Insights Into America's Disneyland And Our "Neo-Feudalistic, Gulag Casino Economy" From Mike Krieger

Tyler Durden's picture

Mike Krieger, formerly a macro analyst at Bernstein, and currently running his own fund, KAM LP, summarizies the pretend reality we are all caught in now, knowing full well America is set on a crash course with reality at some point, yet sticking our collective heads in the sand, as the collapse will be some time in the "indefinite" future. In the meantime, banks will continue to boost US GDP by peddling "financial innovation" and restructuring advice to countries like Greece... and nothing else.

Goodbye Disneyland, by Mike Krieger

In the end the Party would announce that two and two made five, and you would have to believe it.  It was inevitable that they should make that claim sooner or later: the logic of their position demanded it.  Not merely the validity of experience, but the very existence of external reality was tacitly denied by their philosophy.  The heresy of heresies was common sense.  And what was terrifying was not that they would kill you for thinking otherwise, but that they might be right.  For, after all how do we know that two and two make four?  Or that the force of gravity works?  Or that the past is unchangeable?  If both the past and the external world exist only in the mind, and if the mind itself is controllable – what then?
- Winston Smith in George Orwell’s 1984

A government big enough to give you everything you want is a government big enough to take from you everything you have.
- Thomas Jefferson

We Must Move to a Free Market and Shun the Welfare-Warfare State or all will be Lost

Unfortunately for all of us, the primary economic policy of the U.S. government as well as many others around the world is an extend and pretend strategy that is economic suicide primarily in that it keeps the irresponsible in their assets and it makes the responsible shudder and shun productive investments.  Whether it be a homeowner that is subsidized to stay in a home that he cannot afford or a bank that doesn’t want to come clean on the extent of its bad assets, the result is the same.  Complete economic inertia.  Now of course there has been a rebound in demand, but my argument has been and continues to be that this is the most unproductive rebound in aggregate demand that perhaps the world has ever seen.  Whether it be in the U.S. or China, the demand is taking away spare capacity in many areas indeed but we must question the methods.  This is where the whole idea of inflation comes into play.  The whole reason why printing a million dollars and giving it to everyone doesn’t work is because this “liquidity” is not created through a productive process.  It is purely an injection of new dollars into the economy.  The basic rule of supply/demand kicks in.  In the average person’s pocket, this money is unlikely to be “invested” in productive capital endeavors, rather the vast majority of it will simply be spent to consume the resources of that which can be supplied by the already existing capital stock.  So in many ways it isn’t that the creation of the money itself that is the biggest problem, it is the distribution channel of that money.  Only a small percentage of the population that receives the million dollars has the ability, drive and discipline to invest the money into something that will create economic value for the society at large rather than just blow it on a flat screen television.  This is the entire premise of why a free market economy works when it is allowed to work (which I would argue is not possible under the current Federal Reserve system).  The Fed is a socialist organization that SETS the most important price in the economy, the price of money.  Even worse, when they set that price at say 0% as is basically the case today that 0% or anything close to it is not offered to all the small businessmen or potential entrepreneurs out there.  It might not even be so bad if the low interest rates weren’t simply being used to gamble or play a carry trade with treasuries.  Of course, the banks or anyone else for that matter playing a spread by borrowing at near zero to buy long-term treasuries is doing irreparable harm to this nation.  They are complicit in the gross misallocation of capital to the government, capital that can then be doled out at will to favored interests.  So all we have today is essentially a creation of money and credit out of thin air that is allocated to two major constituents.  First, it has primarily been used to maintain the people of wealth, power and political connections (on both sides of the isle) before the crash entrenched in their socioeconomic roles.  Second, is to pay off political favors.  Those who supported the President in his campaign have been paid back handsomely and are today much more powerful and secure than before whether we are talking unions or the oligopoly banks.  If we wish to have any hope of a sustainable recovery preventing the inevitable social unrest to come from truly getting dangerous we must restore the free market and end the union of big business and government, which historically has presented an extremely dangerous situation.  For those that are in big business and think they have made a great move by joining forces with the state I suggest you go back and read your history.  You never will possess the ultimate power, you will be seduced into thinking you do and then when the time is right government can eliminate you and your fortune with the stroke of a pen.  Power is granted to you by this authority when you engage in this unholy union and it can be taken away on whim and your wealth confiscated.  Selling out freedom and your fellow citizens for some extra money or government contracts will come back to haunt you.  Your legacy to the United States will be as Max Keiser has called it, a neo-feudalistic, gulag casino economy that has already begun.  Below is a link to an excellent interview with Bill Moyers on PBS about our financial oligarchy (I believe many industries here are becoming oligarchies but the financial one is the most powerful) and the need to stop its cancerous growth.

There Will be Surplus...In 2050!

The above paragraph is meant to reach those that are actually faced with important decisions every day that can have a meaningful impact on our future.  Decisions on whether to sacrifice their country’s and their children’s futures for an extra buck or to stop the game, stand up for freedom and make a positive difference in this world.  This paragraph is meant for a much more broad based audience.  Key to the entrenched elite strategy (whether in government or business) is to keep the public in an infantile state.  What I mean by this is to keep the notion alive that big daddy government is going to be there to provide for you and protect you.  Taking it one step further, they really want the public to believe the government’s existence is in fact necessary for the realization of all one’s hopes and dreams whether it be economically or with regard to security.  If you remember from Orwell’s 1984, there is never-ending war in Oceania.  Think about how useful a never ending “war on terrorism” is to those in positions of power.  All this said, while I am a small government person, I am no anarchist.  I think government can do a lot of good.  I merely think government must be used a tool, a complement to the freedom, independence and individuality.  Once the government becomes so big that is the primary driver of capital and investment we are in big trouble.  This is where the individual’s economic creativity becomes stifled and things shut down.  One of the key strategies being used by insolvent governments around the world right now are fantasy long-term budget projections.  They basically read something like “well we expect deficits to GDP to be elevated for the next several years but there will be a surplus by 2020.”  Sadly, many people actually believe this nonsense.  As I have said before, the biggest wealth destruction in the next 1-2 years will be in my opinion without a doubt in the sovereign/municipal debt markets.  Whether it be through inflation or deflation this stuff can’t possibly be paid back in real money or anything close to it.  The biggest fallacy I hear from people I know that own government or municipal paper is they say they are “comfortable just collecting the yield.”  Ok, they may be comfortable with that now, but what if inflation escalates in a major way which is in my opinion a one of the more likely outcomes to all this.  It means that clipping 3.7% per year on a 10 year note will not be so comforting.  The only reason people think it sounds good is because of what they just experienced in 2007-2009.  Use some common sense and there is nothing comforting about it.  In fact, it is downright scary.  Here’s why.  As inflation escalates the overall price of these securities will trend lower and then one day, whether in two months from now or a year from now yields are really going to spike and you will be sitting on a pretty hefty capital loss.  By the time an owner actually comes to the admission that there is big inflation in the system (remember the big holders of long-term treasuries will be the LAST to admit this) there will be a major principal loss on the securities and the decision to sell or hold at that point will not be a pleasant one.  Clipping the coupons wasn’t such a good idea after all…

Why Extending Unemployment Benefits is Inflationary and Why Food Stamps = Bread Lines

One theme I have focused on for years now is how the government and the establishment relies on disinformation and propaganda to keep this phony economy alive the populace distracted with “bread and circuses” as the Romans called it, or as we can say in the modern United States “food stamps and American Idol.”  Before I get into some of the “bread” tactics used by politicians on both sides of the isle, I want to make something clear.  I am not saying we should get rid of food stamps and unemployment benefits.  In the current world where we allow corporate oligarchies to control all aspects of the country this would be unhelpful and immoral.  However, I would be in favor of reducing them AFTER the oligarchy problem is dealt with.  To do so before would lead to social chaos and would as I said earlier be entirely immoral.

Ok, so first with regard to food stamps.  The latest data shows that 39.4 million Americans are receiving food stamps.  One of the biggest spins you have heard on the media since 2008 is that this is nowhere near as bad as the Depression, after all, where are the bread lines?  Well of course there are no bread lines, this is 2010.  Food stamps are the modern equivalent.  It is a convenient way to keep the suffering and plight of 13% of the American citizenry out of sight and out of mind.  That way those that are benefitting from the corrupt crony capitalism of the current system can feel better about themselves.  How about you join reality instead. 

Next, there is the issue of unemployment benefit extensions.  This situation is very similar to the simplistic scenario of printing money and giving it to everyone.  Except this is worse.  In that situation, at least some percent of those getting the money will be in a position to put that money to productive uses.  Someone that is struggling with the severe trauma that is unemployment is going to basically use that money to pay the bills, pay down some debt, and if there is a little left over…well that IPAD sure looks nifty.  All the while this is an unused asset of the economy.  This unutilized economic asset is consuming on the taxpayer dime while not adding to the productive capacity of the economy.  This is pure inflation.  Again, I want to reiterate that dealing with this problem is not the first order of business.  Dismantling the oligarchies and restoring a free market is.  Then the welfare issue can be dealt with. 

Next, to those that continue along this irrational line of thinking that without wage inflation there is no inflation (2+2=5), I see the first signs of it appearing despite U6 employment at near 20%.  Let me give you an example.  Here in New York City, we were just faced with a prospect of a doorman’s strike.  At the last minute a deal was reached with the union which calls for a four year contract with a nearly 10% pay raise and no cuts in benefits for workers.  First Wall Street bonuses rebound and now the unions.  Entirely coincidental I am sure.   

Say Goodbye to Disneyland 

One of my old colleagues when I was at Bernstein and who is from another country described America to me with the following statement: “it’s like “Disneyland.”  I never fully understood what he meant until the last couple of years.  However, what I have also realized is this sense of delusional entitlement is extremely manifest in most other OECD nations as well.  In case you missed it, earlier this week the European Union declared traveling a “human right” and is “launching a scheme to subsidize vacations with taxpayers’ dollars for those too poor to afford their own trips” (see link  A friend quipped to me after I sent him that article: “I just realized that there no longer exists any need for political parody. The Onion is a short.”  Indeed.

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economicmorphine's picture

The author is 100% correct but we will not change course until after the collapse.  There is absolutely no political reason nor the political will to do so beforehand.  Just finished an older book...The Mexican Shock by Jorge Castenada.  Lots of folks think we're well ahead of Mexico, but whereas we are still working on our 1st civilization in America, Mexico is wrapping up its 3rd (pre-colonial, Colonial, Republic) and working on its fourth.  Interesting times ahead.  I agree with the author's points except to say that nothing will change until it has to, and it doesn't have to just yet.  Soon, but not yet.

Postal's picture

nothing will change until it has to

I make the same observation regarding most managers (financial or otherwise).

Ragnarok's picture

What scares me the most is not the collapse, but who writes the history after the dust settles.  Will the world even acknowledge reality then or will it simply find a new sand box to bury it's head in? 

Shameful's picture

That has been one of my concerns as well.  Might be pessimistic but I get the feeling the current oligarchs will keep power through the collapse, after all they must know it's coming and can prep for it.  So there is a chance that the free market, "evil speculators", and not being Keynesian enough caused the problem.  Look at the history around hte Great Depression in the popular parlance.  FDR is still seen by most as the man who ended the Depression, not the villain who held us in it.  History is written by the winners, so we must ask, who is going ot be the winner here?

Ragnarok's picture

Don't count on the media, they only stumble on the truth every now and then.

Don't count on parents to teach their children, as they themselves are clueless.


With all the fear that will be running rampant there will be many false prophets capitalizing off the gullible. 


Simply raise your own and inform those around you. 

mikla's picture

That has been one of my concerns as well.   <snip>, History is written by the winners, so we must ask, who is going to be the winner here?

I've thought about this a lot -- yet, what's different this time is the communication medium and way-back-machine capabilities of the inter-web (which is made up of a  series of tubes).

We can communicate real-time with on-the-ground people all over the world, with history, blogs, and intelligent analysis.  Lord knows we don't get that through the standard media outlets.  It seems that sensible statements, and accumulation of data and logic can conceivably carry the day.

It's possible that heavy-handed control attempts censorship, but there's too much high-quality stuff out there.  So, IMHO our greatest worry (or boon) would be the rise of an eloquent and charismatic individual -- instant communication merely magnifies the power that person would wield, whether for good or ill.

Shameful's picture

The Internet is a great tool for freedom, which is why it will be destroyed by those seeking greater power.  A tracking and licensing system will go far to silence dissent, especially as nations get more authoritarian.  Here in the US we openly talk about murdering Americans on foreign soil on suspicions of "terrorism".  How long before those same jackals will go out and "purge" bloggers and the Internet media, especially with a good track and license system.  After all Internet journalism is "sort of like terrorism".

Wait till the first major net "terror" attack.  Then they will have their digital Pearl Harbor to shut down the free Internet.  I'm going to enjoy the free and open Internet as long as it lasts, because each day could be it's last.

LeBalance's picture

*Knock* *Knock*

Good evening Mr. Anderson.

Do you go by the screen name of "Shameful" on

Did you make the following comments today at ....

??? Enough ???

merehuman's picture

if we silence our tongue, we are dead already.


mikla's picture

I agree that they will try.  However, IMHO, it will ultimately fail because:

  1. Like digital copy protection, everything that is "made opaque" can be made "un-opaque".  In any practical sense, any encryption algorithm can be broken, which is why digital media protection is ultimately a fool's errand (although yes, we see continual attempts in this arena).  While any central authority might continue to attempt control, it will ultimately fail.  The only successful business models in this arena are the un-oppressive ones.
  2. Game theory dictates heavy-handed control is transient.  People won't put up with it.  It may take years to peel back oppression, but it will happen.  You couldn't begin to assess a "receiver's tax" in the USA like is assessed in Europe (citizens won't accept it), and after the European nation-states fall, there won't be a receiver's tax over there either.

It's not fun suffering the transition, but it's simply too easy to by-pass corrupt and incompetent centralization.

Alienated Serf's picture

Or we can resort to meetings and passing notes likes some people in the middle east have learned to do after they figured out  their sat phones were being tracked.

Madcow's picture


There was no internet in 1984.  There's no way to stop the cloud computing happening on this site and others like it. Social media, interactive technologies, and a whole new generation of communication strategy, web design, channel planners, community developers, and many others have already created the infrastructure that will make information control impossible. Sure, I could see some misguided zealots try and unplug the internet. but another will pop up. 


All these connections are like synapses firing and connecting for the first time. We're seeing a massive upgrade in collective intelligence and processing power. that increased power is capable of revealing all manners of fraud, delusion, and intellectual dishonesty much more quickly, thoroughly, and effectively than was possible previously. 

If you can get out of the big cities, get yourself a wireless connection, and get an off-grid power source, you'll be just fine. They're not going to come after you. They'll have enough problems to deal with amongst those with no hope for long term survival in the big cities on the coasts.


aka_ces's picture

No, there was an Internet as early as the late 60s/early 70s, created by Cold War R&D.  It didn't start w/ TCP/IP, the core Internet protocol since at least the mid 80s, but there were ancestor protocols.  What started in the 90s was the World Wide Web, on top of the Internet.  It's the World Wide Web that introduced the Internet to the public.

Tethys's picture

Somehow I doubt they will try to destroy their number one tracking tool which allows convenient identification (IP logs are just a subpoena away, until SHTF then the gloves come off) and databasing of just who said what on 'key' sites.

If you think from a strategic point of view, the internet pretty much assures there will be no place for dissidents to hide. Until the remaining few figure this out.

Think it can't happen?


The RIAA names defendants based on ISP identification of the subscriber associated with an IP address,[15] and as such do not know any additional information about a person before they sue. After an Internet subscriber's identity is discovered, but before an individual lawsuit is filed, the subscriber is typically offered an opportunity to settle. The standard settlement is a payment to the RIAA and an agreement not to engage in file-sharing of music and is usually on par with statutory damages of $750 per work, with the RIAA choosing the number of works it deems "reasonable". For cases that do not settle at this amount, the RIAA has gone to trial, seeking statutory damages from the jury, written into The Digital Theft Deterrence and Copyright Damages Improvement Act of 1999 as between $750 and $30,000 per work or $750 and $150,000 per work if "willful." In the case RIAA vs Joel Tenenbaum, the jury awarded $22,500 per song resulting in a judgment of $675,000 for the shared 30 tracks and in the case RIAA vs Jammie Thomas-Rasset, the jury awarded $80,000 per song, or $1.92 million for 24 tracks[16][17] (this award was later reduced by the judge to $54,000[18], though the final amount of damages has yet to be determined).

The Electronic Frontier FoundationAmerican Civil Liberties Union and Public Citizen oppose the ability of the RIAA and other companies to "strip Internet users of anonymity without allowing them to challenge the order in court".[19][20]


pan-the-ist's picture

Who needs the FBI when you have Facebook?

Yes We Can. But Lets Not.'s picture

The internet/web is too good to be true.  I expect Gubmint to try to change that soon, read, under the current POTUS.

Pondmaster's picture

Any thoughts on whom this person may be? Not his name or national origin . Has his appearence been spoken of before ? Like 2000 yrs ago. This my friend is whom the whole world is setting itself up for . Equivalent to Tolkiens "One Ring to rule them all and in the darkness bind them ". But all ( who still have their heads and a mark ) will bow down and worship him as god of the world . The worlds savior !!! Dark future indeed just before the light  . 

pan-the-ist's picture

"Call on God, but row away from the rocks."

-Hunter S. Thompson

DFCtomm's picture

Everybodies got a plan till they get hit.

-Mike Tyson

Goods's picture


This reminds me of what Rumsfeld said, history will have a very different opinion on the Bush administrations actions after 9/11.

LiquidBrick's picture

If we wish to have any hope of a sustainable recovery preventing the inevitable social unrest to come from truly getting dangerous we must restore the free market and end the union of big business and government, which historically has presented an extremely dangerous situation.

Sounds like an oxymoron whistling past the graveyard. We need massive social unrest if we are to purge the nation of the insidious Federal Reserve and IRS and we need it now.

alien-IQ's picture

I think it was Winston Churchill that once said: You can always count on Americans to do the right thing, but only when it's too late.

Seems fitting and true.

Ivan the Russian's picture

..once they have exhausted all other avenues

stormsailor's picture

the plunge protection team has sure been working overtime this week.


every down day gets bought back to even,  every triangle breaks up

Al Huxley's picture

Life is good.  People are out of work and not paying mortgages so have nothing but free time and extra cash.  Profits are up, stocks are up, its party-time.

thegreatsatan's picture

who knew "funemployment" was so profitable.

John McCloy's picture

Hey if Ben just prints everyone a million bucks each we can get this recovery underway. Unfortunately we are printing money for those who already have it in the HOPES if they are kind enough in a few years they may let us all borrow a few dollars to buy an overpriced home and head to Sandals. Tis all good since financial responsibility is SOOOO 20th century.

faustian bargain's picture

...maybe more like 19th century.

Kaiser Sousa's picture

it really has become just disgustingly funny hasn't it...

well maybe just disgusting.....

John McCloy's picture

Nice avatar. What I would give for that brave man to be in office today. Here is a guy who lost his entire family by age 16 and it took him as President to rid this nation of corrupt bankers. Now we have cowardly lions gone wild like Judd Gregg, Dodd and his dear lord master supreme leader commander in facebook profiles President Obama.

macfly's picture

Great piece, and I watched the Moyers clip with SJ & JK yesterday. Those guys make such good sense, I've really enjoyed following their talks on the press tour for 13 Wankers. Amazon still haven't got me my copy, but no doubt it'll be here in time for the apocalypse.

tip e. canoe's picture

i watched too and was equally impressed, especially by JK.  that man sweats integrity and is not afraid to throw a punch (and with style).  if there is any hope at salvaging the system (assuming that it deserves to be salvaged which is a whole nother question in itself), it will be centered around those 2 men.

Gloomy's picture

Japan Tries to Face Up to Growing Poverty Problem



MEMURO, Japan — Satomi Sato, a 51-year-old widow, knew she had it tough, raising a teenage daughter on the less than $17,000 a year she earned from two jobs. Still, she was surprised last autumn when the government announced for the first time an official poverty line — and she was below it.

“I don’t want to use the word poverty, but I’m definitely poor,” said Ms. Sato, who works mornings making boxed lunches and afternoons delivering newspapers. “Poverty is still a very unfamiliar word in Japan.”

After years of economic stagnation and widening income disparities, this once proudly egalitarian nation is belatedly waking up to the fact that it has a large and growing number of poor people. The Labor Ministry’s disclosure in October that almost one in six Japanese, or 20 million people, lived in poverty in 2007 stunned the nation and ignited a debate over possible remedies that has raged ever since.

Many Japanese, who cling to the popular myth that their nation is uniformly middle class, were further shocked to see that Japan’s poverty rate, at 15.7 percent, was close to the Organization for Economic Cooperation and Development’s figure of 17.1 percent in the United States, whose glaring social inequalities have long been viewed with scorn and pity here.

But perhaps just as surprising was the government’s admission that it had been keeping poverty statistics secretly since 1998 while denying there was a problem, despite occasional anecdotal evidence to the contrary. That ended when a left-leaning government led by Prime Minister Yukio Hatoyama replaced the long-governing Liberal Democratic Party last summer with a pledge to force Japan’s legendarily secretive bureaucrats to be more open, particularly about social problems, government officials and poverty experts said.

“The government knew about the poverty problem, but was hiding it,” said Makoto Yuasa, head of the nonprofit Antipoverty Network. “It was afraid to face reality.”

Following an internationally recognized formula, the ministry set the poverty line at about $22,000 a year for a family of four, half of Japan’s median household income. Researchers estimate that Japan’s poverty rate has doubled since the nation’s real estate and stock markets collapsed in the early 1990s, ushering in two decades of income stagnation and even decline.

The ministry’s announcement helped expose a problem that social workers say is easily overlooked in relatively homogenous Japan, which does not have the high crime rates, urban decay and stark racial divisions of the United States. Experts and social workers say Japan’s poor can be deceptively hard to spot because they try hard to keep up the appearance of middle class comfort.

chet's picture

Interesting article.  The other thing to realize is that the official poverty line is set pretty darn low.  In the US, if you support four people on $23,000, you aren't considered to live in poverty.  If you support NINE people on $45,000, you aren't considered to live in poverty.

faustian bargain's picture

Similarly the upper bound of "middle class" is set pretty low.

Cognitive Dissonance's picture

"But perhaps just as surprising was the government’s admission that it had been keeping poverty statistics secretly since 1998 while denying there was a problem, despite occasional anecdotal evidence to the contrary."

I'm sorry but this is just too crazy to even entertain? Governments collecting secret data and denying they're doing so? Lying to their populations?

That just crazy talk.

<sarcasm off>

Ned Zeppelin's picture

There's just winners and losers and don't get caught on the wrong side of that line.

DaveyJones's picture

It's like Disneyland

but they've combined It's a Small World with the Haunted Mansion

and you can't get off

walküre's picture


Now that stupid song is stuck in my head AGAIN!

It's a small world after all, it's a small world after all... lalalalala

Pseudo kid imitating robot voices sounding like Chucky singing ..

John McCloy's picture


Small world = Globalization

Haunted Mansion = Bills coming due and the cannibalization of one other financially.

It is all good times as long as everyone stays in line.