Tag Archives: economics

The Human Toll of Financial Sorcery

30 Tuesday Jul 2019

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A lesson from the Italian middle class: with plenty of cool charts:

Something has changed and the change is deep in the very fabric of the Italian society. And the change has a name: it is the twilight of the age of oil. Wealth and energy are two faces of the same medal: with less net energy available, what Italians could afford 50 years ago, they can’t afford anymore.

But saying that depletion is at the basis of our troubles is politically incorrect and unspeakable in the public debate. So, most Italians don’t understand the reasons for what’s going on. They only perceive that their life is becoming harder and harder, despite what they are being told on TV.”

To resource depletion I would add lower returns on both capital and labor–what is known as diminishing returns: the same investment yields less output.

This decay of return on investment manifests as an S-Curve, which is a constant reference point in my work: an investment that earns a large output at first yields less and less, until the yield (output) stagnates and then declines. Increasing the investment no longer reverses the decline, and often accelerates the decline into a crash.

Feels like you, eh? For Americans, no need to fret. I hear to cure-all election is right around the corner. Sure to fix everything. Vote the Rock!

All Keynesians Now?

29 Monday Jul 2019

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Who said that? Nixon or Friedman? Did they mean all of the Keynesian ways? if so, then it might explain much about the deep state and the Epstein-ism.

The economist then transitioned his analysis into Keynes’ life, which revealed his pedophiliac tendencies:

It is no coincidence that the breakdown of the family has come about through the implementation of the economic teachings of a man who never had any interest in the long term. A son of a rich family that had accumulated significant capital over generations, Keynes was a libertine hedonist who wasted most his adult life engaging in sexual relationships with children, including traveling around the Mediterranean to visit children’s brothels.

Keynes was one of the important architects in the construction of Satandom. His work was integral to the inversion required to create the modern financial system that is built on a foundation of usury.

Thanks, once again, Vox! Again, we see that the evils are always bound closely together. Which, might make them easier to burn all at once. Can we all be Crusaders now?

Cute Little Equations DO NOT Economics Make

18 Thursday Jul 2019

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A confession from the Creature:

Thursday was a Red Letter day for that old “you don’t say!” riposte. We are referring to the obvious response to Powell’s black and white confession to the Senate Banking Committee yesterday that more people working doesn’t cause inflation.

“The relationship between the slack in the economy or unemployment and inflation was a strong one 50 years ago … and has gone away,” Powell said Thursday during his testimony before the Senate Banking Committee. He added the strong tie between unemployment and inflation was broken at least 20 years ago and the relationship “has become weaker and weaker and weaker.”

Read that. Look at the graphs. Think about the parroted absurdities from ECON 101 (if such still be foisted). If you understand the hilarious implications, then you may continue as a reader here.

Independence … From Buying Power

03 Wednesday Jul 2019

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Fifty years of decline.

The keys to understanding the concealed crisis of decline are purchasing power relative to wages/earnings–how many goods and services can wages buy? For the average American household, wages have risen modestly while the purchasing power of those wages has plummeted.

Furthermore, the quality of goods and services has in many cases declined sharply, so that even if prices have dropped, what you get for your money has fallen even further, effectively reducing the purchasing power of your wages.

Case in point: appliances were once designed and built to last a generation or longer. Refrigerators, washers and dryers lasted for decades. Now the average appliance fails within a few years, and the electronic board–costing roughly a third of the entire appliance price–fails and must be replaced. With labor, the cost of the repair is so high, consumers often send the almost-new appliance to the landfill and buy a new (and soon to fail) appliance.

Net-net, low quality reduces purchasing power even if price has declined.

Then there’s the big-ticket items: rent, housing, college, healthcare. Anecdotally, I’ve been told a young engineer in Silicon Valley could earn $20,000 a year and rent a modest apartment for $200. Now the young engineer makes $100,000 but rent for the modest flat is $2,500 per month: wages rose five-fold but rent rose 12-fold.

This is a staggering loss of purchasing power.

As for college, tens of millions of students completed their university training with zero debt–student loan debt as we understand it today simply didn’t exist because it was unnecessary.

The scarcity value of that college diploma has fallen precipitously over the decades, rendering most degrees that aren’t part of artificial scarcity schemes essentially valueless.

Look at the graphs. Maybe print them out and show them to (sober) friends at the BBQ tomorrow. Maybe vote harder next fall.

Recession: Confirming What I’ve Been Saying

26 Wednesday Jun 2019

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Gary Shilling thinks the US is already in a mild recession. I’ve been saying we hit the first phase of a narrow double-dip a few months ago. The rest is coming.

Gary Shilling, an economist and financial analyst who is credited with predicting several recessions over the past 40 years, thinks the U.S. is in a relatively mild slump.

“I think we’re probably already in a recession but I think it will probably be a run-of-the-mill affair, which means real GDP would decline 1.5% to 2%, not the 3.5% to 4% you had in the very serious recessions,” Shilling, president of economic and financial research firm A. Shilling & Co., said in a recent interview broadcast this week by Real Vision.

…

Shilling points to:

• Declining industrial production, a result of a weak global economy and the Trump administration’s trade war with China.

• Feeble job growth of 75,000 in May, along with downward revisions to prior months.

• The Federal Reserve Bank of New York’s recession probability chart, which shows about a 30% chance of a downturn the next 12 months, up from about 10% early this year. That data is based on an inversion of the yield curve, which has shown rates on 3-month Treasury bonds topping 10-year notes recently – a sign that investors don’t have much faith in the longer-term outlook. Inversions do herald recessions but often two years in advance.

• The Organization for Economic Co-operation and Development’s leading economic indicators, which has edged down since last year.

• Shilling also cites weak housing data, though he notes falling mortgage rates have bolstered home sales in recent months.

Funny, when one looks at real metrics and tangibles how the story changes from the boom-boom-boom narrative. The DOW and the newsmen salesmen on CNBC are not the final authorities. And, remember, statistically, this is all overdue.

“Crazy” Uncle Bernie Starts to Make Sense

24 Monday Jun 2019

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It’s a good start, what the Senator is set to propose: canceling ALL student debt in the United States.

Sen. Bernie Sanders, I-Vt., will propose on Monday eliminating all $1.6 trillion of student debt held in the United States, a significant escalation of the policy fight in the 2020 Democratic presidential primary two days before the candidates’ first debate in Miami.

Sanders is proposing that the federal government pay to wipe clean the student debt held by 45 million Americans – including all private and graduate school debt – as part of a package that also would make public universities, community colleges and trade schools tuition-free.

Sanders is proposing to pay for these plans with a tax on Wall Street his campaign says will raise more than $2 trillion over 10 years, though some tax experts give lower revenue estimates.

A few things:

The tax isn’t even necessary.

This, however funded, would be substantially cheaper than the bankster bailout from Too Big To Fail. Unlike that scheme, Sanders’s proposal would benefit the American people.

Before libertardians and “CONservatives” wail about “a deal’s a deal,” kindly consider the original terms of the underlying deals.

And, this is a good start – on the way to repudiating all $74 Trillion in existing total US debt. There’s a very simple way to do it – and to “pay it all off” – within the scope of existing law. After that’s accomplished, new debt should be illegal, in the current mode of many jurisdictions’ misdemeanor drug possession laws: catch an individual with debt, seize the promissory note and any remaining funds – for destruction; catch someone manufacturing debt, felony and hard jail time.

It will be interesting to if this gets traction.

discedite fures!

Some Recovery

14 Friday Jun 2019

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How could there have been a recovery when half the country still suffers?

The median family income, after accounting for inflation, was $59,039 in 2016, little different than it was in 2000 ($58,544). During the same time, medical, childcare and college costs have ballooned.

B-b-but the banks and Wall Street are doing better…

…the next economic slump, whenever it occurs, could be particularly damaging. “Many Americans are still digging out from the recession,” he said. “Even a modest downturn is going to cause further harm to Americans’ personal finances.”

We had a modest downturn and the effects help fuel this survey. The next one won’t be so modest. This is the end result of an entire economy based on fake money, fake debt, financialized sorcery. For many (most), the only thing real is the losses and the suffering.

A Comparison of Depressions

07 Friday Jun 2019

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Doug Casey examines the 1930s alongside the modern age.

THE SOCIETY

1930s

The world was largely rural or small-town. Communications were slow, but people tended to trust the media. The government exercised considerable moral suasion, and people tended to support it. The business of the country was business, as Calvin Coolidge said, and men who created wealth were esteemed. All told, if you were going to have a depression, it was a rather stable environment for it; despite that, however, there were still plenty of riots, marches, and general disorder.

Today

The country is now urban and suburban, and although communications are rapid, there’s little interpersonal contact. The media are suspect. The government is seen more as an adversary or an imperial ruler than an arbitrator accepted by a consensus of concerned citizens. Businessmen are viewed as unscrupulous predators who take advantage of anyone weak enough to be exploited.

A major financial smashup in today’s atmosphere could do a lot more than wipe out a few naives in the stock market and unemploy some workers, as occurred in the ’30s; some sectors of society are now time bombs. It’s hard to say, for instance, what third- and fourth-generation welfare recipients are going to do when the going gets really tough.

At least we’ve got TeeVee, smartphones, and social media today.

Ten Years After the Last Recession,

15 Wednesday May 2019

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And, just in time for the next one (overdue), confirmation of what many Americans have known for, well, the past ten years.

40 percent of U.S. families, including middle-class households, sometimes struggle to afford housing, utilities, food or health care, according to the Urban Institute.

Nearly 1 in 5 families said they had experienced difficulty paying for food or medical care.

About 60 percent of low-income people surveyed by the nonpartisan think tank said they couldn’t pay their bills at times.

Four in 10 Americans sometimes face what economists call “material hardship,” struggling to pay for basic needs such as food and housing, according to a new study from the Urban Institute. Even middle-class families routinely struggle financially and are occasionally unable to pay their bills.

The finding is striking given the U.S. has experienced a decade of economic growth in the decade since the recession ended. The unemployment rate is at its lowest in half a century, and the stock market has enjoyed a decade-long bull run. But for many Americans, incomes haven’t kept up with the rising cost of necessities such as housing and health care, resulting in financial anxiety.

Financialization = financial anxiety = a lost decade in advance of the next downturn.

Those “green shoots” must have dried up or something. The price of the sorcery is becoming obvious. It will be made even more so in the next few years.

Economic Absolution

12 Sunday May 2019

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PCR writes about an ancient practice, one we could sorely use today in America.

In actual fact, these civilizations were more advanced and more humanitarian than our own. They were more advanced because the rulers were focused on ensuring the society’s longevity by maintaining a livable balance between debtors and creditors. It has all been downhill ever since.

The rulers maintained social balance and, thereby, the life of the society by periodically cancelling debts. The rulers understood that compound interest resulted in debt growing faster than the economy. The consequence would be foreclosures on agricultural land, which would shift riches and power into a small oligarchy of creditors. The ruler and the society would be deprived of a self-supporting population on the land which provided tax revenues, soldiers for the military, and corvee labor to maintain public infrastructure. Disaster would follow. A grasping oligarchy could overthrow the ruler or the dispossessed population could flee to a potential invader offering their military services in exchange for debt forgiveness.

To protect their societies from dissolution by unpayable debts, rulers periodically cancelled agrarian debts owed by the citizenry at large, but not mercantile debts among businessmen.

The reason for debt forgiveness was stability, not egalitarianism.

One difference between the debts of then, there, and now and here, is that the ancients generally had debts based in actual currency, debased to a degree perhaps, but based nonetheless. Ours, in contrast, is pure fiat, wished into being by a cartel of financial criminals. What can be made with a wish, could easily be wished away. But, that’s wishing for a lot.

In America today the population is drowning in unpayable debts—student loan debt, credit card debt, home mortgage debt, state and local government debt, and business debt—but policymakers have reserved forgiveness only for the debt associated with the bad and irresponsible investments of the big banks and financial institutions. The Federal Reserve printed $4 trillion to buy up the banks’ bad debt while permitting ten million homeowners to be foreclosed. Student loan debt prevents university graduates from forming independent households. Mortgage and credit card debt prevents households from having discretionary income with which to drive retail sales. But modern day economics has no prescription for preventing our society from failing from debt overload.

…

In the US today we have a situation in which the New York banks control Federal Reserve policy and financial legislation—the deregulation of the banking system and its subsequent bailout, for example. We have a situation in which monopolies, monopsonies, and oligopolies are stronger than the central government, which is unable to rein them in or act against them in any way. Corporations dispossess citizens of their jobs by offshoring the jobs. Creditor demands prevent university graduates from forming households. Debt service preempts retail demand except by further debt expansion.

This is an economy headed down, not up. Clearly, Hammurabi did far better for the Babylonians than Washington can do for Americans.

Cue Darth Sidious: “Wipe [the debts out]. All of them.” Make debt illegal, usurious lending a capital felony.