Friday, November 30, 2012

DELUSION IS NOW GLOBAL ECONOMIC POLICY.......THE BEST FINANCIAL ADVICE YOU ARE EVER GOING TO GET!

The notion that current benign market conditions are a reason for optimism sums up just how out of touch with reality most academic economists (and other alleged experts, including journalists-cum-forecasters who parrot this nonsense) are.

By this sort of logic:

Mid-2005 was the right time to be optimistic on housing
January-2007 was the right time to be optimistic on the banking sector
The spring of 2007 was the right time to be optimistic on credit markets
The fall of 2007 was the right time to be optimistic on global equity markets
Mid-2008 was the right time to be optimistic on commodities
This past September was the right time to be optimistic on technology stocks

Of course, we know how those all worked out (hint: not well).

I WOULD BE VERY CAREFUL ABOUT BEING INVESTED IN STOCKS AND BONDS OF ANY KIND AT THIS POINT. 
 
THE POWERS THAT BE ARE TRYING TO SAVE A VERY BROKEN STATUS QUO, THEY WILL LIE, CHEAT, AND STEAL IN ORDER TO COMPLETE THEIR TASK. EVERY ECONOMIST AND FINANCIAL MANAGER TIED TO THE SYSTEM HAS A VESTED INTEREST IN A RATIONALIZED, DISHONEST OPINION OF WHERE WE ARE HEADED IN ORDER TO MAINTAIN THE SYSTEM.  

THEY AREN'T TRYING TO MAKE OR SAVE YOU MONEY, THEY ARE TRYING TO MAINTAIN THEIR POSITIONS AND INCOME. THEY ARE PAID TO KEEP THEIR JOBS AND COMPANIES GOING, NOT TO MAKE YOU MONEY. THIS IS EXACTLY WHY THEY MEASURE THEIR PERFORMANCE ON A RELATIVE BASIS NOT AN ABSOLUTE BASIS. IF YOU MEASURE THEIR PERFORMANCE AGAINST GOLD YOU WILL THEN KNOW ALL YOU NEED TO KNOW!  WITH EACH PASSING DAY MORE INVESTORS ARE REALIZING THIS IS SO.

DON'T OWN PAPER ANYTHING.......THERE ARE MUCH BETTER INVESTMENTS OUT THERE. AT THIS POINT PAPER ASSETS ARE NOTHING BUT OVERVALUED LIES TO KEEP A VERY BROKEN SYSTEM INFLATED. 

DON'T BE EXPOSED TO ANY PAPER INVESTMENT OVERNIGHT UNLESS YOU REALLY KNOW WHAT YOU ARE DOING AND CAN AFFORD A SUDDEN MASSIVE LOSS OF INVESTMENT CAPITAL. TRADE DURING THE DAY OR FOR SHORT TIME FRAMES IF YOU KNOW HOW, BUT DON'T HOLD OVERNIGHT OTHERWISE. 

DON'T BELIEVE THAT BUY AND HOLD INVESTMENT STRATEGIES WILL EVER WORK AGAIN. HOW HAVE THEY WORKED OVER THE LAST DECADE OR TWO AS THE SYSTEM HAS FALTERED? AS WE GO INTO THE CRISIS AND COLLAPSE MODE THINGS WILL ONLY GET WORSE AND HOPE IS NOT A SOLUTION THAT YOU SHOULD BET YOUR FINANCIAL FUTURE ON.

DON'T ALLOW ANYONE ELSE TO DO YOUR FINANCIAL THINKING FOR YOU, INCLUDING REALTORS.

DON'T TRUST THE OPINION OF ANYONE ATTACHED TO THE CURRENT FAILING SYSTEM.

ASK YOURSELF HOW MUCH BETTER YOU WOULD HAVE DONE OWNING GOLD IN ANY YEAR OR EVERY YEAR SINCE 1998?  ADD UP, AFTER ALL COSTS, HOW WELL YOUR PAPER INVESTMENTS HAVE DONE OVER THE PAST 5, 10, AND 15 YEAR PERIODS AND YOU WILL UNDERSTAND COMPLETELY WHY YOU SHOULD FLEE ALL PAPER ASSETS NOW. IN THE CURRENT ENVIRONMENT, THINGS ARE VERY LIKELY TO BE MUCH WORSE OVER THESE SAME TIME FRAMES GOING FORWARD FOR PAPER ASSETS.

ASK YOURSELF IF THE PRICE OF ANY PAPER INVESTMENT TODAY WILL BE A GOOD DEAL IN A DEBT RIDDLED SYSTEM IN 5, 10, OR 15 YEARS FROM NOW? UNTIL WE TURN 180 DEGREES FROM CURRENT POLICY THE ANSWER IS A DEFINITIVE AND RESOUNDING NO! 

PRECIOUS METALS (BULLION ONLY), LARGE PIECES OF PROPERTY SUCH AS FARMS, RANCHES,TIMBERLAND, INVESTMENTS IN FOOD PRODUCTION, AGRICULTURE AND WATER, CERTAIN COLLECTIBLES AND ART, AS WELL AS GUNS AND AMMO WILL ALL CONTINUE TO DO BETTER THAN ANYTHING IN THE PAPER ASSET REALM. 

THIS ADVICE HAS WORKED EXTREMELY WELL SINCE 1998 FOR EVERYONE THAT I HAVE GIVEN IT TO, IF THEY LISTENED. IT HAS MADE MANY PEOPLE MILLIONAIRES. WITH THAT SAID, THE WORLD IS STILL A VERY TROUBLED PLACE, EVEN WITH THIS ADVICE. BUT YOUR FINANCIAL FUTURE WILL BE MUCH MORE SECURE IF YOU TAKE IT AND YOU WILL SLEEP MUCH BETTER AS WELL.         

THE UNVARNISHED TRUTH........A MUST READ!

THE UNVARNISHED TRUTH

Rulers and would-be rulers view the rest of our species as milk cows, to be kept alive and milked for as long as possible, no matter how much joy is taken from them. The purpose of life, however, is to enjoy yourself. It's not to be treated like part of a herd and be fed what your masters want for their own purposes.

It starts with conquest and expansion, leads to global dominance, and then slips into decline. At this point, the whole system is in a self-reinforcing downward spiral. It needs to be flushed.

The World remains firmly trapped in an economic hell created by Friedrich Hayek's  arch enemy – John Maynard Keynes. Most politicians and central bankers view the World in very short time frames, to truly understand the devastation wreaked by Keynesian economics, one has to take a step back and see how the financial destruction accumulated over time. It is true that these policies initially provided sugar highs for the economy – but the 3 step cycle of cutting interest rates, cutting taxes and borrowing money to create growth has finally reached its end point. If Mr. Keynes was alive today, we are confident he would be embarrassed that his lifelong work had been so severely distorted.

Since WWII, the Americans, Japanese, British and Europeans have spent way more money than they owned. But that was ok because the money they borrowed wouldn't have to be repaid until some far away day in the future with money that was worth less.

Unfortunately the future has now arrived and today, the next generations of Americans, Japanese, British and Europeans have all plunged into a deathly debt spiral.

It is no coincidence that the Americans, Japanese, British and Europeans have all set interest rates as close to 0% as possible. It is also no coincidence that the Americans, Japanese, British and Europeans are all printing money trying to reignite a dying credit / debt fire.

And finally, It is no coincidence that the Americans, Japanese, British and Europeans ignored Friedrich Hayek and instead followed the economic principles of John Maynard Keynes. 

Today the entire global economic and financial system is rooted in unwavering support for John Maynard Keynes and his beliefs in deficit spending and debt-fueled growth a system that can no longer can be driven higher because of excessive valuations and unfavorable employment and demographic trends.

The combination of rising levels of unsold goods (inventory), slowing sales growth and declining incomes all point to weaker GDP growth in Q4 and into the early quarters of 2013.  Look for GDP growth in the 4Q to decelerate to 1.5% to 1.7%.  

The details of the current economic growth are not ones of robust strength. Furthermore, we will have to wait for revisions to the current data until next year where we will see some of these anomalies revised away.  With recent weakness in industrial production, capacity utilization rates and exports it is very likely that there will be further deterioration of economic growth in the months to come.

The economic underpinnings will continue to negatively impact fundamental valuations as profit margins continue to be compressed.  Furthermore, the outlook by corporate CEO's for the next couple of quarters are not optimistic as top line sales and revenues slide.  Any impact from the "fiscal cliff" or "debt ceiling" debate, a resurgence of the Eurozone crisis or some other exogenous event could quickly impact the markets in a very negative way.  

While most of the media, and mainstream analysts, continue to focus on the state of the economy from one quarter to the next - the trend of the data clearly shows the need for concern.  Of course, this also why Bernanke is already considering QE4. 

Central bank easing across the world has created a series of bubbles that by definition must burst — except there will be slow implosions rather than sudden pops:

The 2008-09 bear market decline was swift and violent.  It was over almost before most investors knew what had hit them.  According to the law of alternation, the next bear market decline should be just the opposite in character of the 2008-09 decline.  The next decline should be slow and lazy, with stocks sinking in a deceptive, leisurely manner, sinking in a lazy way that scares nobody.

In some ways, this is even worse than 2008:

The bursting of these various bubbles will result in the bear market being far worse than would otherwise have been the case.  As Shakespeare put it;

 "What fools these mortals be." 

The Grand Bargain is Unraveling.........AN ABSOLUTE MUST READ!

The Grand Bargain is unraveling, and a new arrangement will take the place of the Status Quo--whether we like it or not.

The first step is to set aside ideological blinders and confirmation bias, i.e. only looking for data that supports our current beliefs.

The second step is to look at the foundation of everything: household income.
Household income is the foundation of taxes paid, consumption (spending) and savings/investment. If household income is declining, that means the pie of money that can be divided up into taxes paid, consumption and investment is shrinking.

If taxes go up, there is less pie left for spending or investment. And since the economy ultimately depends on private-sector spending and investment, then reducing those to fund government spending means there will be less private spending and investment.

If the government spent the taxes on investments that yielded a higher return than private investments, higher taxes would not devastate the economy. But the problem is that there are no feedbacks on government spending that favor efficiency or high yields.

Government spending decisions are made solely on the basis of constituency pain:the constituencies that create the most political pain for politicos and Upper-Caste government bureaucrats get funding. Efficiency and high-yielding investments are not in the political equation at all; there is no feedback in monopolies except those that favor expansion of budgets and constituencies.

Let's look at a chart of household income from Median Household Incomes:  Household income has been negative since 2000 except for two brief spikes:



Here is another chart depicting the huge gap between nominal income and real income:while nominal income rose a seemingly healthy 25% since 2000, real income has declined almost 10%.  IT'S CALLED EXPOSING A LIE! FACTS DO MATTER! 



Median income doesn't tell us who is getting most of the income, so let's look at this: All the increases in income since 1970 have accrued to the top 10%.



But we have to remember that median income includes all income, including the wealthy. Real income has declined by 8%-9%. The pie is smaller, period.  AND WHAT A LIE IT IS!

Some of that is due to a declining full-time workforce, which has dropped to 115 million workers:



Now let's look at the size of government spending and taxation. In terms of the overall economy (GDP), government spending's share of the economy has been rising for decades. The Internet and housing bubbles briefly "grew" the economy faster than government spending, but once these one-off expansions faded, government spending quickly returned to its trendline (ever higher). UNSUSTAINABLE!



Federal spending rose exponentially until it exceeded the carrying capacity of the economy. For context, recall that Social Security costs $817 billion, Medicare and Medicaid costs total about $800 billion annually, and the Pentagon/National Security budget is around $690 billion. Add in interest on the ballooning national debt, and the vast majority of the Federal budget goes to these four. You could eliminate all other Federal spending and these four consume all the tax revenues and then some.



Tax receipts, meanwhile, topped out at $2.4 trillion, leaving a structural gap of $1.3 trillion.



OK, so now we see why government spending can't keep following an exponential path higher: households are earning less income.

Next up: the welfare/cartel State. Some welfare flows directly to individuals ("transfer payments") and some flows to cartels: defense, sickcare, the education cartels, etc.

The problem here is the number of citizens who are dependent on government transfers and spending now exceeds the number of full-time workers. Recall (see chart above) there are 115 million full-time workers in the U.S.

Of the roughly 150 million workers in the U.S., 38 million earn less than $10,000 per year, 50 million earn less that $15,000 a year and 61 million earn less than $20,000 annually. All these numbers are drawn directly from Social Security Administration payroll data.

100 million wage earners, or 2/3 the entire workforce, earn less than $40,000 per year.

In practical terms, only the 115 million full-time workers pay significant taxes, and of those, The top 25% (those earning more than $66,193) paid 87% of the taxes. The bottom 50% of taxpayers, roughly 70 million people, earned 13% of the income and paid 2% of the income taxes collected.

The top 1% of taxpayers reported almost 17% of all taxable income and paid 37% of all income taxes. The top 5% reported 32% of all income and paid 59% of the taxes, and the top 10% earned 43% of the income and paid 70% of the taxes. 

The Real-World Middle Class Tax Rate: 75% (July 5, 2012)

There are roughly 127 million people dependent on government transfers: 61 million recipients of Social Security and Medicare and 66 million people receiving welfare (SNAP food stamps, housing credits, Medicaid, etc.)

That means there are 1.1 government dependents for every full-time worker in the U.S. This is not sustainable.

In my analysis, there has been a Grand Bargain reached; 

The top 1% owns most of the productive assets of the nation and most of its machinery of governance (this is the "half class"). Most of the income not siphoned off by this "we own the important stuff" class goes to the next 19.5% who pay most of the Federal taxes (class #1).

Class #2 is the dwindling "middle class" (also known as the working poor) which receives no government transfers and lives off earned income. This is perhaps 30% of the households.

Class #3 is the lower 50% who depend on transfers, subsidies, etc. because they are retired, don't make enough at their jobs to support their families or are disabled (legitimately or otherwise).

The Grand Bargain was this: we at the top will pay significant taxes as long as we get to control the levers of financial and political power. We in the top 19% will pay much of the taxes as long as we and our children can continue to live well and accumulate wealth. We in the "middle class" will continue to work hard as long as we have hope of bettering our lifestyle and the lives of our children. We in the bottom 50% and retirees agree not to threaten the top 1%'s power and the wealth of the top 19% as long as we can get by on our government transfers.

This Grand Bargain is now fraying as the promises made to everyone cannot possibly be met. 

Claims on welfare and disability programs are skyrocketing at the same time that the demographics of an aging populace are causing 10,000 people a day to enter Social Security and Medicare, the two costliest government programs. The triple-whammy is the upper-middle class that pays most of the taxes has been slammed with lower income and a devastating drop in their net worth.

That which is unsustainable will be replaced by another more sustainable arrangement probably after a lot of unrest. 

Everyone who slips off their ideological/self-interest blinders knows the Status Quo is unsustainable, and so everyone in the 3.5 classes is shifting nervously: will I get taxed to the point of "uncle" or will my bennies get slashed?

By heavily taxing earned income, the system extracts the highest taxes from the most productive citizens, leaving the less-productive with essentially no income taxes and the super-wealthy with the huge tax break offered to capital gains and other unearned income.

In essence, this is a vote-buying scheme by the Status Quo: the top 1% control the policies of the State in alliance with the State's own Elites, and together they buy the complicity of the bottom 50% to passively accept their dominance.

In other words, the bottom 50% pay relatively modest taxes or are recipients of Central State aid and the top 1% who "own" the political process limit their taxes by favoring unearned income (what they collect from sales of securities, stock options, rents, etc.). Thus the productive quintile (top wage earners) pay the highest tax rates and most of the taxes.

It's a partnership of "Tyranny of the Majority" and "entrenched incumbents Elites."If the political Status Quo alienates the majority by making them pay more taxes, they risk losing power in the next election. If they alienate the top 1% who fund their multi-million-dollar campaigns, then they will also lose power. So they heap the tax burden on what remains of the upper-middle class.

When that 20% rebels, falters or opts out, the system collapses for want of tax revenues. Not coincidentally, that happens to fit the Pareto Distribution: the 20% "vital few" who exert outsized influence on the 80%.

The Grand Bargain is unraveling, and a new arrangement will take the place of the Status Quo--whether we like it or not, it will happen suddenly, no notice.

WHY THINGS ARE FALLING APART........A MUST READ!

Things are falling apart--that is obvious. But why are they falling apart? 

The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding more debt to too much debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify or understand. 

Here are the five core reasons why things are falling apart:

1. Debt and financialization
2. Crony capitalism and the elimination of accountability
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy

Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we continue to cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new paradigm that is Decentralized, Adaptive, Transparent and Accountable (DATA).

We are not powerless. 

Not accepting responsibility and being powerless are two sides of the same coin: once we accept responsibility, we become powerful.

Thursday, November 29, 2012

NIALL FERGUSON: US UNFUNDED LIABILITIES TOP $238 TRILLION!!........AN ABSOLUTE MUST READ!

NIALL FERGUSON: US UNFUNDED LIABILITIES TOP $238 TRILLION!!

In an excellent economic lecture series presented by the BBC, economic historian (& author of the recent Newsweek piece Hit the Road Barack) Niall Ferguson states that the total US unfunded liabilities is a mind-blowing $238 TRILLION- over 16 times the total US debt claimed by the Treasury Department of $16 trillion!!

Can you say QE to INFINITY….AND BEYOND!!!  ?  There is simply no other viable solution.

The rapidly rising quantity of these bonds certainly implies a growing charge on those in employment, now and in the future, since – even if the current low rates of interest enjoyed by the biggest sovereign borrowers persist – the amount of money needed to service the debt must inexorably rise.

But the official debts in the form of bonds do not include the often far larger unfunded liabilities of welfare schemes like – to give the biggest American schemes – Medicare, Medicaid and Social Security.

The most recent estimate for the difference between the net present value of federal government liabilities and the net present value of future federal revenues is $200 trillion, nearly thirteen times the debt as stated by the U.S. Treasury.

Notice that these figures, too, are incomplete, since they omit the unfunded liabilities of state and local governments, which are estimated to be around $38 trillion.

PAST, PRESENT AND FUTURE: GOVERNMENT DEBT AS PERCENTAGE OF GDP

Country200020122017
China16.42210.1
France57.48984.6
Germany 60.1 78.971
Greece103.4153.2136.8
Ireland37.5113.1109.2
Italy108.5123.4118.9
Japan140.1235.8256.6
Portugal48.4112.4109.2
Spain59.47991.6
United Kingdom 40.988.486.8
United States54.8106.6113

Source: IMF, April 2012 World Economic Outlook. Figures for 2012 and 2017 are estimates.

Carlo Ponzi, Alias Uncle Sam..............AN ABSOLUTE MUST READ!........DON'T MISS THIS ONE!

Carlo Ponzi, Alias Uncle Sam

Carlo "Charles" Ponzi was a con man who was the Bernie Madoff of his era. For two years, 1918 to 1920, he sold an impossible dream: a scheme to earn investors 50% profit in 45 days. He paid off old investors with money generated from new investors. The scheme has been imitated ever since.

Every Ponzi scheme involves five elements:

1. A promise of statistically impossible high returns
2. An investment story that makes no sense economically
3. Greedy investors who want something for nothing
4. A willing suspension of disbelief by investors
5. Investors' angry rejection of exposures by investigators

Strangely, most Ponzi schemes involve a sixth element: the unwillingness of the con man to quit and flee when he still can. Bernie Madoff is the supreme example. But Ponzi himself established the tradition.

The scheme, once begun, moves toward its statistically inevitable end. From the day it is conceived, it is doomed. Yet even the con man who conceived it believes that he can make it work one more year, or month, or day. The scheme's designer is trapped by his own rhetoric. He becomes addicted to his own lies. He does not take the money and run.

This leads me to a set of conclusions. Because all Ponzi schemes involve statistically impossible goals, widespread greed, suspension of disbelief, and resistance to public exposure;

All fractional reserve banking is a Ponzi scheme.
All central banking is a Ponzi scheme.
All government retirement programs are Ponzi schemes.
All government-funded medicine is a Ponzi scheme.
All empires are Ponzi schemes.
All Keynesian economics is a Ponzi scheme.

But there is a difference between a private Ponzi scheme and a government Ponzi scheme. The private scheme relies on deception and greed alone. A government Ponzi scheme relies on deception, greed, badges, and guns.

SOCIAL SECURITY

Political liberals in the mainstream media get very upset when somebody speaks of the sacred cow of Social Security as a Ponzi scheme. They go gunning for any political figure who uses the phrase "Ponzi scheme" in relation to Social Security. This is because they know that such a politician is a conservative, and they want to see him defeated at the next election. TRUTH IS UNACCEPTABLE IN POLITICS AT THIS POINT!

It doesn't matter whether politicians say the naughty words or not; the Social Security system is a Ponzi scheme, and it will go bust.

Medicare is a vastly larger Ponzi scheme, and it, too, will go bust. In fact, it will go bust with such an impact on the federal budget that it will pull down the Social Security system with it. In fact, if the promises are not broken to the oldsters who are dependent upon Medicare and Social Security, the deficits in the Medicare system will bring down the entire federal government. The government will default on all of its debts. Anybody who bought that debt will then wind up as helpless as the people who have become dependent upon Social Security and Medicare.

The people who are dependent upon Social Security don't want to hear this. They want to tell us that they paid into the system, fair and square, and therefore we owe them the money. Well, I am in the system, and I paid into the system, and I'm going to cash my checks from the system, but I will be glad when the system goes belly up.

ETHICAL CAUSE AND EFFECT

Why should the thought of the bankruptcy of these Ponzi schemes cheer me up? Because I believe in ethics. I am horrified by the thought of a completely unethical system being successful over time. The longer the day of reckoning is delayed, the more people will be lured into it. I wish the system would go belly up sooner than later, because fewer people will become dependent on it if the system goes belly up sooner rather than later.

Sadly, the people who believe that it is ethical to stick a gun in the belly of one man and take his money, in order to support someone else, are in favor of the Social Security system. They want it to keep going forever. They want the moral corruption of coercion to continue.

The initial motivation for sticking the gun in a man's belly was political rather than charitable. Chancellor Otto von Bismarck in the 1880s rammed the first old age retirement program down the throats of German politicians because he knew that this would undercut the liberals, which it did. The reasons were not based on charity. The reasons were political. They were justified by arguments favoring state-funded charity, but it was all a con job, as all Ponzi schemes are.

But Social Security is vastly more corrupt than a Ponzi scheme, because a Ponzi scheme involves no coercion, whereas Social Security involves massive coercion and a much bigger lie. I will shed no tears when the system goes down.

The theologian C. S. Lewis once described as totally evil a world in which food would make people hungry. In other words, food would have the same kind of addictive power as heroin. The more you eat, the more you want. This is what Social Security and Medicare do. These systems are addictive, and the longer they operate, the larger the number of people who become adicted to them. The more you are dependent on the system, the more dependent you will become on the system. The weaker you get because you are dependent on the system, the more you are dependent on the system. This is the equivalent of Lewis's food that makes people hungry.

A POLITICAL REVOLT

Because the Social Security system, like the Medicare system and Medicaid, has the characteristic of addiction, politicians cannot break it. Neither can the people who are dependent on the programs. 

Inevitably, the systems will continue to grow until such time as they threaten the bankruptcy of the entire government. At that point, there will be a political revolt. Younger people, meaning voters who are paying into the system, will send people to Congress specifically to cut the spending on the three Ponzi schemes. They will make it clear to elected representatives that if they do not find ways to cut spending, they will not be re-elected. Politicians will get the message.

The first people to be cut will be physicians. The government will cut payments to hospitals and physicians. This will create a shortage of medical care. The lines to get treatment will get longer. The quality of the care will be reduced. But, at some point, the government will have to find other ways to cut the expenditures. It will be political criteria that decide exactly how the various programs will be cut. But they will be cut.

One of the most amusing phrases that we hear today about the evils of Social Security is this one: "We are placing a burden on our children." This slogan is so nonsensical that I find it difficult to believe that anyone could believe it.

First, we are not placing a burden on our children. We are placing a burden on ourselves. The government is borrowing money to pay for the systems. We are therefore raising our level of indebtedness. Our children are not going to be burdened with this; we are going to be burdened with it when the kids get smart enough to pull the plug. They are going to stiff the creditors who have bought Treasury bonds and Treasury bills, and that means the banks that have bought them, the money market funds which have bought them, the retirement funds which have bought them, and anyone else who has bought them, including the Chinese central bank, the Japanese central bank, and the other central banks of the world.

Of course, the other central banks will be playing the same game, and all the other voting blocs in foreign nations will be moving against the geezers. Around the world, the same Ponzi system is in operation, and around the world they are all going bankrupt. There is not one of them that will survive. So, it will be a question of who pulls the plug first. Who stiffs the creditors first?

Congressmen hear the phrase about the immorality of burdening our children and grandchildren, and they know that the phrase is nothing but political hype. If they really tried to cut spending on the Ponzi schemes, and justified this by the fact that they were doing something effective to keep from stealing from children and grandchildren, they would be out of office after the next election. It's all crocodile tears. 

The geezers want the money, and they don't give a hoot about the children and grandchildren. 

They're going to get their checks, one way or the other, by hook or by crook they will stick their hooks into Congress, and Congress will do their work for them.

We can't pass on any obligations to our children and grandchildren if our children and grandchildren will be in a position to reject the transfer. There is nothing legally that compels our children and grandchildren to continue to pay into the system. We can scream bloody murder about how we paid in, and how the kids owe us, and how we are going to make certain that the kids fork over the money, but the kids already have the votes.

Here are the reasons why the kids don't simply pull the plug now. First, the kids want to pretend that somebody else is going to pay for their parents, especially the parents who are in retirement homes, or need costly medical care. The Ponzi schemes seem like good ideas, because those voters who think that somebody else is going to pick up the tab are willing to increase the tab. They still think that somebody else is going to pay for the free lunch of Social Security and Medicare.

The next reason why they pay is that the government threatens to send out IRS agents to compel them to pay. They're afraid of dealing with IRS agents who carry guns. They don't want to go to jail. They don't want to be fined. So, they keep paying into the system, because they think they have no choice but to stay in the system.

Third, they have the illusion, which a lot of them are losing, that someday they will be the beneficiaries of the system. But it is getting clearer to larger numbers of them that this is not going to be the case.

So, when the day finally comes when the burden of paying into the system is greater than the expected benefits to be received, younger voters are going to instruct Congress to pull the plug. There is no way around this statistically. 

The present value of the unfunded liabilities of Social Security, Medicare, and Medicaid is $238 trillion. There is no way that this is ever going to be paid off. It will be statistically impossible for the government to ever pay off this amount of debt and liability. THE FUTURE IS NOT BRIGHT DESPITE WHAT FOOLS MAY WANT TO BELIEVE AND LIARS MAY SAY!

There will be great weeping and gnashing of teeth when the plug gets pulled. The Gray Panthers will be outraged. The AARP will organize campaigns to get the geezers' noses back into the trough. But, ultimately, there are more young voters than old voters, and the young voters will ultimately vote their economic self-interest. They're going to pull the plug.

BLIND MEN BLUFFED

Why can't people see this? They cannot see this because it is not in their immediate self interest to see it. They are like northern European bankers who loaned the money to the spendthrift socialists in the sunny climate of the Mediterranean, confident that the spendthrift socialists were not going to run up the tab and then default. They pretended that the Greeks were Germans. They pretended that the interest rate which they received by lending to the Greek government, which was only slightly above the interest rate they could receive by lending to the German government, was a reasonable deal. They poured hundreds of billions of dollars into that Club Med countries, oblivious to the fact that the socialist spendthrifts in the sunny climates had no intention of repaying.

Of course, no government has any intention of repaying. Every government just wants to run up the bill for another year. Every government wants to be able to make annual interest payments, and then run up the bill some more. Nobody expects any government ever to pay it all off. But, when dealing with the socialist spendthrifts of the sunny Mediterranean, Northern Europeans were dealing with really efficient spendthrifts. They were dealing with crooks of the highest order. They were dealing with profligate governments that put to shame northern European governments. So, beginning in April of 2010, the bankers of the north have had to deal with the problem that they are not going to get repaid. They're not even to get their interest payments.

Why were they so stupid? It is clear now that they were stupid. Hard money advocates in the 1990s predicted exactly what was going to happen, and now it has happened. They predicted that the euro would begin to fall apart, because bankers in the north would lend money to private borrowers and government borrowers in southern Europe, a region which is not governed by the same ethical system that prevails in the north. The north is more future-oriented, thrifty, and concerned with the burden of debt. The sunshine socialists in the Mediterranean are concerned with none of these things. They believe that the north owes them a living, and they also believe, Keynesian style, that they can borrow their way into prosperity. So, that is what they did.

The bankers in northern Europe now are begging the governments of northern Europe to bail them out. The bankers do not wish to suffer the pain and embarrassment of sitting on top of hundreds of billions of dollars of bad debt issued by the sunshine socialists of the Mediterranean. They don't want to be embarrassed by the inevitable results of their own short-term policies. They were dummies, and now they want the voters to cover their losses, leaving them with just as much prosperity as before, leaving them in charge of the system in which most of the benefits go to the bankers, and most of the liabilities go to the voters. I mean, isn't that the bankers' way? You bet it is.

The bankers are involved in a Ponzi scheme. The Ponzi scheme involves accepting promises by the sunshine socialists of the Mediterranean that they would be able to make interest payments, because somehow, they would find ways to tax their people, or at least borrow more money to make the interest payments. The great Ponzi schemes of the Mediterranean world are ahead of the great Ponzi schemes of northern Europe. So, the northern Europeans, believing in Keynesian miracles, really have nothing much to say about the policies of southern Europe. Both regions pursue Keynesian policies, which means both regions pursue the economics of Charles Ponzi, the Italian-American immigrant whose name is attached to this scheme which he first developed.

The entire Western world is at this point one large Ponzi scheme. It is a Ponzi scheme, because it is based on the concept of debt issued by governments that will never be repaid, and future taxes imposed on voters who supposedly cannot escape, all in the name of the vast Ponzi scheme of the golden years of retirement funded by hard-working taxpayers in the next generation.

We are not imposing these burdens on the next generation, unless the next generation is dumber than dirt. The next generation is finally going to figure out that the Ponzi scheme is going to bankrupt them if they stay in it. So, they're going to pull out of it. There will be a political revolution in the thinking of voters, and when that day comes, they will tell the politicians to pull the plug on the geezers. This is exactly what the politicians will do.  WELFARE SCHEMES WILL BE DOWN THE TUBES AS WELL.......MASSIVE SOCIAL UNREST LIES AHEAD!

That day should be a day of great rejoicing, precisely because it will be the day of reckoning for an immoral system based on badges and guns. It was an immoral system when it was imposed in 1935 by Franklin Roosevelt's New Deal, and it was an immoral system when it was invented in the 1880s by Otto von Bismarck. It is a Ponzi scheme, through and through, except that it is based on badges and guns and preposterous lies. Preposterous lies undergird both systems, but, as I have said, Ponzi never forced anybody into the system.

DEFERRING THE INEVITABLE

I favor the looming collapse of Social Security and Medicare, because I am in favor of predictability in ethical matters. Unethical acts are supposed to result in negative sanctions. If these sanctions are not imposed by the civil government, or by some other agency, then the sanctions will be imposed by basic accounting. One way or the other, negative sanctions will be imposed.

The problem with Social Security and Medicare is that the negative sanctions are not imposed on the beneficiaries, but are rather imposed on voters who think that they will become beneficiaries. The system is morally corrupt, but it also is tenacious. The moral corruption which underlies this then spreads throughout the society. It is seen as immoral to pull the plug. It is not immoral to pull the plug, but since the plug will not be pulled for ethical reasons, it will be pulled for actuarial reasons. It will be pulled because it is a mathematical impossibility, in the same sense that a Ponzi scheme is an impossibility.

You either do things for the right reasons, or else you do things because of your fear of the negative sanctions involved in doing the wrong things. But, one way or the other, you will stop doing the bad things at some point. The heroin addict may not give up his addiction in order to save his health, his family, or his reputation. But he gives it up when he cannot get enough money to continue the habit. One way the other, he gives it up. The only other way to give it up is to die.

If you don't want to give up heroin, despite the fact that you know it will kill you, you are thinking about as clearly as somebody who becomes dependent upon Social Security and Medicare. If you would tell the heroin addict that he has to quit, because his addiction is going to kill him, or bankrupt him, you are giving the person sound advice. But, in our culture, it is considered a breach of political etiquette to warn addicts of Social Security and Medicare that they are risking death by remaining dependent on the systems. When the plug gets pulled, they will be in a weak condition. They will not be in a position to go back to work to earn a living. Their children, who have been paying taxes into the system for decades, will have less capital to provide for them.

We are a nation of addicts, and we live in a civilization in which the residents of every Western industrial nation are addicts. 

We are addicted to Ponzi scheme economics.

In every university, in every high school, it is considered bad form to talk about the economics of Social Security and Medicare. Despite the statistical inevitability of the bankruptcy of the systems, the victims of the system are not supposed to be warned about it.

We warn children about drugs. We warn children about obesity. We warn children about cigarettes. We warn children about sexual promiscuity. But we don't warn children about the inevitable bankruptcy of Social Security, Medicare, and Medicaid.

The teachers who do not sound the warnings also think that their retirement programs, coupled with Social Security and Medicare, will give them comfortable retirements. They don't want to believe that this isn't true, so they are not about to tell the students that it is not true. Think of these people as northern European bankers in 2009. In other words, they are dumber than dirt.

I structure my life as well as I can, so as not to be dependent on Social Security and Medicare, because I know that the plug will be pulled on both Ponzi schemes. But the vast majority of Americans have yet to understand this. This is why there is still a market for the silly phrase, "We are burdening our children and grandchildren with an unbearable level of debt." No, we are not. Our children are not dumber than dirt. When the pain of paying into the system is greater than the pain of bringing granny back into the household, or converting a garage into a little room for her, the voters are going to tell Congress to pull the plug.

CONCLUSION

I don't care if AARP doesn't want to hear this. I don't care of the voters in southern Florida don't want to hear it. When the plug gets pulled, they will hear it. Sooner or later, they will hear it. I prefer sooner. They prefer later. Congress prefers later. But, sooner or later, they will hear it.

REALITY ALWAYS TRUMPS DELUSION.........EVEN THE DELUSIONS OF A MAJORITY! 

TRADING RULES.............

The Danger of Gambling Psychology in Trading

If you trade like a gambler, you're bound to lose money. You'll make bad trades. You'll throw good money after bad. And eventually, you'll find yourself wondering where all your money went.

(Hint: Wall Street took you for a ride!)

Fortunately, there are a few simple mindset shifts that can turn your trading around, sometimes overnight.

Mindset Shift #1: 

Don't Chase Trades; Let Them Come to You

Gambling produces some strange responses in people. If a gambler wins once, he's likely to keep gambling until he wins again… even if he loses a small fortune along the way. And if he loses, he's likely to keep gambling in an effort to "win back" what he lost – even if he continues losing.

These behaviors are not unique to gamblers; traders are guilty of doing the same exact things. If we win a trade, we try to force another winning trade – even if the second trade is doomed. And if we lose a trade, we try to quickly make back what we lost on the next trade.

This irrational behavior is caused in large part by our cultural conditioning. All of us are hard-wired to work 40 hours a week. If we work any less, we somehow feel that we don't deserve the money we're making. We believe we must "work hard" to earn a living.

This belief often carries over into trading, and so we "work hard at trading." We enter trades even when there aren't any good trades available. We trade for trading's sake. Then, when our poorly placed trades move against us, that gambler's fear of loss kicks in… and we begin making even more foolish decisions, which compounds our losses.

It doesn't take a genius to see where this behavior will lead. So here's a suggestion: 

Once you understand what makes a good trade versus a bad trade, let the good trades come to you.

One of the best ways to do this is to monitor just a handful of stocks, options, or currency pairs and become familiar with them. Over time, you'll understand the price movements better, and you'll be able to spot good trades more easily.

You don't have to trade a lot to make a very good living as a trader. You only have to make a few good trades when the opportunities present themselves. In trading, patience is most definitely a virtue.

Mindset Shift #2: 

Adopt a "Win Small" Approach to Trading

Gamblers-turned-traders are often looking to "hit the jackpot." They want to place one trade and be set for life.

But it doesn't work this way. It often takes scores of trades, even hundreds, to really build the kind of fortune your neighbors would envy.

With that in mind, it's much better to aim for small consistent wins. Small consistent wins are much more realistic. And compounded over time, small wins can add up to truly staggering numbers.

The best part is this: While you are focusing on small consistent wins, you'll be sure to experience some big wins as well, a natural by product of your "win small" strategy.

Mindset Shift #3: 

You Don't Have to Win Every Trade.

The last mindset shift – and possibly the most difficult of all – is to understand that you don't have to win every trade to make good money as a trader. In fact, losses should be expected and planned for.

The best fund managers, the best traders, and the best trading software all have this in common: Sometimes they lose money.

Ultimately, it's how you react to losing money that dictates whether you'll succeed over the long haul. 

Do you follow your money management rules?

You see, it's not how you do on a single trade that counts. It's how well you do over a series of trades. If you win 6 or 7 trades out of every 10, you will be doing quite well.

What's more, if you do a good job of limiting losses (a function of a solid exit strategy), then you may even be able to come out ahead if you only win half the time (five winning trades, five losing trades).

However, I understand that emotions can still run rampant in spite of your best efforts to control them. So after getting out of a losing trade, you might want to take a break for a while so you don't make any more bad trades during the depths of disappointment.

Change Your Mindset, Change Your Trading Account

The truth is, your trading account reflects what's going on in the gray matter between your ears. So the next time you start wondering why you've been on a losing streak, or why your trading account is shrinking, take a moment to self-reflect.

Then remind yourself to:

Wait for good trades

Aim for small consistent wins

Be okay with losing trades (so long as you limit your losses)


These small "mindset shifts" will help prevent you from trading like a gambler and get you trading like a real business person instead. Not to mention it will help you grow your trading account consistently over time.

YOU MUST FIRST OVERCOME YOURSELF BEFORE YOU CAN EVER LEARN TO TRADE AND MAKE MONEY CONSISTENTLY.

THE WORLD IS LAUGHING AT US...........

Pravda: Obama Was Re-Elected by "Illiterate Society"

Russian newspaper Pravda is blaming President Obama's re-election on an "illiterate society" who voted for him.

Putin in 2009 outlined his strategy for economic success. Alas, poor Obama did the opposite but nevertheless was re-elected. Bye, bye Miss American Pie. The Communists have won in America with Obama but failed miserably in Russia with Zyuganov who only received 17% of the vote. Vladimir Putin was re-elected as President keeping the NWO order out of Russia while America continues to repeat the Soviet mistake.

After Obama was elected in his first term as president the then Prime Minister of Russia, Vladimir Putin gave a speech at the World Economic Forum in Davos, Switzerland in January of 2009. Ignored by the West as usual, Putin gave insightful and helpful advice to help the world economy and saying the world should avoid the Soviet mistake.

Recently, Obama has been re-elected for a 2nd term by an illiterate society and he is ready to continue his lies of less taxes while he raises them. He gives speeches of peace and love in the world while he promotes wars as he did in Egypt, Libya and Syria. He plans his next war is with Iran as he fires or demotes his generals who get in the way.

Penny and Nickel Coins to be Phased Out in 2013...............

Earlier this week Canada announced that they would be phasing out their penny coin.  On the heels of the Canadian announcement, U.S. Treasury Secretary, Tim Giethner stated in a press conference today that the U.S. Mint will remove the penny and nickel coins from circulation, starting early in January 2013.

Due to the rising costs of zinc and production related expenses, the U.S. Mint now spends 4.8 cents to make a penny.  And the cost of copper and nickel have inflated the cost to create a nickel coin to 16.2 cents.

Gone in 2013!  A LOT MORE THAN JUST PENNIES AND NICKLES WILL BE GONE BY THE END OF 2013.

In 2011, the U.S. mint made over 4.9 billion pennies. That is $236 million to produce only $49 million worth of pennies, a loss of $187 million in minting costs.  Minting the nickel coin also represents a significant loss in revenue.

By comparison, the dime (which costs 9.2 cents to mint) and the quarter (21.31 cents) are economically more feasible, and will continue in circulation through 2013.  However, according to Giethner, the dime may be in jeopardy as early as 2014.

Once the phase out of pennies and nickels begins, merchants must be equipped to round all transactions to the nearest ten-cent increment.

If something costs $1.53, for instance, it will be rounded down to $1.50, and a transaction for $1.55 or higher will be rounded up to $1.60.  Credit card, debit and check payments would also be subject to the rounding rule.  It is expected that the rounding will not result in higher costs for purchases or losses for merchants.

Pennies and nickels will continue to hold their inherent cash value, and they can be traded in at financial institutions.  Banks will then return the coins to the mint for recycling into their base materials.  By mid 2013 it is expected that the penny and nickel will both be  mostly removed from the U.S. economy.

UNPRECEDENTED!

Wednesday, November 28, 2012

GREAT GRAPHICS........

THE FOUR HORSEMAN ARE RIDING HARD........WAKE UP...... AND FIND GOD!

TRUTH IN PICTURES!





Unfit To Rule PDF File




States Rights Join Or Die Sticker (Rectangle)
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Robbed by bailouts
This  cartoon below was in the Chicago Tribune in 1934 .
 
Look carefully at the plan of action in the  lower left corner.
 
Remember  the adage: 
 
"Those who forget history are doomed to repeat  it ."  
and-
 
"If you put the federal government in  charge of the Sahara Desert,
in five years  there'd be a shortage of sand."
Milton  Friedman



WORST OF ALL TAXES ARE GOING WAY UP!