The Individual Mind

Interesting podcast with Nobel Peace Prize nominee, Robert David Steele. Open sources lead to peace and prosperity for all.

https://www.youtube.com/watch?v=fVBknoOSVIQ&feature=youtu.be

“Once Latin America’s richest country, Venezuela can no longer feed its people, hobbled by the nationalization of farms as well as price and currency controls.”

Please see the WSJ article from May 5, 2017.

I posted elsewhere some thoughts on the economic, political and humanitarian disaster of Venezuela, and wanted to preserve some of that here. I lived in Venezuela for a few years in the 1990s and left about the time that Hugo Chavez was coming to power. Given my connection to that country, I have followed its decline with saddened interest. Now, post-Chavez, Maduro has accelerated the dysfunction and demise of seemingly every societal system.

When I left Venezuela in 1992, about 16 Bolivares bought a dollar, if I remember correctly. Now, it takes 5,000. (Of course, I think their central bank was recently about to lop off a few zeroes to make things look better.) In an attempt to control everything and everyone, their Gov has nationalized (and destroyed) almost all commerce, and hyper-inflated their currency to the point of near uselessness. They’ve driven businesses out of business, and international investment entirely out of the country. This is Gov doing everything it wanted to do without public restraint. Gov writ large. In its near fullness. Statism unveiled. Perhaps the only things we don’t currently witness that would fulfill the completeness of the state are wars of Empire (which they can’t afford) and political prisons/work camps (of which there are multiple stories of political enemies being removed and imprisoned, just not on large scales. Perhaps that is unnecessary, as their silence is culturally imposed or they’ve already fled.)

I was in Venezuela for almost two years in the 90s. Beautiful, fertile, temperate climate, diverse terrain, hundreds of miles of Caribbean coast, tourism-ideal land…. but for Gov. One of my vivid memories is of all of the fruit that would rot on the ground in the smaller towns. Massive mango trees were common, and often, there would be scores of rotting fruit on the ground from overabundance. Similarly, all manner of other fruits were plentiful – some of which I had never before tasted: varieties of banana and plantain, star fruit, guayaba, guava, papaya, others I can’t remember the name of. There is no reason that country should not be an agricultural powerhouse to the world, much less be able to feed its people… other than the reason that we’ve mentioned.

One thing that I disdained about their culture, however, is likely a direct contribution to their situation. In essentially every instance, the common colloquialism was, “si Dios quiere.” Essentially, “God willing.” Any future plan, appointment, project or even luncheon for the next day was qualified with that thoughtless suffix. It was if they had culturally and religiously abandoned their own responsibility, will, forethought, commitment, etc. in exchange for whatever might occur… because certainly that would be God’s will. They always had a Divine out, a Holy Excuse, for their failings and apathy. Myself, even as a Christian at the time, I found this horribly annoying, lazy and unproductive. I think that this mindset especially put that people at risk for Gov stepping in to impose all manner of controls. The people had abandoned self-responsibility, awareness, intellectual curiosity and even self-preservation to a faulty security that God would just take of every little aspect of their lives without any work or attention on their own part. Government  and its actors had the cover and distraction they needed to do whatever they wanted to control, regulate, inflate, devalue, nationalize, self-promote, nepotize, conspire. History is replete with Gov’s use of religion to subdue and control the masses. Unfortunately, the Venezuelans will have their own chapter in that book.

maps from geology.com

This graphic and title are lifted directly from demonocracy.info, which has great graphics to help visualize a very precarious financial system and monetary policy. With my interest spurred from the recent post on fractional reserve banking, I wanted to check on the current fund level for FDIC insurance (which looks to be $83B per page 94 of the 2016 GAO report – up from $25B a few years ago). Bank checking and savings deposits (M1 + part of M2, as I understand them) in the US appear to be about $13 Trillion. That would mean FDIC assets could cover 0.64% of total deposits.  Of course, in the totality of the US financial system, which includes innumerable other forms of deposits, investments, instruments and debt, one might begin to get the sense that there is very little asset to cover astronomical liabilities. In comparison to the potentially $300T in derivatives, the FDICs cushion would cover 0.028% of losses. With that in consideration, one might do well to consider broad diversification into asset classes outside of numbers in a computer which hang tenuously upon a distorted and manipulated economy of wanton credit expansion, boom-bust cycles, artificially low interest rates, and ever-expanding debt. Some cautious skepticism wouldn’t seem entirely out of order.

Overlaying three historical charts from the year 2000 to today: money supply in $Trillions, gold and silver in dollars/ounce. Metals dropped off of the growth curve in 2012, although the money supply has continued to grow (devaluing the dollar). One would expect metals prices to follow the inflationary trend upward, getting more expensive as the dollar value falls with increasing supply. The fact that they have not makes me think that they may be significantly undervalued. While I do not use metals as an investment, per se, I find them very useful as stores of value – much moreso than the fiat currency of a government-controlled, ever-expanding money supply which can only continue on its current growth curve as printed/credit-expanded money is used to cover unfunded and untenable liabilities owed to the public. My take away: more metals.

I pulled these charts from www.kitco.com and from www.nowandfutures.com

Edit on May 6, 2017: After I posted this, I was thinking about one of the points that David Stockman (and others) have made regarding the correlation in money expansion and rising stock prices. Particularly, I think I first saw this vividly in Stockman’s book The Great Deformation: The Corruption of Capitalism in America, wherein he describes the basically 1:1 correlation between Fed money expansion and corporations making use of that easy money and credit to indebt themselves in order to buy back their stocks. This decreases the number of outstanding stocks, increasing the earnings-per-share number, making the stock look more valuable than it really is. Additionally, for individuals, easy credit allows them to keep high debt levels while pouring money into an increasingly distorted market. A third factor is that as the Fed keeps interest rates extremely low, there is nowhere to “invest” that is safe and simultaneously offers a decent rate of return. Historically, one could park one’s savings in a CD and safely make 5%. Now, with artificially low interest rates near 0%, and in some countries rates are negative, people “chase returns” in the only place that they hope to keep a positive return on investment: that increasingly distorted stock market which is inflating/devaluing values in step with the flood of dollars. (Peter Schiff has significantly commented on all of this, as well.)

See the below chart to follow what looks to be only M1 (which is only cash and demand checking deposits which can be quickly liquidated, and does not include all of the expanded monetary credit lines of M2 and M3 – see Investopedia on the topic) in correlation with the Dow Jones Index. All of that money seems to be dumped right into the stock market. There has been no real growth. The Dow is just an indirect indicator of money supply expansion. (At another time, we might discuss M1. As it includes savings and checking accounts, we might dig into how much of that money even exists in a fractional reserve banking system wherein the financial institutions hold 90%+ of those dollars only as numbers in a computer. There is no paper cash or real asset to back those liabilities to account holders.)

chart source: Stockcharts, which was linked from a Gold Eagle article.

Just finished a great one! Excellent and often laugh-out-loud satire of the follies of war. Written by Czech Jaroslav Hasek in the aftermath of WWI. He mocks the Monarchy, bureaucracy, military, church and the throngs of their ridiculous adherents. Hasek was a Twain of Eastern Europe as satirist and humorist, with a very interesting biography through his phases as vagabond, political dissident, anarchist, conscripted soldier, Russian prisoner of war, communist, socialist and apparently back to anarchist. He gave them all hell and made political enemies in every circle as a result of his perpetual pranks and uncomfortable-for-most observations. God love him. Wish I’d known the man.

Link for Amazon

TED talk. Michael Vlahos, PhD, professor at both the  US Naval War College and Johns Hopkins, consultant for both the Dept of State and the CIA, national security commentator, etc. His predictions for US Empire seem about right. It will fall apart. Some excerpts from the embedded John Batchelor interview: “The empire will be replaced – in the meantime, there is savagery. Americans need to embrace their identity and new things. New things can be remarkable, yet not to be found in the currency of elite conversations of today – not in political correctness, not in the empty ideological coinage and currency of today. As the elites collapse – it will open up new space in which the people can approach the world differently. There is no ultimate hope that the current system in the United States can continue. Things like $500 billion deficits are just metaphors for the impoverishment of the system itself. It is the spiritual core that will come down. The system is absolutely hollowed out – incapable of offering anything to the world or to its own American people. No possibility of revival through the current system exists. It will eat itself out in the civil war that is coming. Nothing of it will remain. Without the elites being sensitive to the needs of the larger society, this has to happen.”

Vlahos describes well the historic cycles of control by elites, increasingly imposed order to serve themselves at the expense of the rest, increased stratification and rigidity, increased militarization to maintain the imposed order, decreased social mobility among the rest of society leading to increasing levels of general poverty while the rich get richer, increasing controls justified in order to “protect civilization” by which the elites mean “their order which benefits them,” people stop believing in the leadership and system as external triggers foment a destructive event (climate change, wars, migration, famine, epidemic disease,…), a void is left after the system falls in which humanity is able to grow/advance and meet previously unmet needs/desires, people find meaning in themselves and their communities,…. Then, the cycle repeats. At the end of the TED talk, he says to the select Johns Hopkins university audience: you are the elite, and the revolution is coming for you.

I advocate freeing people to live how they want, to work how they want, to keep what they earn, to move freely, to stop protecting and bailing out and legislating in favor of elites and politicians and corporations that use societal controls and levers to benefit themselves at the expense of others, to stop militarizing for domestic controls, to stop intervening internationally in affairs that do not serve the interest of individuals and which lead to massive costs and blow back, to stop putting people in prison and ruining their lives over things that they put in their own bodies, to legalize competition in everything: schools, medicine, employment, transportation, currency,…, to stop the facade of “protecting society” from threats that really only threaten an imposed order which requires great external pressure and cost to maintain – be those exaggerated threats domestic or foreign. By reducing the external pressures of the artificial system now, by reducing controls and permitting mobility, perhaps the adjustment to a level of more natural homeostasis will be less violent, deadly, destructive, destabilizing. The correction may not have to be severe if it is proactively defused and permitted to evolve in voluntary and mutually beneficial fashion.

Of course, no elites throughout history have voluntarily given up their ill-gotten power and wealth. As history shows, they will resist and control till your last breath – which has not been uncommonly caused by those that “just follow orders.” Censorship, police presence, surveillance, conscription into their wars, social isolation, political prisons, labor camps, expulsion, employment controls, intimidation, property and wealth confiscation, currency manipulation,… – so many tools at their disposal. Fortunately, the energy and cost required to maintain such systems and controls are high and eventually self-limiting, as typically is the tolerance of the controlled. But as Dr. Vlahos points out, these cycles tend to run in temporal terms of centuries. So, buckle up, ‘Murka. It’s sure to be a bumpy ride.

Additionally, realize that you can never own your property. Even after you pay off the mortgage to the bank, you will continue to rent your property from the government via property taxes that for a median home value of about $250K will equal roughly the rent of a small apartment: ~ $500/month in Missouri… on top of every other tax you pay. Property tax also applies to your “owned” vehicles, boat, trailer,…. You can never own your home or property. Not in the Land of the Free where private property and self-ownership are so vocally touted by your government schools, institutions and officials while those principles are so blatantly violated. The unsuspecting, mind-numbed, unprincipled, thought-molded public herds right along with gov’s hand in its pocket. Simultaneously, the public has its hand sticking out for the “freebies,” undeliverable promises, and unfunded liabilities to receive from gov (i.e. their fellow taxpayers). Quite an inefficient and immoral system which perpetuates the politicization of everything, the distortion of the economy and incentive structures, and the entrenchment of the power class as the enlightened, self-important, benevolent, central planners. One of my favorite quotes: “The curious task of economics is to demonstrate to men how little they know about what they imagine they can design.” – FA Hayek.

And as Frederic Bastiat said, “Government is the great fiction through which everybody endeavors to live at the expense of everybody else.”

(See the Bloomberg article on Fed interest rate manipulation.)

The Fed (your totalitarian financial Gov Sponsored Enterprise) forces interest rates artificially low, which means you can make no money by lending your savings to banks and other corporate entities through savings accounts or bonds. So, people “chase gains” in the stock market. It also means that borrowing money is so cheap that corporations take out tons of debt, buy back their own stocks, show great Earnings-per-Share (now with fewer outstanding shares) which make it look like they are super healthy. The stock market indices go up without any true valuations or growth to support them, and the bubble becomes ripe for major correction. Thus, the Fed’s policies to juice the economy end up creating instability, robbing people of income and stable investment avenues, and worse of all, the credit expansion/money printing erodes the value of the dollars that people are able to save. Central planners! My favorite Hayek quote: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

Article by Carmen Elena Dorobăț at Mises Institute today.

In my opinion, economists are politically-motivated behavioral scientists – sociologists that crunch numbers. Their soft science of behavior observation does not give them an ability to plan economies, create monetary policy, or allocate societal resources. While they may make predictions, they cannot control an economy, which is the aggregate of billions of individual human decisions regarding their own resources via complex value judgments, the individual responses to subjectively-determined incentives and disincentives, the movement of services and products in numbers and ways that cannot be finitely understood by anyone. Economists – just another set of snake oil salesmen. Dorobat’s article supports this view.

(Graphic and data from article sourced here from CNS news)

US Gov took over $600B from individuals in the month of February – a record. Regardless, it still cannot meet its obligations without the continual creation of debt: a roughly $350B budget deficit in the first five months of the fiscal year – which will be added to the roughly $20T outstanding national debt. Vote harder? You silly, silly Americans. You cannot fix this system. You certainly cannot do it at the ballot box. Perhaps you opt for state secessions as a partial improvement. Perhaps you reach the enlightened awareness that all Govs eventually fail and perpetually do harm. Or perhaps you just keep ignoring it, as the Empire Parasite outgrows its food/tax source, spreads the globe in unsustainable patterns of influence and manipulation, creates wars and control systems which require continually increasing expenditures and management to maintain them in extremely unstable and disequilibrated states, and, as it must, as Empires without exception have suffered throughout history, it collapses (e.g. the Romans, Dutch, Portuguese, Spanish, French, British,…).

You can hope for a quick Soviet-style collapse wherein the separate states splinter without violence and starvation. Or maybe you’ll get a Venezuela which has been dying for decades through a state-imposed suicide, which has controlled every aspect of life until they now stand in long lines to get into empty grocery stores to buy a scrap of anything with the money that is worth considerably less at the checkout line than it was just a few hours before when they formed the line with their poor, unfortunate comrads, thinking, “Si Dios quiere, quizás pueda encontrar hoy la leche y pan para dar de comer a mis hijos.” While they’ve been hoping, in complacency, for centuries that God wills them good, real men have done them ill. Your religion of statism will serve you equally well. Good luck.