Today, the government of the USA is in an accelerating transition. For the first 100 years (with a few exceptions) the government of the USA existed to set man free from men. The rights of the people were respected by the law and by the courts. And it is no coincidence that the USA grew from a small agrarian society in the 18th century to a wealthy superpower barely a century later. But today, the government is taking control over every facet of the economy: sector by sector, law by law, regulation by regulation, court decision by court decision, czar by czar, presidential diktat by president diktat. In this environment, formerly good and honorable words like “police officer”, “banker”, and “corporation” have taken on negative connotations as people become aware of the nature of our present system. The evil is not in the fact of being a police officer; it is in the nature of enforcement of bad laws (and neglect of enforcement of good laws). It is not in the nature of lending (i.e. exchanging wealth for income), but in helping the central bank create inflation (i.e. counterfeit credit). It is not in the nature of forming a large-scale enterprise, but in buying coercive powers and in forming an evil alliance with government. By Corporation, I do not refer to the modern parasite that latches onto the government, seeking to coerce its customers, destroy its competitors, and feed at the public trough. Benito Mussolini coined the term for this system—fascism—though of course he did not regard it as the terminal stage of civilization. People today also call this “crony capitalism”, a term I don’t favor, as it is not any kind of capitalism at all, but the negation of capitalism.
By definition, we cannot shrink our way back to the sort of growth required to service the West's accumulated debts. Something has to give. That something will ultimately be social and political disorder on a continent-wide basis, particularly as the taxpayer becomes increasingly frustrated in his obligations to fund the rapidly growing and untenable costs of Big Government. Such disorder is almost universally feared-- by politicians, by markets, by institutions. As the London-based marcoeconomic research consultancy Capital Economics recently commented: "The last thing that the markets need right now is increased political uncertainty at the heart of Europe at a time when the economic outlook is already bleak..." The only reasonable response to this is: tough. If social and political disorder is what it takes to shift an unsustainable status quo in which vampire banks and clueless bureaucrats suck the life out of the productive economy, bring it on.
The following are from a report published last week by the European Union’s Institute for Security Studies (ISS). They’re projections that assume today’s trends will continue in one direction only — which may not be the case.
"A majority of doctors support measures to deny treatment to smokers and the obese, according to a survey that has sparked a row over the NHS‘s growing use of 'lifestyle rationing'", The Guardian notes, and that’s the trouble with services and institutions run from the taxpayer’s purse, administered by centralists and bureaucrats. It becomes a carrot or a stick for interventionists to intervene in your life. Its delivery depends on your compliance with the diktats and whims of the democracy, or of bureaucrats. It is easier to promote behaviour desired by the state when a population lives on state handouts; and increasingly throughout the Western world, citizens are becoming dependent on the state for their standard of living. With the wide expansion of welfare comes a lot of power, and the potential for the abuse of power. Citizens looking for a free lunch or an easier world should be careful what they wish for. Welfare recipients take note: you depend on government for your standard of living, you open yourself up to losing your liberty.
Way back in 2009, we remember fielding all manner of questions from people wanting to invest in gold, having seen it spike from its turn-of-the-millennium slump, and worried about the state of the wider financial economy. A whole swathe of those were from people wanting to invest in exchange traded funds (ETFs). John Aziz always and without exception slammed the notion of a gold ETF as being outstandingly awful, and solely for investors who didn’t really understand the modern case for gold — those who believed that gold was a 'commodity' with the potential to 'do well' in the coming years. People who wanted to push dollars in, and get more dollars out some years later. 2009 was the year when gold ETFs really broke into the mass consciousness. Yet by 2011 the market had collapsed: people were buying much, much larger quantities of physical bullion and coins, but the popularity of ETFs had greatly slumped. This is even clearer when the ETF market is expressed as a percentage of the physical market. So what does this say about gold now? Especially as Zhang Jianhua of the PBoC noted "No asset is safe now. The only choice to hedge risks is to hold hard currency — gold."
Krugmann fails to address even a single one of the arguments forwarded by Spitznagel. This is no surprise, as he has often demonstrated he does not even understand the arguments of the Austrians and moreover has frequently shown that his style of debate consists largely of attempts to knock down straw men. After appraising us of his economic ignorance (see the idea that time preferences can actually 'go negative' implied by his argument on the natural interest rate above), he finally closes a truly Orwellian screed by claiming that everybody who is critical of the Fed and the financial elite is guilty of being 'Orwellian'. As we often say, you really couldn't make this up.
Does believing in the "recovery" make it real? The propaganda policies of the Federal Reserve and the Federal government are based on the hope that you'll answer "yes." The entire "recovery" is founded on the idea that if the Fed and Federal agencies can persuade the citizenry that down is up then people will hurry into their friendly "too big to fail" bank and borrow scads of money to bid up housing, buy new vehicles, and generally spend money they don't have in the delusional belief that inflation is low, wages are rising and the economy is growing.... Data is now massaged for political expediency, failure is spun into success, and consequences are shoved remorselessly onto the future generations. The entire policy of the Federal Reserve and the Federal government boils down to pushing propaganda in the hopes we'll all swallow the con and believe that down is now up and our "leadership" is a swell bunch of guys and gals instead of sociopaths who will say anything to evade the consequences of their actions and policy choices.
Guest Post: The New Drug of Choice In The White House, Federal Reserve and Treasury: Delusionol (tm)Submitted by Tyler Durden on 04/27/2012 11:45 -0400
Inside sources are reporting that there's a new drug of choice circulating in the hallways of power--the White House, Federal Reserve and the Treasury Department--and it's a perfectly legal prescription psychotropic: Delusionol (tm). Delusionol works by activating the parts of the brain that replace cognition and reasoning with positive fantasies. For example, a driver on Delusionol might run over a person in a wheelchair, bounce off a fire hydrant and send a baby carriage hurtling into a brick wall, and they would be happily convinced that they were an excellent driver. Now you understand why Delusionol is being gulped in vast quantities in the halls of power: the guys (and yes, it's mostly guys) really want to believe the "economic recovery" they've been hyping, and since it's rationally preposterous, they need a drug to suppress recognition that their policies have only made the financial disease worse and stimulate a delusional belief in the fantasy of "recovery."
The Social Security Administration made an alarming announcement recently that they will exhaust their funding capability by 2033 which was several years earlier than originally projected. As millions of baby boomers approach retirement more strain is put on the fabric of the Social Security system. The exact timing of this crunch is less important than its inevitability. The problem that Social Security has is "real" employment. I say "real" employment simply to sidestep the ongoing arguments about the validity of government employment survey's from the Bureau of Labor Statistics. The Federal Government receives income from the Social Security "contribution" from employee's paychecks. Social security "contributions" have decreased sharply by almost $70 billion from its peak. This is due to two factors. The first is that the number of "real" employees, while growing, is in lower income producing and temporary jobs. The second factor is that a larger share of personal incomes is made up of government benefits which does not affect social security contributions. The entire social support framework faces an inevitable conclusion and no amount of wishful thinking will change that.
I was approached recently by a member of our Sovereign Man community who filed the paperwork to relinquish US citizenship some time ago. Long story short, after an incomprehensibly long wait, the US government finally sent him a reply: Application DENIED. Absolutely shocking. That you even have to ‘apply’ to relinquish what you never signed up for is intellectually insulting. That you cannot do so freely, and immediately, is nothing short of totalitarian. It’s still an embryonic movement, though more and more US citizens are being driven to divorce their country. Last year nearly 1,600 people gave up US citizenship, up from 1,485 in 2010, 731 in 2009, and 226 in 2008. While some renunciants have philosophical misgivings about being American, most do it for tax reasons. There’s a growing number of expats who, despite living abroad for years, are still paying huge portions of their income to Uncle Sam.
Common sense suggests that if employment is rising, the stock market should follow as more jobs means more wages, sales and profits. We see this correlation in the overlay of the S&P 500 (SPX) and employment until the latest recession and stock market Bull run-up: this is clearly a jobless "recovery" yet the stock market has more than doubled. Is this decoupling of employment from the stock market "the new normal" or an aberration that's about to revert to historical correlation? To do that, the market would need to fall in half or the economy would need to add 10+ million jobs in short order. If we combine Peak Oil with Peak Credit, we get a household sector with stagnant disposable income burdened by servicing monumental debt loads. Here is a chart of household liabilities and wages/salaries, unadjusted for inflation. Household debt has completely outstripped income. These charts do not paint a picture of robust recovery, they sketch a grim picture of stagnant household incomes and rising costs for fuel and debt service.
H.L. Mencken was a renowned newspaper columnist for the Baltimore Sun from 1906 until 1948. His biting sarcasm seems to fit perfectly in today’s world. His acerbic satirical writings on government, democracy, politicians and the ignorant masses are as true today as they were then. I believe the reason his words hit home is because he was writing during the last Unraveling and Crisis periods in America. The similarities cannot be denied. There are no journalists of his stature working in the mainstream media today. His acerbic wit is nowhere to be found among the lightweight shills that parrot their corporate masters’ propaganda on a daily basis and unquestioningly report the fabrications spewed by our government. Mencken’s skepticism of all institutions is an unknown quality in the vapid world of present day journalism.
H.L. Mencken understood the false promises of democracy 80 years ago:
“Democracy is also a form of worship. It is the worship of Jackals by Jackasses. It is the theory that the common people know what they want, and deserve to get it good and hard.”
We deserve to get it good and hard, and we will.
I don’t understand the furore around Obama’s secret service handlers being (ahem) secretly serviced by Colombian hookers. To writers like myself who specialise in salacious analogies, the incident was a gift. To the rest of the press, who don’t normally get to write about such matters, it was an excuse to shoot off pent-up sexual frustration. So I can understand the press pushing the story just the way Bill Clinton pushes expensive cigar cases (enthusiastically, by all accounts). The worry, apparently, is the potential to compromise the President’s security. Rep. Peter King, chairman of the House committee that oversees the Secret Service, says the key question is whether the prostitutes could have accessed “any data or information that could have compromised the president of the United States or made an enemy force aware of the practices and procedures of the Secret Service.” But surely this applies to all sexual relationships, not strictly ones for money? Surely prostitutes are absolutely the safest kind of liaisons? After all, why would a foreign agent trying to sequester intelligence information try and charge the American agent for sex? If you were setting a honey trap, why would you create some barrier to entry, such as a fee? There’s playing hard to get, and then there’s playing easy to brush off, and that would be the latter.
Once again pundits are claiming that housing is "finally recovering." But they're overlooking three peaks: Peak Housing, Peak Financial Fraud, and Peak Suburbia, all of which suggest years of stagnation and decline, not "recovery." Once the belief that housing is the bedrock of middle class wealth fades, so too will the motivation to risk homeownership in an economy that puts a premium on mobility and frequent changes of careers and jobs. Only one aspect of housing hasn't yet peaked: property taxes. If the risks of homeownership weren't apparent before, they certainly are now as local governments jack up property taxes to indenture homeowners into tax donkeys.
Guest Post: Will Bond Investors And Savers Have To Hold Forced Government Loans At Some Point In The Future?Submitted by Tyler Durden on 04/25/2012 16:00 -0400
If central planners decide to circumvent the already manipulated bond market and enforce much lower interest rates by implementing forced loans, there would be a big uproar for some time in the market. However, the negative wealth effect on the private sector would be more foreseeable and stretched out over a longer period of time. This definitely would decrease uncertainty. In my opinion, this measure would actually help to break through the downward spiral and avoid the much more devastating course towards a restructuring event with its negative side effects.