Guest Post: The Broken Limb & Burst Pipe Fallacies

Tyler Durden's picture

Submitted by Jim Quinn of The Burning Platform blog,

“Economics is haunted by more fallacies than any other study known to man. This is no accident. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.


In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of man to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.” Henry Hazlitt – Economics in One Lesson



Saturday was the first day since a double shot of snow and ice storms hit the Philadelphia metro area on Monday and Wednesday I had a chance to drive around Montgomery County and witness the devastation firsthand. Over 750,000 homes lost power at the height of the ice storm on Wednesday and over 100,000 remained without power this past weekend. The mainstream media has become such a farce and propaganda machine for vested interests, it is essential to verify with your own eyes everything they report as fact. Their purpose is to entertain the consciously ignorant, exaggerate threats to keep the low IQ multitudes fearful, and function as mouthpieces for the ruling class. Deceitful corporate executives, mendacious government apparatchiks, and oblivious teleprompter reading media talking heads have been utilizing cold weather as an excuse for every poor earnings announcement, horrific employment report, and dreadful decline in retail sales. It certainly has nothing to do with decades of stagnant household income, awful monetary and fiscal policies, or the consequences of Obamacare.  

We have become a delusional state dependent upon fallacies to convince ourselves our foolhardy beliefs, ludicrous economic policies, corrupt captured political system, and preposterously fraudulent financial system are actually based on sound logic and reason.  Some fallacies have been perpetrated intentionally by the ruling class to manipulate, sway and deceive the populace, while others have been willfully employed by millions of techno-narcissistic iGadget addicted zombies as a substitute for thinking, reasoning and taking responsibility for the course of our nation.

You have men who constitute the unseen true ruling power of the country making a conscious and intentional effort to peddle fallacies to the masses in order to manipulate, mold, and corral them in a manner beneficial to the ruling power, financially, politically, and socially. The ruling class has been hugely successful in their capture of the public mind, creating a vast majority of the willfully ignorant who desperately grasp at fallacious concepts, beliefs, and storylines in order to avoid dealing with reality and being accountable for their actions and the actions of their leaders.   

The fallacy being flogged by government drones and the legacy media about companies not hiring new employees because it has been cold and snowy during the winter is beyond absurd, except to someone who lives in the cocoon of Washington D.C. or regurgitates words processed on a teleprompter by paid minions of the ruling class. If you live in the real world, run a business, or manage employees, you understand weather has absolutely nothing to do with your decision to hire an employee. An organization takes weeks or months to hire employees. They don’t stop hiring because it snowed on Wednesday or the temperature was below normal. The contention that hiring has been weak for the last two months due to weather is outlandish and based upon flawed logic and warped reasoning. It is so illogical, only an Ivy League economist could believe it.

The other fallacy being pontificated by retail executives in denial, cheerleaders on CNBC and the rest of the propaganda press is weather is to blame for terrible retail sales over the last quarter. Again, this argument is specious in its conception. The retail executives use weather as an excuse for their failure in execution, hubris in over-expanding, and arrogance in pursuit of quarterly earnings per share and bonuses. CNBC and the rest of the Wall Street media pawns must provide lame fallacies for the corporate fascists regarding our downward economic path or the masses my wake up to reality. Protecting and expanding the wealth of the parasitic oligarch class is the one and only purpose of the corporate media.

Think about whether cold and snow in the winter will really stop purchases by individuals. If you need a new shirt for work or a pair of sneakers and it snows on Wednesday, you will wait until Saturday to make the purchase. Groceries will be consumed and replenished whether it is cold and snowy, or not. If an appliance or car breaks down, weather will be a non-factor in the new purchase decision. The proliferation of on-line retailing allows everyone to shop from the warmth of their homes. If anything, bad winter weather often spurs stocking up of groceries and the purchase of items needed to contend with winter weather (salt, shovels, coats, hats, gloves). Only an asinine spokes-model bimbo on CNBC could non-questioningly report the press release excuses of retailers. Critical thinking skills and journalistic integrity are non-essential traits among the propaganda mainstream press today.

Revealing the truth about pitiful employment growth and dreadful retail sales would destroy the fallacy of economic recovery stimulated by the monetary policies of the Federal Reserve and fiscal policies of the Federal government. The ruling class must perpetuate the myth that central bankers pumping $3.2 trillion of debt into the veins Wall Street banks and Obama dumping $6.7 trillion of debt onto the shoulders of future generations in order to cure a cancerous disease created by debt, has revived our economy and cured the disease. The unseen governing class cannot admit their traitorous actions have impoverished the working middle class, destroyed small businesses, depleted senior citizens of their savings, and warped our economic system to such an extent that recovery in now impossible. If the ignorant masses were to become sentient, the ruling class would become lamppost decorations.

After discovering water pipes at my rental property had burst due to the extreme cold weather and witnessing the widespread damage caused by the mid-week ice storm, I immediately thought how overjoyed my favorite Keynesian, Ivy League, Nobel Prize winning, New York Times scribbler, Paul (destruction is good) Krugman must be. All this destruction and devastation will be a tremendous boost to the economy according to Krugman and his ilk. This intellectually deceitful, morally bankrupt, despicable excuse for a human being spoke these words of wisdom three days after the 9/11 attacks:   

“Ghastly as it may seem to say this, the terror attack – like the original day of infamy, which brought an end to the Great Depression – could even do some economic good.  So the direct economic impact of the attacks will probably not be that bad. And there will, potentially, be two favorable effects. First, the driving force behind the economic slowdown has been a plunge in business investment. Now, all of a sudden, we need some new office buildings. As I’ve already indicated, the destruction isn’t big compared with the economy, but rebuilding will generate at least some increase in business spending.”

He had expanded his broken window beliefs to broken buildings, broken nations, and a broken people. You can’t keep a cunning Keynesian down when they need to propagate discredited fallacies in order to feed their own ego and promote foolish debt fueled spending by government, consumers and corporations as a solution to all economic ills. It makes no difference to a statist like Krugman that Frederic Bastiat had obliterated the preposterous notion that destruction and the money spent to repair the destruction was a net benefit to society, 164 years ago in his essay – That Which is Seen, and That Which is Not Seen. Bastiat’s logic is unassailable. Only the most highly educated Princeton economists don’t get it.    

Have you ever witnessed the anger of the good shopkeeper, James B., when his careless son has happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation – “It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade – that it encourages that trade to the amount of six francs – I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.”

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.

I wonder whether the myopic focus on only immediate impacts and inability of ideologues to understand unintended consequences is premeditated or just erroneous reasoning. The broken window fallacy can now be extended to broken limbs and burst pipes across the Northeast. Huge trees have been toppled, limbs and branches are strewn on the properties of homeowners across the region, homes and businesses have been physically damaged, and power outages wrecked profits at small businesses. Society has gained no benefit whatsoever from the mass destruction wrought by these storms. This weather induced ruin exposes GDP calculations as useless and misleading regarding the true economic health of the nation. The hundreds of millions in destruction will not be factored into the GDP calculation, but the spending by homeowners and businesses to remove downed trees, fix broken roofs, replace burst pipes and clean-up debris will be factored positively in the GDP calculation. The inevitable politician response will be increased government spending to repair damage to infrastructure. This will also be additive to GDP. Krugman will get a tingle up his leg.

CNBC’s Cramer & Liesman will rave about the unexpectedly strong GDP in the first quarter as proof the economy is doing great. The fallacy that GDP growth and stock market gains are beneficial to the average American will be flogged by the propaganda press at the behest of the ruling class until the last vestiges of national wealth are confiscated by the oligarchs. In the real world, the destruction caused by the harsh winter weather will not benefit society one iota. GDP will reflect the immediate short-term seen impact of the cleanup and repair of property damage. GDP will ignore the unseen opportunity costs which were lost and the long-term consequences of expenditures made to put property back in the condition in which it started. Destruction does not create profit, except in the Keynesian world of Krugman and his Ivy League educated sycophant cronies.

There are 2.5 million households in the Philadelphia metro area. There are hundreds of thousands with trees down, pipes frozen, gutters smashed, roofs leaking and electrical infrastructure damaged. An individual homeowner with a couple of large trees down will need to pay $500 to $1,000 for a tree service to remove the debris from their property. Considering the median household income in Montgomery County, PA is $75,000, that is not an insubstantial sum.

The homeowner did not anticipate this expenditure and will react by not dining out, taking a shorter vacation, not buying that new couch, or not investing in their small business. A landlord who has to repair busted pipes will incur added expense, resulting in less profit. Less profit means less taxes paid to the state and federal government, exacerbating their budget deficits. The landlord will defer replacing that old air conditioner for at least another year. Multiply these scenarios across the entire Northeastern United States and you have the long-term negative financial implications outweighing the short-term boost to GDP.

The Keynesian fallacy of increased economic activity being beneficial is annihilated by the fact homeowners and business owners are left in the same condition as they were prior to the storms, while the money spent to achieve the same property condition was not spent on other goods and services that would have truly expanded the economy. The fallacious government engineered GDP calculation will portray destruction as an economic boost. Keynesian worshiping economists and government bureaucrats observe this tragedy as only between two parties, the consumer who is forced to repair their property and is denied the pleasure of spending their money on something more enjoyable and the tree service company who experiences a positive impact to their business. They exclude the appliance store, restaurant, or hotel that did not receive the money spent on repairing the property. It is this third unseen party who is left out of the equation. It is this third party that shows the absurdity of believing destruction leads to profit and economic advancement. The national economic output is not increased, but highly educated government drones and Wall Street captured economists will point to GDP and disseminate the fallacy.

This leads us to government in general and the fallacy that government spending, government borrowing, and government programs are beneficial to society and the economy. Legalized plunder of the populace through income taxes, real estate taxes, sales taxes, gasoline taxes, cigarette taxes, license fees, sewer fees, tolls, and a myriad of other ass raping techniques is used to subsidize crony capitalist special interests, the military industrial complex, faux wars on poverty, drugs and terror, a failed public education system, vote buying entitlement programs, and a tax code written to benefit those who pay the biggest bribes to the corrupt politicians slithering around the halls of congress.

Government is a criminal enterprise designed to take from the weak and powerless while benefitting the connected and powerful. The government extracts the earnings of citizens and businesses at the point of a gun and redistributes those funds to special interests; funding boondoggles, wars of choice, foreign dictators, and the corporate and banking interests who control the puppet strings of Washington politicians. State organized and legal plunder designed to enrich everyone at the expense of everyone else is the delusional fallacy permeating our cultural mindset today.

President Obama declared my region a disaster area, allowing for government funds to supposedly help in the cleanup efforts. Again, the fallacy of government intervention benefiting society is unquestioned by the ignorant masses. Local and State governments are required by law to balance their budgets. The never ending progression of storms and record cold temperatures has already blown the winter storm budgets of transportation departments across the region. Gaping potholes are swallowing vehicles and will need to be repaired.

Government spokespersons and politicians tell the public not to worry. The government will come to the rescue, even when the funds officially run out. They won’t react the way a family would react to a budget overage, by cutting spending in another area. We have had mild winters in the recent past when the winter road budgets were far under. Did the government set aside this surplus for winters like the one we are currently experiencing? Of course not – they spent it on some other boondoggle program or useless shovel ready bridge to nowhere. Government politicians and their lackeys do not look beyond their 2 year election cycle.

The government budget overages due to winter storms will show up in the GDP calculation as a positive impact. A snowplow pushing snow to the side of the road and a crew filing a pothole has put the roadway back into the condition it was prior to the bad weather. The roadway is exactly the same. The money spent could have been used to pay down debt, fund the government pension shortfalls which will overwhelm taxpayers in the foreseeable future, or be given back to citizens to spend as they choose. There has been no net benefit to society.

No government spending provides a net benefit to society. Every government program, law, regulation, subsidy, tax or fee gives rise to a series of effects. The immediate seen effect may be favorable in the eyes of myopic politicians and an ignorant populace, but most government intervention in our lives proves to be fatal and unsustainable in the long-term. Whatever short-term benefits might accrue is far outweighed by the long-term negative implications on future generations. All government expenditures are foisted upon the public either through increased taxation or state created surreptitious inflation.         

We have a country built on a Himalayan mountain of fallacies. We are a short-term oriented people who only care about our present situation, giving no thought about long-term consequences of our policies, programs, laws or actions. Critical thinking skills, reasoning abilities, and a basic understanding of mathematical concepts appear to be beyond our grasp. We’d rather believe falsehoods than deal with the harsh lessons of reality. We choose to experience the severe penalties of burying our heads in the sand over using our God given ability to think and foresee the future consequences of our irrational choices. We suffer from the ultimately fatal disease of ignorance, as described by Bastiat.

This explains the fatally grievous condition of mankind. Ignorance surrounds its cradle: then its actions are determined by their first consequences, the only ones which, in its first stage, it can see. It is only in the long run that it learns to take account of the others. It has to learn this lesson from two very different masters – experience and foresight. Experience teaches effectually, but brutally. It makes us acquainted with all the effects of an action, by causing us to feel them; and we cannot fail to finish by knowing that fire burns, if we have burned ourselves. For this rough teacher, I should like, if possible, to substitute a more gentle one. I mean Foresight.

It’s a big country and one fallacy doesn’t fit all. Some fallacies are committed purposefully by evil men with evil intent. The Wall Street financial elite, big corporations, big media and their politician puppets fall into this category. Other fallacies are executed by people whose salary depends upon the fallacies being believed by the masses. Middle level bankers, managers, journalists, and bureaucrats fall into this category. And lastly you have the willfully ignorant masses who would rather believe fallacies than look up from their iGadgets, Facebook, and Twitter and think. The thing about fallacies is they eventually are buried under an avalanche of reality. If you listen closely you can hear the rumble of snow beginning to give way on the mountaintop. Fallacies are about to be crushed and swept away by the real world of consequences.

“Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid.  It was an experience for which the captains of industry were not entirely prepared; they had forgotten the public.  It was like some great convulsion of nature, which made mockery of all the powers of men, and left the beholder dazed and terrified.   In Wall Street men stood as if in a valley, and saw far above them the starting of an avalanche; they stood fascinated with horror, and watched it gathering headway; saw the clouds of dust rising up, and heard the roar of it swelling, and realized it was only a matter of time before it swept them to their destruction…

But it is difficult to get a man to understand something when his salary depends upon him not understanding it.”

Upton Sinclair – The Moneychangers


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NotApplicable's picture

Somebody oughta go break Krugman's windows in order to spur on the economy.

Oldwood's picture

I was always taught the all economies are local, but these fucks believe that all economies are other people's money, other people's circumstances and not their own. Someone should fix that for them.

LetThemEatRand's picture

They believe that they have found a way to funnel other people's money (the middle class) to themselves, and they are right.  I stopped thinking a long time ago that they believe anything else, least of all what they say.

stant's picture

i want drunk aliens with alice coopers billion$ babies cranked up on the box. firing fake trillon dollar coins out thier guns at him

laomei's picture

In theory at least, it works under certain circumstances.  If damage is incurred on an owner who is sitting on a pile of money that is effectively idle, then yes, damage is good as it forces them to spend.  If I sink a megayacht, then another one's gonna get built.  The line of logic goes back to WW2, all that production... the same result would have been seen if they just dumped it all in the ocean.  Meaning, that it really didn't matter.  Of course, the second it stops, it all comes crashing down.  The real problem is that this government money isn't going into any sort of actual improvement.  None, nadda, zip, zero zilch.  No new public facilities that benefit anything or anyone apart from the criminals who land that no-bid contract.  Patching potholes only restores the state to pre-storm conditions.  Removing fallen trees doesn't do much of anything either.  If say, instead they used the opportunity as an excuse to IMPROVE conditions, ie, light rails, better bus service, etc. etc.  Or I don't know... upgrade utilities so they STOPPED dying the instant there was a slight breeze or some heavy dew.  I guess that's just too much to ask for though.  America just wouldn't be America without the inbuilt corruption and third-world infrastructure.

FreedomGuy's picture

It does not work under any circumstances. Money is never idle. The pile of money becomes reserves for lower rate loans. If this theory worked then the yatch maker could sink all his yatchs and make money forever. Better yet, we could have never ending wars and destroy everything and rebuild everything.

Humans have nearly unlimited productive power. The question is where it will be harnessed and applied. If your parents can leave a paid for home to you then you can buy his and hers Mercedes to go with them. If the Japanese bomb your home and destroy it you will rebuild it instead and perhaps never buy a Mercedes. The point is that without destruction each generation could build upon the accomplishments of it's predecessors.

The biggest inheritance is knowledge. It is good that we do not have to rediscover metallurgy and electricity each generation.

stant's picture

well that pretty much covers it imho, but what the hell do in know. i was droped on my head as a baby reading hunter s thompson. and we dont like folks from louisville in my part of ky

Oldwood's picture

I don't understand?

Flakmeister's picture

Like the fallacy that says cutting taxes creates jobs? 

Or the related one that says we have to coddle those Fortune 500 execs so they can create jobs?

You know, the same guys that have overseen the export of millions of jobs...

Oldwood's picture

The problem with your assumption is that money seized by the government and spent by them will have an equal or greater impact on growth in the economy, and I take exception to that. First of all that's a big assumption, one that is not supported by anything we see in fact. We see endless wasteful spending and most of it goes to overpaid cronies. Your second false assumption is that this money is somehow in the governments discretion to take at will, like its their money. And next, government should not be in the business of coddling anyone, rich or poor. All of the calls for more regulation fall on my deaf ears as we see more regulation, more regulators, more government drones writing untold numbers of rules and laws that no one can easily interpret and are accountable to no one. We need transparency and clarity in our laws and their enforcement. And lastly, explain to me how any company can export their jobs if we Americans refuse to buy their product? I keep hearing this same drivel over and over again, like manufacturers can just arbitrarily decide to relocate and we have nothing to say to it. I have watched over the last 60 odd years people continue to buy imported goods and brag about it, about how good it is or how cheap it is, while never, not once wondering what it will do to their job at some point. Yes, government and big business have made it easy. They have "loaned" us the money to buy what we could not afford. They have provided benefits, welfare, unemployment to salve the pain a bit. But it cannot last, and you harping about how business has basically stolen our fucking jobs just completely pisses me off. Americans made their fucked up choice. And the lying Libs will just keep repeating this crap because they know the simple fucks that just gave away their jobs will eat it the fucking up. Yes, blame is the number one market for the masses today. Who will we blame next and for what. But at least like the dumbass libs will want us to believe, we really were being oppressed anyway, to have been forced to have a job to pay for healthcare, food, housing and entertainment.

Flakmeister's picture

Fuck, I don't make any assumptions I just look at the data of the past 50 years....

Taxing rents the same as entreprenuership was a bad idea...

BTW, Homo Economicus never has existed...

Oldwood's picture

Explain what the fuck you just posted has to do with anything I wrote or you did prior?

Data! You mean the same fucking data they feed our dumb asses every day of the week?

How's that employment number looking to you?


And for all of your precious fucking data, exactly where, anywhere, does it say that the government taking YOUR money, will spend it better, more efficiently than yourself and result in a stronger economy? WHERE? Fucking libs doing Gods work with other people's fucking money.

Dick Buttkiss's picture

Paragraphs exist for a reason, i.e., so that people might read what you write. Without them, you stick a brick in their faces, and they turn away.

As i did.

Oldwood's picture

Works for me.

It appears to work for a vast number of Americans.

Sorry there were no pictures

FreedomGuy's picture

I like when the brainless libs state things such as "Each dollar spent in welfare/food stamps/unemployment generates $1.40 in economic benefits."

This is so incredibly stupid or perhaps willfully stupid that only a committed zealot could take it at face value. If this were true then it would be best for the entire country to immediately stop work and begin collecting unemployment or some other benefit. The GDP would immediately expand 40 percent with no one producing anything. It is economic magic!

The second nearly as stupid statement is that higher taxes and government spending is good for the economy. With this line of reasoning then it would be best for government to seize all income with a tax rate of 100%. How do suppose this would work out? Hint: Ask the old USSR.

MagicMoney's picture

Government can create jobs, but they are unproductive jobs, or low level jobs that really don't have a huge impact on society progressing and accumulating higher standards of living. One thing that people like to think about Nazi economy in Germany is that the Nazis created a miracle economy, that all was well. Truth is, Nazi Germany increased activity by spending money, however, at the same time there was shortages of goods, including food. Soviet Union had jobs for everybody, yet had shortages. A job isn't a ends. It only appears to be to people who see the immediate effect that is a wage so you can buy things.

International trade has a overriding factor, one country spends, the other supplies. Sure low labor costs make it more economical, but if a economy with higher labor costs does not spend money, there is no imports from foreigners. It's called comparative advantage. A consumers want cheaper prices, they determine prices. People determine prices. Instead of blaming corporations for exporting jobs, maybe you should blame the consumer, or people.


Economics is pretty simple, if you don't spend, you save. If you use savings for investment, well that's an investment. If you spend your savings, that's of course spending. Real savings, savings with actual purchasing power that is are essential for the process of production. Also energy cost, labor costs, etc.


It's a folly to cheer on for more taxes, and more government spending, when government spending does not even create exports most of the time. They create low impact service jobs that really don't improve the standing of people in the long term to accumulate real wealth. Higher prices are not sought by people. Sure there is people who want to buy low, and sell high, and make a profit, but people want cheaper prices. This improves the standing of people in the long term with efficiencies of divison of labor, and allows people to viably pursue higher goals.

If you understand marginal utility, or even heard about it, you would know that people seek abundance. Abundance of one good has a lower value than scarcer higher satisfactions. You make a fallacy that higher prices are economic growth. That's like saying that making things more scarce improves abundance. It's a complete paradox of your argument, but nationalist emotions have no real concept of big picture logic. This is how we get national socialist, and all these crack pot theories about utopian societies engineered by a central planner.


FreedomGuy's picture

Government produces virtuallyl nothing but impediments. When you go to the DMV you are spending dollars, time and energy to do absolutely nothing of productive value. You already own the car, know how to drive and have roads. Those are the productive aspects.

Government workers are a net loss to the economy. The modern GDP calculations drive me nuts as they are stupid. They add both private and government/public spending. By that reasoning the government could seize the entire economy and GDP would be unchanged. Yet, we all know that would be the end of the economy.

A proper GDP would subtract government spending from private sector value.

As an added note, trade deficits are an accounting fallacy, as well. There are no trade deficits. All trades are equal. One party gets currency while the other party gets products. This also is a fallacy in GDP and drives hugely bad trade policies.

gann1212's picture

couldnt have said it better myself. agree 100%

AdvancingTime's picture

To say the market is rigged is an understatement. After over 30 years of trading commodities I will flat out state without any reservations that lies and manipulation run rampant. If you think anyone is looking out for the small independent trader you are wrong. We have seen in the market a total disconnect from Main Street. It almost looks like those controlling this game are afraid to go into any weekend or holiday without a strong appearing market.

An unholy alliance of the Federal Reserve, the government, and the too big to fail has left the rest of us in a precarious position. For the big boys, its insider information and computer trading, this includes computing patterns that exploit where stops are placed, this improves their ability to wash the weak out of their positions. More about this dangerous game in the post below,

Ignatius's picture

“Ghastly as it may seem to say this, the terror attack – like the original day of infamy, which brought an end to the Great Depression – could even do some economic good.  So the direct economic impact of the attacks will probably not be that bad. And there will, potentially, be two favorable effects. First, the driving force behind the economic slowdown has been a plunge in business investment. Now, all of a sudden, we need some new office buildings. As I’ve already indicated, the destruction isn’t big compared with the economy, but rebuilding will generate at least some increase in business spending.”  --  Paul Krugman

Normally I oppose the death penalty, but lately I've begun to think that there are exceptional circumstanmces and exceptional people.

Oldwood's picture

Make the fucker replace window panes for a few months and then lets see how fucking much growth he wants. Fucking pusses setting around theorizing on how the world should WORK, when they never have.

22winmag's picture

It's a *fallacy* to believe genuine change can come from within the utterly corrupt system.


The Tea Party *politicians* ain't riding to anyone's rescue people. Get a grip.

Oldwood's picture

Our government is absolutely corrupt. No one that gets in comes out the same. The "system" changes them. besides, there are too many outside of government dependent on keeping this mess its going down. Anything else is likely only for our personal entertainment. I thinking of redecorating the sitting positions in my living room.....yes that should help.

steelhead23's picture

One man's fallacy is another's ideology.  Let's take Krugman's argument, setting-aside the horrible optics in your quote.  Krugman is a Keynesian - an ideology.  Ideologues comport facts and logic to fit their ideology.  Hence, if businesses are hording cash because prospects for growth seem dismal, by golly, having to rebuild previously existing facilities would be "good."  As regards Bastiat's little vignette, the argument is clearly sound.  But what if instead, the shopkeeper was the government and the government would have to either tax its citizens or borrow the money into existence to fix that window?  Yes, Bastiat's unseen reality of loss to the government and its citizens would be true - but it would be delayed as the annual loss due to interest payments on the debt would be a small compared with the immediate benefit.  The central argument in Keynsian stimulus is that this increased velocity of money, the multiplier effect through the economy, would make that debt a good investment.  I have seen evidence on both sides of this argument - neither is compelling.

What I find most disturbing in Keynsianism isn't the concept of stimulating the economy through government deficit spending, but the idea that there is no limit to doing so - no eventual downside.  I am concerned that when the federal debt is growing faster than GDP and approaching it in scale, we are heading for a Minske Moment - an asset value collapse and credit crunch of epic proportions.  It seems a bit odd to me that while I see a lot of vague references to the risks of protracted debtage here on ZH, the great Hyman Minske is discussed a heck of a lot less than JMK.  Why is that?

forwardho's picture

Now that was a true pleasure!

An article, in plain english, that speaks the plain truth .

Bravo Sir

Yancey Ward's picture

Yes, but I have been assured that QE IV will be directed towards buying fallacies hand over fist.  

Westcoastliberal's picture

Great article Jimbo!

Radical Marijuana's picture

“Economics is haunted by more fallacies than any other study known to man."

Militarism clearly takes the prize for being more haunted by fallacies than economics. The frauds in the monetary system depended upon the force in the murder system in order to operate. The history of successful warfare being based on backing up deceits with destruction was the foundation of creating a financial system based on backing up frauds with force. The rest of the starting quotation from Henry Hazlitt I would summarize as saying the feedback through the funding of the political processes always resulted in the privatized profits being given more weight than the socialized losses. However, one of the main themes of our times, and our apparent future, is that the synergistic accumulation of all the socialized losses is resulting in the previously privatized profits being overwhelmed in their aggregation. Since the processes of privatizing the profits depends upon evil deliberate ignorance, operated through fundamentally fraudulent financial accounting systems, and bizarrely biased statistical analyses, the accumulating results are the overall destruction of society and nature as a whole. But nevertheless, the feedback of the privatized profits through the political processes keep on driving the same phenomena in that direction.

Meanwhile, this article moved on to quote Paul Krugman, as one of the favourite whipping boys mentioned on Zero Hedge. There is no doubt that the events on 9/11/2001 enabled Greenspan to justify lowering the interest rates, which drove the American housing bubble. On the way there, those benefiting from blowing that bubble were granted immunity to engage in predatory and fraudulent lending. Therefore, the financial crises precipitated in 2008 were surely an "Inside Job." However, to return to my original point, that 9/11 itself was an inside job, false flag attack, demonstrates how the infinitely fractal, tunnels of deceits that operate through warfare are far greater than those frauds which operate through finance. There is actually a combined money/murder system, where the denominator is the murder system. The financial frauds are the symbolic aspects of the deceits which are backed by physical destruction, as their necessary historical foundation. They work together, as an integrated system, operating according to the principles and methods of organized crime.

In that context, the "ignorance of the masses" is far more profound than this article above by Jim Quinn recognizes, (despite how eloquently he expresses that social situation.) Similarly, the "evil men with evil intent" are too superficially described by Quinn's article. The "ignorant masses" acted like the Zombie Sheeple, who were preyed upon by the Vicious Wolves in the ruling classes. However, Quinn does not provide any better overview of how and why some human ecology must operate, and therefore, how political economy operated within that human ecology, where there developed some men that preyed upon other men.

Understanding those problems better is extremely difficult, because of the degree to which the biggest bullies' bullshit social stories have been able to dominate everything including the philosophy of science, such as exemplified in the understanding of the basic principles of thermodynamics and information theory. In particular, the entropy equations had an arbitrary minus sign inserted into them, so that the measurements of power and information would end up generating positive numbers, rather than negative numbers, which is what the mathematics itself reveals.

THE MOST IMPORTANT FUNDAMENTAL CONCEPT OF ALL CONCEPTS IS SUBTRACTION. However, our civilization is built upon understanding that concept backwards. That is extremely relevant to the ways that we understand the combined money/murder systems, or the financial frauds, backed by the force of governments. The apparent paradox is that it is the production of destruction which controls all other production, including reproduction. The men that make their living breaking things and killing other men are those to whom it most applies that "it is difficult to get a man to understand something when his salary depends upon him not understanding it."

If no life existed, then none of our problems would exist. However, as soon as any life exists, then it comes as a package deal with chronic political problems inherent in the nature of life. The fundamental definition of life includes that it can grow and reproduce. However, no environment can sustain endless growth and reproduction. Instead evolutionary ecologies develop ways to maintain dynamic equilibria. All of the various factors which cause deaths balance out those which are life. Since any notions about ecology begin with the presumption that the life exists, and can grow and reproduce, therefore, the central concepts regarding any evolutionary ecology are always the relative death controls, which limit life.

Clearly, the ways that the "evil men with evil intent" in the ruling classes operate is through applying the methods of organized crime, primarily through the funding of the political processes, which includes bribery and intimidation, but which also includes paying for political opponents that can not be bribed or intimidated to be discredited or destroyed. However, meanwhile the "ignorant masses" are brainwashed to not comprehend the necessary roles of such "evil."

Instead, people like Jim Quinn operate as "black sheep" or reactionary revolutionaries, who do not describe any better death controls, but merely denounce the "evil men with evil intent," while lamenting that the Zombie Sheeple act so incompetently, when they are routinely fleeced, and being set up to be slaughtered, by the ruling classes, the "evil men with evil intent." The main thrust of this article was about the fallacy that destruction is good for the economy. However, nowhere in that do I detect an understanding of how and why the production of destruction directs all the other production, including reproduction. Instead, there tends only to be the standard superficial morality of the Sheeple, that destruction is "BAAAD."

From a deeper philosophical perspective, one should take First Law of thermodynamics and information theory, the conservation of energy, more seriously, namely that the destruction of energy is NOT possible for human beings to do. Humans can only use energy to direct the transformation of energy. The way that we understand how we do that is through the Second Law of thermodynamics and information theory, which is the increase in entropy. Everything that we understand today we do through those basic principles. We understand evolutionary ecologies as the operate of general energy systems.

However, that then returns to the IMPORTANCE of us having understood entropy backwards, as represented by the way an arbitrary minus sign was inserted into the entropy equations. Thereby, we reversed the meaning of everything, since we subtracted the subtraction, in order to make it appear to be positive, and thereby created a Bizarro Mirror World where we talk about everything backwards, because we see everything backwards, while taking it for granted that we are seeing things the way they are. Therefore, the ironies abound, and are more profound than can be readily appreciated. Remember that as one travels through a whirlpool, one spirals around. In that context, one may well ask again, "How far down the rabbit role does Alice go?" Or, "How far up the tornado does Dorothy go?"

The most important political consideration is how human beings operate their murder systems. Of course, militarism is the supreme ideology, and making weapons has always been the most important business. However, the history of warfare demonstrated that its success depended upon backing up deceits with destruction, and therefore, the most crucial feature of militarism is that it lies about itself, as much as possible.

It is in that context that the USA now represents those phenomena in various forms, such as its murder systems operate through the maximum possible deceits, as spectacularly demonstrated by the way that the events on 9/11/2001 were an inside job, false flag attack, so that everything done thereafter was built on that deceit. Similar to how the history of murder systems operated through the maximum possible deceits was the foundation for a financial system based on the maximum possible frauds. That was symbolized in the USA by the financial crises precipitated in 2008 also being an inside job, which can be traced back to 9/11 being an inside job. However, to continue through those infinitely fractal tunnels of deceits, we should have some sympathy for the devil, or the "evil men with evil intent," which corresponds to having less sympathy for the "ignorant masses" of Zombie Sheeple, because THERE MUST BE SOME DEATH CONTROLS.

The consistent theme is that the only better resolutions to our real problems require better death controls, and the more intense our real problems become, the more that is the case. Welcome to the Bizarro Mirror World Fun House, Folks! There are no fundamental dichotomies, and impossible ideals based upon false fundamental dichotomies cause the opposite to happen in the real world. Actually, the "evil men with evil intent" do something which is necessary to be done, especially since the "ignorant masses" of Zombie Sheeple are too incompetent, so far, to do it for themselves.

The USA is surely "a country built on a Himalayan mountain of fallacies." However, one should remember that the biggest mountains in the world are actually the volcanic Hawaiian Islands. Everest is the highest elevation on land, but it is only a single peak in an entire mountain range. Mauna Loa is a single mountain on the island of Hawaii. When you start measuring Mauna Loa from its true base on the bottom of the ocean, in the Hawaiian Trough, the total height exceeds that of Everest by over 3/4 of a mile:

In a metaphorical way, Jim Quinn's article typifies the failure of the Black Sheeple, reactionary revolutionaries to put things in proper overall perspective, metaphorically like measuring mountains only from above sea level, rather than from their base underwater. While there is no doubt that governments are the biggest form of organized crime, controlled by the best organized gangs of criminals, authors like Jim Quinn tend to not look any deeper as to how and why that has happened. Rather, authors like Jim Quinn tend to continue to still operate within the biggest bullies' bullshit social stories, which are paradoxically the moralities that the Vicious Wolves taught the Sheeple to bleat.

That the production of destruction controls production and reproduction plays a good and necessary role inside the overall human ecology and political economy. The "evil men with evil intent," as the top predators, or parasites, upon their prey, the "ignorant masses," perform a service for their prey, which the prey must have be done in some fashion, because it is absolutely impossible for good growth and reproduction to continue be endlessly exponential. In that context, this analysis of the economic aspects of destruction is too superficial. Therefore, it does not lead to better resolutions, rather than merely lamenting the fate of the ignorant masses.

What we need, and should do, are better death controls, which should be done by more citizens becoming more competent, in the sense, metaphorically speaking, that everyone should become better Wolves, NOT that everyone should become better Sheeple. However, guys like Jim Quinn tend to merely be Black Sheeple, who may well rightly despise the "ignorant masses" in the flock of Sheeple generally, but who do not have sufficient sympathy for the devil, and therefore, do not tend to provide directions regarding how the "evil men with evil intent" could perform their overall duties better.

DavidPierre's picture


May I paraphrase your excellent comment, which by the way, will fly FAR above SmokeyQuinn's narrow mind.


'Jim Quinn continues to still operate within the biggest bullies' bullshit social story...'

He refuses a deeper understanding of the reality of the Nazi States of Amerika.

Thus he FAILS... again...

the Litmus Test


He is just one of the many 'reactionary revolutionaries' who believe in the 9/11 conspiracy theory.

acetinker's picture


Saw my downvote.  Knew it would be you. Voila!  There you are.

El Diablo Rojo's picture

So Radical Mary,

Do you suggest we kill the weak, the sick, the poor, the old, without impunity and without remorse? Where do we set the cut off line? Does the cut off line have to be reevaluated as population increases? Natural selection needs a helping hand? Do we incorporate race into your mathematical equation? Speaking of slippery slopes, once you start down that path, most don’t return. Pretty soon you are doing the Lord’s work.

You would make a good banker.



Radical Marijuana's picture

El Diablo Rojo, it is NOT possible for human beings to not operate some form of artificial selection. That is the essence of human nature, that human beings construct stories about their world, and themselves, and then live according to the degree that they more of less believe their stories.

Natural selection is a necessarily existing force of nature. Natural selection pressures are as real as any other physical pressure. Natural selection has always existed, and will always exist, as long as energy exists, and manifests through energy systems. Human beings emerged into that context, where natural selection already existed. As human beings developed their ability to tell better stories, they were able to create more of an artificial environment around themselves, within which more artificial selection manifested.

I would NOT say that "Natural selection needs a helping hand?" Rather, what I say is that human beings discover that natural selection is operating, and as they become more consciously aware of that, then their participation in that process becomes more conscious. Metaphorically speaking, human beings have no choice but to "Play God."

However, the main themes of the original history of Neolithic Civilizations were the attempts to Privatize God. The paradoxes that flow from those assertions are infinite tunnels of fractal deceits. The REAL death controls mostly get done through the maximum possible lies about what they are REALLY doing. That became the foundation for creating fundamentally fraudulent financial accounting systems, as the kinds that almost totally dominate the world today. Since I recognize that social fact, it is NOT possible for me to be a "good banker!"

Of course, what I think "should" happen has almost nothing to do what what I think WILL happen. I believe that we should make a greater use of information, as the operational definition of higher consciousness, in order to operate better death controls, which would manifest spirituality on more levels. However, what I think WILL happen is runaway deceits, backed by destruction, becoming more psychotically insane that we can currently imagine.

There are no "cut off lines." We are already accelerating faster down steeper and steeper "slippery slopes."  I am merely attempting to tell my kind of story about the world, however, there are no realistic reasons to believe that more radical truth about artificial selection will make any significant difference to the entrenched money/murder systems. Although I believe that better artificial selection "should" be done, that feeling is nothing more than irrational hope for a series of political miracles.

Ideally, we should be channeling the power to rob, backed by the power to kill, though a constitutionally limited democratic republic, operating through the rule of law. However, in the REAL WORLD there already ARE runaway systems of rulers, and those they rule, who are evil and ignorant. Together the world is dominated by evil deliberate ignorance, and THAT is the primary way that we operate our REAL artificial selection systems, because REAL natural selection selected for society to be controlled by the people who were the best at being dishonest, and backing that up with violence, in each short-term increment, no matter how insane the consequences of controlling civilization through Huge Lies would become in the longer term.

Natural selection WILL correct our erroneous artificial selection. I would like to enable a better catalysis of that process. However, I see no credible reason to believe that the established systems of the rulers and the ruled will correct themselves in any better ways than to drive themselves mad, and thereby become self-destructive. At present the rulers are "evil men with evil intent" while those they rule over are the "ignorant masses." My comment on Jim Quinn's article was an attempt to provide an overall perspective on political economy operating inside of human ecology. However, as I outlined, those system ACTUALLY work through the maximum possible deceits, backed by destruction, so that the vast majority of people act like Zombie Sheeple, who are very unlikely to do anything genuinely better to respond to that, especially since guys like Jim Quinn are merely Black Sheeple, who provide some better analysis of the problems, but never provide genuinely better solutions, because they deliberately avoid discussing how to operate better death controls, which would be necessary in order to actually back up any better debt controls.

As one tiny illustration of how severely insane Neolithic styles of civilization have become, consider the existence of "backpack atomic bombs:"

U.S. Special Forces Carried Miniature Nukes on Their Backs

One man can carry a weapon that can kill millions of men. Everything that used to be possible to work within social pyramid systems has become runaway psychotic insanities, but, so far, there is barely the slightest hint of the current systems of the rulers, and those they rule over, changing in any ways which would be theoretically necessary to cope with the advances in science and technology making weapons that are trillions of times more powerful than during the thousands of years of previous history of the development of Neolithic Civilizations.

Theoretically, that requires radical changes in militarism, regarding how murder systems are operated. Theoretically, the best forms of death controls, in terms of efficiency and effectiveness, are what we call "birth controls." However, since we understand everything in politics and society in ways which are more and more grossly divergent from advances in areas like physics and biology, therefore, the contradictions are accumulating that things like backpack atomic bombs, as potential death control weapons, EXIST, while their primary real purpose is to back up the banksters' financial frauds. In that context, the point of my criticisms of Jim Quinn's article is that we should operate better death controls. However, there are no good reasons to believe that will actually happen, while there are an abundance of sound reasons why the collective deliberate ignorance, of BOTH the rulers, and those they rule over, will destroy themselves together.

acetinker's picture

Mr. Quinn, I have a fatal flaw in that I generally read other users' comments as an inline supplement to the article. Hence, I rarely reply directly to the poster. Then again, I would have had to visit Burning Platform to do that as well, wouldn't I? I'm gonna make an exception in this case. I could quibble on some minor points, but on balance, they'd just be quibbles, anyway. This was an exceptional article- both in message and composition. I'm sure some will disagree, they always do, and for that we defer to Mr. Sinclair. There are so many things I don't understand. That word, understand, has a different meaning in Black's, than it does in Webster's. I don't understand that. I like Kunstler too, he makes me laugh at myself sometimes. But you, you are my favorite blogger. Period. Oh, and Tyler(s) make it possible through aggregation, to see your posts, as well as many others, in one place. Thanks, Tyler(s)!

smacker's picture

Many people who have been around long enough, worked hard and enjoyed a self-made successful career will have learnt that an ability to evaluate situations, apply common sense, logical thinking and make judgements that stand the test of time, is not the same as being an "expert", someone who has collected strings of Letters after their name, having attended all the right schools, universities and know all the right people.

And it is the "experts" who manipulate their way into positions of power and influence, in the public and private sectors. These people are responsible for wrecking our economies and societies.

I often watch and listen to so-called "experts" on TV news channels and find myself gobsmacked by their gross inability to think clearly and evaluate situations. Yet simply because they are "experts", their views are accepted.

Radical Marijuana's picture

Economic experts are like soldiers, in that they follow orders, and so, work to deceive. Economic experts are relatively popular due to the long history whereby the biggest bullies' bullshit "works," namely a prolonged system of backing up lies with violence, which operates systems of robbery that benefit those who are best at doing that. Economic experts are paid to promote the biggest bullies' bullshit, and since promoting that bullshit makes those bigger bullies become more wealthy and powerful, then those bankster bullies, and their buddies, continue to be able to pay for economic experts to keep that feedback loop going.

In a world where everything that can have a claim staked to own that, has already been made, and that has already been backed by violence for a long time, there is no way to operate outside of those established systems of legalized lies, backed by legalized violence. Economic experts demonstrate the paradoxical ways that being dishonest benefits those doing that, in the short-term, no matter how much cognitive dissonance that generates in the longer term.

As I outlined in my comment above, the mainstream economic experts are professional liars and immaculate hypocrites, because the history of the application of the methods of organized crime is how our real society was created and operated. Economic experts present systems of rationalizations and justifications for what is basically and necessarily organized social robberies. However, since that works, that loops around and around, so that a small piece of the pie is shared with those mainstream economic experts, to continue to advance the views that the biggest bullies want advanced, because that benefits them, which then enables those biggest bullies banksters and their buddies to dominate the funding of the schools of economics. Thus those ironies continue to go deeper and deeper, in that students are learning to operate as liars and hypocrites, from better trained liars and hypocrites.

As with success in warfare based on deceits, success in finance is based on frauds. However, dishonesty does not work by telling other people the truth. Dishonesty works by telling more and bigger lies, no matter how absurd that have to become, due the fact that they are lies. In the context, mainstream economic experts are profoundly dishonest, but those who are the best at lying to themselves are also the best at lying to other people.

"People who have been around long enough, worked hard and enjoyed a self-made successful career" did so WITHIN the established systems of legalized lies, backed by legalized violence, which they mostly took for granted. Inside of those systems, more truth is punished, while more lies are rewarded. In the longer term, that drives the entire society to become more and more psychotically insane. However, in the short-term, the mainstream economic experts make a better than average  by promoting the biggest bullies' bullshit social stories.


Gotta say you're on a roll today RadMan ; ) My posts are like the old Ford 9N and yours are the Fendt Trisix !

Seriously, well done and thank you. The writer of this article does a great job of getting across his feelings of disgust but... then what? I'm getting your drift on the bullshit solutions but can't seem to shake my own ignorance and zombie sheeple cage. I like to think ZHrs do try. I notice often even casual social interactions can more quickly evolve into discussions about what the hell is going on! ZH and writers great and small are helpful.

Briefly, you have brought up the issue of campaign financing here, in recent posts (thanks), and in your links. The E.D.A. (if i got that  right) is awesome although the .000001% participation rate sucks! lol In the context above, the stuff Lawrence Lessig expresses on "the funders" is great but it seems like it would take an Article V convention to move it and THAT seems impossible too!!! GRRRRR


Radical Marijuana's picture

Thanks for the compliment, MEAN BUSINESS!

I am currently still working at putting what little pressure I can on the Canadian income tax authorities, regarding my use of the political contribution tax credit through Electoral District Associations (EDAs). Over the previous 30 years, I have jumped back and forth between putting pressure on Elections Canada, then Revenue Canada (which became the Canadian Revenue Agency during that time), to respond to my actual use of the Canadian political contribution tax credit. During that process, at different times, I DID talk face to face to tens of thousands of Canadians about monetary and taxation issues. Therefore, my comments about the FUNDING OF POLITICS, and the average PUBLIC AWARENESS about the monetary and taxation systems, are based on those actual experiences, due to my political experiments, and court cases based on those political experiments.


One of the strangest things that has happened during my own voyage of discovery is that things which I originally tended to automatically dismiss as nonsense, due to my own conditioning, I GRADUALLY discovered, many years later, appeared to make more sense that I had originally believed.

Therefore, I tend to take more seriously this quote from the Haldane:

"I have no doubt that in reality the future will be vastly more surprising than anything I can imagine. Now my own suspicion is that the Universe is not only queerer than we suppose, but queerer than we can suppose."

Riprake's picture

There's one exception to Bastiat's "broken windows fallacy" being a fallacy, and that's if the destructive activities in question specifically destroy socialists. If a shard of glass from the broken window happens to go flying in just such a way that it cuts some socialist busybody's throat and he dies, everything Bastiat says is true, but now there will be one less socialist meddler to impose new taxes on the productive and rob them of their funds.

The victim is still out six francs to the glazier, but now stands a much greater chance of keeping his next six francs which the socialist meddler would otherwise have stolen from him through taxation. Thus, the economy receives a net benefit from destroying a socialist. Setting Krugman's couch on fire would be a shameful waste of a good couch, but if Krugman happened to be sleeping on it at the time and got destroyed along with it, then the act of setting the couch on fire would be a net benefit to our economy.

That, incidentally, is also the one way in which a war can benefit people economically: if it frees them from the socialist thugs that are oppressing them, they'll still have some broken windows and ruined buildings to rebuild, but the cost of these repairs is far less than the cost of still having a thug regime oppressing them. Thus, war can be good for business; just not in the way war merchants would like us to think.

mkhs's picture

Mr. Quinn says there is no weather effect.  He follows up to explain that damages of 500-1000 dollars per uprooted tree decreases discretionary spending.  Which of the two diametric points should I believe?