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Violence In The Face Of Tyranny Is Often Necessary

Violence In The Face Of Tyranny Is Often Necessary.

It was the winter of 1939, only a few months earlier the Soviet Union and Hitler’s Third Reich had just signed a partially secret accord known as the Molotov-Ribbentrop Pact; essentially a non-aggression treaty which divided Europe down the middle between the fascists and the communists. Hitler would take the West, and Stalin would take the East. Stalin’s war machine had already steamrolled into Latvia. Lithuania, and Estonia. The soviets used unprecedented social and political purges, rigged elections, and genocide, while the rest of the world was distracted by the Nazi blitzkrieg in Poland. In the midst of this mechanized power grab was the relatively tiny nation of Finland, which had been apportioned to the communists.

Apologists for Stalinist history (propagandists) have attempted to argue that the subsequent attack on Finland was merely about “border territories” which the communists claimed were stolen by the Finns when they seceded from Russia during the Bolshevik Revolution. The assertion that the soviets were not seeking total dominance of the Finns is a common one. However, given the vicious criminal behavior of Russia in nearby pacified regions, and their posture towards Finland, it is safe to assume their intentions were similar. The Finns knew what they had to look forward to if they fell victim to the iron hand of Stalin, and the soviet propensity for subjugation was already legendary.

The Russian military was vastly superior to Finland’s in every way a common tactician would deem important. They had far greater numbers, far better logistical capability, far better technology, etc, etc. Over 1 million troops, thousands of planes, thousands of tanks, versus Finland’s 32 antiquated tanks, 114 planes which were virtually useless against more modern weapons, and 340,000 men, most of whom were reservists rallied from surrounding farmlands. Finland had little to no logistical support from the West until the conflict was almost over, though FDR would later pay lip service to the event, “condemning” soviet actions while brokering deals with them behind the scenes. Russian military leadership boasted that the Finns would run at the sound of harsh words, let alone gun fire. The invasion would be a cakewalk.

The battle that followed would later be known as the “Winter War”; an unmitigated embarrassment for the Soviets, and a perfect example of a small but courageous indigenous guerrilla army repelling a technologically advanced foe.

To Fight, Or Pretend To Fight?

Fast forward about seven decades or so, and you will discover multiple countries around the globe, including the U.S., on the verge of the same centralized and collectivized socialist occupation that the Finnish faced in 1939. The only difference is that while their invasion came from without, our invasion arose from within. The specific methods may have changed, but the underlying face of tyranny remains the same.

In America, the only existing organization of people with the slightest chance of disrupting and defeating the march towards totalitarianism is what we often refer to as the “Liberty Movement”; a large collection of activist and survival groups tied together by the inexorable principles of freedom, natural law, and constitutionalism. The size of this movement is difficult to gauge, but its social and political presence is now too large to be ignored. We are prevalent enough to present a threat, and prevalent enough to be attacked, and that is all that matters. That said, though we are beginning to understand the truly vital nature of our role in America’s path, and find solidarity in the inherent values of liberty that support our core, when it comes to solutions to the dilemma of globalization and elitism, we are sharply divided.

While most activist movements suffer from a complete lack of solutions to the problems they claim to recognize, constitutional conservatives tend to have TOO MANY conceptual solutions to the ailments of the world. Many of these solutions rely upon unrealistic assumptions and methods that avoid certain inevitable outcomes. Such strategies center mostly on the concepts of “non-aggression” or pacifism idealized and romanticized by proponents of Gandhi, Martin Luther King Jr, and the anti-war movements of the 1960’s and 1970’s. The post-baby boomer generations in particular have grown up with an incessant bombardment of the “higher nature” of non-violence as a cure-all for every conceivable cultural ailment.

We have been taught since childhood that fighting solves nothing, but is this really true?

I can understand the allure of the philosophy. After all, physical confrontation is mentally and emotionally terrifying to anyone who is not used to experiencing it. The average “reasonable” person goes far out of their way on every occasion to avoid it. Most of the activists that I have met personally who deride the use of force against tyrannical government have never actually been in an outright confrontation of any kind in their lives, or if they have, it ended in a failure that scarred them. They have never trained for the eventuality. Many of them have never owned a firearm. The focus of their existence has been to hide from pain, rather than overcome their fears to achieve something greater.

There is nothing necessarily wrong with becoming an “intellectual warrior”, unless that person lives under the fantasy that this alone will be enough to defeat the kind of evil we face today.

Non-aggression methods rely on very specific circumstances in order to be effective. Most of all, they rely on a system of government that is forced to at least PRETEND as if it cares what the masses think of it. Gandhi’s Indian Independence Movement, for example, only witnessed noticeable success because the British government at that time was required to present a semblance of dignity and rule of law. But what happens if a particular tyranny reaches a point where the facade of benevolence disappears? What happens when the establishment turns to the use of the purge as a tool for consolidation? What happens when the mask comes completely off?

How many logical arguments or digital stashes of ethereal Bitcoins will it take to save one’s life or one’s freedom then?

Arguments For And Against Violent Action

The position against the use of “violence” (or self defense) to obstruct corrupt systems depends on three basic debate points:

1) Violence only feeds the system and makes it stronger.

2) We need a “majority” movement in order to be successful.

3) The system is too technologically powerful – to fight it through force of arms is “futile”, and our chances are slim to none.

First, violence does indeed feed the system, if it is driven by mindless retribution rather than strategic self defense. This is why despotic governments often resort to false flag events; the engineering of terrorist actions blamed on scapegoats creates fear within the unaware portions of the population, which generates public support for further erosion of freedoms. However, there is such a thing as diminishing returns when it comes to the “reach, teach, and inspire” method.

The escalation of totalitarianism will eventually overtake the speed at which the movement can awaken the masses, if it has not done so already. There will come a time, probably sooner rather than later, when outreach will no longer be effective, and self defense will have to take precedence, even if that means subsections of the public will be shocked and disturbed by it. The sad fact is, the faster we wake people up, the faster the establishment will degrade social stability and destroy constitutional liberties. A physical fight is inevitable exactly because they MAKE it inevitable. Worrying about staying in the good graces of the general populace or getting honest representatives elected is, at a certain point, meaningless. I find it rather foolish to presume that Americans over the next decade or two or three have the time needed to somehow inoculate the system from within. In fact, I’m starting to doubt that strategy has any merit whatsoever.

Second, the idea that a movement needs a “majority” of public backing to shift the path of a society is an old wives tale. Ultimately, most people throughout history are nothing more than spectators in life, watching from the sidelines while smaller, ideologically dedicated groups battle for superiority. Global developments are decided by true believers; never by ineffectual gawkers. Some of these groups are honorable, and some of them are not so honorable. Almost all of them have been in the minority, yet they wield the power to change the destiny of the whole of the nation because most people do not participate in their own futures. They merely place their heads between their legs and wait for the storm to pass.

All revolutions begin in the minds and hearts of so-called “outsiders”. To expect any different is to deny the past, and to assume that a majority is needed to achieve change is to deny reality.

Third, I’m not sure why non-aggression champions see the argument of statistical chance as relevant. When all is said and done, the “odds” of success in any fight against oligarchy DO NOT MATTER. Either you fight, or you are enslaved. The question of victory is an afterthought.

Technological advantage, superior numbers, advanced training, all of these things pale in comparison to force of will, as the Finnish proved during the Winter War. Some battles during that conflict consisted of less than a hundred Finns versus tens-of-thousands of soviets. Yet, at the end of the war, the Russians lost 3500 tanks, 500 aircraft, and had sustained over 125,000 dead (official numbers). The Finns lost 25,000 men. For every dead Finn, the soviets lost at least five. This is the cold hard reality behind guerrilla and attrition warfare, and such tactics are not to be taken lightly.

Do we go to the Finnish and tell them that standing against a larger, more well armed foe is “futile”? Do we tell them that their knives and bolt action rifles are no match for tanks and fighter planes? And by extension, do we go to East Asia today and tell the Taliban that their 30 year old AK-47’s are no match for predator drones and cruise missiles? Obviously, victory in war is not as simple as having the biggest gun and only the uneducated believe otherwise.

The Virtues Of Violence

The word “violence” comes with numerous negative connotations. I believe this is due to the fact that in most cases violence is used by the worst of men to get what they want from the weak. Meeting violence with violence, though, is often the only way to stop such abuses from continuing.

At Alt-Market, we tend to discuss measures of non-participation (not non-aggression) because all resistance requires self-sustainability. Americans cannot fight the criminal establishment if they rely on the criminal establishment. Independence is more about providing one’s own necessities than it is about pulling a trigger. But, we have no illusions about what it will take to keep the independence that we build. This is where many conceptual solutions are severely lacking.

If the system refuses to let you walk away, what do you do? If the tyrants would rather make the public suffer than admit that your social or economic methodology is better for all, how do you remove them? When faced with a cabal of psychopaths with deluded aspirations of godhood, what amount of reason will convince them to step down from their thrones?

I’m sorry to say, but these questions are only answered with violence.

The Liberty Movement doesn’t need to agree on the “usefulness” of physical action because it is coming regardless. The only things left to discern are when and how. Make no mistake, one day each and every one of us will be faced with a choice – to fight, or to throw our hands in the air and pray they don’t shoot us anyway. I certainly can’t speak for the rest of the movement, but in my opinion only those who truly believe in liberty will stand with rifle in hand when that time comes. A freedom fighter is measured by how much of himself he is willing to sacrifice, and how much of his humanity he holds onto in the process. Fear, death, discomfort; none of this matters. There is no conundrum. There is no uncertainty. There are only the chains of self-defeat, or the determination of the gun. The sooner we all embrace this simple fact, the sooner we can move on and deal with the dark problem before us.

 

The Trends to Watch For in 2014: Charles Hugh Smith | Peak Prosperity

The Trends to Watch For in 2014: Charles Hugh Smith | Peak Prosperity.

At the beginning of this year (2013), I identified eight key dynamics that will play out over the next two to three years (2013-2015):

Trend #1:  Central Planning intervention in stock and bond markets will continue, despite diminishing returns on Central State/Bank intervention

Trend #2:  The omnipotence of the Federal Reserve will suffer a fatal erosion of confidence as recession voids Fed policy and pronouncements of “recovery”

Trend #3:  The Mainstream Media (MSM) will continue to lose credibility as it parrots Central Planners’ perception management

Trend #4:  The failure of what is effectively the “state religion,” Keynesianism, will leave policy makers in the Central State and Bank bereft of policy alternatives

Trend #5:  Economic Stagnation will fuel the rise of Permanent Adolescence

Trend #6:  Income, the foundation of real economic growth and wealth-distribution stability, will continue to stagnate

Trend #7:  Small business—the engine of growth—will continue to decline for structural reasons

Trend #8:  Territorial disputes will continue to be invoked to distract domestic audiences from domestic instability and inequality

I know it may strike some as “cheating” that my forecast is for these trends to be consequential within a three-year window rather than by a specific date, but note these are trends, not events, and trends tend not to matter until suddenly they do. This is the nature of Pareto Distributions, in which trends are inconsequential until they reach a critical mass of 4% of the populace, at which point the “vital few” exert outsized influence on 64% of the populace.

Let’s see how the trends developed in 2013:

Trend #1:  Intervention yielded outstanding returns on corporate profits and stocks, but diminishing returns on employment, household incomes for the bottom 80%, and growth, all of which are historically subpar:

Trend #2:  The Fed’s members are still regarded as heroic demigods who benignly manage the Earth’s economy. When (not if) the stock market rolls over in 2014-15, Fed omnipotence will suffer.

Trend #3:  This one is difficult to track, but anecdotal evidence (declining circulation of many mainstream print media, declining viewership in some cable news channels, etc.) may reflect rising disenchantment with the media’s coverage of key issues.

Trend #4:  I think it is quite clear that the Fed and its posse of experts have no alternatives to ZIRP (zero interest rate policy) and QE (quantitative easing).

Trend #5:  This one is difficult to monitor. If we use the percentage of young people still living at home and the rise of “selfies” (photos taken of oneself), then perhaps a case can be made that this trend is already visible.

Trend #6:  Median household income has edged up, but I suspect this is the result of higher incomes for the top 10% rather than widely distributed gains. Since the top 10% collect 51% of all income, it stands to reason that increases flowing to the top will boost median income even if the bottom 90% sees declines in income:

Trend #7:  The unintended consequences of the Affordable Care Act have yet to fully play out.

Trend #8:  China’s recent invocation of a “defense zone” that includes the Senkaku Islands suggests this trend is definitely in play.

I also listed eight outcomes:

Outcome #1:  The counterfeiting of risk-free assets will continue to be a primary policy of the Status Quo.

Outcome #2:  Risk will continue to be transferred en masse to the public.

Outcome #3:  Democracy in America is officially dysfunctional.

Outcome #4:  Incentives will continue to be structurally perverse, and the rule of law will continue to be bent by individuals, enterprises, and the government.

Outcome #5:  Health care (a.k.a. sick care) will continue to be an enormous drag on the economy as diminishing returns, fraud, complexity, and defensive medicine add costs without equivalent improvements in health.

Outcome #6:  The costs of complying with Obamacare will act as an inflection point in the decline of small business

Outcome #7:  The trend of the Status Quo “solving” perceived problems by adding layers of immense complexity to systems already suffering from marginal returns will continue.

Outcome #8:  The informal cash economy will continue expanding, as those who choose to opt out of the Status Quo and those who must opt out as a survival mechanism do so.

Without going into detail, I think a self-evident case can be made that each of these outcomes is already visible at the end of 2013.

Additional Trends to Watch in 2014

Since the trends listed above are still operant, these eight are additional rather than replacement trends:

Trend #1:  The Number One growth industry in the private sector will increasingly be lobbying the government for favors.  When the State selects the winners and losers throughout the economy, then companies are essentially forced to make their case for special dispensations via campaign contributions and unrelenting lobbying. Elected officials benefit from their centralized powers as the line of corporations anxiously pressing campaign cash on them lengthens in direct proportion to the expansion of State power.

This is the essence of what some call the Corporatocracy that effectively governs the U.S.A. and what I call the Neofeudal Cartel/State system, as the State and its chosen cartels dominate the economy and society in a fashion that can only be described as neofeudal.

Since organic growth from increases in wages and purchasing power are limited to the top 10%, the only sectors that can possibly gain growth from rising sales are Porsche dealerships and other luxury outlets that cater to the top 10%.  But since the number of households adding income is a thin 10 million out of 121 million households, moving more luxury goods offers little growth opportunities for the rest of the economy, which is stagnant at best.

As a result, lobbying the central State for favors is the default “growth industry.”

Trend #2:  The difference between anemic growth and recession will increasingly be semantic. This is another “How many angels can dance on the head of a pin?” debate in which Ivory Tower/State economists parse juiced or manipulated data to conclude the economy is “growing slowly” or slipping into negative growth; i.e., recession.

Experientially, if purchasing power and discretionary income (what’s left after paying taxes, rent, mortgages, food, utilities, etc.) are both declining for 90% of households, the “growth” in inventories, exports, and other factors that feed into gross domestic product (GDP) are not reflecting the economy we actually inhabit.

Trumpeting what amounts to signal noise as “steady growth” is adept perception management (i.e., propaganda), but if it doesn’t include increases in purchasing power and discretionary income for the bottom 90%, it’s a propaganda embarrassment, like the Fed official hyping the declining cost of tablet computers while someone in the audience shouts, I can’t eat an iPad!

Trend #3:  The decline in local government services will accelerate as rising pension/healthcare costs squeeze budgets.  Local governments (city, county, state) have avoided the politically combustible collision of rising pension/healthcare costs and angry taxpayers tired of service cuts by accounting trickery and jacking up fees and taxes. Crunch-time has also been put off by rising home values that pushed property tax revenues higher.

These solutions are running out of rope: Property values have topped out, and accounting trickery hasn’t solved the fiscal impossibility of maintaining services and meeting pension obligations in a stagnant economy. When push comes to shove, services must be cut, either by bankruptcy or by negotiation. Since the likelihood that taxes will drop is zero, taxpayers will get fewer services for their taxes.

Trend #4:  Middle-class income, purchasing power, and discretionary income will all continue to stagnate.  Unless you define “middle class” as those households earning $150,000 and up (9.1% of households)—and if you define the top 9% as “middle” class, your definition has lost all meaning—what’s left of the middle class will see real and discretionary income continue to stagnate. The causes of this decline in labor’s share of the economy are structural and cannot be remedied by lowering interest rates to zero or jacking up the stock market: Zero-interest rates have deprived households of income, and few in the bottom 90% own enough stock to affect their wealth. (Source: The Distribution of Household Income and the Middle Class)

Trend #5:  Junk fees will continue to replace legitimate taxes.  Fearful of blowback from ever-rising taxes, local governments have turned to junk fees as the preferred method of “revenue enhancement.”  These include sharply higher fees for recreation, parking tickets, permits, etc., and a multitude of add-ons to property taxes and other existing tax structures. Local authorities are counting on the taxpayers to sigh but do nothing as long as the fee increases are small enough to avoid triggering political resistance.

In our small California town, the city has raised the fees for trash pickup by more than 100% in recent years—ironically, their reason is that recycling (which they encourage) has reduced the amount of trash being collected.  This sort of nonsensical rationalization for radically higher fees will join the usual justifications; i.e.,We can no longer fill potholes and pave streets unless we raise your taxes.

How did they manage to perform these basic services 10 or 20 years ago with much smaller budgets? The answer: See Trend #3, skyrocketing pension and healthcare costs.

Trend #6:  The African oil exporting nations will move from the back burner to the front ranks of geopolitical flashpoints, joining the South China Sea, the Mid-East, and North Korea. I recently discussedThe Scramble for Africa’s Oil and the “resource curse” that is fueling the potential for conflict over Africa’s untapped oil wealth:

Trend #7:  Americans will continue to passively accept the rise of the Police/National Security State. This may eventually change, but for the next few years the existing motivations for passive acceptance of increasing centralization of power will continue to hold sway.

The first is complicity: The 49% of all Americans—156 million out of 317 million—who receive direct transfers/benefits from the Federal government see little reason to rock the boat or put their cash from the government at risk.  (Source)

The second reason is a rational fear of State power: fear of getting tear-gassed and arrested should you join a protest, for example, and a generalized fear of putting whatever you still have at risk by confronting a government given to secrecy and retribution against whistleblowers, protesters, etc.

Trend #8:  The Federal government will quietly absorb the rising losses from defaulting student loans rather than reveal the bankruptcy of the entire Higher Education/Student Loan Cartel.  There are myriad ways to quash the recognition that the Higher Education/Student Loan Cartel is failing to provide useful education while it burdens younger generations with $1+ trillion in high-interest debt: quietly forgive some defaulted loans, stop enforcing collection of defaulted loans, etc.  The Federal government doesn’t want to call attention to its management of this powder keg, as widespread recognition that the system is broken will unleash calls for a general debt amnesty that will blow the big-debt-for-worthless-degrees system wide apart.

In Part II: Outcomes to Bet On in 2014, we’ll forecast the most likely consequences of these trends. With such understanding comes the opportunity to position ourselves in front of them for protection and/or profit.

Click here to access Part II of this report (free executive summary; enrollment required for full access).

 

The World According To Ron Paul | Zero Hedge

The World According To Ron Paul | Zero Hedge.

With 72% of those polled believing “big Government” is more of a problem now than 4 years ago, it is hardly surprising that Ron Paul blasts “the failure of government is all around us” in this brief FOX news interview. Perhaps it is the fact that “Obamacare has been such a trasparent failure of big government,” along with Keynesian economics, and the NSA debacles; that more and more of even the most liberal are realizing just what America has become. “It’s really great news that people are starting to recognize this,” Paul adds, because there is no way to replace the status quo “until people give up on what we have.”

 

Guest Post: What’s Real? What’s Fake? | Zero Hedge

Guest Post: What’s Real? What’s Fake? | Zero Hedge.

Is the unemployment rate real or fake? It is obviously fake, but we want to believe the fake is real for a variety of reasons.

We like to think we know the difference between what’s real and what’s fake. When we’re fooled by a fake Rolex watch purchased for $20 on some humid Asian street corner, we shrug it off: it’s no big deal because the fake isn’t harming anyone.

And when it’s difficult to discern the fake from the legitimate, as in fine art paintings and financial policy, we rely on experts to differentiate between the two.

But what if the “experts” are as clueless as the rest of us? What if they’ve been corrupted by easy money to authenticate the fake as legitimate? Consider ObamaCare, an extraordinarily complex policy that “experts” assure us is a phenomenal advancement that is “working well.”

But what if ObamaCare is a fake? What if it is really not insurance at all, but a giant skimming machine designed to enrich and solidify the power of the state-cartel that operates the sickcare system?

“Experts” (PhDs and Federal Reserve economists) assure us our financial system is the core engine of “growth” in our economy. But what if this assertion is simply a useful illusion, and the reality is that the U.S. financial system is a giant skimming operation that harvests immense profits off the real economy to the benefit of the few, the financial cartels and their lapdogs in the Central State?

“Experts” in the Federal government assure us the unemployment rate is 7%. But if we include the 91.5 million people of working age who could be working (and would be working in a work-fare economy), then the real unemployment rate is double the official rate: 14% or even higher.

Is the unemployment rate real or fake? It is obviously fake, but we want to believe the fake is real for a variety of reasons.

The 1974 Orson Welles documentary (recommended by correspondent K.K.) F For Fake helps elucidate this peculiar dynamic of human nature.

The master art forger who plays a central role in F For Fake noted (self-servingly, but amusingly so) that his addition of a few fake Modigliani paintings into the world’s collections did no damage to Modigliani (long since deceased) or the collectors, who benefited from the opportunity buy a Modigliani masterpiece.

We want to believe the fake unemployment rate of 7% rather than the real rate of 14+% because the officially sanctioned forgery feeds our belief that our bloated, corrupt Empire of Debt is sustainable, fair and working well. To accept that we’ve been bamboozled, ripped off, taken advantage of and ultimately cheated out of an authentic economy and life by swindlers is too painful.

How is the Federal Reserve’s creation of money out of thin air not officially sanctioned forgery, a forgery we accept because we are like the collectors who are willing to buy forgeries as masterpieces, as long as they’re good forgeries, rather than forego the joy of owning a masterpiece?

Just as the belief in the provenance of a masterpiece creates its value in the marketplace, so it is with money: if it is created by a central bank and ultimately backed by the State’s right to tax its citizenry, we consider it legitimate, even though it is clearly an intrinsically worthless forgery of real value (i.e. gold, silver, land, cans of beans, machine tools, etc.).

And just as the value of a masterpiece is shattered by the loss of faith in its value, so it is with money: should the belief that creates the value fade, so to will the practical utility of the money.

Any doubts about the value of the euro, yuan, yen or dollar are dismissed by the mainstream as the confused ravings of a lunatic fringe, because maintaining the faith in the provenance of paper money is essential to the power created by financial engineering. But it’s worth keeping in mind that this belief in the value of money created out of thin air by the conjurer’s wand is just that, a belief.

Between a Rock and a Squishy Place | KUNSTLER

Between a Rock and a Squishy Place | KUNSTLER.

The rock is reality. The squishy place is the illusion that pervasive racketeering is an okay replacement for an economy. The essence of racketeering is the use of dishonest schemes to get money, often (but not always) employing coercion to make it work. Some rackets can function on the sheer cluelessness of the victim(s).

Is it fair to suppose that money management is at the heart of the sort of advanced, complex economy that developed early in the 20th century? I think so. Money is the lifeblood of trade and of investment in productive activities that support trade. Of course, in order for money to have meaning, to function in such transactional relations, the people must be convinced that it legitimately represents its face value. Otherwise, money must be labeled “money” — that is, a medium of exchange suspected of false value. An economy that uses “money” — especially an economy of rackets — is an economy in a lot of trouble, and that is where ours is in December 2013.

The trouble reached escape velocity in the fall of 2008 when a particular brand of racket among the Wall Street kit-bag of rackets got badly out-of-hand, namely the business of selling securitized bundled mortgages and their “innovative” derivative “products” to dupes unaware that they were booby-trapped for failure which would, perversely, hugely reward the seller of such trash paper. These were, in the immortal words of Senator Carl Levin (D-Mich), the “really shitty deal[s]” propagated by the likes of the Goldman Sachs crypto-bank — so-called collateralized debt obligations — pawned off on credulous pension fund managers and other “marks” around the world greedy for “yield.”

It turned out that all the large banks trafficking in such booby-trapped contracts ended up choking on them when “the music stopped” — that is, when the derivative “swaps” payoffs at the heart of this particular racket began to fail, sending up a general alarm that all such “products” were primed to blow up the entire “banking” system. By the way, the quotation marks I so liberally resort to are necessary to denote that in such a matrix of rackets things are not what they appear to be but only what they pretend to be.

The failure of Bear Stearns followed by the implosion of Lehman Brothers and the near-death experience of AIG alerted “civilians” outside Wall Street that the banks were linked in a web of fraud and insolvency and had to be “rescued” in order for the rest of America to keep its “way of life” going. The rescue remedy proved to be several new layers of fraud that have now matured into institutionalized rackets. The best known are the Siamese twins of “Quantitative Easing” and zero interest rate policy (ZIRP). The lesser-known racket was the 2009 rule change by the Financial Accounting Standards Board that allowed banks to make up whatever numbers they felt like in reporting the value of their holdings (“assets”).

Hence, these dishonest, regularized operations can be labeled a hostage racket with coercion at their core. The coercion comes in the form of the threat that any let-up in the stream of QE “money” enjoyed by the banks in the form of carry-trade “loans” and “primary dealer” premium cream-offs will send the economy back to the stone age. Overlooked in this equation is the ongoing destruction of ordinary citizens (a.k.a. the “middle class”) who have already lost their grip on the emblematic “way of life” Wall Street is working so tirelessly to defend. Politicians are, of course, deeply implicated and indeed directly involved in all these rackets, since these hired handmaidens make and execute the laws protecting Wall Street’s looting operations.

The catch to all this, lately, lies in the cognitive dissonance between the symptomatic euphoria of record stock market indexes versus the conviction of a few hardcore skeptical observers that the rackets are now so reckless and impudent as to be beyond any hope of control and on a trajectory to bring about hardships orders of magnitude above anything imagined in 2008.

So-called “health care” is also a hostage racket, since sick people are hardly in a position to bargain for anything, but it is only a sub-system of the larger matrix of rackets that have made this such an unusually dishonest society. My guess is that ObamaCare is sure to make it worse, and pretty quickly too, since the rules for ObamaCare were written by the hireling lobbyists of the industries that benefit from the racketeering.

The big mystery in all this remains: where are the people with some institutional power who might stand up and denounce all this perfidy? What has made us such a culture of cowards and cravens that the best we can do is produce a couple of comedians who speak truth to power in the form of jokes. Most of this is not that funny.

By the way, one reason for the vulgar orgy of “consumerism” that, in recent years, has turned the Thanksgiving holiday into a sort of grotesque sporting event, is to mount a crude demonstration that our “money” is a viable medium of exchange. The dumbest people in the land are induced to swarm through the merchandise warehouse stores and fight to exchange their “money” for hard goods offered at false “bargains.” I wonder how much of it is a dress rehearsal for what happens in a hyper-inflation?

 

The Turning | KUNSTLER

The Turning | KUNSTLER.

In these northern climes, this turning into the year’s final quarter feels written in the blood, or at least into the legacy code of culture. The leaves skitter across the streets in an early twilight, chill winds daunt man and dog, the landscape buttons itself up for the long sleep, and human activity moves indoors — including the arduous festivities around the spooky solstice. We take the comfort that we can in all that. But a strange torpor of event attends this year’s turning. In the year’s final happenings, nothing seems to happen, and what little does happen seems not to matter. The world sits with frayed nerves and hears a distant noise, which is the cosmic screw of history turning.

The nation gets over everything without resolving anything — fiscal cliffs, debt ceilings, health care implosions, domestic spying outrages, taper talk jukes, banking turpitudes, the Syria bluster, the Iran nuke deal fake-out. It’s dangerous to live as though there was no such thing as consequence. Societies have a way of reaching a consensus about something without ever stating it outright. The American public has silently agreed to sit on its hands though one more Christmas and after that things shake loose.

What happens, for instance, in the limbo months of ObamaCare ahead, when people either won’t sign in for health insurance, or can’t because of the stupidity of the website design, and the failure of its work-arounds, and the number rises of people falling seriously ill without insurance, and the ludicrously extortionate hospital bills start rolling in and the machinery of bankruptcy and re-po turns the screws on tens of thousands of families — while the insurance company executives spend their 2013 bonus money on Beemers and McMansion additions? There must be some threshold for criticality there, some breaking point that prompts a swindled population to break out its fabled arsenals.  Say, somewhere in America a child tragically dies after being hit by a car and three unsuccessful surgeries to try to fix the damage, and thirty days after the funeral, the uninsured dad gets a bill for $416,000? I doubt a society can withstand many insults like that.

Above all, this big nation has failed to reckon the central quandary of our time: the fatal hypertrophy of finance. This ghastly engine of rackets and swindles is the enlarged heart of a dying body politic, and all we know how to do is feed it more monetary Cheez Doodles. This has been going on far longer than the doctors and the witch doctors thought possible, and there is a foolish hope among the credulous that the larger organism of the economy must therefore be immortal. But the reality-based minority stoically awaits the final congestive infarction.

Everything points to 2014 as the moment the pretending stops and things get real. Nobody believes anymore that the Federal Reserve can replace an economy of authentic transactions with promissory notes. There is only one final thing that can happen with the Fed, and that is losing all control over rising interest rates. Janet Yellen is being set up as one of the epic chumps of history, and proof of her academic fecklessness is the mere fact that she accepted the post as Fed chair. She will preside over a fabulous disappearance of wealth in America. The blame for it will be epic, too, but it will not represent any genuine understanding of what happened.

Much is being made of the loneliness of Barack Obama these days. He also occupies a rather tragic niche in history — or the arc of his story at least points that way these days. Right now, it is very hard to tell whether he has been a hostage or a fool. He could have moved to break up the big banks in January of 2009, and any time since then he could have sent a memo to the Department of Justice instructing the prosecutions of financial crime to begin in earnest (or replaced the Attorney General). Didn’t happen. Was he being blackmailed by the likes of Jamie Dimon and Lloyd Blankfein, or did he just not know what was at stake?

The history of Barack Obama will be one long record of omissions to act, not just overt failures. He is the Bartleby the Scrivener of our politics. He “prefers not to….” Hence, the powerful lure of the charismatic figure who is sure to act. Adolf Hitler was very clear about his proposed program in the early 1920s, a decade before he came to power. He spelled it out unmistakably in his speeches and his political testament, Mein Kampf: do away with pain-in-the-ass democracy and destroy the Jews. He couldn’t have put it more plainly. The residual admiration for Hitler among the extreme right-wingers of today derives mainly from the simple fact that the man actually did what he said he would do. You can’t overstate the potential hunger for that sort of thing. The current climate of US politics being Weimar-on-steroids, I’m sure that an American corn-pone Hitler would have huge appeal for a beaten-down citizenry.

The means for such a coup of the zeitgeist are rather frightful now: drone aircraft, computer surveillance, militarized police, a puppet press. It makes thoughtful folks queasy. My bet, though, is that a fascist takeover of the US would end up being as inept and ineffectual as ObamaCare. It is one of the great hidden blessings of our time, actually, that anything organized on the massive scale is doomed to failure. But it is likewise the great mission of our time to prepare to get local and smaller, something we’re not really ready for and certainly not interested in. The intertwining of these dynamics will be the story in the year to come.

 

Duct Tape Politics | KUNSTLER

Duct Tape Politics | KUNSTLER. (source)

The ObamaCare website rollout fiasco, joined by the bait-and-switch “You can keep your current insurance (not)” tempest, obscure the fundamental quandary about so-called health-care in America: that it is a gigantic racket structured to allow countless layers of grift and counter-grift. The end product of all that artifice is that medical care costs twice as much in America as any other civilized country, and that it has to be operated by a cruel and despotic matrix of poorly coordinated bureaucracies that commonly leave people more disabled financially than the diseases that brought them into the system.

ObamaCare was designed to work like a giant roll of duct tape that would allow the current cast of characters in charge (Democratic Progressives) to pretend that the system could keep going a few years longer. But it looks like it has already blown out the patch on the manifold and is getting ready to throw a rod — which duct tape will not avail to fix.

I had three major surgeries (hip, open heart, spine) the past year and paid attention to the statements that rolled in from my then-insurer, Blue Shield (the policy was cancelled in October). These documents were always advertised as “this is not a bill” and that was technically true, but it deflected attention from what it really was, a record of negotiated scams between the “providers” (doctors and hospitals) and the insurance company.

There was never any discussion (or offer of discussion) of the cost of care before a procedure. When asked, doctors commonly pretend not to know what their work costs. Why is that? It’s not to spare the patient’s feelings. It’s because sick people are hostages and both the doctors and the hospital management know they will agree to anything that will get them through the crisis of illness. This sets up a situation that allows the “providers” to blindside the patient with charges after the fact.

My hip “revision” operation was necessary because my original implant was a defective (“innovative” circa 2003) metal-on-metal joint that released metal fragments into my system and it had to be removed. The stated charge for replacement part — a simple two piece bearing made of metal and plastic, about the size of tangerine — was $14,000. Blue Shield “negotiated” the price down to about $7,000. If you go to the websites of any of the manufacturers of these things, you will not see any suggested retail or wholesale price. The markup on these things must be out of this world. Cars come with four ball joints that carry roughly the same time warrantee, and they come with a staggering array of “extras”— engines, transmissions, air-conditioning, seats, air-bags, and radios. The pattern was similar for the other surgeries and what they entailed. I ended up paying five-figures out-of-pocket. Lucky for me that I saved some money before this all happened. I don’t have kids so I haven’t been paying extortionate college tuitions during my peak income years.

All the surgeries I had required hospital stays. For the hip op, I was in for a day and a half in a non-special bed (no fancy hookups). The charge was $23,000 per day. For what? They took my blood pressure nine times. I got about six bad meals. The line charge on the Blue Shield statement said “room and board.” It would be a joke if this extortion wasn’t multiplied millions of times a day across the nation. Citizen-hostages obviously don’t know where to begin to unravel this skein of dreadful rackets. If you think it’s possible to have a productive conversation with an insurance company rep at the other end of the phone line, then you’re going to be disappointed. You might as well be talking to a third-sub-deputy under-commissar in the Soviet motor vehicle bureau.

This ghastly matrix of corruption really only has two ways to go. It can completely implode in a fairly short time frame (say, five years, tops), or we can, by some miracle of political will, get our priorities straight and sweep away all the layers of racketeering with a single-payer system. The evidence in other civilized countries is not so encouraging. England’s National Health Service has degenerated into a two layer system of half-assed soviet-style medicine for the proles and concierge service for the rich. France’s system works more democratically, but the nation is going bankrupt and eventually their health care network will fall apart. The Scandinavian countries have relatively tiny populations. I don’t know, frankly, how the Germans are doing.

Here in the USA, you can make arguments for putting a greater share of public money into a single-payer system. For instance, if we redirected the money spent on our stupid military adventures and closed some of the countless redundant bases we run overseas. That would be a biggie. Given the current choke-hold of the military-industrial complex on our politicians, I wouldn’t expect much traction there.

You can argue that nobody complains about government spending on the highway system, so why should “the people” complain about organizing a medical system that really works? Obviously, there’s no consensus to make that happen. Too many doctors want to drive BMWs. Too many insurance executives and hospital administrators want to make multi-million dollar salaries. Too many lobbyist parasites and lawyers are feeding off that revenue stream. Too many politicians with gold-plated health insurance coverage don’t want to change the current distribution of goodies. End-of-story, as the late Tony Soprano used to say.

It’s the old quandary of fire or ice… which way do you want to go? Since I’m interested in reality-based outcomes, my bet would be on implosion. In any case, several of the other systems that currently support the activities of our society are scheduled for near-term implosion, too. That would be the banking-finance system, the energy supply system, and the industrial agriculture system. As those things wind down or crash, you can be sure that everything connected with them will be affected, so the chance that we could mount a real national health care system is, in my opinion, zero.

The ObamaCare duct-taped system will go down. The big hospitals, HMOs, insurers, pharma companies will all starve and shrivel. Like all things in the emergent new paradigm, they will reorganize on a small and much simpler basis. Everyone will make less money and high-tech medicine will probably dwindle for all but a very few… and for them, only for a while. Eventually, we’ll re-set to local clinic style medicine with far fewer resources, specialties, and miracle cures. There will be a whole lot less aggravation, though, and people may die more peacefully.

Finally, there’s the pathetic American lumpen-public of our day itself, steadily committing suicide en masse by corn byproducts, the three-hundred pounders lumbering down the Wal-Mart aisles in search of the latest designer nacho. What can you do about such a people, except let fate take them where it will?

 

Published as an E-book for the first time!

The 20th Anniversary edition

With an entertaining new introduction by the author

 

GON_thumb

 

 

charles hugh smith-System Reset 2014-2015

charles hugh smith-System Reset 2014-2015. (source)

Resets occur when the price of everything that has been repressed, manipulated or obscured is repriced.

The global financial system will reset in 2014-2015, regardless of official pronouncements and financial media propaganda hyping the “recovery.” Despite the wide spectrum of forecasts (from rosy to stormy), nobody knows precisely what will transpire in 2014-2015, so we must remain circumspect about any and all predictions– especially our own.

Even as we are mindful of the risks of a forecast being wrong (and the righteous humility that befits any analysis), it seems increasingly self-evident that financial systems around the world are reaching extremes that generally presage violent resets to new equilibria–typically at much lower levels of complexity and energy consumption.

John Michael Greer has described the process of descending stair-step resets (my description, not his) as catabolic collapse. The system resets at a lower level and maintains the new equilibrium for some time before the next crisis/system failure triggers another reset.

There is much systems-analysis intelligence in Greer’s concept: systems without interactive feedbacks may collapse suddenly in a heap, but more complex systems tend to stair-step down in a series of resets to lower levels of consumption and complexity–for example, the Roman Empire, which reset many times before reaching the near-collapse level of phantom legions, full-strength on official documents, defending phantom borders.

In the present, we can expect the overly costly, complex, inefficient, fraud-riddled U.S. sickcare (i.e. “healthcare”) system to reset as providers (i.e. doctors and physicians’ groups) opt out of ObamaCare, Medicare and Medicaid; like the phantom armies defending phantom borders of the crumbling Empire, the vast, centralized empire of sickcare will remain officially at full strength, but few will be able to find caregivers willing to provide care within the systems.

Just as much of the collateral supporting the stock, bond and housing bubbles is phantom, many other centralized systems will reset to phantom status. As local and state governments’ revenues are increasingly diverted to fund public union employees’ sickcare and pension benefits, the services provided by government will decline as the number of retirees swells and the number of government employees actually filling potholes, etc. drops.

Local government will offer services that are increasingly phantom, as stagnating tax revenues fund benefits for retirees rather than current services. On paper, cities will remain responsible for filling potholes, but in the real world, the potholes will go unfilled. In response, cities will ask taxpayers to approve bonds that cost triple the price of pay-as-you-go pothole filling, as a way to dodge the inevitable conflict between government retirees benefits and taxpayers burdened with decaying streets, schools, etc. and ever-higher taxes.

As for phantom collateral–the real value of the collateral will be undiscovered until people start selling assets in earnest. As long as everyone is buying, the phantom nature of the collateral is masked; it’s only when everyone tries to get their money out of asset bubbles is the actual value of the underlying collateral discovered.

When assets go bidless, i.e. there are no buyers at any price, the phantom nature of the supposedly solid collateral is revealed. Price discovery is one way of describing reset; transparent pricing of risk is another way of saying the same thing.

When risk has been mispriced via state guarantees, fraud, willful obfuscation, complexity fortresses, etc., then the repricing of risk also resets the system.

Resets occur when the price of everything that has been repressed, manipulated or obscured is repriced. The greater the manipulation and financial repression, the more violent the reset. What been manipulated, obscured or repressed? Virtually everything: risk, credit, assets, labor, currency, you name it. Everything that has been manipulated by central banks and central states will be repriced.

Trust is difficult to price. Every reset erodes trust in the capacity of the centralized status quo to manipulate/repress price to its liking. Once trust in the system is lost, it cannot be purchased at any cost.

 

Two Forces and Three Bears | KUNSTLER

Two Forces and Three Bears | KUNSTLER. (source)

In these climax years of industrial technocratic society, two opposing forces shape the destiny of government: the desperate effort to control everything versus the decline of the ability to carry out that effort. The result will be the loss of legitimacy and the collapse of government from the highest levels, moving downward until the real power to make anything work re-sets at a feasible and appropriate level — probably very local. This dynamic is seen very clearly in three spectacles du jour: the “national security” (spying) mess, government-sponsored accounting fraud in finance, and the ObamaCare rollout.

As history develops, people do things for the simple reason that it seems like a good idea at the time. Computer tech made it possible for bureaucrats and military apparatchiks to invade the privacy of everybody, but in the end it only had the effect of embarrassing the perpetrators and eroding a big chunk of the US government’s legitimacy. The attempt at maximum control will eventually lead to maximum resistance and, quite possibly, some sort of political revolution, perhaps starting with the death of the two dominant political parties. When political disruption finally occurs, it will manifest quickly, as criticality thresholds are breached. It has the potential of taking this society in very undesirable directions including civil war, theocracy, and war against other peoples.

The diminishing returns of computer technology applied to intelligence gathering are that it produces more mountains of data than any team of professionals can make sense of, and it prompts said professionals to make mischief with the information that is easiest to sort out: the financial records of ordinary citizens. Nothing will create political resistance more surely than messing with people’s money. The NSA apparatus is now a self-reinforcing monster that will strive for ever more control ineffectively, creating a debris path of ever more embarrassment and resentment. A lone true patriot like Snowden does more to oppose this monster than all the “freedom” and “liberty” spouting, flag-lapel-pin-wearing cowards in either political party.

The pervasive accounting fraud in the attempt to prop up an unsound banking system is even closer to criticality. A society that produces tradable goods needs sound money which functions as 1) a medium of exchange, 2) a store of value 3) a unit of account for establishing prices. The combined accounting frauds in Federal Reserve policy, private banking and securities markets, and government fiscal management is destroying all these functions. The more abstracted finance gets from real productive activity, the more fragile the system becomes. We are doing nothing now except adding more complexity and abstraction to it, causing the system to become more detached from reality. In effect, we’re opting to forego an economy based on goods in favor of one based on empty promises and paper swindles. The potential and probable consequent destruction of nominal wealth would be an event that advanced technocratic society likely will not recover from — in the sense that today’s standard of living could be preserved for billions of people worldwide. That destruction would herald a new dark age, this time without any prospect of recovery via the exploitation of natural resources, which will have been depleted.

The ObamaCare piece of the picture is a mere pathetic soap opera compared to the first two quandaries. The 2000-page law did nothing to address the core tragedy of medicine in America — namely, that it has evolved into a hideous hostage racket. You go to a hospital with a terrifying illness and you are susceptible to fleecing by the so-called “care-givers” for the promise that you may get to live. No prices for treatment are never discussed. They are presumed to be astronomical — but who cares if you end up dead, and if you do get to live, you’ll figure that out later. If you hold an insurance policy, these charges will be subject to a fake negotiation between grifting insurance companies and grifting hospitals, physicians, and drug companies. The price “settlements” are only slightly less a joke than the actual charges, and are obfuscated in documents designed to bewilder even well-educated policy-holders.

Even if you are insured, the charges may bankrupt you. A typical one-day charge for “room and board” in a non-specialized hospital in-patient bed runs $23,000 at my local hospital. For what? Half a dozen blood-pressure checks and three bad meals? You can be sure that ever-fewer families will be able to fork over $12,000-a-year for basic coverage. The ObamaCare legislation and its laughable rollout of a useless website is just a punctuation mark at the end of the soap opera script. The result eventually will be the complete implosion of the medical racket and a return to a very primitive clinic system, with payment in chickens or cords of stove-wood. The smaller number of surviving humans will surely enjoy better health, and greater piece of mind, when this monster racket expires of inertia, bad faith, and deceit.

These efforts to manage runaway hyper-complexity with more complexity are guaranteed to fail. Our prime task at this moment in history is managing contraction, and the means for doing that would be simplifying, not adding layers of complication larded with fraud, pretense, and mendacity.

 

oftwominds-Charles Hugh Smith: What Do We Expect to Happen?

oftwominds-Charles Hugh Smith: What Do We Expect to Happen?. (source)

What we can expect to happen generally happens, as the causal chain cannot be disrupted by wishful thinking.

If I go to Las Vegas and gamble with abandon, what do I expect to happen? If I wander alone through a tough part of town waving my iPhone around, what do I expect to happen? If I insist on hiking up a muddy rain forest trail in street clothes in the pouring rain, what do I expect to happen?

We all know what is likely to happen: In Las Vegas, we will lose our stake; in the tough part of town, our iPhone will be stolen, and on the tropical trail, we will get soaking wet.

These consequences are easily predictable. What we can expect to happen generally happens, as the causal chain cannot be disrupted by wishful thinking.

Yet when we re-elect the same politicos who have failed miserably for years, we somehow expect they will magically succeed in providing leadership the next time around. When we eat visibly unhealthy packaged junk food that is engineered to trigger our reward centers with massive doses of fat, salt and sugar, we somehow expect there will be no consequences of eating this “food.”

We sit in front of digital devices all day and eliminate physical fitness from our schools, yet we expect there will be no consequences from this inactivity.

We create trillions of dollars from thin air and borrow trillions of additional dollars into existence, yet we expect there will be no consequences from this unprecedented monetary and credit expansion.

We borrow a third of all government expenditures, yet we expect there will be no consequences from this monumental dependence on public debt to maintain the Status Quo.

We buy the cheapest quality goods, yet complain about the poor quality.

We pursue a plan of borrowing our way to prosperity, yet we are flummoxed that prosperity is elusive.

We push everyone with any assets into risky asset bubbles with zero-interest rates, yet we are surprised when asset bubbles pop.

What do you expect to happen? The causal chain cannot be disrupted by wishful thinking. Bubbles will pop, and increasingly leveraged, fragile systems will crash. Hoping causal consequences will magically vanish is a strategy doomed to catastrophe.

 

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