backwards society

We now live in a nation where doctors destroy health, lawyers destroy justice, universities destroy knowledge, governments destroy freedom, the press destroys information, religion destroys morals, and our banks destroy the economy.

-- Michael Ellner (1997) & Chris Hedges (2010)

inflation to war

 The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.

-- Ernest Hemingway

The Power of the Powerless

The citizen has to put a slogan in his window, not in the hope that someone might read it or be persuaded by it, but to contribute, along with thousands of other slogans, to the panorama that everyone is very much aware of.  This panorama, of course, has a subliminal meaning: it reminds people where they are living and what is expected of them. It tells them what everyone else is doing, and indicates to them what they must do as well, if they don’t want to be excluded, to fall into isolation, alienate themselves from society, break the rules of the game, and risk the loss of their peace and tranquility and security.

Whether the slogan is true or not is beside the point. The point is signaling compliance out of fear, not an honest discussion of the evidence, or persuasion, or any mechanism respecting the informed and open consent of the governed. In postings signs of affirmation of the regime, citizens have adapted to the conditions in which they live; but in doing so, they also help to create those conditions. Quite simply, each helps the other to be obedient. Both are objects in a system of control; but at the same time, they are its subjects as well. They are both victims of the system and its instruments.

Citizens’ assistance to a lying and oppressive regime changes those who corrupt themselves. They may learn to be comfortable with their involvement, to identify with it as though it were something natural and inevitable and ultimately come to treat any non-involvement as an abnormality, as arrogance, as an attack on themselves, as a form of dropping out of society.  In other words, falsifying reality brings about more of that falsified reality.

Once people have compromised themselves, they are more likely to identify with their compromise, because it’s embarrassing to admit you were wrong. So instead, people double down. They heap onto their initial cowardice the additional cowardice of refusing to admit they could have been wrong.  This also helps account for the viciousness with which people often treat dissenters. Dissenters are living proof that everyone does not have to comply, that it is possible to live in the truth. This shames those who have chosen temporary comfort over noble sacrifice.

Within the system, every individual is trapped within a dense network of the state's governing instruments, themselves legitimated by a flexible but comprehensive ideology, a "secularized religion." Power relations are therefore best described as a labyrinth of influence, repression, fear, and self-censorship which swallows up everyone within it, at the very least by rendering them silent, stultified, and marked by some undesirable prejudices of the powerful.

-- Vaclav Havel (summarized / paraphrased) 1978

Temples of Syrinx

We’ve taken care of everything:
the words you read, the songs you sing,
the pictures that give pleasure to your eye.

One for all and all for one.
Work together, common sons.
Never need to wonder how or why.

-- Neil Peart (Rush) 1976

imbalanced resource / capital distribution

Three dynamics that define any human civilization are the distribution of resources, capital, and agency. Resources are straightforward — food, energy, shelter, etc.  Capital is financial (money), tangible (tools, ownership of land, etc.) and intangible (social / human capital). Capital productively invested produces income. Agency is control of one's life, having a say in community / public decisions, and having some control and power over one's circumstances.  When these three are distributed asymmetrically -- where the majority of the resources, capital, and power are distributed to an elite -- society and the economy are imbalanced and prone to stagnation and eventual discord.

Statistics are unequivocal: income-wealth inequality in the U.S. continues reaching new heights. This is reflected in asymmetric access to healthcare and other resources, asymmetric ownership of income-producing capital, and limited agency.  The bottom 90% of the U.S. economy has been decapitalized: debt has been substituted for capital. Capital only flows into the increasingly centralized top tier which owns and profits from the rising tide of debt that's been keeping the bottom 90% afloat for the past 20 years. Globalization and financialization have richly rewarded the top 5% and especially the top 0.1%. Everyone else has been been reduced to a powerless peasantry of debt-serfs.

America has no plan to reverse this destructive tide of neo-feudal pillage. Our leadership's "plan" is benign neglect: send a monthly stimulus of bread and circuses (the technocrat term is Universal Basic Income or UBI) to all the disempowered, decapitalized households so they can stay out of trouble and not hinder the New Nobility's pillaging of America and the planet.

As for agency: Martin Gilens of Princeton University and Benjamin Page of Northwestern University are authors of the study "Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens."  Professor Gilens gave this brief summary of their conclusions:

"Ordinary citizens have virtually no influence over what their government does in the United States. And economic elites and interest groups, especially those representing business, have a substantial degree of influence. Government policy-making over the last few decades reflects the preferences of those groups — of economic elites and of organized interests." (Foreign Affairs, Jan. 2021, Monopoly Versus Democracy)

That is as definitive as soaring income-wealth inequality. Both are inherently destabilizing.

Meanwhile, central bankers, monopolists and the politicos whose campaigns are funded by monopolists are all frantically trying to convince us their policies will heal the metastasizing tumor consuming America.  Borrowing a quarter of the nation's entire economic output every year to prop up an ineffective, corrupt status quo is merely kicking the can down the road while not addressing the root problems in our country.

If America cannot bear to discuss these realities (and structural solutions) openly, the social, economic, and political orders will unravel in a non-linear Cultural Revolution with a highly uncertain outcome.

-- Charles Hugh Smith (The Daily Reckoning) March 27, 2021

 

bodyguard

So-called leaders with deceitful faces
Corruption in high places
Your hands filled with bribes, mouth pours out lies
Cause of all oppression now running for protection

-- David Hinds (Steel Pulse) 1984

I am the virus

 

Death misery and tears
Calculated waves of fear
Drawn up by think tanks
There's a darkness in the west
Oil swilling
Guzzling corporate
Central banking
Mind-fucking omnipotence


False flags and black ops
Tavistock manufactured shocks
Something's gone horribly wrong
Hot flashes for the neo-con
A population in deep denial
Contagion released from a vial


No one believes in 9/11
Steel frame buildings don't fall in seconds
Murderers in black robes decapitate innocents
The public's blank stare
Did you sleep okay last night, Mr. Blair?

I am the fury, the spirit of outrage
I am the fire
I am the virus
I am the furnace where resentment glows
I am the bias
I am the virus
I am the Hydra headed beast
I am the worm you can never delete
I am the danger that never sleeps

-- Killing Joke (2015)

End foreign wars

The American people are tired of our ‘endless wars’ and seem to understand that long-term military commitments like those in Afghanistan and Iraq don’t serve our national interests and aren’t worth the costs. With nearly 70 percent responding in favor of bringing our troops home from Afghanistan and Iraq, it’s clear that our approach to the Middle East doesn’t square with the will of the American people who bear the human and financial costs of these decisions. Unfortunately, the Washington foreign policy establishment, including many in government, has resisted real change....

Americans look ready for a more thorough-going rethink of our foreign policy and shift away from the military-first strategies that have seen trillions in tax dollars spent and thousands of American lives lost. The president’s instincts on ending endless wars are with the American public’s. He should work to withdraw our troops from Iraq and Afghanistan and forge a different path forward in the Middle East—one that employs the many other, less expensive, and more effective tools in the statecraft toolbox.

[W]e need to stay focused on what America’s long-run national interests require and define our approach... based on that.... [A] full and speedy withdrawal of our troops is imperative. Our national interest isn’t served by continuing to wage a futile battle, but by exiting it. 

-- William Ruger (Koch Institute) January 23, 2020

Bigger Isn't Better

It’s now been over a decade since the world’s major central banks reacted to the financial crisis with record-low interest rates and quantitative easing. Major central banks gave themselves a blank check with which to resurrect problematic banks; purchase government, mortgage, and corporate bonds; and in some cases -- as in Japan and Switzerland -- stocks, too. They have not had to explain to the public where those funds were going or why. Instead, their policies have inflated asset bubbles while coddling private banks and corporations under the guise of helping the real economy.

When money is cheap because interest rates are low or near zero, the beneficiaries are those with the most direct access to it. That means, of course, that the biggest banks, members of the Fed since its inception, get the largest chunks of fabricated money and pay the least amount of interest for it.  The biggest six U.S. banks have been rewarded with an endless supply of cheap money in bailouts and loans for their dangerous behavior. They have been given open access to these funds with no major consequences, and no rules on how they should utilize the Fed’s largess to them to help the real economy.

The zero interest rate and bond-buying central bank policies that prevailed in the U.S., Europe and Japan were part of a coordinated effort that has plastered over potential financial instability in the largest countries and in private banks. It has, in turn, created asset bubbles that could explode into an even greater crisis the next time around.  The risks posed by the largest of the private banks still exist, only now they’re even bigger than they were in 2007-2008 and operating in an arena of even more debt.

Today the big banks are bigger than ever and the amount of de‌bt in the system is larger than ever. There’s been no substantial reform since the financial crisis, just some cosmetic moves that have been passed off as major reform. The big banks are always ahead of the regulators.  It’s just one part of a system rigged in favor of Wall Street that has been deemed too big to fail. It’s a corrupt and incestuous system filled with perverse incentives and conflicts of interest.

-- Nomi Prins, The Daily Reckoning (Dec. 13 & 19, 2019) edited

bank regulation

The Board of Governors of the Federal Reserve System recently published their annual Supervision and Regulation Report which measures the financial condition of major U.S. banks, including loan growth and liquidity in the banking system.  Overall, 45% of U.S. banks with more than $100 billion in assets received a supervisory rating of “less than satisfactory.”  That’s not good. As we learned during the 2008 crisis, the stability of these large banks is essential to the health of our banking system.

Furthermore, this rating should not sit well with hardworking Americans who bailed out many banks during that last major crisis.  As bank lobbyists continuously push for more deregulation, it's prudent to remember what happened a decade ago with bank bailouts and a market crash.  We need more regulation, not less, if banks continue to receive less than a “C” grade on their report cards.

-- Nomi Prins, The Daily Reckoning (edited) (Dec. 7, 2019)

Speculation Encouragement

Needless to say, if you bail out speculators, they will simply speculate more. And if you do it over and over and predictably so, you will extinguish the fear of risk and loss, which is the only thing which keeps the speculative impulses in check.

-- David Stockman (as quoted in The Daily Reckoning) Sept. 24, 2019 (slightly edited)

market manipulation

The problem with any kind of market manipulation (what central bankers call “policy”) is that there’s no way to end it without unintended and usually negative consequences. Once you start down the path of manipulation, it requires more and more manipulation to keep the game going.  Finally it no longer becomes possible to turn back without crashing the system.

Of course, manipulation by government agencies and central banks always starts out with good intentions. They are trying to “save” the banks or “save” the market from extreme outcomes or crashes.  But this desire to save something ignores the fact that bank failures and market crashes are sometimes necessary and healthy to clear out prior excesses and dysfunctions. A crash can clean out the rot, put losses where they belong and allow the system to start over with a clean balance sheet and a strong lesson in prudence.

Instead, the central bankers ride to the rescue of corrupt or mismanaged banks. This saves the wrong people (incompetent and corrupt bank managers and investors) and hurts the everyday investor or worker who watches his portfolio implode while the incompetent bank managers get to keep their jobs and big bonuses.  All it does is set the stage for a bigger crisis down the road.

-- Jim Rickards (The Daily Reckoning) July 31, 2019

Central Bank Experimentation

The grand central bank experiment of the last 10 years has ended in utter and complete failure. The games of cheap money and constant intervention that have brought record global debt to the tune of $250 trillion and record wealth inequality are about to embark on a new round.  All under the banner to “extend the business cycle” at all costs. Never asking whether they should nor considering the consequences.  This is not capitalism, nor does this ongoing farce constitute free market price discovery. It’s politburo based central planning, desperately trying to keep the balls in the air.  

The pretense is gone, it’s all about keeping the illusion alive that the Fed knows what it’s doing, that it’s always there to save markets from any trouble.  But since they are not elected by the people and face zero consequences for failure, they don’t have to consider the collateral damage they inflict.  Everything every central banker has uttered last year was completely wrong. Every projection they made over the last 10 years has been wrong.  Why place confidence in people who are staring at the ruins of the policies they unleashed on the world and are about to unleash again?  We’re all staring at a colossal policy failure with no accountability.  Brace yourselves as no one, absolutely no one, can know how this will turn out.

-- Sven Henrich (Northman Trader) June 7, 2019 (edited)

Too Big to Fail (Again)

In the wake of the 2008 financial crisis, the bank bailouts did not save the economy as their architects advertised. Rather, they bolstered the biggest U.S. banks from an insolvency crisis of their own creation. Those banks were, and remain, too big to fail. Their CEOs are too connected to jail.

The leaders of the major banks oversaw multi-trillion dollar enterprises that committed fraud, lost other people’s money, harassed public service members, and fired thousands of low-level employees. Worst of all, they have put the entire financial system and markets at the edge of ruin again.

Big banks know they have political and Federal Reserve support. Low or negative rates provide banks access to cheap capital if they need it, which encourages greater recklessness than if they had to “pay” more for it. They have taken this as a license to gamble large. By rescuing and supporting the big banks’ dangerous behavior, such recklessness has been not only condoned but encouraged.

The argument big banks make about their mega derivatives positions is that they are “hedged.” In other words, though the total (or “notional”) figure is large, most of the long and short positions net out against each other. The problem with that assessment is that the big banks take long and short positions against each other. They have set themselves up again in domino fashion.

We are heading for another financial crisis at some point. No one can say when for certain, but probably sooner than later. There’s a lot more money supporting the system artificially that the central banks have conjured than we had going into the last crisis. If that subsidy was to go away or be reduced, the money would come draining out of the same financial system that it’s been inflating.

-- Nomi Prins (Daily Reckoning) May 23, 2019 (edited)

Deficits Do Matter... Eventually

"Deficits don’t matter," said Dick Cheney....

If there were no tomorrow, Mr. Cheney would be right. Why not eat tomorrow's "seed corn" today? There would be no reason not to reach for another dessert, or park your car in a handicapped space, or tell your boss exactly what you think of him.

The trouble is -- there is a tomorrow. And tomorrow is when a drinking binge turns into a hangover, a bad marriage turns into a divorce, and your boss fires you. Tomorrow is when deficits DO matter. 

We don't know exactly what will happen or when. But we know the world still turns. Every boom not supported by real savings and real increases in output is phony. Tomorrow is when you find out.

Today's prosperity, such as it is, was built on fake money, fake savings, and fake signals from the Fed. The feds have pumped $37 trillion in "excess credit" -- above and beyond the traditional relationship between debt and GDP -- into the system over the last 30 years.

And now, the economy -- especially the parasitic half of it run by the Deep State -- depends on more and more fake money and fake credit. That's the one thing Republicans, Democrats, and Trumpistas agree on -- nothing will be allowed to get in the way of the fake-money flow. With the sluices open, the debt will rise. How much? No one knows. All we know for sure is that, with nothing to stop it, you can expect it to keep going up -- until the whole economy drowns in it.

-- Brian Maher (The Daily Reckoning) Sept. 22, 2017

The Undrainable Swamp

The establishment’s concerns have less to do with peace and security than raising sales, earnings, and stock prices in the Atlantic-area's military industrial complex. And the establishment won’t abide any threat to its power.

The Swamp is so undrainable that it will end up making mincemeat of Donald Trump.... The ultimate causes of his demise are anchored deep in the failing status quo. America is so addicted to war, debt, and central bank driven false prosperity that even the most resourceful and focused challenger would be taken down by its sheer inertia.

But [Trump] is so undisciplined, naïve, out-of-touch, thin-skinned, unfocused, and megalomaniacal that he is making it far easier for the Swamp critters than they deserve. To a very considerable extent, in fact, he is filling out his own bill of indictment.

-- David Stockman (The Daily Reckoning) August 4, 2017

profound political disunity

[A] nation ruled by Imperial kleptocrats is intrinsically destabilizing, as there is no longer any moral or political center to bind the nation together.  The public sees the value system at the top is [to] maximize personal profit by whatever means available (e.g., complicity, corruption, monopoly, and rentier rackets), and they follow suit by pursuing whatever petty frauds and rackets are within reach: tax avoidance, cheating on entrance exams, gaming the disability system, lying on mortgage and job applications, and so on.  But the scope of the rentier rackets is so large, the bottom 95% cannot possibly keep up with the expanding wealth and income of the top 0.1% and their army of technocrats and enablers; so a rising sense of injustice widens the already yawning fissures in the body politic....

When the system is rigged, "democracy" is just another public-relations screen to mask the unsavory reality of Oligarchy....  The conventional markers of democracy -- elections and elected representatives -- exist, but they are mere facades; the mechanisms of setting the course of the nation are corrupt, and the power lies outside the public's reach.  History has shown that democratic elections don't guarantee an uncorrupt, functional government. Rather, democracy has become the public-relations stamp of approval for corrupt governance that runs roughshod over individual liberty while centralizing the power to enforce consent, silence critics, and maintain the status quo....

-- Charles Hugh Smith (Of Two Minds blog)

Russian Distraction

[T]he demonization of Russia [is] a way more idiotic exercise than the McCarthyite Cold War hysteria of the early 1950s since there is no longer any ideological conflict between us, and all the evidence indicates that the current state of bad relations is America’s fault -- in particular, our sponsorship of the state failure in Ukraine and our avid deployment of NATO forces in war games on Russia’s border....

Rather, the Evil Russia meme seems a projection of our country’s own insecurities and contradictions. For instance, we seem to think that keeping Syria viciously destabilized is preferable to allowing its legitimate government to restore some kind of order there. Russia has been on the scene attempting to prop up the Assad government, while we are on the scene there doing everything possible to keep a variety of contestants in a state of incessant war. U.S. policy in Syria has been both incoherent and tragically damaging to the Syrians.

Russians stood aside while the U.S. smashed up Iraq, Afghanistan, and Libya. We demonstrated adequately that shoving sovereign nations into civic failure is not the best way to resolve geopolitical tensions. Why would it be such a bad thing for the U.S. to stand aside in Syria and see if the Russians can rescue that country from failure? Because they might keep a naval base there on the Mediterranean? We have scores of military bases around the region.

It’s actually pretty easy to understand why the Russians might be paranoid about America’s intentions. We use NATO to run threatening military maneuvers near Russia’s borders. We provoked Ukraine — formerly a province of the Soviet state — to become a nearly failed state, and then we complained foolishly about the Russian annexation of Crimea — also a former territory of the Soviet state and of imperial Russia going back centuries. We slapped sanctions on Russia, making it difficult for them to participate in international banking and commerce.

What’s really comical is the idea that Russia is using the Internet to mess with our affairs — as if the USA has no cyber-warfare ambitions or ongoing operations against them (and others, such as hacking Angela Merkel’s personal phone). News flash: every country with access to the Internet is in full hacking mode around the clock against every other country so engaged. Everybody’s doing it.

-- James Howard Kunstler (The Daily Reckoning ) Oct. 29, 2016

Not Me

Who's gonna fight?  Not Me!
Who thinks it right?  Not Me!
"The threat of war is a passing phase."
Try telling that to a waiting grave.
They say the bunkers will be safe.
They're not big enough for the human race.

Who's having fun?  Not Me!
Gonna carry a gun?  Not Me!
I've got to fight; I got no choice.
They'll never hear my fucking voice.
Deafened in the deathly noise
Created by their brand new toys.

Who's gonna die?  Not Me!
I'll tell you why....
I won't do whatever they say
Even if it means getting put away.
That's what I think -- OK?
You've got to react -- it's the only way.

Subhumans, 1983

inflation deficiency nonsense

For several years now, a small group of Keynesian academics and hacks have seized nearly absolute financial power. They’ve used the Fed’s printing presses to justify the lunacy of unending zero interest rates (ZIRP) and massive quantitative easing (QE) on the grounds that there is too little inflation. This whole consumer inflation-targeting scheme is an inherently preposterous notion. There is not one scrap of evidence that 2% consumer inflation is better for rising living standards and societal wealth gains than is 0.2%. And there is much history and economic logic that points in exactly the opposite direction....

[T]here isn’t an inflation deficiency problem, and there never has been. The whole 2% inflation mantra is just a smoke screen to justify the massive daily intrusion in financial markets by a power-obsessed bunch of monetary central planners. They made it up and then rode it to ever increasing dominance over the financial system.

-- David Stockman (The Daily Reckoning) Feb. 22, 2016