Financial Predictions from David Stockman

David Stockman is one of the favorite economic writers (Gary North is another one). They both write from an Austrian Economic perspective. That basically means that they oppose central bank manipulation of money and credit, I agree. Here is what Stockman recently said:

But here's the thing. Maybe 100,000 people "live large" off the casino. By contrast, according to the Social Security Administration's wage records, there were 100 million workers, or two-thirds of all Americans who held any kind of paying job during 2013, who earned a collective total of just $1.65 trillion that year.That amounts to the incredibly small sum of just $16,500 per average worker.

In short, full-time wage workers have been on a treadmill for decades; average pay for the overwhelming share of jobs celebrated by the talking heads on payroll Friday is pitifully low; and the central bank keeps its heavy foot on the monetary accelerator as it witlessly inflates a $95 trillion financial bubble that it stubbornly denies. I have called this a tale of two graphs. But what it really describes is a clear and present danger to American capitalism fostered by an unelected monetary politburo in thrall to its own lust for power and mesmerized by its own doctrinaire group think. The tragedy is that nothing can stop them except the thundering crash of the gargantuan bubble they have single handedly enabled.

The Federal Reserve Bank of the US has distorted markets to such an extent that unavoidable financial disaster lies ahead. Janet Yellen and the rest of the jedis at the Fed have created a Death Star weapon of mass financial destruction.

Here is what Gary North says about the looming financial and default of the feddle gummint.

That is when corporations will start laying off workers. The working people are going to get hammered, not by the fall of the stock market, but by the contraction that follows. That was what happened, beginning in 1930, and extending throughout the 1930's. The little people did not lose their money, except the money they had in banks -- 9,000 small banks. The rich got less rich, but they became paranoid. The government expanded, and investment ceased. When the rich get paranoid, and refuse to face the challenge of uncertainties, and they see salvation in terms of cost-cutting, that is when innovation slows, unemployment rises, and economic growth disappears. It happened in the 1930's, and I think it is going to happen again. It is certainly going to happen for the common wage earner.

Rich people are counting on their pensions. Pension hopes will be smashed in the next stock market crash.

Common people trust Social Security and Medicare, and these will be defended for as long as Congress can defend them. But, at some point, the money will not be there. The great default will call into question all of the dreams of the common people. At that point, all over the Western world, there would be massive competition for explanations as to why it happened, who did it, and what must be done to recover from it. That will be a time of great entrepreneurial opportunities for Austrian School economists.

Here where I present the explanation that North talks about. 

The Market - we should actually try it instead of just talking about it. No more centrally planned economic policies, no more banksters, creating trillions out of thin air to save their friends in a kind of heads we win, tails you lose arrangement.

Also, the reason for the coming great default and crash is the monetary manipulation by the Fed over the last 4 decades.



 

Irony!

Talk about irony! I am absolutely convinced that God has a well developed sense of irony!

Consider this. These are all true, by the way. The director of safety at a certain company was named Lucky. The the head of quality at a certain organization was named Low and even had a national award named after him - the Low Quality Award.  I swear I am not making this up.

And now - drum roll please - the new US Attorney General is named - wait for it - Lynch!

I could never make up fiction like this and have anyone even believe it for a second.

Progressivism in US

History is the most boring and pointless (for the student) of any subject foisted on young minds by public schools. It is the history that the state wants you to learn.  It is not the real history of anything.

It also goes without saying that you can't learn something you don't want to learn and I think that most people are uninterested in history, but the public school approach is utterly barren - useless dates without any backstories and the vapid names of all the US Presidents. Who cares.

Surprising to me that decades after having departed public schools that I have discovered history, or at least certain areas of it and I find it is quite fascinating.

Consider this from Gary North regarding the early 20th Century:

Progressivism rested on four key assumptions regarding institutions. First, the messianic redemptive power of tax-funded education. This was said to be neutral education intellectually, yet also moral. Second, universal suffrage. The democracy was seen as redemptive. Third, the need for political legislation to redistribute concentrated wealth. Fourth, the need for professional bureaucrats to administer the various political programs of wealth redistribution -- no political patronage, no political spoils. This was to be enforced by Civil Service laws.

Now that is not like any history I ever studied in high school - a cogent, one paragraph summary of the whole Progressive Era - four simple ideas, stated simply.

He continues:

A conspiracy view of history denies the authority of all four. Public education does not stop rich men from manipulating the masses. Second, universal suffrage is helpless to root out the powers behind the thrones. Third, the super-rich manipulate the politicians, who in turn create tax code loopholes. Fourth, bureaucrats are impotent. This means that the pillars of Progressivism have failed to root out the power of wealth. It means that Progressivism's program of social redemption has failed. Worse, it has served as a convenient cover for ever-greater concentrations of wealth and power. It means that Progressivism is a false religion. Academic historians fight conspiracy views of history. They understand that conspiracy views of history, if widely accepted, would lead to the political rejection of the Progressives' agenda. It would undermine the legitimacy of Progressivism.

The most dangerous version of the conspiracy view of history is Murray Rothbard's. He argued that the Progressives were dupes from day one. They were pawns in the chessboard of the power-seekers who sought state power in the name of democracy, only to use this power to keep rivals out of their markets. The far Left argues this way, too. So, Rothbard used New Left historian Gabriel Kolko's book, The Triumph of Conservatism (1963), to support his case against the Progressives' push to establish federal regulation of big business. The result of this political agenda was the opposite of the rhetoric: the entrenchment of big business. Kolko and Rothbard showed that the Progressives' agenda was funded from the beginning by big business.

This makes a lot more sense to me than the "trust busters" and the Bugsy Malone public school version of the Progressive Era. Of course, this is not the official version of history, but it sure is a lot more interesting, and, I believe, a lot more honest.

This study of the Progressive Era led me to coin a phrase - money is not the root of all evil, Progressivism is the root of all evil.  Just think of all the changes of that era, creation of the Federal Reserve Bank, imposition of income tax, direct election of Senators, etc. The world was transformed from the one my great grand parents knew.  The only feddle gummint agent they ever ran into was the postman. How different it is now, and certainly not for the better in terms of liberty.

Lest you think I exaggerate, please realize that the US would not have gotten into WWI without the twin horrors of income tax and the feddle reserve bank. Those obscenities provided for the financing of the global bloodletting. Further, Lenin, Stalin, and Hitler most likely would not have become the monsters they did had the warring nations of Europe been left alone to conclude their own peace in 1918 or before.

These facts are conveniently left out of the public school version of US History!



 
 

The Great Default

I stole this lock, stock, and barrel from Gary North. I wanted to copy it because I agree with what he is saying. The feddle gummint will default and then Americans might realize that Washington is not the savior and can't even deliver the mail.

At that point, I believe that there will be a return of much of the power that has been consciously concentrated in Washington over the last 200 years. This will be good for liberty and freedom.

Americans still think the federal government can and should solve problems. This is their default mode. At the same time, they do not think Washington is competent. This is what is sometimes called cognitive dissonance.
Lack of trust is across the boards: in the presidency, Congress, and the Supreme Court. Here are the latest findings.

Americans’ confidence in all three branches of government is at or near record lows, according to a major survey that has measured attitudes on the subject for 40 years.
The 2014 General Social Survey finds only 23 percent of Americans have a great deal of confidence in the Supreme Court, 11 percent in the executive branch and 5 percent in Congress.

As long as the checks keep coming, Americans will grin and bear it. When the checks bounce, the game will be over.

The checks will eventually bounce. The Federal Government has unfunded liabilities of $210 trillion. There will be a Great Default.

The great thing about the Great Default will be this: there will be a cacophony of analyses and solutions offered. The politicians will look like the Keystone Kops. There will be great confusion.

At that point, those of us who have warned that the free market will triumph over Keynesian economic planning will get a hearing. Establishment Keynesianism’s control in the media over what constitutes the acceptable limits of discussion will be blown apart.

Problem: if the Republicans win the presidency in 2016 before recession hits, it will hit on their watch. The Democrats will have a field day in 2020. “We told you so!” They will give us another round of statism. But it won’t work.

The political oligopoly will fail. Council on Foreign Relations Team A will be as impotent in solving the economic crisis as Council on Foreign Relations Team B

Obamacare Oligopoly

Sometimes a writer comes along that is able to summarize an issue in a single sentence with such clarity that it dispenses with hours of talking heads. Gary North is one of those people.  Here is what he says about health care.

The biggest problem with healing today is that the health-care field is an oligopoly. The state controls patient access, prices, and practitioners' training. This either keeps prices higher than [they] need to be or else it leads to rationing by standing in line. Sometimes, it does both: the rich buy services outside of the subsidized system, paying more, while the less rich line up inside the system.

The "state" is the feddle gummint and the state governments.  They have systematically created the oligopoly over the last 100 years.  Each time they fix "it", the system gets worse for patients.

Obamacare is just another intervention into the healthcare market; albeit a major bad one.

Perhaps one day we might actually try the free market?

PS. The Rockefellers had a lot to do with the early "fixes" to healthcare, which is one of the reasons for my disdain for them.

Kirk Sorensen Will Be Talking About Liquid Thorium Reactors at the U!

Kirk Sorensen will be presenting a lecture on LFTR technology at the University of Utah on Tuesday, January 13th at 2pm local time. Interested parties are invited to attend.
Intermountain Network and Scientific Computation Center (INSCC) at the University of Utah, 155 South 1452 East – Salt Lake City, UT 84112

New Years Resolutions for Congress

The following is a weekly column by Ron Paul.  You can see the original here.

These seem like reasonable suggestions to me.

Since New Year’s is traditionally a time for resolutions, and since the new Congress convenes this week, I thought I would suggest some New Year’s resolutions for Congress:

1) Bring the troops home — Congress should take the first, and most important, step toward ending our hyper-interventionist foreign policy by bringing our troops home and closing all overseas military facilities. The American people can no longer afford to bear the cost of empire.

2) Pass the Audit the Fed bill — The American people deserve to know the entire truth about how the Federal Reserve’s monetary policy benefits big-spending politicians and financial elites while harming average Americans.

3) Repeal the PATRIOT Act and rein in the National Security Agency — It is approaching two years since Edward Snowden revealed the extent of the NSA’s unconstitutional spying. Yet Congress still refuses to put a leash on the surveillance state. Congress should take the first step toward restoring respect for the Fourth Amendment by allowing Section 215 of the PATRIOT Act to expire.

4) Shut down the Transportation Security Administration — Treating all American air travelers as criminal suspects and subjecting them to intrusive and humiliating searches does nothing to enhance our security. Congress should shut down TSA and return responsibility for airline security to the airlines. Private businesses can effectively protect their customers and employees if the government gets out of the way.

5) End all corporate welfare — Federal programs that provide subsidies or other special benefits to politically-connected businesses cause economic inequality, distort the market, and waste taxpayer money. It also makes political and moral sense to cut welfare for the rich before cutting welfare for the poor. Congress should start dismantling the corporate welfare state by killing the Export-Import Bank and the Overseas Private Investment Corporation. Congress should also reject legislation proposed to benefit one industry or individual, such as Sheldon Adelson’s Internet gambling ban.

6) Repeal and Replace Obamacare — Many Americans are losing their insurance while others are facing increasing health care costs because of Obamacare. Repealing Obamacare is only a first step. Congress should both repeal all federal policies that distort the health care market and restore a true free market in health care.

7) End police militarization — The killing of Michael Brown in Ferguson, Missouri in August brought the issue of police militarization to the center of national debate. Congress must end all federal programs that provide military equipment to local police forces.

8) Shut down the Department of Education — It is no coincidence that education in America has declined as federal control over education has increased. Congress should de-fund all federal education programs and return control over education to local communities and parents.

9) Allow individuals to opt out — A positive step toward restoring a free society would be allowing individuals to opt out of Obamacare and other federal mandates. Young people should also be granted the ability to opt out of paying Social Security and Medicare taxes in exchange for agreeing to never accept Social Security and Medicare benefits.

10) Allow state governments to opt out — If Congress lacks the votes to end the war on drugs, repeal Obamacare, or roll back other unconstitutional federal programs, it should at least respect the rights of states to set their own policies in these areas. Federal prohibition of state laws nullifying Obamacare or legalizing marijuana turns the Tenth Amendment upside down.

By adopting these resolutions, Congress can make 2015 the year America begins reversing the long, slow slide toward authoritarianism, empire, national bankruptcy, and economic decline.

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