Economics

Economics
Max and Stacy give you all the financial news you need as the Global Insurrection Against Banker Occupation gathers pace. Occupy Wall Street, Crash JP Morgan, Buy Silver and DEFINITELY visit MaxKeiser.com!
Updated: 57 min 5 sec ago

[KR1061] Keiser Report: End of Easy Money?

22-Apr-2017

We ask whether or not it is the end of easy money. In the second half, Max interviews Mike Maloney of GoldSilver.com about interest rates, free money and gold.

A Banquet without Consequences by Alex Schaefer

22-Apr-2017

I wanted to paint a picture of how disgusting I feel our financial system has become, so this came out: A Banquet without Consequences. A bacchanal of financial terrorists indulging themselves in their largess. This feels like the zeitgeist: Sex Drugs and Warren Buffet on a ukulele; they are all bringing down the house. Oil on canvas, 48 by 44 inches – follow me on Instagram @paintwithalex

The American Empire Under Donald Trump Has Become Increasingly Desperate, Dangerous & Insecure

21-Apr-2017

The American empire is becoming increasingly insecure and desperate, which also makes it increasingly dangerous. Empires don’t reform, and as we can see from Trump’s first 100 days, we certainly aren’t going to see a reversal of course from him.

We the people need to keep our eye on the prize and stop bickering with one another over relatively trivial issues. That is precisely what the status quo wants and actively encourages us to do. They can’t keep us oppressed if we stand together, so let’s not make their jobs easier by constantly fighting with one another. We need to stand tall and say enough is enough. That we are sick of your puppets, your wars and your Wall Street bailouts. America is tired of being controlled by a small group of unaccountable, incompetent, greedy, unethical crooks running around stealing everything in sight.

Read the rest here.

Silver, Platinum and Palladium as Safe Haven Investments

21-Apr-2017

– Silver, platinum and palladium see increased role as investment vehicles
– Increase in academic output on the white precious metals is in line with this
– Silver and particularly gold are safe haven assets
– Silver was a safe haven at times during which gold failed to be
– Platinum and palladium less so but have diversification benefits
– Silver manipulation is possible and indications of, if not legal proof
– Benefits platinum and palladium could provide as money not been fully addressed
– Main focus in investment drivers is price – not on drivers of physical demand
– Platinum, palladium and silver have different relationships with other assets and divergent abilities in hedging risk
– White precious metal investors should employ a buy-and-hold strategy
– Silver markets have become more efficient since 1977
– White precious metals are increasing in investment importance
– Research shows hedging role and diversification benefits of precious metals

by Jan Skoyles, Editor Mark O’Byrne

A review of the academic literature on the financial economics of silver, platinum and palladium has recently been conducted by Vigne, Lucey, O’Connor and Yarovaya.

The review surveys and covers the findings on a wide variety of topics in relation to the White Precious Metals including Market Efficiency, Forecast-ability, Behavioral Findings, Diversification Benefits, Volatility Drivers, Macroeconomic Determinants, and their relationships with other assets.

For those asking whether or not they should invest in precious metals or to increase their allocation, it can be of use to read some academic research into the role the white metals can play in hedging risk in their investment and pension portfolios. There are many strongly held opinions regarding gold and silver and precious metals and some mathematical and economic analysis can go a long way in helping us to understand how and why we should consider investing in these less popular precious metals.

How efficient are the white metal markets?

Given that silver is traded 24 hours a day, across the globe one would, argue the authors, expect to find a market that is ‘constantly involved in price discovery and adhere closely to the Efficient Markets Hypothesis’. This expectation has lead to a number of studies seeking to address this question.

Below we summarise the authors’ findings. The papers featured look at not only the efficiencies of the markets but the effectiveness of futures markets at predicting spot prices and also market manipulation.

Read Full Story Here…

Access Award Winning Daily and Weekly Updates Here

Marx, Orwell and State-Cartel Socialism

20-Apr-2017

OK, so our collective eyes start glazing over when we see Marx and Orwell in the subject line, but refill your beverage and stay with me on this. We’re going to explore the premise that what’s called “socialism”–yes, Scandinavian-style socialism and its variants–is really nothing more than finance-capital state-cartel elitism that has done a better job of co-opting its debt-serfs than its state-cartel “capitalist” cronies.

We have to start with the question “what is socialism”? The standard definition is: a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.

In practice, the community as a whole is the state. Either the state owns a controlling interest in the enterprise, or it controls the surplus (profits), labor rules, etc. via taxation and regulation.

The problem with equating the community with the state is the community is a completely different order from the centralized state, which is operated and controlled by a self-serving clerisy class that institutionalizes benefiting the few at the expense of the many.

The more accurate definition of socialism is: the means of production are owned and controlled by those who produce the goods and services.

Marx wrote a great many things in his career, and those who view his writings as scripture will argue endlessly over various interpretations and passages, much like people argue over the Bible.

In my view, Marx was a political-economy philosopher, not a demi-god, and so he retained the right to be completely wrong about some things, to contradict himself, to have missed important second-order effects, to have gotten some things half-right, etc., and most importantly, not to have been clairvoyant about the trajectory of history and capitalism, which he correctly identified as disruptively dynamic, i.e. everything solid melts into air.

One of the things Marx got right was the alienation of the producer/ worker from the output of his/her labor. The alienation is not just a loss of ownership; it’s also a loss of agency and a psychological alienation from the entire mode of production.

The workers’ alienation from the output of their labor doesn’t vanish just because the state owns the means of production; rather, the “capitalist” elite is replaced by a political elite and a state-clerisy managerial class.

“Socialism” is simply another flavor of state-cartel capitalism; Orwell would be proud of all the simulacrum self-serving “socialists” who have managed to enrich themselves at the expense of those actually producing goods and services.

Calling state-cartel finance-capitalism “socialism” doesn’t make it socialist.Orwellian double-speak doesn’t change the neofeudal nature of debt-based state-cartel finance-capitalism.

Let’s boil it down to its essence: if the producers don’t directly own/control the output of their labor, it’s capitalism, not socialism. State ownership/ control is nothing but the state-cartel coin turned over.

The only truly socialist system would be comprised of worker-owned collectives and co-ops, and privately owned and operated small enterprises.

In a truly socialist system, global corporations would pay such high entry fees and taxes that they could not compete on price against local worker-owned collectives/ co-ops.

In a truly socialist system, state functionaries would be banned from accepting bribes, campaign contributions, seats on philantro-capitalist foundations, corporations, etc., and barred from taking jobs in corporations after leaving state employment.

In state-cartel economies, “socialist” or otherwise, the system optimizes corporate profits, influence and agency. In a truly socialist system, worker-owned collectives/ co-ops and small business are optimized and corporations are de-optimized.

The only way state-cartel “socialist” economies can prop up their vast spending is by inflating even vaster debt and housing bubbles via financialization— the exact same mechanism used in so-called “capitalist” economies to benefit the few at the expense of the many.

So-called “socialist” nations from China to Scandinavia are inflating monumental bubbles of debt to keep their delusions of sustainability aloft. I have covered China’s unprecedented expansion of debt many times; Acting Man does an admirable job of covering Scandinavian Bubbles in Overdrive.

Worker-owned and controlled enterprises don’t need to inflate-monopoly-capital financialization bubbles to stay afloat. Only state-cartel elite-run systems need to exploit financialization to keep from imploding.

Danish household debt to GDP is among the highest in the world: what’s “socialist” about debt bubbles?

“Socialist” countries like Denmark are practicing extreme financial repression: what is “socialist” about negative interest rates?

Why does “socialist” Sweden need to inflate one of the world’s most precarious housing bubbles? If “socialism” requires extremes of financialization to stay afloat– sorry folks, it isn’t socialism.

Here’s Norway’s M2 money supply. What’s remotely “socialist” about this staggering increase in elite-controlled money supply?

Last but not least, here’s SOE (state-owned enterprises) “socialist” China’s debt to GDP ratio.

As Marx anticipated, finance-capital would come to dominate industrial capital and the state. What we see in these charts is finance-capital running to extremes to keep the state-cartel version of capitalism from imploding.

When “socialist” states have to impose finance-capital extremes that even exceed the financialization of nominally capitalist economies, it gives the lie to their claims of “socialism.” The simulacrum “socialist” economies will implode with even greater force than the nominally capitalist economies, as a result of the same dynamic: state-cartel financialization is intrinsically unstable and unsustainable.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

[KR1060] Keiser Report – The Russia Connection

20-Apr-2017

We discuss war ratings for Rachel Maddow leading to war spending for Donald Trump. In the second half Max interviews Reggie Middleton of BoomBustBlog.com about property markets, the Fed’s balance sheet and his Initial Coin Offering.

Trump To “Bully” Fed Into Printing Money – Negative for Stocks, Positive for Gold

20-Apr-2017

David McWilliams has written an interesting article in which he puts forward the case that Trump is likely to turn on the “enemy within,” the Federal Reserve and bully them into “printing money.”

He points out that this was seen in 1971 when Nixon bullied the Fed into printing and debasing the dollar. McWilliams says this would be bad for stocks markets which would fall in value as was seen in the 1970s.

This would be positive for gold as the printing of dollars, rising inflation and stagflation saw gold surge in the 1970s when it rose from $35 per ounce in 1971 to over $850 per ounce in January 1980 (see chart). Along the way there was a significant correction when gold prices fell by nearly 50% – very much akin to gold’s price falls from 2013 to 2015.

Gold in USD in 1970s

McWilliams does not expressly say that it is positive for gold but the 1970s, the historical record and the data shows that the printing of money and currency debasement is positive for gold in the long term.

McWilliams writes:

“What happens if Trump bullies the Fed into accepting his higher growth rates which he achieves by boosting government spending and borrowing billions? Could it happen in the first place?

Yes it could. In the 1970s, Richard Nixon bullied the Fed into printing money so that he could win the 1972 election. It can happen because it has happened. This would mean that all the old rules go out the window. American wages would rise much quicker than they have in the past few decades. The average guy will feel richer and then he will be persuaded to vote for Trump again.

Wall Street would wobble and the stock market fall, but the vast majority of people don’t own stocks, so they won’t care. And Trump will get his re-election and the only people who will squeal in the short term are rich bankers and investors on CNBC.

Sounds logical? That’s because it is. The Fed gets put in its technocratic place, the White House spins it as a victory for democracy over technocracy, and the Democratic Party is robbed of its electoral clothes.

From a Trumpian perspective, what’s not to love? That’s exactly why it’s likely.”

Read full story here…

Access Award Winning Daily and Weekly Updates Here

More War – U.S. ‘Boots on the Ground’ Headed to Somalia

20-Apr-2017

The war is waged by each ruling group against its own subjects, and the object of the war is not to make or prevent conquests of territory, but to keep the structure of society intact. The very word ‘war’, therefore, has become misleading. It would probably be accurate to say that by becoming continuous war has ceased to exist.

– George Orwell, 1984

Although the U.S. already has special forces operating in Somalia (of course), Mr. “America First,” Donald Trump, figured it’d be a swell idea to add some more…

Read the rest here.

Our Intellectual Bankruptcy: The “Religion” of Economics, UBI and Medicare For All

19-Apr-2017

Here we stand on the precipice, and all we have in our kit is a collection of delusional magical thinking that we label “solutions.” We are not just morally and financially bankrupt, we’re intellectually bankrupt as well.

Here are three examples of magical thinking that pass for intellectually sound ideas:

1. Mainstream neo-classical/ Keynesian economics. As economist Manfred Max-Neef notes in this interview, neo-classical/ Keynesian economics is no longer a discipline or a science–it is a religion.

It demands a peculiar faith in nonsense: for example, the environment–Nature– is merely a subset of the economy. When we’ve stripped the seas of wild fish (and totally destroyed the ecology of the oceans), no problem–we’ll substitute farmed fish, which are in economic terms, entirely equal to wild fish.

In other words, the natural world cannot be valued in our current mock-science religion of economics.

Other absurdities abound. Stripping the seas of wild fish adds to GDP, so it’s all good, right? Dismantling newly constructed buildings and building a replacement structure also adds to GDP, so it’s an excellent source of “growth.”

As Max-Neef points out, conventional economists have absolutely no understanding of poverty. If you need a sobering account of just how this abject willful ignorance works in the real world, I recommend reading The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good.

Gail Tverberg (among others) has shown how the existing economic model no longer makes sense of the actual economy we inhabit: The Economy Is Like a Circus.

As for rising wealth/income inequality–there is a cure for that, but it’s not in mainstream econ textbooks: The Only Thing, Historically, That’s Curbed Inequality: Catastrophe Plagues, revolutions, massive wars, collapsed states—these are what reliably reduce economic disparities.(via Arshad A.)

2. Universal Basic Income. As noted in yesterday’s essay, wages are no longer an adequate means of distributing the dwindling surplus of advanced economies. Wages as a share of GDP have been declining for decades, and only click up temporarily during massive speculative bubbles. Once these bubbles pop, which they inevitably do due to their instability and unsustainability, wage earners’ share of GDP plummets to a new low.

The mainstream is enthusing about the “solution”: Universal Basic Income (UBI). The solution to low pay and scarcity of middle-class paid work is to give everyone a basic income for doing nothing.

Delusional academics anticipate a flowering of creative talent akin to a new Renaissance as people are freed from work by robots and automation. But if we look at people already receiving the equivalent of “free money” UBI–disability– studies find recipients are simply watching more TV and YouTube videos and pursuing opioids, not writing poetry and composing concertos.

They are not volunteering in their community or engaging their communities in any positive fashion. What actually happens with UBI is recipients become isolated and miserable because UBI strips their lives of meaning, purpose and the need to contribute to a community.

The real purpose of UBI is to chain every household to the state, and drain all social relations between the isolated “consumer” and the state.

As tragic as the delusion of UBI is to individuals, it is unworkable financially because profits will fall as automation becomes commoditized, and the surplus available to distribute to every household will diminish.

I explain this at some length in my books Why Our Status Quo Failed and Is Beyond Reform and A Radically Beneficial World: Automation, Technology & Creating Jobs for All.

Much of what is passed off as “corporate profits” is accounting fraud and the monetization of what was once free. For example, all that customer labor: now that we pump our own gasoline, check and pack our own purchases, do our own banking–who’s skimming the output of our labor? Yup, the corporations.

Commoditization of software and tools + the Internet = loss of monopoly. This is a problem, for the core function of the state-cartel version of capitalism we inhabit is the state enforces a cartel-monopoly structure to guarantee steady surpluses it can tax for its own expansion.

As automation is commoditized, profits plummet as competition can no longer be controlled by cartels or even the state–just as Marx laid out.

Combine declining productivity and declining surplus (profits) (both for deeply structural reasons) and there cannot be enough money to fund UBI. Weirdly, proponents of UBI never even perform a back of the envelope calculation of cost and the source of all this free money (tax revenues and/or borrowing from future generations). Perhaps they intuit that such an exercise would reveal the bankruptcy of their magical thinking.

As we shall see below, the system can’t even support the entitlements it has already promised to hundreds of millions of people, never mind an additional universal entitlement.

(Note to UBI enthusiasts: there are limits on what robots and automation can and will do: they will only perform work that is highly profitable. Since most human work is not profitable (or even paid), the idea that robots and automation will free everyone from work is delusional fantasy. I explain all this in greater detail in A Radically Beneficial World.)

3. Medicare for all. I understand the desire for a single-payer healthcare system, and have published various proposals over the years for such a system.

The latest magical-thinking “solution” attracting widespread support (again, without any basis in actual numbers) is Medicare for all. The idea is: take a system (Medicare-Medicaid) that’s already bankrupting the government and the nation and expand it from 70 million people to 320 million people.

Uh, right.

Shall we consult reality before embracing delusional “solutions”? Here’s a chart of the rise of administrative costs in healthcare, public and private. Proponents of Medicare for All claim admin costs are lower in Medicare, but this conveniently overlooks the estimates that 40% of Medicare costs are paper-shuffling, needless or harmful tests, procedures, etc. and outright fraud.

We know a few things as fact. One is that the populations qualifying for Medicare and Medicaid (the elderly and low-income households) are expanding at a high and very predictable rate.

The other thing we know is that the Medicare-Medicaid costs are rising at a rate far above the growth rate of the economy that supports these programs (GDP), far above the growth rate of tax revenues and far above the growth rate of wages, which matters because payroll taxes fund Medicare.

It doesn’t take much to extend these lines and conclude Medicare-Medicaid alone will bankrupt the federal government and the nation. The problem is these programs are bloated by fraud, defensive medicine, predatory pricing for medications, and every other costly ill of our healthcare system.

Like every other centrally funded/regulated sector, Medicare-Medicaid is optimized for maximizing private-sector profits and increasing regulatory costs.This is one manifestation of the diminishing returns on the entire centralized-control model:

We’d all like “solutions” that don’t change anything, but when the system itself is the source of our problems, changing nothing guarantees collapse. As noted in the article linked above, various inequalities and asymmetries get resolved by collapse.

Clinging to magical-thinking fixes that change nothing on the fundamental level hastens collapse. In that sense, magical-thinking fixes are “solutions,” but not the sort their proponents imagined.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Silver Production Has “Huge Decline” In 2nd Largest Producer Peru

19-Apr-2017

– Silver production sees “huge decline” in Peru
– Production -12% in one month in 2nd largest producer
– Silver decline is due to ‘exhaustion of reserves’ in Peru
– GFMS recognise that ‘Peak Silver’ was reached in 2015
– Global silver market had large net supply deficit in 2016
– Silver rallied 13.5% in Q1 in 2017
– Base metal production accounts for 56% of silver mining
– Base metal demand under threat from global economy
– Own financial insurance of silver coins and bars


Investors and silver stackers should position themselves for falling silver production around the globe. Peru has just posed another 12% fall in silver production – Peak Silver is here.

SRSrocco Report has drawn attention to falling silver production in Peru and how this is likely to be echoed across the globe in the wake of the looming debt crisis in an article published yesterday.

The world’s second largest silver producer, Peru, has reported a 12% fall in February’s silver production to 323.1 metric tons, from the same period last year.

Read full story here…

Access Award Winning Daily and Weekly Updates Here

The Left’s Descent to Fascism

18-Apr-2017

History often surprises us with unexpected ironies. For the past century, the slide to fascism could be found on the Right (conservative, populist, nationalist political parties).

But now it’s the Left that’s descending into fascism, and few seem to even notice this remarkable development. By Left I mean socialist-leaning, progressive, internationalist/globalist political parties.

What is fascism? There is no one tidy definition, but it has three essential elements:

1) State and corporate elites govern society and the economy as one unified class.

2) This status quo (i.e. The Establishment) seeks to impose a conformity of values and opinion that support the dominant narratives of the status quo via the mass (corporate) media and the state-controlled educational system.

3) Dissent from any quarter is suppressed via mass-media ridicule, the judicial crushing and silencing of whistleblowers, and all the other powers of the central state: rendition, extra-legal imprisonment, political gulags (in our era, disguised as drug-war gulags), character assassination, murder by drone, impoverishing dissenters via firings and blacklists, and on and on.

The Left is now the political wing of the corporatocracy. As Phillipe Poutou, a Ford factory mechanic from Bordeaux who is the sole working-class candidate in France’s presidential election, so deliciously pointed out, the Left and Right status quo candidates are indistinguishable in terms of their self-serving corruption and elitism:Mechanic-Candidate Bursts French Political Elite’s Bubble (NY Times)

Here in the U.S., the self-serving Democratic Party elites operate within the Corporatocracy structure, in which the state protects and funds private-sector cartels; the two intertwined and self-reinforcing elites manifest and enforce state policies.

This state-corporate elite domination is fascism. Some may claim the Left was co-opted by the Corporatocracy structure, others will blame capitalism (never mind the dominant form of capitalism is state-cartel, and it cannot exist without the central state enforcing the privileges of monopoly).

But these are simply excuses for the abject surrender of the Left to self-enrichment and power. Since the Left has always claimed the high moral ground–and continues to do so–see my essay Virtue-Signaling the Decline of the Empire(February 28, 2017)– the Left must mask its own corruption and role in the Corporatocracy structure.

The Left accomplishes this by imposing a virtue-signaling conformity on corporate media, social media, and the state institutions under its control— higher education, government agencies, etc.

Dissent is by definition fake news or hate speech–Orwell would be so proud of the Left’s deft doublespeak.

The suppression of skeptical inquiry and alternative narratives is fascism. There is no way to sugar-coat this, so let’s not even try, shall we?

The principle of substitution reveals the underlying truth. If a Rightist state imposed a virtue-signaling conformity on corporate media, social media, and the state institutions under its control, the Left would be very quick indeed to identify this as fascist.

It’s still fascist if the Left does the same thing.

While the Left attempts to deflect a wider understanding of its descent into fascism with obsessive accusations of fake news and incessant demands for virtue-signaling conformity, the developed-world economies are circling the drain. The Left’s obsession with meaningless speech acts is a direct result of its lack of will and intellectual firepower to tackle the erosion of working-class/middle-class income, wealth and political power.

This is the harsh reality: wages are no longer an adequate means of distributing the dwindling surpluses of advanced economies:

The Left’s single “solution” to this profound structural trend is for central states to “fight austerity” by borrowing and blowing trillions of dollars, yen, yuan, euros, etc.–with no end in sight. But as even the most economic illiterate Leftist understands somewhere in their muddled soul, borrowing trillions from future generations is morally and fiscally bankrupt, and the very opposite of a “progressive” policy.

Here’s the U.S. central state debt: if the Left claims this trajectory is sustainable, what is this claim based on? It’s based on magical thinking.

The magical thinking of the Left is that decades of slowing growth will be reversed and the clock of history magically reset to 1946 if the central state borrows even more trillions from future generations. But there is abundant evidence (see the wages chart above) that borrowing and squandering immense sums has not boosted growth rates in a sustainable fashion–rather, the staggering debt loads are squeezing current spending and shackling future policy-makers with an ever-grimmer slate of self-reinforcing bad choices.

The Left is morally and fiscally bankrupt, devoid of coherent solutions, and corrupted by its embrace of the Corporatocracy. Its descent to fascism has too much momentum to be stopped. Isn’t it obvious that the only way forward is to jettison both the Left and Right flavors of state-cartel Corporatocracy and pave a third way?

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

[KR1059] Keiser Report: Bailout Bulimia & High Rent Blight

18-Apr-2017

We discuss high rent blight and the retail apocalypse. In the second half Max interviews Roy Sebag of Goldmoney.com about how monetary policy leads to the boarded up shop fronts of high rent blight. They also discuss the pitch for gold in an age of ever rising asset prices.

Wells Fargo and Bitfinex war escalates, Bitfinex shuts down fiat deposits

18-Apr-2017

“Wells Fargo has suspended U. S. dollar wire transfer operations needed to remit to plaintffs’ customers U. S. dollars that the customers deposited with plaintiffs to purchase digital currency, causing imminent and irreparable harm to plaintiffs.”

The legal basis for the lawsuit lies in the fact that Bitfinex works with Taiwanese banks, including a bank called ‘Taishin’. Tashin is responsible for relaying …

Read More

Gold Erases Post- Election Fall as Trump Wrong on Dollar

18-Apr-2017

Gold Bullion Erases Post- Election Fall as Trump Wrong on Dollar – Daily Prophet 

Robert Burgess of Bloomberg Prophets

President Donald Trump sent currency markets into a tizzy late Wednesday when he signaled his preference for a weaker dollar. “I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me,” Trump told the Wall Street Journal.

Although the greenback immediately dropped before stabilizing Thursday, that’s only part of the story. In fact, it has been falling all year as traders lose confidence in Trump’s ability to push his pro-business, pro-growth policies through Congress. Judging by the Federal Reserve’s U.S. Trade Weighted Real Broad Dollar Index, the currency is weaker now than at the end of November, the month of Trump’s election victory. Other markets are sending similar signals. Stocks are rolling over and yields on Treasuries suggest optimism for stronger economic growth is quickly fading.

BULLISH ON GOLD
It’s no wonder that perhaps the only market hotter than the one for Treasuries is the one for gold. Bullion is up 11.4 percent this year to $1,289.10 an ounce. In a survey this week, traders and analysts were the most positive on gold since December 2015, according to Bloomberg News’ Eddie van der Walt and Ranjeetha Pakiam.

Read full story here…

Access Award Winning Daily and Weekly Updates Here

U.S. Propaganda is Embarrassingly Bad (and Why it Matters)

18-Apr-2017

The believability of some of the stuff being pushed these days defies all logic and is easily dispelled with an ounce of critical thought, yet there it is, in our face on a daily basis almost taunting the intelligence of the U.S. population. Indeed, it appears the current strategy is no more sophisticated that proclaiming any and all dissent as being the result of “Russia operations.” This is done to prevent any actual debate on subjects of grave national importance since the U.S. government knows its claims don’t hold up to any real scrutiny. Why look into the veracity of a deep state claim when we can just dismiss alternative viewpoints as “Russian operations.”

Read the rest here.

What’s Your Plan B?

17-Apr-2017

We all have a Plan A–continue living just like we’re living now.

Some of us have a Plan B in case Plan A doesn’t work out, and the reasons for a Plan B break out into three general categories:

1. Preppers who foresee the potential for a breakdown in Plan A due to a systemic “perfect storm” of events that could overwhelm the status quo’s ability to supply healthcare, food and transportation fuels for the nation’s heavily urbanized populace.

2. People who understand their employment is precarious and contingent, and they might have to move to another locale if they lose their job and can’t find another equivalent one quickly.

3. Those who tire of the stresses of maintaining Plan A and who long for a less stressful, less complex, cheaper and more fulfilling way of living.

The Fragility and Vulnerability of Highly Optimized Supply Chains

Many people are unaware of the fragility of the supply chains that truck in food, fuel and all the other commodities of industrialized comfort to cities. As a general rule, there are only a few days of food and fuel in a typical city, and any disruption quickly empties existing stocks. (Those interested in learning more might start with the bookWhen Trucks Stop Running: Energy and the Future of Transportation.)

Most residents may not realize that the government’s emergency services are actually quite limited, and that a relatively small number of casualties/injured people (for example, a few thousand) in an urban area would overwhelm services designed to handle a relative handful of the millions of residents.

Authorities can call up the National Guard to maintain order, but the government isn’t set up to provide food and fuel to millions of people stranded by a natural disaster or a “Black Swan” (unexpected disruption).

To reduce costs, supply chains and other essential systems have been stripped of redundancies–any break in the optimized flow has the potential to cripple the entire system. Since these highly optimized systems work so well most of the time, we don’t really understand the vulnerabilities that lurk just below the surface of “just in time” deliveries and other efficiencies.

This inherent fragility has long fueled interest in rural “bug-out” retreats, a topic I recently addressed in Having A ‘Retreat’ Property Comes With Real Challenges.

Where Do We Go When the Economy Falters?

For the past eight years, US politicians and Federal Reserve authorities have attempted to repeal the classic business cycle of growth, stagnation, recession and renewed growth. It may appear they’ve succeeded, but the era’s slow growth has been sustained by unprecedented expansions of debt in the government, corporate and private sectors.

This extraordinary expansion of debt has been enabled by a decline in interest rates. Most observers with a sense of history view these extremes of debt expansion and near-zero interest rates as unsustainable and destabilizing:

(Source)

In other words, extending the expansion cycle by extreme policy measures cannot actually repeal the business cycle; rather, these policy extremes increase the likelihood that the eventual recession will be deeper and/or longer than it would have been absent the policy extremes.

Thus we can anticipate a recession of some sort, in which mal-investments and unpayable debts are liquidated and written off, and credit expansion (and the consumption that depends on it) slows or even reverses, as it did in the 2008-09 recession.

Employers must lay off employees when sales and profits fall, and as incomes fall, sales fall further, creating a feedback loop of mutually reinforcing declines in household income and spending.

When the music finally stops, many laid-off employees won’t be able to find a chair (i.e. another job). Without a job, most people can’t afford to remain in high-cost urban centers for long.

When the 2000 recession gutted employment in the San Francisco Bay Area, 100,000 people moved away.

Recent immigrants to wealthy metro areas have the option of returning home to the village or town they’d left to seek work in the city. Many immigrants from south of the border have invested their earnings in building new homes in their villages of origin. When the economy north of the Rio Grande falters, they can return to the home they built when their incomes were high.

In China, many of the urban workers laid off in slow periods return to their villages, where there is a source of food (farms) and a roof over their head (the family home).

Today’s “rootless Cosmopolitans” (urban dwelling Americans) typically lack a village they can return to in hard times. So a common Plan B is to seek an equivalent low-cost place to retreat to in recessions.

Where Do We Go When We Burn Out?

There’s a simple phrase that embodies the exhaustion and dissatisfaction we experience when we feel like we’re on a treadmill going nowhere that’s speeding up: Burn-out.

As Historian Fernand Braudel (and others) observed, cities have always had a higher cost of living than the countryside—and offered higher pay scales. Cities aggregate capital, talent and power, and while this dynamism serves to raise many out of poverty, it can also exacerbate wealth and income inequality.

The globalization of labor and capital combined with the aforementioned policy extremes has deepened the divide between “haves” and “have-nots” in many urban regions. Those who bought their homes in desirable metro areas for $150,000 are much wealthier now that these modest homes fetch $750,000 or more. Young people with conventional jobs will never be able to afford these home prices, and so the time-honored source of middle-class security–home ownership– is out of reach.

Many of those who dove in and bought a home are stretching to pay crushing mortgages, soaring taxes and higher costs for healthcare and childcare. They are burning out, and their Plan B is a permanent move to a less burdensome and more fulfilling life elsewhere.

Three Different Purposes, Three Different Durations of Residence

Although Plan B includes a wide spectrum of options, these three basic categories define three different purposes for having an alternative residence lined up, and these purposes define three different durations of Plan B occupancy.

While the serious prepper with a “bug-out” Plan B might be planning for the long haul, others will view their “bug-out” Plan B preparations as a temporary arrangement–a place to go in the event of a natural disaster such as an earthquake or hurricane, or localized social unrest.

Such a temporary home-away-from-home could be as simple as an RV parked in the parents’ driveway, a spare room in a relative’s house or more elaborately, a storage shed turned into a “tiny house.”

Those planning for the eventuality of a much lower income due to recession will have a much different Plan B, as they need dirt-cheap housing for an extended occupancy that might last from a few months to as long as a few years.

The recession Plan B must include planning for childcare/schooling, healthcare, employment/earning a living—all the day-to-day components of Plan A.

The recession Plan B also has to account for the possibility that the return to the Plan A lifestyle will no longer be an option due to health issues, the decline of the sector of employment, or permanent declines in household income.

The burn-out Plan B is intended to be permanent. Plan A is being replaced by a Plan B that must provide the essentials of home, work and community–what I call fully functional residence.

In Part 2: The Benefits & Challenges Of Maintaining A Retreat Property, we present our framework that clarifies the trade-offs, costs and benefits of owning and maintaining a Plan B “retreat” property. There is no “one size fits all” solution to a retreat property — selecting and operating one needs to be custom tailored to your own individual requirements, resources, skills and risk assessment.

Using our framework, we’ll help you zero in on the factors that make the most sense given your personal situation.

Maintaining a functional separate retreat residence is a responsibility that comes with real costs and complexities. But if done right, it can yield great returns during both good times and bad.

This essay was first published on peakprosperity.com, where I am a contributing writer, under the title “Does Your Plan B Include a Second Place to Live If Plan A Doesn’t Work Out?”.

Does Your Plan B Include a Second Place to Live If Plan A Doesn’t Work Out?

16-Apr-2017

Maintaining a functional separate retreat residence is a responsibility that comes with real costs and complexities. But if done right, it can yield great returns during both good times and bad.

Click here to read the full article

The U.S. and China: Why the Sudden Convergence on North Korea?

15-Apr-2017

In the past, China resisted U.S. saber-rattling against North Korea. Now China is threatening North Korea with military action. What’s going on? Why the sudden convergence of U.S.-China threats of military force against North Korea?

China Threatens To Bomb North Korea’s Nuclear Facilities If It Crosses Beijing’s “Bottom Line”.

China also noted that “nuclear weapons is DPRK’s trump card for its defiance of China and the United States. Once this card is lost, it will become obedient immediately.”

The author then speculated rhetorically that if North Korea’s “nuclear facilities are destroyed, they will not even fight back, but probably block the news to fool its domestic people. The DPRK will freak out if its nuclear facilities are destroyed.” And yes, a Chinese author said “freak out.”

The report also said that “the DPRK must not fall into the turmoil to send a large number of refugees, it is not allowed to have a government that is hostile against China on the other side of the Yalu River, and the US military must not push forward its forces to the Yalu River.”

For context, here is a satellite photo of the Korean peninsula: note the black hole devoid of lighting. That’s North Korea.

The difference between North Korea and South Korea is mostly political. Stalinist North Korea has starved its people for decades to support a vast war machine, and kept them ignorant of the broader world. This is slowly changing as smugglers do a brisk and highly dangerous business in banned DVDs and other digital media:

How media smuggling took hold in North Korea (PBS)

Can Smuggled TV Shows Change North Korea? (NY Times)

South Korea’s economy is larger (by some measures) than the economies of nations such as Spain, Australia, Mexico and Russia. South Korea is not just a formidable economic power; it fields a powerful military and has global “soft power” via its media and investment reach. It also has substantial trade with China.

South Korea is a powerhouse, North Korea is a rogue state that has starved millions of its citizens to death and threatens to spark a nuclear war that could impact China very negatively, even if China avoids military conflict.

Which state would you rather be responsible for protecting? Which one is an asset and which is a costly, risky liability? The answer is obvious to all.

To understand the China-North Korea client state relationship, we have to start with the 1950s-era Cold War and the Hot War in Korea 1950-1953. Threatened by the Cold War American presence in South Korea, China viewed North Korea as an essential buffer against invasion from the south.

When allied Western forces occupied virtually all of North Korea in the Korean War, China’s army crossed the Yalu River to force a return to the pre-war border between North and South Korea.

China’s supreme leader Chairman Mao Zedong took the threat of land invasion so seriously that he ordered (at enormous expense) the relocation of critical industrial plants from coastal areas into the hinterlands, the better to distance them from invasion.

China has effectively subsidized and supported the North Korean state for the past 70 years as a buffer against a land invasion from South Korea. China supplies North Korea with fossil fuels and other essentials and protects it diplomatically.

But does this buffer-state strategy make sense in today’s world? The threat is now from nuclear missiles and trade wars, not a land invasion. Though we cannot know what’s being discussed or decided behind close doors, the high cost of subsidizing a rogue nuclear state for the now-irrelevant value of a physical buffer may finally be weighing on Chinese decision-makers.

Then there’s the all-important matter of “face”. The perception of status, influence and power–what’s known as “face”–is the core concern in East-Asian societies. “Losing face” by being revealed as powerless and lacking influence is to be avoided at all costs.

Western analysts often under-estimate the importance of maintaining or recovering lost “face” in Asian decision-making.

Consider how much “face” China is losing in being unable to control its rogue client state, North Korea. China is quite keen on projecting itself as a rising global power, and the dominant power in Asia and the adjacent seas.

So how does it look when a supposed global power can’t even control a client state on its own border? China’s inability to influence, much less control, North Korea’s nuclear ambitions and threats gives the lie to its claim of global power.

Even worse, China–the supposed hegemon of Asia–must stand by as the U.S. sails in to deal with China’s rogue client state. In terms of “face,” this drama is telegraphing that the global power is the U.S., not China, which has been reduced to bystander in the stand-off over North Korea’s nuclear threats.

Imagine if the roles were reversed and China had to send its fleet to the Caribbean to deal with a rogue client state of America’s, that America could not control or contain. The loss of face is immense.

It was no coincidence that America’s 11-ton bunker-tunnel busting bomb was deployed in Afghanistan as tensions mount over North Korea’s nuclear threats. The Chinese newspaper report excerpted above noted that the Chinese military knows the location of North Korea’s nuclear facilities, but disabling those deeply buried facilities without resorting to nuclear weapons may be beyond China’s military capabilities.

So China loses face again: not only can it not control North Korea’s nuclear ambitions, it doesn’t have the non-nuclear means to destroy them.

In the context of face being lost as China’s inability to control or contain its client state is revealed to all, China has no choice but step in before the U.S. acts unilaterally. In terms of saving face, it would be better to force North Korean compliance before the risk of a nuclear exchange escalates, and China may be signaling North Korea that its patience has finally run out.

China’s leadership may have finally concluded that supporting and protecting a costly, rogue-nuclear buffer state is actually reducing China’s security and rather than enhancing it. It may be time, at long last, for China to engage in its own version of “regime change” as a necessary step to maintaining China’s own security.

From this point of view, the entire drama of American threats of military action may be designed to force China to finally step up and take whatever action is necessary to control its rogue client state.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Pages