Monday, April 30, 2012

Leaving Ponzi In The Dust...........

Leaving Ponzi In The Dust

The European Central Bank prints money and hands it to the banks in undiminished size and at an interest rate which compels massive carry trades. The European banks buy sovereign debt that helps to lower the price of the sovereign's funding costs, the banks use some of the money to increase their own capital and lend some of the money to individuals and corporations in the nations where they are domiciled. The money gets used and eventually dries up and a some of the capital is used to come into compliance with Basel III. The yields of the periphery nations fall but then begin to rise again. Germany, using Target-2, keeps lending money to the other central banks which use part of the money to support their currency, the Euro. The circle is then completed and the equity markets, notably in America, trade off of the strength of the Euro and some days at almost a point by point movement. Never before in the history of the world has such a grand scheme been implemented and in such an all-encompassing fashion. The unlimited amount of money that is available, because they can print all the money they want, has allowed Europe to game the world's financial system while no one looked or caught on to the scheme. The world's fiscal system has been rigged by Europe.
In the past, when countries such as Peru or Argentina hit the wall and defaulted; they did not have enough capital to overcome the rest of the players in the financial markets and so this Ponzi manipulation could not be done. Now with Europe utilizing all of the assets of a Continent; the pipedream of absolute control can be exercised by the State with the only dangers being the United States, China, an accurate IMF, investors opting out of buying Europe's debt and the ratings agencies. This is why then that Europe is so vicious when it comes to the ratings agencies; because they are out of their control and one element that could sink the ship. Europe has minimized America and China by the natural fears of nation-states realizing the potential wreckage that could be done to their national economies from Europe's duress. Europe has minimized the IMF by one of their own in charge and by supplying manufactured numbers that leads to each and every projection done by the IMF for Europe to be far past wildly optimistic as Europe manipulates their own data. The Great Game has now been rigged past any attempt ever made before but real numbers eventually catch up with falsified numbers I can assure you. It may take some time ,the falsification may not be readily apparent, but the truth eventually rears it grizzled head. There will be a point when so many institutions will no longer buy European debt and when the balance sheet at the ECB terrifies everyone and the demands of austerity drive nation after nation into throwing out their governments and replacing them with politicians who want to protect their own country and not fantasize about any European visions or, in the darker case, the people revolt against their government in some kind of violent manner that the construct sinks under its own mountain of debt. To continually pay off old debt with larger and larger amounts of new debt eventually has serious consequences. In the case of the recent LTRO, to get the same results, you would have to double the size with $1.2 trillion paying off the old debt and $1.2 trillion being used for the same purposes of the original monetary easing so that the balance sheet at the ECB would balloon to $5.2 trillion.

There are a number of logical reasons why the central banks in Europe buoy the Euro and the first and foremost is that Oil/Energy trades in Dollars so at 1.32 euros to the Dollar Europe has a 32% discount when buying Oil/Energy. This method also allow Europe to buy American goods at a 32% discount so that their imports are cheap while they trade with themselves and Asia at the rate of the Euro and then finance themselves through the ECB and Target-2. They have, in fact, created a closed system that they try to maintain at ANY cost. No government in the history of the planet has been able to close off the financial circle in such a fashion but without growth or Inflation the paradigm cannot go on indefinitely as the ratings agencies and then investors opine upon the scheme.

The construct which supports the European Union is also coming under fire. It is not, I assure you, that there is no mechanism for a country to leave the Eurozone that stops any nation from departing. This is similar to Chancellor Merkel's nonsensical comment last Friday that the new EU fiscal pact cannot be renegotiated. Of course the fiscal pact can be changed and changed anytime enough governments want to change it. A country can leave the EU anytime they wish to leave. The reasons that nations do not leave can be found in both the carrot and the stick of the manner that the European Union is structured. The carrot is open borders, open trade, financing by the ECB and Germany and available capital if a country has fiscal difficulties. The stick is a loss of trading partners, isolation from the rest of Europe and a lack of financing by the core nations. However, and I point to Greece specifically, when you have borrowed all you can borrow and your begging falls on deaf ears then it is your benefit to depart because you have gotten all you are going to get and then the ECB, the EIB and the IMF are stuck with the consequences of Greece's sizeable debts that will finally have to be recognized with quite dire consequences for those institutions.

In the short term the greatest pain will most likely be felt in Spain. There is no way out for this country any longer. They are experiencing a deep recession, unemployment that may lead to social unrest and any further attempts at austerity will only lead to even worse economic conditions. Here is one more example of a funding country that is about to be a funded country and the size of the bailout will strain Europe in a manner that cannot yet be accurately contemplated.

I suspect the biggest surprise though will come in Germany. Berlin has done all that it can do exempt itself from the recession that is sweeping across Europe but they have just about run out of tools to exempt themselves. All of the austerity measures and all of the fiscal restraints that they have imposed upon the rest of Europe undoubtedly result in one specific consequence and this is a severe lessening in Demand. Providing financing for that which is not sought is irrelevant in the end and as Demand for goods and services dries up across the Continent then Germany will begin to feel the pain as well and join the rest of its neighbors in recession. With no growth it will come down to a choice between declining economics or Inflation and if there is one country that is allergic to Inflation it is Germany and so the choice will come late, will be agonizing and will lead to a massive political re-structuring where I suspect it will come to "Germany for the Germans" and a rise in political parties that represent that vision.

When it comes to the European debt to GDP ratios or the financial projections that are never, ever accurate or the ascertations made by the politicians that each and every country in Europe is on sound footing never forget the basis for German logic. It is grounded in what they have learned during the last one hundred years and as the "wink, blink and nod" mentality in Sothern Europe has not changed; neither has the German manner of thinking either.

Take Ivy League Classes Without Paying A Dime..................GREAT STUFF

Now There's A Way To Take Ivy League Classes Without Paying A Dime

If you've always dreamed of learning from a professor at an Ivy League school, but can't afford it, Coursera wants you to go to their website.

The social entrepreneurship company offers courses from Princeton University, Stanford University, University of California, Berkeley, University of Michigan-Ann Arbor, and University of Pennsylvania, for free. For everyone.

Users can log on, listen to the lectures, interact with graphics and power points, do the homework and even get it graded.


Dare To Be Great........... An awesome Inspirational Video Clip

Dare To Be Great








                                                                ERIC HORNE


" It is not goodness to be better than the worst. "


"Ideas are indeed the most dangerous weapons in the world."

                                                                          Justice William O. Douglas

"Logical consequences are the scarecrows of fools and the beacons of wise men."

                                                                                                                      Thomas Huxley

"THE test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function," 
                                                         F. Scott Fitzgerald 

ENORMOUS problems remain for the global economy.

What's more important, being right or making money?

The two most powerful warriors are patience and time. 

The winter's encouraging signs of recovery have given way to spring doubts.

Global deleveraging still needs to be completed, and that will have a very negative effect on the stock market.

Four years from now it is very likely that you will find that the stock market trading much lower than it is today.

The "experts" and "profeesionals" at the Federal Reserve have shown themselves to be demolition experts and general incompetents.

We should all be very concerned about the long-term consequences of the Fed's zero interest rate and easy credit policies and our exploding government deficits.

As currently constituted, the U.S. economy looks less and less capable of generating the kind of prosperity that a president, or a party, needs to ensure a long run in power.

Econometric data is relentlessly massaged for political expediency, failure is spun into success by the mainstream media, and consequences are shoved remorselessly onto future generations.

If you look at both the economy and the market, and believe that the economy is weak and that the market's momentum is upward, you may not be entirely comfortable with any course of action.

We are in secular bear market, the economy is plagued by deep-seated maladies that will take years to clear up and at some not to distant future point, the stock market will resume a long-term downward trend.

Housing sales remain weak because many buyers don't have enough cash for a down payment or can't qualify for a loan, despite the fact that mortgage rates have fallen to near-record lows. What happens when rates begin to rise?

The High priests of voodo economics, once obtaining the exalted title of PhD think themselves equal to engineers, scientists and mathematicians. They are not equal. They are pretenders. Most have never worked at any meaningfull job in their entire lives.

When Albert Einstein died, he met three New Zealanders in the queue outside the Pearly Gates. To pass the time, he asked what were their IQs. The first replied 190. "Wonderful," exclaimed Einstein. "We can discuss the contribution made by Ernest Rutherford to atomic physics and my theory of general relativity". The second answered 150. "Good," said Einstein. "I look forward to discussing the role of New Zealand's nuclear-free legislation in the quest for world peace". The third New Zealander mumbled 50. Einstein paused, and then asked, "So what is your forecast for the budget deficit next year?"


The amount of money thrown at rescuing the world economy since the Great Recession began is truly staggering, probably more than $14 trillion, and the financial spigots are still open.


Propaganda must not investigate the truth objectively and, in so far as it is favorable to the other side, present it according to the theoretical rules of justice; yet it must present only that aspect of the truth which is favorable to its own side…The receptive powers of the masses are very restricted, and their understanding is feeble. On the other hand, they quickly forget. Such being the case, all effective propaganda must be confined to a few bare essentials and those must be expressed as far as possible in stereotyped formulas. These slogans should be persistently repeated until the very last individual has come to grasp the idea that has been put forward…Every change that is made in the subject of a propagandist message must always emphasize the same conclusion. The leading slogan must of course be illustrated in many ways and from several angles, but in the end one must always return to the assertion of the same formula.


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. 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."

What can you say about someone who knows household incomes are falling, inflation and unemployment are much higher than officially reported, all the jobs created out of thin air by the birth-death model of small business employment are bogus, yet they "believe the recovery is self-sustaining"?

Even worse, the most blatant lies (for example, the birth-death model fabrication of phantom jobs, the illusory "declining rate of unemployment," the fantasy that cutting 1% of the Federal budget will make a difference in a budget that is 40% borrowed money, and so on) are suddenly "real" to the person on Delusionol.

No sane person would believe that one corporation with $40 billion annual profit can juice a stock market worth $14 trillion, but folks on Delusionol will believe any absurdity if it's presented as "real." They have literally lost the ability to discern between fantasy and reality.

The debt-clogged financial arteries of the nation are about to burst, but the Delusionol-tripping "leaders" in the White GHouse, Fed and Treasury are confident the economy is ready for a sprint, or a 10K run, heck, even a marathon. Anything's believable to a drug-addled sap on Delusionol.

ONCE UPON A TIME..........

Equity valuations are rich and dependent on permanently high profit margins, speculators appear "all in" based on depressed bearish sentiment, mutual fund managers have whittled their cash holdings to nearly zero and have taken on unusually high beta risk, Europe is already in recession, and we are seeing a broad deterioration in U.S. economic data, as coincident evidence catches up with what we've persistently observed in the leading evidence in recent months.

Once upon a time, the stability of European government debt, the solvency of the European banking system, the prospects for the euro, and the speculative elements of the financial markets were all fairly distinct aspects of the financial landscape. Unfortunately, as the result of bailouts, monetary interventions, accounting changes, watered-down capital standards, and other kick-the-can strategies, all of these issues have become glued together, as the whole world has gulped down the elixir sold from the wagon of Ben Bernanke's Traveling Medicine Show. In response to strains in the European banking system due to risky sovereign debt holdings, the ECB made loans to those banks in return for "collateral" in the form of newly issued, unregistered bank debt, and the banks used much of the proceeds to take even larger positions in sovereign debt, against which no capital needs to be held. So rather than "fixing" the problem, the ECB simply bound the problems of the European banking system more tightly to its own balance sheet, and to the fiscal strains of European governments. Nobody cares right now - I get it. But understand that this is likely to end badly, particularly given that government debt typically grows sharply during recessions.


The Financial System Is Increasingly Being Rigged

People Are Finally Figuring Out: Austerity is Stupid

Spanish Economy Crumbling, Unemployment Nearly 25%

Italy Sells 4, 5, 7 And 10 Year Bonds: Yields Jump, Bids to Cover Slump.

Because rates are manipulated we live and invest in a hall-of-mirrors leaving us with a distorted vision of the real-world.

The Fed will resist another round of quantitative easing in the short-term but "if unemployment begins to rise for two-to-three months then QE3 is back on the table.

FOMC's Bag Of Tricks Is Empty...

The FOMC statement once again had a little for everyone but critically lacked the all-important- we'll print now and to infinity.


A must watch video clip........Awesome stuff here.


A second video worth watching.

Monetary Anarchy Is Driving Markets.



Any sensible person who takes the time to review the evidence must conclude that we are no longer living in a Constitutional Republic. We are, by all accounts, living in a modern day Police State influenced by corporate agendas, the almighty dollar, and the desire for power and control.

It's happening right before our eyes – just as it has happened so many times throughout history.


Here's the scenario – the crash of '29, the Great Depression, currency wars, trade wars, World War II.

The panic of '08, the Great Recession/Depression, we have currency wars going on now, trade wars next.

There's no saving the financial system. You saw the employment numbers that came out last week – they were twice as bad as what they had projected on Wall Street. You're seeing what's going on in Europe – the Spanish are again calling for more austerity measures because they can't get out of the mess.

So, there's no way out.

The only way out for psychopaths is war.

…Everything they touch they turn to crap.


Buffett's Berkshire Hathaway stock when priced not in dollars but in ounces of gold has declined in value by about 75 percent since 2000 from 280 ounces per share to 70 ounces per share. Put differently, someone who bought gold rather than Berkshire in 2000 could today buy four times as much Berkshire stock using the same gold.


The biggest problem facing housing now is that ordinary working people can't make their monthly payments. An article in Reuters summed it up like this: "The subprime stuff is long gone," said Michael Redman, founder of "Now the folks being affected are hardworking, everyday Americans struggling because of the economy."

So what we're seeing now is the knock-on effects from high unemployment, tight credit, shitty wages and deep protracted economic stagnation. This is a policy issue, but policymakers refuse to address it, so housing will bump along the bottom for years to come.

Housing prices won't be going up for a very long time. Maybe never. Moody's ratings agency forecasts that we'll see "an 8% to 10% decline in housing prices" due to a 25 percent uptick in repossessed properties from 1 million in 2011. Unfortunately, Moody's calculations are far too optimistic. In fact, "top housing analyst Laurie Goodman estimates the amount of shadow inventory at between 8 and 10 million homes, and Michael Olenick, using a different methodology, comes in at just under 9 million homes."

Even if Goodman-Olenick's predictions are wrong by half–which is unlikely–prices have a long way to go before they hit bottom.


Our economy is like the I-35 bridge that suddenly collapsed in Minnesota, of course everyone assumed that the bridge was completely safe.The bridge had normal wear and tear on it that MOST people chose to ignore, it will be fine. Then one day, most of it came down. The economy is much the same as that bridge, the public is being told that everything is recovering and will be fine with time. One day in the not to distant future it is likely that our economy will SUDDENLY and RAPIDLY plunge into crisis.

TARP IS A BIG LOSER............

The latest report from the TARP inspector general is out, and the very first paragraph takes aim at the idea that TARP was a money-maker for U.S. taxpayers:
After 3½ years, the Troubled Asset Relief Program ("TARP") continues to be an active and significant part of the Government's response to the financial crisis. It is a widely held misconception that TARP will make a profit. The most recent cost estimate for TARP is a loss of $60 billion. Taxpayers are still owed $118.5 billion (including $14 billion written off or otherwise lost). But the analysis should not be focused alone on money in and money out. TARP's costs and legacies involve far more than just dollars and cents. Using a microscope to narrowly focus on the profit or loss of TARP risks losing sight of the bigger picture of whether TARP has been successful in meeting its goals and whether lessons learned from the financial crisis have been adequately implemented so that Treasury, banking regulators, and Congress do not find themselves in the position of rushing out another massive bailout of the financial industry, i.e., TARP 2.0.


In essence, America was an idea, and an excellent one, that was unique in world history.

This isn't the place to deconstruct Machiavelli, but he makes a couple of points that are worth pondering. Does "good ... naturally decline to evil"? In politics (which is his subject) it does, because politics necessarily attracts evil people, and evil necessarily brings ruin.  Machiavelli is right. Virtue does bring good fortune, and evil brings ruin.

Our higher education system is totally controlled and populated by morally and intellectually bankrupt instructors who are believers in socialism, and believe in the effectiveness of statism and collectivism.
A sign of intellectual bankruptcy in the US is the absence of serious discussion about capitalism (except in small, specialized forums. 

What made America unique was its foundation in a philosophy of freedom.

It's important to gain an intellectual understanding of why freedom is good and collectivism is bad, why freedom works and government doesn't. S
tatism and collectivism, by restricting liberty, tend to reward stupidity. Political leaders are oriented toward controlling other people; they're clever about it, but they're basically stupid about the rest of reality.

People like Obama, which is to say most people with real power in Washington and every other government – do what they do because it's their nature. They're as cold, unemotional and predatory as reptiles, even though they look like people.

It's important to be precise in the use of words, because if you're not, then how can you possibly say you know what you're talking about? A failure to define words properly invites sloppy thinking.

What really distinguishes political elites from normal people is not just a predilection for stupidity but a real capacity for evil. Evil might best be defined as the intentional and usually gratuitous commission of acts that are cruel or unjust. A person who commits many evil acts is a sociopath. The sociopaths who are naturally drawn to government eventually come to dominate it. They're very dangerous people.


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.


We skipped the light fandango
turned cartwheels 'cross the floor
I was feeling kinda seasick
but the crowd called out for more
The room was humming harder
as the ceiling flew away
When we called out for another drink
the waiter brought a tray

And so it was that later
as the miller told his tale
that her face, at first just ghostly,
turned a whiter shade of pale 

A VERY CLOSE CALL...........

Did you hear about the 60-meter-wide rock? Asteroid 2012 DA14, with the kinetic energy of a thermonuclear bomb, is headed toward us. In February of next year, its approach path, as recently estimated, will bring it to within 17,000 miles of the Earth. What I haven't seen mentioned in any of the reports is that the closer an orbiting body is expected to get to the Earth, the less precise and reliable the estimates of its path become. Its path may veer this way or veer that way. And in astronomical terms, 17,000 miles is very, very close – closer than most man-made satellites. So it's not just the economy we need to anticipate.

BIG WEEK AHEAD................

This week we've got big-time economic events, earnings, important central bank meetings, and oh yeah, even elections that have implications for the entire world.

So, let's preview ..........

Monday, April 30 is probably going to be the quietest day, but even that will be stacked. On the US economy front, we've got fresh data for Personal Income & Spending, the Chicago PMI Report, and the Dallas Fed Manufacturing Outlook Survey. There's also a boatload of earnings that day, as there will be every other day this week.

Tuesday, May 1 is another big day for meaty data. In the US we get the ISM Manufacturing Index, Construction Spending, and auto sales. Auto sales are particularly important to us, as they make for a great barometer for employment (which we'll find out a lot more about later in the week). ALSO on Tuesday we get the beginning of one of the most exciting days for the economy: Global PMI Day. That's when all the countries have their April PMI reports released. It will really kick off with a bang, when the Chinese Manufacturing PMI comes out at 10:30 US time. Actually, Japanese and South Korean numbers come out a bit earlier in the evening, so that's technically when things will kick off.

Wednesday, May 2 will see a continuation of the PMI releases. In the early hours of the US day, we'll get fresh numbers for all of the European economies. Then in the US that day we get Factory Orders and the ADP jobs report, a key preview for Friday's main-event Non-Farm Payrolls Report. And remember, there are tons of earnings throughout.

Thursday, May 3 will see the entrance of the central banks. The ECB is meeting in Barcelona, and will make its latest monetary policy decision at 7:45 AM ET. It is possible that we'll get some movement, or a chance in policy. The Eurozone is clearly on the skids, economically, and a rate cut is called for. The Mario Draghi press conference at 8:30 AM ET will be scrutinized to see what, if anything, he says about the surge in rates in Spain and Italy and so forth. There's been a growing din about 'growth' in Europe, and how to make it happen. We'll see if Draghi moves the ball forward on this front. In the US on Thursday we get initial jobless claims (which have been uncomfortably high three weeks in a row), productivity data, and the ISM Services report.

Friday, May 4 brings the granddaddy of economic reports: The Jobs Report. The current estimate is for just 162K new jobs created... which would definitely signal a downshift from the recent trend. Of course, there's tons of sub-data within the jobs report that will be picked over like crazy.

So that's the end of the work week, but the busy week doesn't end there!

Sunday, May 6 is elections day! There's the French election of course. Francois Hollande is the overwhelming favorite to replace conservative Nicolas Sarkozy, potentially throwing a huge monkeywrench into Europe's plan to place every country into a fiscal straitjacket. Also there are Greek elections, and they're arguably more important than the French ones. If the two main parties fail to secure a majority in Parliament, watch out! There's also a chance we'll see an upsurge in support for the nationalists. And even that's not it. Italy has regional elections that go from May 6 to May 7, and that will prove to be a major test of Monti's ability to push reforms. Between these three countries, it's possible we will see a major negative shift against the status quo after the elections.

So there you have it: Earnings, elections, central banks, and some of the most important economic data there is.

Sunday, April 29, 2012

Amid the Financial Chaos, Blessed Be the Name of The Lord........PART 1





                                                                                                                                      ERIC HORNE

Amid the Financial Chaos, Blessed Be the Name of The Lord

The Meltdown

Since the decisive defeat of Saddam Hussein's army in March of 2003, the stock market had been on a roll in North America. By late 2007, the market had experienced about five and a half years of positive returns.

It was an unprecedented series of gains.

Statistically, the market was due for a breather; yet many optimists were eagerly calling for another year of positive returns. Only a few were hedging their bets.

A troublesome factor was an emerging, but little understood problem in the United States: sub-prime loans and its travelling companion, Asset-Backed Commercial Paper (ABCP). Some would later call these ABCP 'assets' liabilities.

Much later, many in the U.S. came to believe that the financial institutions which created these either lied, or completely misunderstood the risk associated with both toxic products. Nevertheless, it would take some time for the crisis to unfold, and the band, as they say, played on. At the beginning of the sub-prime mess, the fiscal problems associated with it seemed distant and unrelated to business affairs in Canada.

The first weak signal of trouble that I noticed occurred when my wife and I went out for dinner with a friend and his date in February 2008. During our time at the restaurant, my friend's date complained bitterly about the losses she had accumulated in her mutual funds. At the time, I mentally assigned her losses to the bad advice of an inexperienced financial consultant.

When this same woman learned of my passion for the stock market, more questions followed. But I could not provide her with the comforting information she sought. Unbeknownst to me, the personal financial stress she was experiencing was intense. After hearing my negative take on the market, she immediately became agitated and sought comfort in another drink. Even now, I can still remember her anxiety when she realized that her losses would not be recovered easily.

Although I suspected that the near-term prospects for the market were not rosy, I never imagined the carnage that followed later in the year. 

They couldn't.

Only God knows the end from the beginning (Isaiah 46:10; Revelation 21:6). As I recall, it's God who gives the power to get wealth, not the simple plans of men (Deuteronomy 8:18).

The underlying problems of the market will not be fixed by the stock market continuing to climb, and the better market analysts and technicians know this, as do their bosses. Obviously, the first problem with the markets is paper fiat money. Simply put, this type of money is a currency of which value rests in the confidence that pieces of paper can be exchanged for various goods and services.

Fiat money is produced by governmental decree and has existed in the U.S. since the creation of the Federal Reserve System. It has existed as a stronger more absolute form of currency as the world standard since President Richard Nixon closed the gold window to domestic and international markets in 1971.

The second problem is the greed and fear exhibited at times by various market participants. Fiat money allows the defacto agent of the government, the U.S. Federal Reserve, known as a central bank elsewhere, to create money, or liquidity, virtually out of thin air and worry about paying the bills later. The inflation associated with fiat money has been a concern for several decades, but massive Third World immigration and the import of cheap foreign goods have temporarily papered over the problems of inflation in North America.

Essentially, some of the First World inflation associated with fiat money has been exported to Third World countries in the form of excess liquidity, which has been used to build dynamic economies and raise the standards of living there. China and India have been two of the major Third World countries that have been so blessed. They are now on their way to First World status and may reach it soon. 

Up until recently, the only true negative for North America was the ever-declining manufacturing base and the loss of high paying manufacturing jobs. Later, some of the research and development jobs that congregate near manufacturing centers also began to disappear. As did the call center jobs. India was the net winner in this category. For the most part, Wall Street, Bay Street and North American governments seemed to care little. The rich got richer, workers were otherwise employed, and the various governments got their tax revenues. Even the unemployed got benefits, retraining, and handouts.

The trouble is that many of the financial tricks designed to mitigate the effects of inflation and clean up the problems of unemployment do not work over the long term. Eventually, inflation facilitated by fiat money works its way into the financial system as excess leverage or debt. At first, the effects are not noticeable, but at some point the toxic sludge builds and becomes very clear. The continued use of excess leverage or debt over decades produces profound credit inflation.

In other words, prices for financial assets rise dramatically and become unsustainable.

When credit is cut off, as it has been recently, asset prices financed by leverage (debt or credit inflation) sag, since buyers now must rely on their own resources or reduced credit to purchase items. Stocks, cars, houses, artwork, and the like, fall in price under these conditions.

This is what has happened.

Left unchecked, deflation in the form of a depression can follow the bursting of massive credit bubbles. This is what happened in the U.S. during the 1930s after the credit driven inflation of the 1920s. If the symptoms of credit inflation are treated incorrectly by means of massive trillion dollar bailouts, the credit bubble shifts to other asset classes and grows larger. 

The day of reckoning is postponed but not eliminated.

This is what may happen in most First World countries post 2008.

The present financial carnage with more to come as the decades roll by is not unpredictable. 

The Bible hints at this. Scriptures in both the New and Old Testaments suggest this. Revelation tells us of a time when a day's wages buy only enough wheat or barley (that is bread and by extension poultry and beef which are fed various grain stocks) to feed that same worker for a day, and nothing more (Revelation 6:6). This is inflationary, reminiscent of the problems in Weimar Germany back in 1923. It could also be deflationary, that is too many workers and people competing for limited resources force real wages down. 

However, the second part of the verse suggests that wheat is harmed deliberately while other food items are left untouched (Revelation 6:6). As the supply of wheat and barley is decreased, inflation sets in if demand for grains (that is mouths to feed) is left unchanged.

Why is this?

War, famine and pestilence come to mind (Revelation 6), but I also suspect that fiat money has a role too. Isaiah states that men shall throw out their idols of silver and gold (Isaiah 2:20; Isaiah 31:7). Some say that this verse means exactly what it says and no more. Some say that these verses have implications for the future financial worth of precious metals. I agree. Erroneously, they say that gold will be rejected because it becomes worthless. I disagree.

I say that these verses describe a time when a generation will exist which cannot determine what is valuable, and will foolishly make paper fiat money their store of physical wealth. Inflation will result. Gold has been and always will be a store of physical value. Easily created paper and electronic money is not. The problems of the fiat money financial system that we live under today, demonstrate this fact.

Another problem with our financial system is the greed and fear exhibited by market participants. When an economy rocks along, as it did from 1993 until 1999, and again from mid 2003 until the fall of 2007, everyone wants more, gets more and then throws greater amounts of money at assets, whether it's stocks, houses, or cars. They can do this because credit or borrowed money is plentiful. Everyone hopes for gain and pleasure. The attitude of something for nothing abounds. This is greed and it creates unhealthy asset bubbles as well as unhealthy spiritual attitudes of avarice and pride (1 Timothy 6:10).

How many families were unable to buy houses during the last housing bubble while others, who owned or built, demanded more and more? Even within the church during these times, greed can be and is present. Some imagine godliness as a means of gain (1 Timothy 6:5). This can feed the prosperity message taught by some and rebuked by the Bible (1 Timothy 6:10-11). EVERY CHURCH WITH A LARGE BUILDING AND COMMENSURATE DEBT IS A HUGE PART OF THE PROBLEM. THEY COULD HAVE HELPED PEOPLE WITH THAT MONEY, INSTEAD THEY BUILT WHAT IS TEMPORAL. THAT IS NOT BIBLICAL LEADERSHIP. THEY ARE SOCIAL ORGANIZATIONS, NOT CHURCHES. TELLING PEOPLE WHAT THEY WANT TO HEAR, INSTEAD OF WHAT THE BIBLE SAYS THEY NEED TO HEAR, IS NOT SRCIPTURAL, BUT IT DOES KEEP THE CASH FLOWING. GODS TRUTH MIGHT OFFEND A FEW OF THE TITHING MULTITUDE AND THE GOOD TIME CHARLIE PASTORS OF THE WORLD CAN'T ALLOW THAT TO HAPPEN.      

When fear sets in, as it did, during the fall of 1987, the summer of 1998, the period of 2002 to mid 2003 and again in the fall of 2008, people hold their money tightly and refuse to lend or give. When this occurs, business lending and charitable donations lock up. When business lending declines to unnaturally low levels, as is currently the case, businesses fold and unemployment increases. When tithes and charitable donations are withheld, the work of the church and charities remain undone. Those in need of spiritual and physical help suffer.

What is the end result? In this environment of fiat money and asset bubbles, greed and fear set in and the phenomenon of stock market volatility emerges. Large pools of money begin to slosh about from one asset class to another, distorting prices and causing financial chaos as the tide of cash ebbs and flows. The average citizen is unable to cope with the high level of asset price volatility and is unable to understand why.

One thing that many average investors do realize is this: money laboriously accumulated over many years can vanish quickly when market confidence sags as fear replaces greed. Following this, many workers will soon experience the same in the employment arena. Under these conditions, people suffer loss and retirement timeframes lengthen. Misery soon follows.


                                                                                          ERIC HORNE

Amid the Financial Chaos, Blessed Be the Name of The Lord ...........PART 2

Amid the Financial Chaos, Blessed Be the Name of The Lord

In Part 1 of this article, I described the nature of the financial chaos now facing us.  I concluded that section with the following words:

"One thing that many investors do realize is this: money laboriously accumulated over many years can vanish quickly when market confidence sags as fear replaces greed.  Following this, many workers will soon experience the same in the arena or employment. Under these conditions, retirement timeframes lengthen, and people are taken advantage of."

The Quick Fix

Of course, governments don't like situations as described above, especially if an election looms.  Voters become upset, and the finger pointing begins.  

Many blamed the Bush presidency for the nation's economic woes. I don't think that was entirely fair. Politicians may influence, but they don't control the economy. Nevertheless, the average voter thought differently and as a result, a Democrat was elected.  Where it will lead is anyone's guess, but the voter had his say.  CORPORATIONS AND THE WEALTHY FEW PICK OUR LEADERS, VOTERS HAVE LITTLE TO DO WITH IT! 

What we do know is that President Obama, despite his mantra of "change" is likely to carry forward the same economic medicine prescribed by his predecessor's team. Increased market liquidity in the form of handouts, bailouts, lower interest rates, and eventually greater public spending on infrastructure projects etc., are likely to continue. Remember the tax rebate checks sent out by the Bush administration in 2007?  Watch for more of the same.  SPENDING MONEY WE DON'T HAVE, AT RATES FEW CAN COMPREHEND IS SUPPOSED TO BE THE SOLUTION IN THIS NEVER, NEVER LAND WE LIVE IN!

These tools and others will be used because they've been used in the past with some temporary success (e.g. by FDR in the 1930's) and they're readily available, because fiat money makes it possible. SO ONE LIE MAKES THE NEXT EVEN BIGGER LIE POSSIBLE UNTIL THE LIES BECOME SO BIG AND ALL CONSUMING THAT THE LIES CAN NO LONGER SUPPORT THE ILLUSION THEY HAVE PROMOTED. 

The problem is that the financial spin doctors don't follow the advice of their mentor John Maynard Keynes. He suggested that fiscal stimulus and deficits were good during bad times, but that their use during good times should be curtailed.  The problem is that this never seems to happen. 

Welfare, for example, is never severely curtailed during good times, but rather it seems to morph into various forms, especially when times are good. In the public's mind, social system handouts become entrenched entitlements; politicians see them as useful tools when seeking re-election. As a result, the fiscal problems of credit inflation and the knock on effects associated with deficits and excess liquidity remain. They accumulate and fester, much like a wound left untreated. A day of reckoning is looming. Eventually, the total fiscal problems will become so large that no government can solve them with their bag of tricks.

In the interim what will we see?

Taxes will rise, deficits and unemployment will grow, and inflation caused by excess fiscal stimulus will rear its ugly head, but the world's bankers will cooperate to prop up the current system in the face of inflation. This means, in part, that the US dollar will be supported now, even as it's later allowed to quietly and gently decline in value almost unnoticed.  A CURRENCY CRISIS IS COMING. 

Will gold rise as the US dollar quietly declines?

As an alternative to paper fiat money, it should. If it does not, the Gold Bugs will notice. They'll be quick, as they have in the past, to suggest that there's a concerted worldwide effort (read conspiracy) to suppress a rise in gold prices which, if left unchecked, would indicate a failure of the US dollar and expose the truth of things.  ABSOLUTELY CORRECT, AND IT IS NO CONSPIRACY THEORY!

Surprisingly, governments sometimes listen.  In particular, after many voices were raised against perceived gold price manipulation several years ago, the Central Bank Gold Agreement was signed in 2004 limiting Central Bank sales of gold. Remember the example from Isaiah in Part 1 of the article? (Isa. 2:20; Isa. 31:7). As predicted, and now suspected by some, the world's central banks have been casting off their hordes of silver and gold to prop up their paper fiat money system. They may continue when the current agreement expires. More inflation will be the result (Rev. 6:6).

Why do governments allow this?

The underlying causes are non-God based governmental systems. Democracy, although a better form of government than communism, is still a flawed human system.  Alexander Tyler, a Scottish History professor at the University of Edinburgh, is reputed to have noted, democracies fail when voters learn that they can use the ballot box to pick the pockets of others for their own gain (e.g. various undeserved social benefits for some, paid for by others).

Another reason that democracy doesn't work is that it attracts the wrong people to office. All authority is given by God, but this does not mean that the currently elected politicians and their attendants are necessarily His first choice. IGNORANT VOTERS STILL HAVE FREE WILL!

They are merely His current choice. How many scandals in the news surround the political class? Look at the social changes that they've brought to our world. How much of this lines up with God's Word?

When I look at the fiscal carnage day after day and read about the hardship it has caused, I shudder in disbelief. For those who have lost money or jobs, the immediate future seems gloomy. As the disaster continues to unfold, many seem similarly shell shocked by the swift downward vortex. Recently a man I know asked this question. "There must be a lesson in all of this?".  

The lessons are as follows;

When a financial system pursues the wrong objective of more at all costs, trouble comes (1 Tim. 6:10).  

When the wrong people are in charge, trouble comes (Prov. 29:2; 1 Cor. 6:9).  

When the financial system is based on confidence and the designs of men, and God is forgotten, trouble comes (Deut. 8:18; Isa. 46:10; Rev. 21:6; Prov. 17:2; Eccl. 10:7).

Nevertheless there is a solution; (THE ONLY SOLUTION!) 

"Be of good cheer" Jesus said, for "I have overcome the world" (John 16:33). 

There is coming a future kingdom of prosperity which is known as the Millennial Kingdom. It will last a thousand years on the Earth.

The righteous, as God sees it, will rule under the stewardship of Jesus (Rev. 20:4-6).  

Under His guidance, the world will experience peace and prosperity (Isa. 9:6-7; Isa. 2:4; Isa. 11:6-9; Isa. 65:21).  

Men will live much longer lives (Isa. 65:20).  Each man will enjoy the fruits of his own labours and not another's (Isa. 65:22).  Those who practice wrong doing will be excluded from leadership (1 Cor. 6:9).  Democracy, fiat money, the stock market and dirty tricks will be things of the past.

Will everyone be convinced? No! There will still be rebels within (Isa. 65:20) requiring a rod of iron to rule (Ps. 2:9; Rev. 2:27; Rev. 19:15) and culminating in rebellion (Rev. 20:7-10), but things will be better.

There are some caveats though.

In order to enter an office of authority in the Millennial Kingdom, you must either survive the Great Tribulation, or be returned from the dead, and become a spirit-born being during the first resurrection.

Who are these people?

They are the ones who have accepted Jesus as their sovereign Lord, ruler and personal Saviour (Matt. 10:33). These are people who have also repented of their worldly ways and adopted the attitudes, beliefs and habits of the God of the Bible (Rev. 3:8).

What is this new way? In a word, it is love. God is love (1 John 4:16; Eph. 2:4).  Jesus said it this way:

"If you love Me, keep My commandments." (John 14:15)

God's commandments are not burdensome (1 John 5:2-3).

Greed and fear drive the financial markets. Greed is a form of idolatry which is sin (Col. 3:5), and those who refuse to repent and turn to God's way of thinking cannot enter in (1 Cor. 6:9; Rev. 22:15).

Those who practice love do not sin. As well, perfect love casts out fear (1 John 4:18).  

In the coming Kingdom, neither greed nor fear will predominate. Love will.

My advice to you, dear readers, is this; keep a cool head, the future belongs to those on God's side! This world and its troubles will pass! 

If you want to invest, invest in the Kingdom (Matt. 6:19-20; Matt. 16:24-28) by running after God and His way (Matt. 6:33).

Afterwards, blessings will come supernaturally. If you have a need, seek God through prayer (Eph. 6:18-19) and fasting (Ps. 35:13; Dan. 9:3; Luke 2:37; Acts 14:23). 


Saturday, April 28, 2012


If I Were the Devil........... 


Long time radio newsman/commentator Paul Harvey created this homily around 1965. 

It is a warning to America about its own decay.



If you're going to grill meats, marinating meats for hours beforehand in liquid mixtures that contain rosemary and other herbs/spices can dramatically help to reduce HCA's (heterocyclic amines), which are carcinogenic compounds that can form when meats are grilled.  So using rosemary, thyme, garlic, oregano and other spices in a meat marinade before grilling meats can drastically reduce any carcinogens that normally would form on grilled meat. 

The antioxidants in rosemary and thyme from a marinade were specifically cited in studies at being powerful inhibitors of HCA formation when grilling meats.  But it was also noted that other spices such as garlic, oregano, and others can help to prevent HCA formation as well, so I suggest using a variety, which tastes great anyway!

One more important point about grilling meat: Remember that the more well-done a meat is cooked, the higher concentration of carcinogenic HCA's can form, so rare, medium-rare, or medium are healthier choices than well-done.  I've never understood why anybody would want to ruin a good steak by burning it to oblivion anyway.  But hey, if you're one of those folks that likes your steaks well-done, just remember that you're eating a lot more carcinogens than a steak that's cooked less, so make sure to load up on your antioxidants (spices, teas, berries, etc) to help combat those extra carcinogens.  

Washing down your barbequed meal with a glass of unsweetened iced tea (rich in antioxidants) and also a good salad with lots of raw veggies can provide the antioxidants needed to counteract the effect of HCAs in your body from grilled meat. 

By the way, even charring vegetables on the grill creates different carcinogens such as acrylamides, so don't think that the negative effect of charring only applies to meats.

Hey, we all love a great barbeque, so no need to give that up just because of HCAs or acrylamides, but at least now you know how to counteract the effects of these in your body to protect yourself, and also how to use spices to drastically reduce the formation of HCAs on grilled meat!


Rare White Killer Whale Photographed............

Rare All White Killer Whale Photographed

Originally observed in August 2010 near the Commander Islands in the North Pacific, researchers decided to wait until the animal had been studied further before releasing photographs.


Albino Orca May Be First White Killer Whale Spotted in Wild



Political Power, A User's Manual.......... POLITICS IS A JOKE YOU MIGHT AS WELL LAUGH!

Political Power, A User's Manual!

Friday, April 27, 2012

Has America Been Crippled By Intellectual Idiots? .......


Has America Been Crippled By Intellectual Idiots? 

As far back as I can remember, the overarching message of the American social atmosphere has been one of idolization.  Oh to one day join the ranks of the "professional class"; that 5% to 10% of our culture which enjoys unparalleled respect and an assumed position of knowledge, so much so that they are rarely even required to qualify themselves to anyone besides their own compatriots.  The goal of every person I knew during my formative years with a desire to succeed was to one day hold in their hands an official looking embossed document announcing their ascension to the ranks of the intellectually anointed.          

The dangers of academic deification are numerous.  Those who dominate the educational language of the times determine the moral compass (or lack of compass) of the curriculum.  They control who is accepted and who is rejected, not by measure of intelligence or skill, but by their willingness to conform to the establishment ideal.  They construct a kind of automaton class, which has been taught not to learn independently, but to parrot propaganda without question.  Simultaneously, those of us who do not "make the grade" are relegated to the role of obliged worshippers; accepting the claims of the professional class as gospel regardless of how incorrect they happen to be.  

Elitism has always lent itself to morbid forms of educational molestation.  This is nothing new, especially within their own limited circles.  However, to have such perversions of logic and reason gutting the minds of entire generations across endless stretches of our country without any counterbalance is a far more heinous state of affairs in the long run.  Ultimately, this highway can only lead to a deterioration of our future, and the death of reason itself.

The collectivist hardline reigns supreme on most college campuses.  At this point Americans have NO recourse against a centralized government.  Not through their state and local representatives, and not through concerted confrontation. In fact, to even suggest that states act on their own accord without permission is an outlandish idea. In the end, the only outlet for the public is….to vote.   AS IF THEIR VOTE REALLY COUNTS!

No one seems to be able to address the fact that both major parties support the exact same unconstitutional policies, thus making national level elections an act of pure futility. 

Universities are today's centers of connection.  They are one of the last vestiges of American tribalism and community in an age of self isolation and artificial technological cultism.  Adults do not meet face to face much anymore to share knowledge, or discuss the troubles of the day.  The academic world provides such opportunity, but at a terrible price.  To connect with the world, students must comply.  To be taken seriously, they must adopt, consciously or unconsciously, the robes of the state.  They must abandon the passions of rebellion and become indifferent to the truth.  All actions and ideas must be embraced by the group, or cast aside.  They must live a life of dependency, breeding a culture of fear.   

How could anyone possibly sustain themselves on a diet of congealing fantasy, and personal inadequacy?  The intellectual life bears other fruits as well.  What it lacks in substance, it makes up for in ego, proving that being educated is not necessarily the same as being intelligent. 

The following is a list of common character traits visible in the average intellectual idiot, a breed that poisons the American well, and is quickly eroding away any chance of Constitutional revival.

1)  An Obsession With The Appearance Of Objectivity

I say "appearance" of objectivity because the intellectual idiot does indeed take sides on a regular basis, and the side he takes invariably benefits the establishment.  He would never admit to this, though, because he believes it gives him more credibility to at least be thought of as standing outside an issue looking in.  It is not uncommon to find Intellectual Idiots being contrary regardless of your view, even if they would normally agree.  They often try to approach debate with the fa├žade of detachment, as if they do not care one way or the other.  The costume soon wears away, however, when they are faced with an opponent that is not impressed with their educational status.  I have seen lawyers, doctors, engineers, and even politicians devolve into sniveling toddlers when they are derailed by an argument beyond their ability to tap-dance around it.  Their middle of the road persona evaporates, and the real person erupts like an ugly pustule.  

2)  Clings To Labels And Status

Like anyone else, Intellectual Idiots cradle a philosophy they believe in, or are told to believe in.  But unlike most of us, they see themselves above the scrutiny of those who do not pursue a similar academic path (i.e. only a lawyer should be allowed to debate another lawyer).  The reality is, anyone is privy to the information that proponents of the professional class have.  With the advent of the internet, it is easier than ever to educate one's self on multiple subjects without aid if that person has the determination to do so.  Reputation is not earned by shelling out tens of thousands of dollars for university approval.  A Masters Degree or Ph.D is not a get out of logic free card.  In fact, because the Intellectual Idiot often uses his position to avoid true opposition, he tends to become lazy and even more incapable of defending his methodologies when the time comes. 

3)  Predominantly Collectivist

The curriculum of the average college is partly to blame for this, and because the Intellectual Idiot is so desperate for acceptance and accolades, they can't help but fall into the trap.  Collectivism is marked by a distinct attachment to the state as the source of life.  All social and all individual crises thus become a matter of government purview.  Individual self reliance is a terrifying notion to them.  In fact, many Intellectual Idiots have lived on the dole since they were born, moving from their family's money, to state money through grants and loans.  It is not unheard of for these people to become career students, avoiding work for years, and then moving on to a bureaucratic job when the free money runs out.  They cannot fathom why anyone would rebel against the system, because they are a part of a select group which has always benefited from it.  How could the federal government be bad when it has paid their way for most of their existence?

4)  Disconnection From Reality

The Intellectual Idiot is not necessarily afraid to acknowledge that the system is troubled.  For them, the federal government is not infallible, even if their favorite party is in office, but, it IS unapproachable.  Academics revel in the disastrous nature of government.  They see political and social catastrophe as a sort of mental gameplay.  An exercise in theoretical structures.  For them, America is not a country built on an enduring set of principles, but a petri dish; an ongoing anthropological experiment that they can watch through a microscope at their leisure.  The idea that the disasters they view from the safety of their sub-cultural bubble might one day come to haunt them is a distant one.  

5)  Abhors Those Who Step Out Of Bounds

Have you ever entertained a view that went against the grain of the mainstream only to be met with accusations of extremism and sneers befitting a leper?  You were probably talking to an intellectual idiot.  The rules, no matter how distasteful or meaningless, hold special power for these people.

They make the system what it is, and when the system is your great provider, you might lean towards defending it, even in the wake of oligarchy and abuse. 

This penchant for overt structure for the sake of centralization is especially damaging to our Constitutional rights, because alternative solutions are never treated as viable.   

6)  Believes Academia To Be Free From Bias

The Intellectual Idiot assimilates every bit of information he is given at the university level without a second look. He simply assumes it is all true, and if something appears mismatched, it is only because he does not yet fully grasp it.  Very rarely will he go beyond designated source materials to get a different opinion.  This habit is the root of his idiocy.  

Being that most universities draw from the same exact materials, and peer reviewed papers are usually tested by those with the exact same underlying educational backgrounds, I can't see how it is possible for much variety of thought to form.  Whether intentional or not, severe bias cannot be avoided in this kind of environment without considerable strength of heart.

The shock that these people express when faced with Liberty Movement philosophies is quite real.  They have spent the very focus of their future life within the confines of a miniscule spectrum of truth; like seeing technicolor for the first time after a long limited existence in black and white.   

It's hard to say when it all really began, but for decades, Americans have been progressively tuned like pliable radio antenna to the song of the elitist intellectual.  Many of us want to be him.  Others want to follow him, straight to oblivion if need be, as long as they don't have to blaze their own trail.  This is not to say all professionals are a danger to the Republic.  Some are fantastic proponents of freedom.  But, without a drastic reversal in current educational trends, I see little hope of Constitutional guardians becoming a mainstay of U.S. campuses in the near term.

With mashed potato minds fresh from the psychological Cuisinart of public schools, the next generation in line to inherit the most fantastically schizophrenic nation in history will be like candy for social engineers; utterly unequipped for the mission.  

Strangely, the drastic financial slide the elites have also triggered might hold the key to our salvation.  The next batch of would be statist citizens may find themselves so poor that higher educational brainwashing will be impossible to afford, giving them precious time to think for themselves, and come to their own conclusions.   


Thursday, April 26, 2012

The Ascendence Of Sociopaths In US Governance, part 2..............AN ABSOLUTE MUST READ!


The Ascendence Of Sociopaths In US Governance, part 2

At this point, it seems as if society at large has been captured by Madoff clones. If that's true, the consequences can't be good. So what I want to do here is probe a little deeper into the realm of abnormal psychology and see how it relates to economics and where the world is heading.

If I'm correct in my assessment, it would imply that the prospects are dim for conventional investments – most stocks, bonds and real estate. Those things tend to do well when society is growing in prosperity. And prosperity is fostered by peace, low taxes, minimal regulation and a sound currency. It's also fostered by a cultural atmosphere where sociopaths are precluded from positions of power and intellectual and moral ideas promoting free minds and free markets rule. Unfortunately, it seems that doesn't describe the trend that the world at large and the US in particular are embarked upon.

In essence, we're headed towards economic and financial bankruptcy. But that's mostly because society has been largely intellectually and morally bankrupt for some time. 

I don't believe a society can rise to real prosperity without a sound intellectual and moral foundation – that's why the US was so uniquely prosperous for so long, because it had such a foundation. 

And it's also why societies like Saudi Arabia will collapse as soon as the exogenous things that support them are pulled away. It's why the USSR collapsed. It's the reason why countries everywhere across time reach a peak (if they ever do), then stagnate and decline.

This isn't a matter of academic contemplation, for the same reason that it doesn't matter much if you're in a first-class cabin when the ship is taking on water.

Economics and Evil

When I was a sophomore in college, I asked my father – a worldly wise man but one of few words – some cosmic question, as sophomores are famous for doing. His answer was, "It's all a matter of economics." Some months later I asked him another, similar question. His answer: "It's all a matter of psychology." They were unsatisfactory to me at the time, but those simple answers stuck in my mind. And I've since come to the conclusion that they comprehend most of what drives human action.

Let's look at the "matter of economics" only briefly, because it's covered at length elsewhere and because it's not nearly as significant as the "matter of psychology."

One definition of economics is: The study of who gets what, and how, in the material world. Unfortunately, it's been distorted over the years into the study of who determines who gets what, and how, in the material world. 

In other words, economic power has gradually been transferred from producers to political allocators.

This has had predictably bad results, including not only the bankruptcy of the US government but of large segments of US society. YOU ARE A HEAD IN THE SAND DENIALIST IF YOU BELIEVE OTHERWISE.  

But what's happening today is much more serious than an economic bankruptcy; you can recover from financial woes by cultivating better habits. 

We're talking about psychological and spiritual bankruptcy. 

The word psychology comes from psyche, which is Greek for soul. When you look at the word's origin, it's clear that psychology is about much more than mental peculiarities. It's not just about what a person has or what he does. It's about what he is. The real essence of a man, his soul, is revealed by his philosophy and his beliefs. POLITICIANS, BANKERS, CEOS, WALL STREET..... ALL NO BETTER THAN COMMON THIEVES, NO MATTER HOW THEY RATIONALIZE? 

In any event, it's rare that anyone goes bankrupt because of a single bad decision. It takes many missteps, and consistently bad decisions aren't accidents. Consistently bad decisions are the product of a flawed moral philosophy. Moral philosophy guides you as to what is right or wrong. The prevailing moral philosophy has so degenerated that Americans think it's OK to invade other countries that not only haven't attacked it but can't even credibly threaten to attack it. I'm not talking just about Afghanistan, Iraq or Libya – pitiful non-entities on the other side of the world. They were preceded by even weaker prey, closer to home, like Granada, Panama, Haiti and the Dominican Republic. Not only that, but they think coercion should be used to steal wealth from the people who produce it, and give it to those who've done absolutely nothing to deserve it.

It's hard to pick an exact time America's moral bankruptcy started; perhaps the draconian Alien and Sedition Acts of 1798 were the first real breach in the country's ethical armor – but they were quickly repealed and subsequently served as an example of what not to do for many years. There were real moral problems that arose because of the Mexican War, the War between the States and the Indian Wars. There were early attempts to create a central bank, but they fortunately failed. But I believe the real change in direction came with the Spanish-American War, which resulted in the accretion of an overseas empire, particularly in the Philippines where 200,000 locals were killed. As Randolph Bourne said, "War is the health of the state."

Then came the creation of both the Federal Reserve and the income tax in the very unlucky year of 1913, which made it possible to finance the country's completely pointless entry into World War 1. From there, with the New Deal, World War 2, Korea, the Great Society, Vietnam and so on, the US has gradually descended into becoming a very aggressive welfare/warfare state. 

It now has an overt government policy of inflating the currency, which constitutes a fraud, and running up the national debt, which is a swindle because it will never be repaid.

America is not the first to start with moral failure and move on to economic failure. 

In all the examples history provides, economic bankruptcy and political tyranny are invariably preceded by moral bankruptcy. 

It's bad enough that these things have happened. But it's even worse that they're celebrated and taught to students as triumphs. That guarantees that the trend will accelerate towards a real disaster. Most people accept what they're taught in school uncritically. THERE ARE ALMOST KNOW INDEPENDENT THINKERS LEFT IN AMERICA.  

The pattern is no secret to historians. Machiavelli noted in his Florentine Histories (1532): "It may be observed that provinces, among the vicissitudes to which they are accustomed, pass from order to confusion, and afterwards pass again into a state of order. The way of the world doesn't allow things to continue on an even course; as soon as they arrive at their greatest perfection, they again start to decline. Likewise, having sunk to their utmost state of depression, unable to descend lower, they necessarily reascend. And so from good, they naturally decline to evil. Valor produces peace, and peace repose; repose, disorder; disorder, ruin. From ruin order again springs, and from order virtue, and from this glory, and good fortune."

This isn't the place to deconstruct Machiavelli, but he makes a couple of points that are worth pondering. Does "good ... naturally decline to evil"? In politics (which is his subject) it does, because politics necessarily attracts evil people, and evil necessarily brings ruin. Then order reasserts itself, because people despise chaos. And from order virtue arises, and from that good fortune. Machiavelli is right. Virtue does bring good fortune, and evil brings ruin. I believe it would be clear to Machiavelli that in the US virtue is vanishing and evil is on the rise. And Machiavelli would predict that things aren't going to get better at this point until they "sink to their utmost state of depression, unable to descend lower, they necessarily reascend."

In general, he's correct. But sometimes it takes quite a while for a society to reset. After the collapse of Rome, real civilization didn't return to the West until the Italian Renaissance, which was when Machiavelli lived. Interestingly, culture in Italy started a rapid decline in the 1490s, and the peninsula became a backwater – a quaint theme park at best – for hundreds of years. You can argue Italy is still headed downhill today. Perhaps it simply has to do with the nature of entropy: all complex systems eventually wind down, no flame can burn forever. But that's another subject. It would have been nice, though, to keep the flame of America burning for longer than turned out to be the case.

Moral and Intellectual Bankruptcy

One element of moral bankruptcy is intellectual bankruptcy, to wit, belief in the effectiveness of statism and collectivism. 

Our higher education system is totally controlled and populated by morally and intellectually bankrupt instructors who are believers in socialism.

It's said Obama is a socialist. I don't doubt he's sympathetic to socialism but, to be true to the meanings of words, he's a fascist.

Let's define these terms and two others with a little help from Karl Marx. His recommended solutions are part of the world's problems, but his analysis of conditions was often quite astute. As Marx pointed out, political systems are all about the ownership and control of goods, whether consumer goods (houses, cars, clothes, toothbrushes) or capital goods (farms, factories and other means of production). Although he didn't break it down this way, his analysis gives us four possible economic systems – communism, socialism, fascism and capitalism.

A communist advocates state ownership and control of all the means of production and all consumer goods. That's a practical impossibility, of course, even in the most primitive aboriginal bands. The idea is even more absurd and preposterous for an industrial society. But that doesn't keep professors and politicians from pretending that it's a good idea, even if just in theory.

A socialist advocates state ownership of society's means of production but accepts private ownership (with state control) of consumer goods. While it's a big improvement over communism, socialism is also completely impractical and always either collapses or evolves into fascism. North Korea and (now to a lesser degree) Cuba are the world's only socialist states.

A fascist advocates nominal private ownership of both the means of production and consumer goods – but with strong state control over both. In other words, you can own mines, farms, and factories – but the state reserves the right to tax, regulate or even expropriate them. Fascism has nothing to do with jackboots and black uniforms; you can have those in communist and socialist states as well. It has to do with a corporate state and a revolving door between business and government, with each protecting and enriching the other. Fascism can be maintained for a long time but necessarily entails all the problems we now face. Almost all the world's states are fascist today; they differ only in degree and detail.  

A capitalist advocates the private ownership of everything. An extreme capitalist may be an anarchist, who believes that anything people need or want should be, and would be, provided by entrepreneurs at a profit.

No country provides a perfect example of any of these four arrangements. But every government promotes one or the other as a theoretical ideal. In most places, certainly including the US, the "mixed economy" is put forward as a good thing; the "mixed economy" is a polite way of describing fascism. Nobody wants to call fascism by its name today because of its strong association with Hitler's "National Socialists." In any event, look and analyze closely before you use these words and attach any of the four tags to any country.

In that light, it's funny how the Chinese are still referred to as communists, even though communism was tried only briefly, under Mao. In fact, up to the mid-'80s, China was a socialist state. Now it's a fascist state. China's Communist Party? It's just a scam enabling its members to live high off the hog.

Sweden is usually referred to as socialist, but it's always been a fascist country. All of its means of production – businesses, factories, farms, mines and so forth – have always been privately owned but heavily taxed and regulated. The presence of lots of "free" welfare benefits is incidental. People often conflate a welfare state with socialism, but they're two different things. Socialist states necessarily become too poor to provide any welfare. Fascist states can better afford it and usually offer some in order to help justify the government's costly and annoying depredations.

There is no truly capitalist state in the world today; perhaps Hong Kong comes closest (although not very close).The early US came quite close in some regards. In fact, the West as a whole was quite free in the century from the fall of Napoleon in 1815 to the start of World War 1 in 1914. Almost everywhere taxes were low and regulations few; there was no inflation because gold was currency everywhere; there were almost no serious wars and passports hardly existed, which enabled most anyone to travel almost anywhere without permission. It's no accident that, in percentage terms, the 19th century saw far greater and wider advances in prosperity than any time before or since. Capitalism is both natural and ideal – but, oddly, it doesn't exist anywhere. Why not? I'll explore that shortly.

One sign of intellectual bankruptcy in the US is the absence of serious discussion about capitalism (except in small, specialized forums). Nearly all political debate is about how to fine-tune a fascist system to best suit those who benefit from it – or who think they do. Almost everyone in the public eye is a political statist and an economic collectivist. Those who start attacking the heart of the matter, like Andrew Napolitano or even Pat Buchanan, are quickly evicted from their bully pulpits.

In reality, there's little philosophical difference between the Republicrats and the Demopublicans; they're really just two wings of the same party. The left wing of the party claims to believe in social freedom (but doesn't) and overtly disbelieves in economic freedom. The right wing says it believes in economic freedom (but doesn't) and overtly disbelieves in social freedom. The right wing uses more aggressive rhetoric to build the warfare state, and the left wing talks more about the welfare state. But the net difference between them is minuscule. That's because they share the same corrupt intellectual and moral views.

What made America unique was its foundation in a philosophy of freedom. That word, however, has become so corrupted that the younger Bush was able to use it two dozen times in some of his early speeches without being laughed off the stage or targeted with shoes and rotten vegetables. Perversely but predictably, Bush is today presented in the mainstream media as a free-marketeer, in order to pin blame for the current depression on the free market. This is as much of a hoax as calling Hoover a supporter of the free market. 

But pointing out the sad state of the world today serves little purpose. It's rare that an intellectual argument changes anyone's mind. Opinions are mostly a matter of psychology. But it's almost impossible to change someone's psychology and the attitude with which he views the world, simply by presenting facts and arguments. A person's beliefs have much more to do with his character and spiritual essence than anything else.

You'll hear some of the candidates for the upcoming elections talk about "American exceptionalism." The phrase makes me wince because it's so anachronistic. In the first place, America was only incidentally a place, a piece of geography. In essence, America was an idea, and an excellent one, that was unique in world history. But now America has morphed into the US, which is essentially no different than the other 200 nation-states that cover the face of the planet like a skin disease.

It's funny, actually, to see how quickly and profoundly things have changed in the US. Back in the '50s and '60s, kids used to say, when one of us did something the others didn't approve of, "Hey, it's a free country." I'll bet you haven't heard that expression for many years. Back in the '70s, there used to be a joke: "America will never have concentration camps. We'll call them something else." Guantanamo, and the long rumored FEMA detention centers, are proof that it wasn't a joke after all.

It's all a matter of mass psychology, which is to say a moral acceptance of collectivism and statism. These systems actually aren't serious intellectual proposals, despite being doctrine at almost every university in the Western world. They're psychological or spiritual disorders on a grand scale.

It's important to gain an intellectual understanding of why freedom is good and collectivism is bad, why freedom works and government doesn't. It's important – but it doesn't strike at the root of the problem. The root of the problem is psychological, not intellectual. Do you think for a moment that if you could make Dick Cheney, Barack Obama, Hillary Clinton or any of the other sociopaths who control the state sit down and listen to intellectual arguments, it would change their attitudes? The chances of that are Slim and None. And Slim's anorexic.

Why am I so certain of that? It's not because these people have low IQs and can't understand the arguments. It's because most of the people at high levels of government are sociopaths. They're susceptible to reasoned argument against a police state to about the same degree that a cat can be convinced he shouldn't torment a mouse before killing it. People like Obama, Hillary or Cheney – which is to say most people with real power in Washington and every other government – do what they do because it's their nature. They're as cold, unemotional and predatory as reptiles, even though they look like people.

You may think I'm kidding or exaggerating for effect. I'm not. It's been said that power corrupts, and that's true. But it's more to the point to say that the corrupt seek power. A good case can be made that anyone who wants to be in a position of power should be precluded from it simply because he wants it. As a purely practical matter, the US would be far better off – assuming a Congress and a Senate are even needed – if their 525 members were randomly selected from a list of taxpayers. But that's impossible in today's poisonous environment because it would leave over half the population – those who only receive government largess and don't pay any income taxes – ineligible. This last fact is a further assurance that the situation in the US is now beyond the point of no return.

There are lots of ways to divide people into seperate groups or classes: rich/poor, male/female, smart/dumb, etc. But from the perspective of political morality, I'd say the most useful dichotomy may be people who want to control the material world vs. those who want to control other people. The former are scientists, engineers and entrepreneurs; the latter are politicians, bureaucrats and assorted busybodies. Guess which group inevitably – necessarily – gravitate toward government? And I might also add, toward big corporations and the media. Big corporations are political arenas where the prize is economic power, and they're heavily populated by backslappers and backstabbers. The media specialize in a different type of power, manipulating opinion; one way they do that is by promoting an atmosphere of bad news, threats and general paranoia for which they imply government action is needed. Government, mega-corps and media – they are the triumvirate ruling today's world.


You may be thinking: Sure, I can see that Obama or Hillary or Cheney may be evil. But how about Bush or Vice President Biden or Prime Minister Cameron of the UK? It's sometimes hard to tell whether one is dealing with a knave or a fool. The fool does destructive things that may make him seem knavish. And the knave can do stupid things that make him seem like a fool. Isn't it a mistake to accuse someone of malevolence when Occam's Razor might indicate stupidity as a more likely answer? They seem more like fools than knaves. Pity the poor fools.

Stupidity certainly can account for many of the world's problems. As Einstein said, after hydrogen, stupidity is the most common thing in the universe. Unfortunately, the word "stupidity" is thrown about too carelessly, usually as a pejorative, and then often by stupid people. Let's define the word. It's important to be precise in the use of words, because if you're not, then how can you possibly say you know what you're talking about? A failure to define words properly invites sloppy thinking.

Most of the time people use "stupidity" to mean low intelligence. That's accurate, but it's a synonym, not an explanation. So it's not terribly helpful, because it doesn't really tell us anything we don't already know. Just look at how stupid the average person is (they're thick underfoot on Jay Leno's many "Jay Walking" segments) and then figure that, by definition, half of the electorate are lower than average.

It's helpful to use an example, and since we're talking about politics, let's pick a well-known political figure. George W. Bush was president recently enough that everyone can still remember him clearly. I've always said that the Baby Bush was stupid. Technically speaking, I believe he's actually a borderline moron. You may or may not know that a moron, an imbecile and an idiot are not at all the same thing – even though in common usage, the words are more or less interchangeable. In fact, these terms have clinical definitions.

Briefly, an idiot is so dim that he may have to be institutionalized. An imbecile functions at a higher level; he can get by in normal life, given some assistance. A moron does even better. He can conduct himself quite well in day-to-day society and even be liked and respected – a little bit like the character Chauncey Gardiner (who, as it turned out, was being groomed to become the president) in Peter Sellers' movie Being There.

A moron can carry on a conversation about the weather, the state of the roads, sports, TV sitcoms or even, with a bit of coaching – as Bush proved – the economy or a war. Bush seemed more or less normal, even though I suspect he only has an IQ of around 90. I'm not saying that just to be offensive to Bush fans. I believe I can back up that assertion, even if Bush could actually score above 100 on a standard test, by showing you some more practical definitions of stupidity.

Let me give you two of them. One is: an unwitting tendency to self-destruction. Another is: an inability to correlate cause and effect and thereby anticipate the consequences of an act. I would suggest to you that almost everything Bush has done, it seems his entire life, but absolutely while he was the president, would fit those definitions of stupidity precisely.

A moron can see the immediate and direct consequences of actions, even though the indirect and delayed consequences escape his understanding. At least to a cynic, that would seem to indicate that not only Bush but the average American voter is likely not just a moron but an imbecile. Such a deficit of intelligence almost guarantees that we'll see controls of all types – absolutely including foreign exchange controls – imposed as the Greater Depression unfolds. In fact, when the next 9/11-style incident, real or imagined, occurs, they're going to lock the US down like one of their numerous new federal prisons. 

It's going to be, as I've gotten in the habit of saying, worse than even I think it's going to be.

But stupidity is clearly only a partial explanation of Bush's character, just as it was only a partial explanation of Hitler's. Please don't misapprehend me on this. Bush wasn't in the same class as Hitler. Hitler was a criminal genius. But criminals, even so-called criminal geniuses, are basically stupid, according to our definitions – they show an unwitting tendency toward self-destruction. How stupid was it of Hitler to attack Russia, especially while he still had a front open with Britain? How stupid was it to declare war against the US shortly after the Japanese attacked Pearl Harbor? How stupid was it to murder six million innocents in concentration camps? How stupid was it to throw the Wehrmacht's Sixth Army into Stalingrad? It's a long list.

Stalin provides another example. How stupid was Stalin to murder several million of the most productive farmers when Russians already lacked enough to eat? How stupid was it to liquidate half of the Red Army's most experienced officers and higher NCOs just before WW2? 

Or Roosevelt. How stupid was it of him to pour milk into the gutter and slaughter livestock in order to drive up prices while millions were hungry? How stupid was it to burden the US, in the middle of the last depression, with huge taxes and a score of new regulatory agencies?

A catalog of stupidities of these and most other famous political leaders fills libraries. As Gibbon said, history is little more than a chronicle of the crimes, follies and misfortunes of mankind.

There are different types of intelligence – emotional, athletic, mathematical and literary intelligence, for instance. A person can be a genius in one and an idiot in the others. The same is true of stupidity; it comes in flavors. I think a case can be made that liberty cultivates intelligence, because it rewards seeing the distant and indirect consequences of actions.

Conversely, statism and collectivism, by restricting liberty, tend to reward stupidity. 

Remember that political leaders are oriented toward controlling other people; they're clever about it, but they're basically stupid about the rest of reality. Nonetheless, their animal shrewdness is enough for them to gain and keep power over others. The immediate and direct consequences of that political power are gratifying for those who have it; the indirect and delayed consequences, however, are disastrous for everyone else.

But wait. It sounds like stupidity is related to evil. Which it is. Stupidity is a signpost of evil. It's why it often takes a while, when things are going badly, to determine whether you're dealing with a knave or just a fool.

In that regard, Robert S. McNamara offers something of a counterpoint to Bush. When you look at the disasters he caused throughout his life – almost destroying Ford, then almost destroying the US with the Vietnam war, then doing immense damage to the world at large with the World Bank – one might say he was stupid. In fact, he had an extremely high IQ. McNamara underlines the often fine distinction between stupidity and evil. He was clearly a sociopath, but he's held in high regard among the ruling class. Henry Kissinger is a similar case.


I would like to suggest that what really distinguishes political elites from normal people is not just a predilection for stupidity but a real capacity for evil. Evil might best be defined as the intentional and usually gratuitous commission of acts that are cruel or unjust. A person who commits many evil acts is a sociopath. The sociopaths who are naturally drawn to government eventually come to dominate it. They're very dangerous people. They reset the social mores of the country they control. After a certain point, a critical mass is reached, and it's GAME OVER. 

I suspect we're approaching that point.