Sharing a newspaper column I wrote two years ago because it is still apropos


By Keith Nobles

Throwing something up into the air, no matter how hard and far you threw it, does not mean you have defeated gravity. These folks who support the continued distortion of the markets make an argument that is akin to “See, it has not hit the ground again so I have defeated gravity!”

Distorted markets always unwind. Unless people believe, and to be very fair most leftist do believe, that human nature and economics has changed in the most fundamental of ways it will be true again. In my opinion, the problem here is that most leftist do believe that they have used legislation and regulation and popular media to fundamentally change human nature. At the end of the day that will prove delusional. I suspect the price we pay for that delusion will be extreme.

There are many people out in the universe at the moment that happen to believe that if they use enough power and force to distort a market that it will never unwind. They also typically coincide with the people who believe that human nature can be changed via regulation, legislation and popular media.

This is not the first time that people have come to believe that they have changed human nature. Changing human nature is the basis of Marxism and all Marxist believe Marxism changes human nature. Fascism is based in the belief that it can change human nature. This is not uncommon in history; the absolute abject failure in believing that you can change human nature is also not uncommon in history.

In fact, believing you can change human nature has never once succeeded no matter how much force you use.

The pattern is common, they come to believe that they can solve the problems in the world by changing human nature. That belief is inevitably acted upon by using all of the power they can amass in order to compel people to change. What will follow will often be people changing their behavior because they fear the consequences represented by the force compelling them to do so. However forcing people to change their behavior in the face of dire consequences is not the same as changing human nature.

That is the rub in this belief system. You cannot use force to change human nature, you can use force to change human behavior. Ever more force is required in order to maintain that ‘change’ in human behavior. ‘Ever more force’ has a logical end and when that logical end is reached the logical end of the ‘change’ is also reached.

Distortions And Structural Issues And You

Paul Brodsky had this to say this week

“It should not surprise anyone that Western societies are becoming restless. Trump, Brexit, Charlottesville and, arguably, even radical Islamic terrorism are bi-products of global economic distortions largely created by the unwillingness of the Western political dimension to let the global factors of production naturally settle global prices and wages. (Sorry, it had to be said.)”

“As discussed, the biggest challenges facing the US economy and US labor stem from a distorted global price and wage scale. Mr. Trump’s domestic fiscal, regulatory, tax and immigration goals seek only to raise US output and wages. This cannot be achieved without the participation of global commerce. There is no such thing anymore as a US business that makes US products sold only in the US without being influenced by global prices, wages and exchange rates. The romantic, patriotic “made in the USA” theme does not comport with the reality that the US also seeks to keep the dollar the world’s reserve currency and that maintaining America’s power requires the US to control the world’s shipping lanes. Mr. Trump and his base cannot have one without the other. (Do we really have to articulate this?)”

“Mr. Trump’s “Being There” presidency is reflecting an inconvenient truth back on a society that has, until maybe now, successfully deluded itself into believing government is functionally the glue holding society together. Though he does not mean to, Mr. Trump is single-handedly demonstrating to groups ranging from idealistic Washington elites to social media zombies to southern white supremacists that Madisonian government has become a dignified cover for the financial, commercial and national security interests that control it. We suspect those interests would rather the reach of their power be less visible”

Brodsky used a term this week – ‘fake politics’ – not just fake news. Very apropos – the fake politics covers the market distortions and structural economic issues that the politicians lack the courage or intelligence to address.

The distortions in the global economy are causing structural issues around the world – Trump and all this we are experiencing is a by-product of those distortions and structural issues. I don’t agree with everything Brodsky said but he nailed it with “global economic distortions largely created by the unwillingness of the Western political dimension to let the global factors of production naturally settle global prices and wages” – this cannot and will not last and when the current price and wage regime collapses it is likely to do so quickly – which is why debt is your enemy.

Governments and central banks around the world are going to extraordinary measures in order to extend the lifespan of the existing paradigm – but that paradigm will be ending. When the paradigm ends it will be a global earthquake as prices and wages reset in the midst of mountains of unserviceable debt.

Buckle up…

Forget Hacking Russians, Menacing Koreans, and Clashing Fascists and Communists–Let’s Discuss How Colorado Robs Its Taxpayers

In today’s Denver Post, Statehouse reporter Brian Easdon provides an informative and  mostly balanced look at how Colorado government busts the taxing and spending limits that voters meant to impose when they adopted the Taxpayers Bill of Rights (TABOR) in 1992. That loved and hated Constitutional amendment has three basic strictures: Government has to ask voters permission in order to a) raise taxes, b) borrow money; or c) increase real spending (any increase beyond inflation plus population growth). In a lengthy article, Easdon explains the critical piece: politicians have massively shifted the funding source for government programs and services from taxes—which are under TABOR’s limits, to the cash fees charged for individual transactions with government, which are not.

Sound complicated? It’s simple. State and local governments cannot raise your tax rates without permission, but they can unilaterally decide to increase the price they charge you for a driver license, occupational license, CU football ticket, or building permit. Colorado’s politicians—with urging from some activists and corporations–have ridden and abused the latter category hard and put it up wet. Actually, that’s not accurate. They’re still whipping and spurring.
The idea of requiring politicians to get permission to raise taxes has immense appeal to voters. Easdon doesn’t go into the background, but the rationale for separating fees out from taxes is simple enough. Opponents of fiscal restraints on government argued that a TABOR-like measure would require such absurdities as a public vote before universities could raise tuition or sporting ticket prices. TABOR author Douglas Bruce sensibly carved out fees from the measure he was drafting in order to eliminate opponents’ grasping argument. This approach also had the logic that fees are paid by the consumers of a particular service, so there was a fit between payers and beneficiaries.
In a far ranging article, Easdon documents the ways that lawmakers spend money they don’t have without calling it borrowing, and the range of fees that lawmakers have jacked up, up, up, without enacting any “tax increases.” These range from auto registration fees to park entrance fees to court fees for litigation cases, to provider fees charged patients on admission to a hospital and much more. All of these shifts have hit Coloradans hard in the checkbook.
While the article is more searching than most journalistic examinations of TABOR, it is missing several important pieces of context. First, lawmakers and the courts have gutted the line between fees and taxes, thus allowing government to call things “fees” that by any reasonable understanding are taxes. A critical and controversial example is the hospital provider fee, an exaction that hospitals charge each patient upon admission to the hospital. The fee is pooled in a state fund and used to attract federal matching funds that can then be applied to health services in the Medicaid and Children’s Health programs.
But, however worthy those purposes are, they have absolutely nothing to do with charging a patient a fee for any service he is receiving from the government. Quite the opposite, they are a tax on private paid hospital care which then goes to fund government healthcare for the poor. They are not a cash user fee for a service to the user.
Colorado played the same game in jacking up auto registration fees for a road and bridge improvement plan. There is no reasonable fit between the fact of owning a car or holding a license, and the specific roads to be improved. In contrast to a toll road, which is a quintessential user fee—use the road; pay for it—the license fees are a universal shakedown that goes wherever government wants them to go. Again, a tax, not a fee.
Easdon says the “fees” are legal because Colorado courts have specifically upheld them. What he politely leaves out is that bureaucrats and judges are damn liars, especially since 1992. TABOR imposed certain limits and Colorado’s public class has gleefully trashed them.

.The other critical context Easdon leaves out is any skeptical scrutiny of the big government taxer/spenders basic demands and premises: Colorado is strapped for money. It has enormously growing needs. Public officials are forced to create these gimmicks and work-arounds because TABOR leaves them no choice. He quotes CSU political science professor John Strayer to the effect that we can never get a fair proposal for higher taxes and spending on the ballot because timid Republicans are wary of conservative primary challenges, so they’re too chicken to man up and join Democrats in doing the right thing.
All of the above, to be blunt, needs to be spread around on the nearest farmer’s field in order to improve crop yields.

.Colorado government is not cash strapped, but spends per capita right just above the middle of the 50 state national pack, as Insurgent Tribe documented here. Further, state government’s maneuvers have mostly gutted the cap on spending growth. Colorado government spends a whopping real 40% more per capita today than in 1992, as Insurgent Tribe showed here. Government has grown 40% bigger relative to each resident of the state. We don’t have 40% better roads, better schools, or better anything. We have a 40% bigger budget, bureaucrats with an insatiable appetite for more, and a sob story to guilt Coloradans into submitting.
The Tribe thanks Easdon for shining a light on the games politicians play. We wish he had been a bit more skeptical of the tales politicians tell. But we thank him for reminding this correspondent to get back in the hunt to explain more of the ways the politicians have busted TABOR to get deeper into your pockets. More to come.

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.

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.

What Is Next?

Fact: Every centrally planned economy in human history has ended in disaster, poverty and misery.

Fact: The majority of Americans are advocating for a centrally planned economy.
It is impossible to reconcile those two facts aside from our ability to endlessly produce ego and delusion.
Our political system has to a large degree devolved into who can lie better. Who can make absurdities appear plausible, who can appeal to irrational hope over rational mathematics. Who can make the most compelling argument that “Everyone else who ever did this failed but we can succeed!” Immutable fantasy has become our stock in trade. A fantasy propped up by endless debt. A fantasy buffered from shattering reality by trillions and trillions in monopoly money.
Our government must systemically lie to us in order to maintain the fantasy. Data is twisted and contorted and redefined in order to present the storyline the fantasy demands. Those few who can and will tell the truth are isolated and numerically insignificant. What this has produced is a brittle global system – a system without resilience where central control must be maintained in order to assure the stability of the system. A single shock of moderate magnitude would shatter this system into a thousand pieces.
We were warned for more than a century not to go down this path. We disregarded the warnings with a vengeance. We truly believed we were smarter than those who came before us. We could make this succeed where everyone else who trod this path before us failed.
This centrally planned system we have created is drawing to a close. The writing is on the wall. It will be painful and it will cause misery and poverty when it fails. Blame will be apportioned but those most responsible are likely to skate.
The question of what is next is growing in importance. ‘What is next’ is where liberty minded people need to have their effect. We need to become the stubborn minority.
Get ready.