth invokes tariffs to protect their national interests.

Bill Bonner and Lila Rajiva address the difficulties of globalization and “free trade” in Mobs, Messiahs and Markets:

“Unfair trade is yet another of the
dodgy slogans festooning the spectacle of globalization like tinsel
slithering around a pole dancer. How can different regulations and
practices in different countries constitute unfairness? Isn’t the
essence of trade that different countries have different things to offer
– whether cheap labor, or better technology, or more bountiful natural
resources, or more welcoming business environments? If all countries had
exactly the same things to offer each other, there would be no reason
to trade at all. But what “fair” trade advocates are really advocating,
of course, is unfair trade! They want to make sure their foreign
competitors divest themselves of the very advantages that they bring to

“We notice, for instance, that when
Americans in Detroit lose jobs to other Americans in California, they
might grumble a bit. But, by and large, they accept it as part of the
nature of things. They move, or retrain, or change jobs. But when they
lose their jobs to Japanese in Osaka or Indians in Bangalore, then a cry
goes up. Unfair trade, howl the trade unions; race to the bottom, scold
the social activists; yellow – or brown – peril, shriek the xenophobes
and racists.”

It seems the American middle class was sold a false bill of goods.
They bought the Big Lie that globalization would benefit them. They
bought into the delusion that even though their high paying
manufacturing jobs sailed away to China and India, they could maintain
their lifestyle through brain work, easy credit, cheap goods made in
China by the people who took their jobs, and the ever increasing value
of their homes. Noam Chomsky notes the fallacy of this delusion:

“The dominant propaganda systems have
appropriated the term “globalization” to refer to the specific version
of international economic integration that they favor, which privileges
the rights of investors and lenders, those of people being incidental.”

Again, one must seek out who benefits from the delusion of
globalization. The crony capitalists, Wall Street oligarchs, and
corporate fascists who control the puppet strings in this country have
benefited greatly from the Big Lie. Over 5 million manufacturing jobs
have been off-shored since 2000. These good paying jobs are never coming
back. Millions of service sector jobs continue to be shipped overseas.
The global conglomerates like GE, HP, Oracle, IBM, and Boeing continue
to rake in billions of profits, distributing millions to its high paid
executives, while gutting middle class America. The ruling oligarchs
convinced Americans to take advantage of cheap goods and easy credit, to
buy electronics, cars, appliances, new kitchens, and take the vacations
of their dreams. This Big Lie has left the American consumer with $2.5
trillion of non-mortgage debt and the lowest level of home equity in
history. Retailers like Wal-Mart, Target, Home Depot, and Best
Buy reaped billions in profits as Americans whipped out one of their 10
credit cards to buy HDTV’s, economy bags of tube socks, iPads, iPods,
stainless steel refrigerators, and Dell computers. Small town America’s
mom and pop economy was gutted by Big Box retailers selling the
globalization delusion. The biggest beneficiaries of the globalization
delusion were the Wall Street banks. They control 80% of credit card
market and have reaped billions in interest at rates exceeding 20%,
while sucking $20 billion per year in late fees from the clueless
public. Wall Street bankers have rewarded themselves for their
brilliance in destroying the middle class by reaping multi-million
dollar bonus packages.

Vincible Ignorance

“Most ignorance is vincible ignorance. We don’t know because we don’t want to know.” - Aldous Huxley

Based on all available evidence, it seems the American public wants
to be misled. They have chosen ignorance over knowledge and
understanding. They want to believe their corrupt leaders. They want to
believe that things always work out in the long run. They want to
believe that the economy is about to get better. They don’t want to
think about unsustainable debt, unfunded liabilities, saving for
retirement, or Simon Cowell leaving American Idol. Americans desperately
want to be deluded into another bubble, but there are no evident
bubbles left to blow. The existing American delusion is that the
current fiscal path will not lead to the utter destruction of our once
great Republic.


America resembles a 40 year old aging baseball icon with two bad
knees, a pot belly, receding hairline and delusions that he is still the
ball player he was at 24. He doesn’t realize that his skills are shot,
as he flails at curveballs in the dirt thrown by 21 year old kids. The
rest of the league knows he is washed up, but he refuses to accept
reality. America isn’t even running on fumes at this point. It is
running on delusions. Politicians think they have saved the country from
a Depression by adding $3 trillion to the National Debt and allowing 
Wall Street banks to pretend they are solvent. Americans have been
deluded by the ruling oligarchs that a $700 billion bank bailout, an
$800 billion pork filled stimulus plan, the Federal Reserve buying $1.2
trillion of toxic mortgages, and the Treasury forcing taxpayers to pick
up a $400 billion tab for Fannie Mae and Freddie Mac’s bad loans has
actually solved a problem created by too much debt.

The American herd has gone mad. A few people have regained their
senses, but the vast majority still exhibits the behavior of sheep being
led to slaughter. The ruling oligarchs have utter contempt for the
average American, but they fear the masses. In order to retain their
power and wealth, they gladly hand out two years of unemployment
payments, food stamps, and welfare payments to keep the masses sedated.
The working middle class foots the bill. Corruption abounds and is
sustained by the passage of more laws and regulations. The sociopathic
powers that control the levers of power in this country need to be
brought to justice if this country has any chance at survival. The den
of vipers and thieves have trampled on the Constitution, speculated with
the country’s funds, risked blowing up the financial system, committed
fraud on a massive scale, and continue to rape and pillage the American
citizens. Vincible ignorance by the American people is no longer
a legitimate excuse. The criminals on Wall Street and Washington DC must
be routed out and Americans must awaken from their delusional state
before it is too late. I weep for the liberty of my country.

And you run and you run to catch up with the sun, but it’s sinking
Racing around to come up behind you again
The sun is the same in a relative way, but you’re older
Shorter of breath and one day closer to death

                                          Pink Floyd – Time

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hedgeless_horseman's picture

Petraeus: No Guarantee of Afghanistan Drawdown in July 2011

"Oceania has always been at war with Eurasia."

Fish Gone Bad's picture

I woke up this morning and came to the conclusion that things were just not fucked up enough.  Yeah, they are plenty fucked up, but they can still get fucked up even more.  Is the kick the can down the road game over?  Not hardly.  Bush handed Obama a mess and Obama managed to band aid things over and kick that can some more.  There are going to be more bail outs coming because that is what happens when the only tool one has is to kick the can.

So when does it end?  Hell, I don't know.  It ends when kicking the can no longer works.

rapunzel's picture

B I G sign 30ft x 30ft on highway driving into the lead ville.



Dr. Sandi's picture

B I G sign 30ft x 30ft on highway driving into the lead ville.



Damn straight. Voting for Obama led directly to the Internet Bubble, the Housing bubble and the 9 1 1 attacks. That bastard just wants to destroy America.

New_Meat's picture

"That bastard just wants to destroy America."

You said it, I didn't.

- Ned

FEDbuster's picture

I was always told the three biggest lies were:

1. The check is in the mail.

2. I love you.

3. I won't cum in your mouth.

CitizenPete's picture

Yeah! And the prescription drug benefit liability is now 20 TRILLION in the red, surpassing social security liabilities. That damn socialist Obam.....ah, wait that was BUSH WHO SIGNED THAT BILL.


This is not a left right issue. Wake up.

Ned Zeppelin's picture

you missed the B I G sign on the highway right after it:



reread the article above. 

Gordon Freeman's picture

Or until you cut off the kicker's feet...

Alexandre Stavisky's picture

Peter, Peter, American eater

Had a Republic but couldn't keep her

Sold his honor for a daily meal

'Til there was nothing left, to beg, borrow, or steal.




rapunzel's picture

peter, peter america eater

had a democrat but couldn't eat her.

illyia's picture


First we eat our children, (check)

Then we eat each other, (on-going)

Then we eat ourselves. (spirit of the future)

And, that is the end-game?!

I suppose, then, that is what we must get to in order to address the usury and corruption?

Roger O. Thornhill's picture

Endless war. And no real peace.

The founders, especially Washington had it right when they said to stay out these international "entanglements." Switzerland is the better example of how we should have dealt with the world.

Also, I had always thought the American people were just stupid, but they really aren't, it is hard to know anything when you have a corporate/socialist/governmental media with an agenda, and an education system that pushes politically correct tripe instead of logic and cold, hard facts.

We became too succcessful and too lazy and thought we could make a utopia, instead of understanding there is no such thing. The only utopias that have been tried (by Hitler, Mao, Lenin, Pol Pot) have been an education in how horrible human beings can be when they try to make an ideal society.

Actually a good serious implosion may do us all some good. Faster would be better, because this slow death spiral is debilitating. Luckily we have an amazing constitution - if we would just follow it and not try and subvert it.

merehuman's picture

Velobabe, did you forget who you are?

Oh regional Indian's picture

A hah! I've been wondering!


Marla And Me's picture

Velobabe, just like Chumbawumba, has been "capped."  If you look her up in the search engine, you'll get a "You are not authorized to access this page" message.  So Tyler, what's up with these prolific users that go MIA?  Do they elect to kill their account, or have you been eliminating certain profiles?  Which one is it Tyler, inquiring minds would like to know, given the mantra of this site...

ATG's picture

King David on MTP this AM

as part of the power elite runup to being

drafted as President of Amerika in 2012.

World expert in counter-insurgency against the little people,

his motto Money is Ammunition...

DavidPierre's picture

Jim Quinn crawled out from under his turd pile at blog and is attempting to answer some basic questions about "Truth and the Amerikan Way".

Skip to the end of this thread for some Sunday night fun and games.

boooyaaaah's picture

Americans are practical basing decisions on the evidence available


Zero hedge was so sure that Inflation was on the menu

And only recently is foreseeing deflation


So Tyler must be an Ameican in deed if not in fact


Tyler Durden's picture

If you actually read zero hedge, you will know that we have been "so sure" hyperinflation is on the menu... but not before a destructive bout of deflation, at which the Fed will throw everything to preserve the last semblance of a status quo.

Red Neck Repugnicant's picture


Gold goes in the ditch while the dollar soars out of this cosmos?  Then the exact inverse? If so, I agree - despite popular opinion from posters on the forum. 

I think the obsession with gold is a prime example of mass delusion on a global scale.  There might become a time when everyone is killing everyone else for it, but not before a deflationary buzzsaw chops it below $1000.

Oh...and one other mass delusion - the bearded Man in the sky who works in mysterious ways and wants 10% of your income.   

Christobevii3's picture

It depends Red Neck.  If the Europeans continue to panic when the Euro drops and buy gold it might create a continuation of the gold and dollar both going up.  When the dollar has backed off gold has remained relatively flat.  People keep touting silver as out of ratio but I think it isn't dense enough for the rich and the industrial uses are diminished with the death of 35mm film and solid state electronics that buying it is senseless.


I'm in the process of getting in biking shape and purchasing a nice bicycle.  Learning to create water filters out of charcoal (mesquite trees everywhere ready to be made into ash) and storing food.  I'd ideally want to be able to run my deep freeze on solar and would be set.  Only after I have those aligned and enough food for a year and the plans to continue to grow my own food would I consider gold.  Obese people will turn into mindless zombies when mcdonalds can no longer supply their blood sugar spike and 3000 calorie meals.

Kaiser Sousa's picture

I suggest a refresher on the copious industrial applications in which Silver is bieng used and will be used going forth based on its unique charactersics and its current undervaluation due primarily to blatant market manipulation by guess who...JP Morgan and other cartel members, aka the enemies of real money.  the only thing senseless about Silver is those individuals the author of this essay has depicted most accurately who dont own any and who still believe that the debt coupon dollar the bankers concoct out of nothingness is anything other than worthless paper....  

poopdeville's picture

If money is meant to be a proxy for labor, precious metals are not money.  The value of labor decays over time, as entropy causes the value of the product of that labor to decay. If money is to be a proxy to labor, its value must decay in time as well.  Consider that labor performed 100 years ago is not worth as much as labor performed today.  Because of the effects of time, the company/institution the 100-year-old labor helped support has probably failed.  And so no one can benefit from the company/institution any longer.  The same is true for 20-year-old labor, under a probabilistic argument.  If there's a 10% chance that the institution you helped create is destroyed, your 20 year old dollar is worth 10% more than it should be, based on the denomination on the bill.  This is very simple:  If I cannot benefit from your labor, you cannot benefit from mine.  Retirement is freeloading.  The Gold Standard is rent seeking on the grandest scale.  The entropy effects on gold are utterly miniscule, pulling value out of today's labor.

People who seek a PM backed currency are rent seekers (seeking scarcity rent).  If used as currency, precious metals will become more valuable in time, as more and more peoples' labor compete for the same slivers.  An economy in which one can become wealthy by doing nothing is unhealthy.  

George the baby crusher's picture

I really like what you wrote.  I'm not sure I agree fully but in part.  Great post. And now I see some one junked you, I guess they got frustrated because you used some big words.


Maniac Researcher's picture

People who seek a PM backed currency are rent seekers (seeking scarcity rent)

That's definitely one reason. I've seen some admit it and others not.'s picture

In economics, rent seeking occurs when an individual, organization or firm seeks to earn income by capturing economic rent through manipulation or exploitation of the economic or political environment, rather than by earning profits through economic transactions and the production of added wealth.

Most studies of rent seeking focus on efforts to capture special monopoly privileges, such as government regulation of free enterprise competition, though the term itself is derived from the far older and more established practice of appropriating a portion of production by gaining ownership or control of land.

Maniac Researcher's picture

Crockett - you junk me? Because we are actually in agreeance.

My point is that I've been reading a certain comfort level in the goldbug crowd with rent seeking - in just the way it was defined above. As you've shown it's basically unjust - so it always gives me a chuckle to see the same crowd cry foul when they witness massive market manipulation by the banksters.

I'm not fooled by the 'populism' of the gold/guns/collapse crowd. If you have the money lying around to buy that much specie and that much ammo that it's going to make a difference, you probably aren't from the bottom 90% of the folks that are getting screwed out there. Basically this group boils down to at least two discernable camps: the ones that can afford to be rent seekers (what makes them different from the banksters, again?) ..and those who are talking shit - without the firepower/money to do much to resist what comes next. If the latter group wants to collect guns and gold, fine. But that isn't the only survival strategy out there.'s picture

Crockett - you junk me? Because we are actually in agreeance.

I did not junk you and unless I am seriously mistaken we are not in agreement. I posted the wiki definition of rent seeking in order to show that those who call for a gold backed currency are in no way rent seeking. Rent seeking involves "manipulation or exploitation of the economic or political environment, rather than by earning profits through economic transactions and the production of added wealth."

The reinstitution of a gold or bimetallic standard could in no way be called rent seeking. The amount of gold in existence can not be manipulated, while the Federal Reserve Note is openly manipulated in such a way as to incur inflation. The dividends of that inflation, not to mention the interest earned by bankers on "money" which they create from nothing can be described as nothing less than rent seeking. It is manipulative, exploitive and unconstitutional.


I'm not fooled by the 'populism' of the gold/guns/collapse crowd. If you have the money lying around to buy that much specie and that much ammo that it's going to make a difference, you probably aren't from the bottom 90% of the folks that are getting screwed out there.

You don't hang out at the gun shop, do you? I can assure you that the vast majority of people through the door are regular folks. Go check it out sometime.


If the latter group wants to collect guns and gold, fine. But that isn't the only survival strategy out there.

Right, there's aways the Quisling or Vichy route.

Maniac Researcher's picture

..and here I thought your so-called 'anarchist' sensibilities were actually, well, sensible. My bad. Good luck with your nonsensical 'anarchocapitalism'. I think the actual political designation for that group is called libertarianism.

The reinstitution of a gold or bimetallic standard could in no way be called rent seeking

Right. And people hoarding gold right now hoping for a new bimetallic standard aren't rent seekers. Now who's delusional?

You don't hang out at the gun shop, do you? I can assure you that the vast majority of people through the door are regular folks.

Again, you've left out most of my argument - in which I stated that people with enough gold and guns to actually make a difference in a so-called 'collapse event' are not in the same class as 'regular folks'. 

there's aways the Quisling or Vichy route. Again with the 'either you're with us or against us argument'. I don't want to be on your side, Crockett - you're a douche. I also have no love for the banksters. Unlike you, I wasn't hanging at the gunshop. I was working for these motherfuckers and learning how they operate. Know thy enemy.'s picture

There once was a Maniac Researcher,

Who imbibed banker-speak as a precursor.

Then he took up his pen,

Against sovereign men,

You could say he's a mighty fine kneejerker.

maddy10's picture


If everyone had to do something to get something and not carry any value into the future,

Then we are negating the entire economic structure of past 300 years

What are stocks and bonds?- expectation of interest upon saved and invested capital

Thinking of money as just a token of transaction is imprudent

Not that I support the present infinite money system for few, and when we are in dilemma about the role of PMs as money

we need to evolve a new system of honest money,easier said than done

who will bell the cat then??????


trav7777's picture

I agree with you mostly...I see a lot of bugs who want to buy gold and have it "go up" and then they will be rich and can buy things.

AKA, speculators.  But there are others who are merely using it as a more secure savings vehicle that is portable. 

There is no difference between most paperbugs and goldbugs in terms of their desire to be vultures and feast on the carcasses of the bankrupt and become "kings" of a sort.  But there are others who realize that this is a bullshit fantasy and that gold is merely another form of wealth storage.

But it is true that you have to be a bit of a hitter to even afford an ounce these days.  Most people can't just drop $1200 on something the size of a dollar coin

David449420's picture

I did not junk you. Instead, I am responding to you.  Those junkers were also responding to you, but failed to articulate why.

You are a shill.

For which financial parasitical organization, I have no idea.  It probably doesn't matter. You joined 7-8 weeks ago, & it is clear that your agenda has been to obfuscate, divert the direction of the topic under discussion, etc, every time you respond.

Hundreds of millions of people around the world have been adversely impacted & had their lives turned upside down (or are facing that in the near future) by the actions of these financial parasites and  you, in your pathetically small way are intent on furthering these parasites?

What could they possibly offer you to sell your integrity and your soul?

Are you even capable of feeling the contempt?


Max Hunter's picture

I'm glad someone called total bull shit on this guy. Boy, he sure did paint that up nice and pretty though.. good god..

he is essentially saying that if I worked a day in 1966 and saved 10 silver dollars from that day and didn't buy anything but saved it, that that labor should be devalued?  Nonesense. Absurdity.

mephisto's picture

If money is meant to be a proxy for labor, precious metals are not money.  The value of labor decays over time...

OK, lets tweak it a bit. Lets try 'Money is a proxy for future labor'. A good store of value will buy me another mans labor at any time in the future. Of course the results of past labor decay. That doesn't mean money has to.

You seem to relate inflation to entropic growth and claim it is as inevitable as the second law of thermodynamics, which is not true.

merehuman's picture

poop, full of shit, all that mentalizing a simple thing . I will work for silver or gold but not for a piece of shit paper, altho i do prefer charmin.

Have  a better day with the mental acrobatics.

trav7777's picture

You state things as axioms which are not true.

Labor 100 years ago is worth the same as labor now.  Labor is labor.  It's an abstraction.  The LTV from Marx, et. al., was not intended to be fixed by a particular point in time.

Whale oil labor in 1840 was worth what it was paid, this is supply and demand where value is created by the market.  Do not say that this labor was worthless at THAT point in time because it is worthless now.

Software development labor now would have been worthless THEN.  So, if one of us cashes a check for $100 for some coding work, our $100 is 100% overvalued?  This notion that the value of labor decays due to entropy is also grossly wrong.  Entropy has nothing whatsoever to do with it.

epobirs's picture

This is completely nonsensical. The value of labor is immediate. Any value at a date after the transaction that purchased the labor is fortunate but not a requirement for labor to have value. If I buy a cheeseburger at a restaurant, the labor portion of that item's creation is value received in full when I take delivery. If I fail to eat the cheeseburger and leave it to rot, that is my loss. I don't get my exchanged value back. The laborer held up his end of the bargain. If the restaurant no longer is in business a century later, what matter is that to the transaction?

The same goes for products of far greater duration than a cheeseburger. That a house built a hundred years ago and received no upkeep is likely a wreck is not the failing of the laborer who did the construction. Assuming he performed correctly at the time, the purchaser of the labor got full value.

I regularly do business with institutions decades or centuries old. They aren't just the product of labor performed long ago but a long series of labor transactions over the years, each concern with their respective moment. It was their job to make the place continue into the next moment, not the next century. That a chain of labors can achieve such longevity is just the nature of the world. We'd all be much poorer if everyone had to start from scratch, butt naked on the savannah and looking for the next meal.

The usefulness of gold or other highly durable rare element as a measure of value comes largely from its durability. A man can receive a gold coin in exchange for a service performed and hand over that gold to his grandchild a century later with full confidence that it hasn't rotted away. What value is placed on that gold may shift to and fro over that century but unless there has been a mountain of gold found inside an asteroid, the coin is still likely to be of value on an elemental basis.

Again, to say that labor performed in the past is of less value is nonsense. Unless cheap time machines come to market, labor markets live in the here and now. (A certain South Park episode comes to mind.) That the modern environment imposes a lot of additional costs on labor compared to a century ago is artificial distortion of the marketplace. It was cheaper to get a guy to drive nails into boards before expenses like Worker's Comp came on the scene but why do you suppose illegal immigrants find so much work in construction?

When you purchase an existing building instead of buying an empty lot and building on that, are you not placing value on labor performed in the past? Labor that may have been performed at the behest of persons long dead and having no connection to you. Seen that way, those long-dead laborers have delivered value to persons never part of their lives. By that measure, their labor has retroactively gained in value, since you cannot simply hop in your time machine and hire some cheap workers to build your house a century before you were looking to buy. Just the same, those long ago laborers cannot collect new income for the value gained over time as that real estate changed hands but they knew that going in. There is some consolation in that construction workers tend to make a lot more than burger flippers.

Snidley Whipsnae's picture

"If money is meant to be a proxy for labor, precious metals are not money.  The value of labor decays over time, as entropy causes the value of the product of that labor to decay."

Let me just completed work on the Tower of Babble?

The value of the labor that produced gold 5,000 years ago has not decayed. If this statement were true then the gold would have to decay and become non-existant, and, obviously the gold still exists and has increased in every fiat currency as the fiat has been abused by successive governments around the world.

"People who seek a PM backed currency are rent seekers (seeking scarcity rent)."

By your definition all who save, in the form of fiat, gold, or sea shells, are rent seekers. Savings is the basis of real capitalism. Do you work for the Fed? They too, want everyone to spend every dime of income as quickly as the labor earns that dime. Savings, in the form of excess labor, is the only thing of value to real capitalism as it is the basis for capital investment. Of course, we no longer have real capitalism when the Fed decides where to set interest rates instead of letting a free market make that decision...which, coincidentally, forces savers into riskier asset classes to maintain their savings at purchase parity.

Gold is merely an escape valve for savers that see a government gone crazy and destroying their fiat currency. Buying gold is an insurance policy against fiat depreciation via an inflating money supply.

If you neglected to save and chose to consume, that is your porblem. You cannot solve your problem by blaming savers.


Real Estate Geek's picture

The value of labor decays over time, as entropy causes the value of the product of that labor to decay.

I walked across the Golden Gate Bridge yesterday.  It was built ~75 years ago, and doesn't seem to have decayed too much.

Diogenes's picture

Not quite true. The value of the labor that went into a 100 year old brick house has maintained its value and possibly increased, even allowing for the effects of inflation.

Likewise a Chippendale table or even a 1964 Ford Mustang provided it has been maintained in original condition.

Gold and silver fluctuate but never completely lose their value. So do many other things. If you have the room a big pile of scrap iron, scrap aluminum and scrap copper might be the ideal inflation hedge. It will always have a certain value, you can always sell it and there is very little chance of the government confiscating it.

Eternal Student's picture

People are assuming that they'll be able to buy and sell gold. The Chicago Fed put out an article at the end of last month, which was interesting in two notable ways.

The first was how Roosevelt managed to "print up" a ton of money to spend. This was the reason for the confiscation of gold back in the 1930's. Basically, the Fed had "printed" $1 Billion in order to prop up the economy, and didn't want to print any more. It was the original version of QE. Roosevelt side stepped the Fed by confiscating gold at a low price, revaluing it at a high price, and selling it. Presto, they managed to raise $2 Billion to spend. That's twice as much money as the Fed had done.

One has to wonder what the value of the coins in private U.S. hands is worth today. I expect the Feds to pull out all stops again (including the virtual confiscation of retirement funds). Gold seems to me to be an easy target.

The second interesting thing about the article was the timing. It struck me as a "shot across the bow". That, coupled with the 1099 reporting for gold transactions next year makes me a bit concerned about holding on to real money.


thermroc's picture

Suggest anyone worried about confiscation of gold read this blog post:

Eternal Student's picture

I was hoping for something illuminating, but the author seems confused on some issues. Going so far as to call the results "incredible". I suggest reading the Fed's paper. It's not incredible at all.

trav7777's picture

I'd be more worried about FRN confiscation or 401ks.

Gold requires trucks and men.  FRNs are in accounts where you can mouse-click them away.

When Argentina collapsed, what did THEY seize?  What do countries seize these days?  They grab bank accounts.  They tax away property and try to turn it into cashflow.

Eternal Student's picture

With the size of the deficit, I'd be concerned about all three. Especially since they seem to be just warming up. Plus, you're discounting how easy it was to impose Executive Order 6102.