Structural Maladjustment

“Something has raised concerns at the FOMC. Could it be European debt markets, with ECB stimulus to be significantly reduced in the months ahead. Or perhaps it’s China and their officials determined to rein in some financial excess. EM and all their dollar-denominated debt? Maybe a dysfunctional Washington has supplanted international developments on the worry list – or, understandably, it could be a combination of things.
I’m convinced five years of “whatever it takes” took the global government finance Bubble deeper into perilous uncharted territory. Certainly, markets are more complacent than ever, believing central bankers are fully committed to prolonging indefinitely the securities bull market. Meanwhile, leverage, speculative excess and trend-following flows have had an additional five years to accumulate. Market distortions – including valuations, deeply embedded complacency, and Trillions of perceived safe securities – have become only further detached from reality. And the longer all this unstable finance flows freely into the real economy, the deeper the structural maladjustment.” – Credit Bubble Bulletin

“Structural maladjustment” – there is a term we should all learn.
I am assuming that folks who read Insurgent Tribe have read “The Emperors New Clothes” by Hans Christian Andersen. “The Emperors New Clothes” is what we have become as a society. The quote from the Credit Bubble Bulletin is referring to the neo-Keynesian model that the United States Federal Reserve and United States Federal government has decided to pursue. The basic notion is to use a combination of artificially low interest rates and the provision of an extraordinary volume of credit in order to propel certain asset classes ever higher week after week. There are adherents to this neo-Keynesian doctrine who genuinely believe that this is a permanent state, i.e. ‘the new normal.’ Unless everything we know about economics, history and math is incorrect this cannot be a permanent state.
The current result of these neo-Keynesian policies is the largest credit bubble the world has ever known. The future result of these neo-Keynesian policies is the largest credit bubble the world has ever known will pop. That may happen next week, next year, next decade – I cannot tell you when it will pop. However I am quite sure that it will pop.
In addition to the largest credit bubble in history we have the debt of the United States Federal government. Many of you are accustomed to hearing the number ‘twenty trillion dollars’ tossed around in regard to the Federal debt. That is not the actual debt – according to the Congressional Budget Office the actual Federal debt is $210 trillion. I am continually amazed at how many people desire to defer to the CBO in regard to how many people may lose health insurance if Obamacare were repealed and the very same people dismiss the CBO debt number because it mathematically torpedo’s any notion of government healthcare what so ever – more evidence of our societal and political disfunction.
How did we end up with a $190 trillion difference in what Presidents, senators and congressmen proclaim the debt to be and what the budget office calculates the debt to be? It goes back to LBJ who was attempting to fund the Viet Nam war and the Great Society simultaneously – this effort was fiscally devastating. Hence LBJ removed the United States Federal government from calculating such matters via Generally Accepted Accounting Principles and simply ordered the Federal government to count debt and deficits that were politically convenient to count and ignore and cease reporting what was politically inconvenient.
No post-LBJ President has seen fit to return the Federal government to Generally Accepted Accounting Principles (GAAP). Why is that? Primarily due to entitlements the ‘off the record’ debt has grown beyond all imagination. The amount of additional debt accumulating each year that the Feds are not counting exceeds the entire Federal budget. As long as no one mentions that the emperor actually has no clothes then the game can continue. If GAAP were to be officially applied and the Federal debt were to skyrocket to $210 trillion overnight – dominos would start to fall and it is entirely possible that those dominos would lead to something akin to guillotines.
Just what it is – ever further detached from reality. This credit bubble and the real Federal debt are joined at the hip. Grasp that.
As a culture and society we have truly and genuinely confused wealth and debt. By and large individual Americans cannot longer differentiate between the two. The net effect of society not being able to differentiate between wealth and debt is the election of politicians at all levels who have no interest in differentiating between wealth and debt. The other net effect is people who do understand the difference and are in a position to act on that understanding are accumulating great wealth from the ignorance of Americans while that ignorance drives the masses into ever greater net poverty – in fact many Americans are arguing vehemently, stridently, arrogantly and sometimes violently in favor of policies that will further impoverish them.
I suppose that is yet another strike against public schools – or perhaps sometimes societies just collectively go insane.

Simple Corruption

Using force to require others to do as you wish does nothing but plant seeds of misery that will reap disaster. That this is not self-evident to each and every American is truly astonishing. There is no statement with more historical, sociological and psychological evidence supporting its’ truth than this statement.

That a minority of Americans no longer understand this statement – in fact it would appear very few Americans even think about this statement – is the de facto terminal indictment of our public education system. If you desire evidence of why there should not be state-run schools – that this statement is not recognized as universal truth by everyone other than psychopaths and sociopaths is that evidence.

It is easy to indict the education system – simple intentional failure in that schools falsely teach that ‘force’ is actually ‘co-operation.’ Mussolini would be so proud of them. That co-operation must be voluntary and that force is compulsory and not voluntary seems basic beyond belief – but our education system teaches just the opposite. Why shouldn’t they? The salaries and benefits and wealth and power accumulated by teachers unions are wholly dependent on mistaking force for co-operation.

Simple truth. Simple corruption.

Because, Mr. Kaepernick, There is Much More To Respect And Appreciate Than There is to Spit On and Condemn.

Denver recently experienced a late summer flurry. Not the fun weather kind, but a brief wordstorm from the local sports media trying to pressure the Broncos into signing NFL quarterback Colin Kaeprnick. The tempest faded when word came from the Front Office that under no circumstances would that happen. Which, makes sense, because whatever kind of early flashes he showed, Kaepernick just isn’t very good.
Of course, his talent and performance weren’t the big reasons for most people’s interest in the story. Rather, it was the Rorschach reaction to Kaepernick’s stand–to use the right word in an awkward context—on the National Anthem and the US flag. When Kaepernick refused to stand for the Anthem, probably the majority were curiously indifferent. Probably a large plurality were somewhere between troubled and offended. Probably a minority respected and supported Kaeprnick’s expressed intent to protest racial injustice in America.
This correspondent didn’t feel very strongly, but shares the view that Kaeprnick’s bent stance reflects immaturity and a lack of knowledge and perspective.
Let me support that criticism by digressing to tell a story about some students in a high school civics competition several years ago. As a Colorado lawmaker I was helping judge the event. For part of their project, students from an affluent Denver suburb shared their updated and improved version of the Pledge of Allegiance:
“I pledge allegiance to the flag—because the Supreme Court doesn’t enforce the First Amendment—of the United States of America, and to the Republic for which it stands—an imperial power that swept the native inhabitants off their land—one nation under God—because the Supreme Court still doesn’t enforce the First Amendment, indivisible, with liberty and justice for all white, male, heterosexual, upper middleclass property owners.”
The reader finished. The students and I eyed each other, as my mind raced for a way to express a different perspective without being a stiff, Republican scold. Lightning came to me.
“I can feel your aspirations and good will. You see injustices and challenges in your world, and you want to fix them. You see wrongs and you want to right them. I hope you’ll be able to do that. But before you decide your society deserves your condemnation, would you consider a couple things?
“Consider that the United States, with its free enterprise, for-profit system, produces more food, more clothing, more shelter, and a higher standard of living for more people than any other system, anywhere on earth, anytime on earth. Consider that in our country, poor people suffer the problems of obesity far more than of hunger. Cell phones, air conditioning, and cable TV are ubiquitous.
“Maybe material stuff and prosperity isn’t your thing. Maybe you’re more concerned about social justice. Yes, America has slavery, Jim Crow, and discrimination in its history. But consider that America and England led the global fight against slavery. Consider that this nation fought a Civil War, adopted three Constitutional Amendments, passed the Civil Rights Act of 1964, the Voting Rights Act of 1965, to attain equality, and established Equal Opportunity Offices in state and federal governments across the land, all to spot and prosecute unlawful discrimination.
“Consider that as a woman, a minority, or a dissenter from the dominant culture, here in the United States, more than anywhere else on earth, you have more chance to pick the life you want, to start a business, or find your crowd…to do what the Indian immigrant Dinesh D’Souza calls ‘writing the script of your own life.
“I hope you’ll accomplish what you want. Solve those problems; right those wrongs. But please consider that maybe your nation, the society your parents, grandparents, and great great grandparents gave you, deserves not your condemnation but your gratitude. Maybe you can try to make things better here while appreciating what you’ve been given.”
There are a lot of reasons those privileged kids thought their birthplace was mostly a raw deal for the less privileged. But they have the excuse of lack of experience and opportunity to see further and know that it’s probably the best deal on earth.
A college graduate with a multi-million dollar sport contract and unimaginable privilege has less cover. But feeling more or less warmth toward America isn’t even the point. Kaepernick can believe America has a lot to fix, but still respect the civil norms and observances that unite a community. The Anthem and Pledge speak of America’s aspirations. They don’t endorse its abuses.
There’s no reason Kaepernick couldn’t work for change without spitting on social moments of participation. No one would bat an eye if Kaepernick went on the speaking circuit to deliver blistering indictments of social injustice. The problem as I see it is, his chosen path rejected the social part. He was apart. He was more enlightened than the fools and sellouts who stand for the flag. His gesture meant this society deserves his contempt, not his appreciation.
Mr. Kaeprnick, you earned the disapproval of millions and the arms length wariness of owners who are in business to make money, not to subsidize divisive distractions. And perhaps most importantly for your own aspirations, you haven’t shown all that much to general managers or talent scouts.

The Vapidness Of Single Payer

I often comment on the obtuseness of society and nothing illustrates that obtuseness more thoroughly than the proposals and arguments for single payer healthcare.

I have yet to encounter – and I ask nearly everyone I meet who supports single payer about this – an advocate of single payer healthcare who is currently voluntarily picking up the tab for the health insurance of someone who cannot afford it. In fact the proponents of single payer almost unanimously are offended by the mere suggestion that if they truly cared about the uninsured they would be voluntarily writing checks every month in order to purchase health insurance for these people they claim to care so deeply for. That I have yet to encounter a single advocate of single payer willing to voluntarily live what they preach puts the lie to the entire scheme.

It is difficult to find another example of groupthink being as vapid and immoral as the single payer delusion. People who refuse to voluntarily carry the burdens of another are all for using force to require others to carry that burden for them. Think about it – there is nothing in the world preventing these people from sitting down each month and voluntarily writing a check in order to help their neighbor – yet they not only refuse to do that but they are almost to a man (or woman) offended by the very suggestion!

At the same time these very same people are willing to use force – government force at the point of a gun – to require you to involuntarily write that check each and every month.

Of such hypocrisy are civil wars made – yet the proponents are so inexplicably obtuse and consumed with their own self-righteousness that they are oblivious to both alternatives and consequences. All they apparently care about is that the groupthink makes them feel good about themselves.

I occasionally mention that I suspect the future of the United States is divorce – I further suspect that single payer is the moment that divorce is filed.

Are Politicians, Corporate Cronies, and Safety Marms Coming for Your Car?

By most reports, Congress can’t get anything done. But, one legislative vehicle seems to be on the fast track. A bill to address the fast emerging issue of driverless cars roared unanimously through the Energy and Commerce Committee late last month and is headed to the House floor for debate.
According to the congressional newspaper The Hill: The bill “would prohibit states from imposing laws related to the design, construction or performance of self-driving cars. But local governments would still maintain traditional auto responsibilities, such as licensing, registration, insurance and law enforcement.” The philosophy seems to be to prevent states from imposing a quilt work of inconsistent requirements that might stifle development of the vehicles, but still to allow local governments to deal with administrative issues.
The legislative scrambling responds to recent buzz in the technology, automotive, and transportation fields about the rapid advance of self-driving cars or autonomous vehicles. They are the hot new topic.
Industry publications praise the emerging technology with promotional zeal, assuring consumers that a revolution in convenience, safety, and affordability is about to transform American life. The benefits will be so great that some experts predict self driving cars could become dominant as early as 2020 and not long after, most households will opt not to own automobiles.  Instead, they’ll rely on a roving fleet of ready carriages, that can be summoned faster than Uber, drive more skillfully than Danica Patrick, and deliver bigger savings than double coupons at Walmart.
Self driving cars also offer mobility to people with driving limitations, such as the elderly, people with disabilities, or people who have lost privileges for drug or alcohol offenses. The future sounds rosy but many complex questions abound.
The timeline sounds implausible. Old habits die hard and Americans might resist giving up their traditional mobility. For example, the internet has transformed and continues to transform the way people shop, but it didn’t happen back in the 90s as experts predicted. Instead it gradually unfolded over two or three decades.
As consumers adopt the new mode of transit, what complications might arise between autonomous and traditionally driven vehicles? Some lawmakers have questioned whether special lanes should be designated for autonomous cars. Others have suggested cars with drivers should be restricted to certain lanes, both to clear the way for the new, and to incent people to make the switch.
Regarding the carrots of incentives and the sticks of restrictions, will superior driving, accident reduction, and lifesaving potential of autonomous cars create pressure to prohibit traditional human-controlled driving? Many, including entrepreneur Elon Musk believe it could become illegal for people to drive cars, thought Musk says he hopes it will not. Still, the pressure could come from sources beyond just regulators and safety advocates. Corporations, whether startups or current automakers adapting to opportunities, would obviously salivate at the profits possible from mandating a complete turnover of America’s auto fleet in the span of a few years. It would dwarf the audacity of GE pressing Congress to ban incandescent light bulbs and every corporatists rent-seeker in America would leap to play.
Aside from the sticky political and economic issues, some question whether the rosy predictions of much greater efficiency make logistical sense. As a resource facing demand peaks, auto availability would have to meet the needs of morning and evening rush hour. Could a fleet large enough to carry commuter traffic be utilized much more efficiently the rest of the day and night?
Also, Tim Jackson, president of the Colorado Automobile Dealers’ Association raises a few questions about the optimistic projections: First, cars that respond to a ride request will often be empty, which could put more cars on the road going to and from pickups, actually worsening congestion. Second, for automated cars to reduce vehicles on the road, people will have to adopt car pooling in unprecedented numbers. That old idea has not caught on much better than the metric system. Third, if automated on-call vehicles make travel cheaper, more people are likely to make more trips on highways, again, increasing road usage.
The technology of driverless cars is certainly accelerating. The future is coming at us. How fast and how hard it hits remains to be seen when we get a look under the hood.

Yelling Stop

“A conservative is someone who stands athwart history, yelling Stop, at a time when no one is inclined to do so, or to have much patience with those who so urge it.” – William F Buckley, Jr, 1955

62 years down the road and still true.

That is incredibly sad to have to say.

“Probably it is true enough that the great majority are rarely capable of thinking independently, that on most questions they accept views which they find ready-made, and that they will be equally content if born or coaxed into one set of beliefs or another. In any society freedom of thought will probably be of direct significance only for a small minority. But this does not mean that anyone is competent, or ought to have power, to select those to whom this freedom is to be reserved. It certainly does not justify the presumption of any group of people to claim the right to determine what people ought to think or believe.” – Friedrich A. Hayek, 1943

“The Road To Serfdom” was published by Friedrich A. Hayek 74 years ago.

There is certain school of thought that human existence will always return to the mean – and that the mean is something akin to serfdom for a significant number of people. A great number of people are perfectly happy being told what to think and what to believe and what to do. They have no desire to question such things, let alone alter the circumstances. The American experiment in self-government, as flawed as it has been at times, represents the most significant deviation from the mean that the world has yet seen. If human existence does indeed always return to the mean then it is reasonable to expect that American self-governance, being the outlier, would have a short shelf-life.
“Freedom is not empowerment. Empowerment is what the Serbs have in Bosnia. Anybody can grab a gun and be empowered. It’s not entitlement. An entitlement is what people on welfare get, and how free are they? It’s not an endlessly expanding list of rights – the “right” to education, the “right” to food and housing. That’s not freedom, that’s dependency. Those aren’t rights, those are the rations of slavery – hay and a barn for human cattle.” – P. J. O’Rourke

Historically the “the rations of slavery – hay and a barn for human cattle” has contented the bulk of humanity over the centuries. It is what a great number of Americans are calling for today. Unfortunately the United States was not founded on the concept of “hay and a barn for human cattle” though we have increasingly slid down that slope. We are no longer all that far from the bottom. When we reach the bottom, those who despise ‘American exceptionalism’ will be thrilled – for we will no longer be any different than the rest of the world. A few elite at the top and masses of cattle awaiting hay and barn from their masters. Just like nearly everyone else throughout history.
“The most basic question is not what is best, but who shall decide what is best.” – Thomas Sowell
Amazingly enough – people in both political parties are clamoring for someone else to decide what is best for them. I suppose this is the greatest self-indulgence, to be able to slough off on others the most basic decisions about your life.
If others making decisions about your life, if being human cattle awaiting hay and barn is not the future you desire for you and your children – now would be an excellent time to do something about it and not stop doing it until liberty is restored.
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