Tuesday, July 25, 2017

"The 16 Years’ War and Its Cost"

"The 16 Years’ War and Its Cost"
by Paul Rosenberg

"Every night on American TV you can see repeating commercials to raise money for young people who’ve had limbs blown off. It might be cruel to ask the following question in the presence of these veterans, but millions of other people have been forced to pay for all of this, and they need to be protected as well. And so, with condolences to the young people who signed up for these wars believing they were actually defending the good, we must ask this question: What was the payoff?

Some people will evade this question by maintaining that “freedom was preserved,” but that statement rests on a nebulous and self-serving definition of freedom… a definition that boils down to, “What we have is freedom.” Or it's variant: “It's worse in North Korea; therefore we're free.” These lines of reasoning, of course, are fallacious.

The 16 Years’ War (Heading for 20 or More): So, with apologies where due, I must assert that the payoff from all the bloodshed in Afghanistan and Iraq has been negligible. Both places are still a mess, and both places will likely remain a mess for a long, long time.

Almost 16 years of war have gone by in Afghanistan and more than 14 in Iraq. I think we should admit that any possibility of a “respectable win” is long past. So, what was it all for? To make people feel they were getting revenge after 9/11? Was that really worth the cost? Bin Laden (whose official death story reeks) was sick and dying anyway. Or to “get” Hussein? He had been a US ally for many years before he was pushed into the role of the villain. So how reasonable is revenge in that case? Were these two snorts of emotional cocaine worth their price?

Ah Yes… The Price: War is insanely expensive, so I’ve decided to crunch the numbers on this, and I think you’ll want to see them, especially if you’re an American. And so, here, courtesy of Wikipedia, are the costs of the US military-industrial complex for the years 2001 through 2017:

2001                  $335 Billion

2002                  $362 Billion

2003                  $456 Billion

2004                  $491 Billion

2005                  $506 Billion

2006                  $556 Billion

2007                  $625 Billion

2008                  $696 Billion

2009                  $698 Billion

2010                  $721 Billion

2011                  $717 Billion

2012                  $681 Billion

2013                  $610 Billion

2014                  $614 Billion

2015                  $637 Billion

2016                  $522 Billion

2017                  $524 Billion

That comes to a staggering $9.751 trillion. And we should remember that this is for a nation bordered on the east and west by immense oceans, and on the north and south by nations that are more likely to dissolve than to invade. On top of that, The War on Drugs and other programs are only partly accounted for in these numbers.

The costs of just the Iraq and Afghan wars – if they could realistically be separated from the rest of the military-industrial complex – would be substantially lower. One report (PDF) has those costs for 2001 through 2011 at $1.28 trillion. Extending that figure through 2017 would yield a rough cost of $2.2 trillion. But since no war can be fought without the underlying military-industrial complex (bases, training, recruitment, hospitals, logistics and so on), let’s split the difference between the total budget and $2.2T and call the money spent by the US government on these two wars $6 trillion.

And That Comes To… The cost of the past 16 years of these unresolved wars comes to $44,776 per household. That’s a lot of spare change. If you want to look at it on an individual basis, it comes to $18,809 per man, woman, and child in the United States.*

Revenge, we see, is very, very expensive. The full cost of the military-industrial complex (excluding parts of the War on Drugs, some intel agencies, and so on) comes to $30,567 per man, woman, and child and $72,769 per household.

Can We Please Be Honest? I really can’t see a reason to say that the two wars in question kept America safe. I’m not sure how you’d make an argument for that without resting entirely on dark imaginations. And please remember this: Imagined terrors are infinite. You could imagine terrifying possibilities for as long as you had time and energy. And so, any conclusions based upon “what might have happened” are useless. More terror attacks might have happened, or there might have been a Muslim Enlightenment if we hadn’t blown away a few pieces of collateral damage. Both of these are imaginary and neither is an excuse to spend fifty cents, much less trillions of dollars. That first one is scary, however, and fear is great for making humans act stupidly.

I’d also like to add that these expenditures have not gone to the young people who were blown up in these wars and who should have been a top priority. If they had, there’d be no need for perpetual charity appeals on TV. That very expensive segment of the military-industrial complex (VA hospitals, etc.) has failed horribly. Ask a vet.

So let’s be clear on this: The average American family would be at least $44,000 richer if these wars hadn’t been run. And given that most of these families are just scraping by, that seems like a pretty big deal. And given that the net gain from all of this was nil, I don’t know what to call it but a disaster… save for the people who’ve been empowered and enriched by it. Almost no one living has been more damaged by this than all those young people missing limbs. Without this debacle they’d still be whole… and probably a lot wealthier too.”
*I am using Wikipedia's figures of 319 million persons and 
134 million households in the US. 
All this is just money. How do you calculate the human costs? How many dead?
Was it all worth it? For what? For who?

"The Truth Of The Matter Is..."

"So how do you beat the odds when it’s one against a billion? You stand strong, keep pushing yourself past all rational limits and never let yourself give up. But the truth of the matter is, despite how hard you try and fight to stay in control, when it’s all said and done, sometimes you’re just out numbered."
- "Meredith Grey", "Grey's Anatomy"

"The Elites Are Privately Warning About a Crash"

"Revealed: The Date When the Liquidity Starts Drying Up"
by Brian Maher

"We heaved up evidence last Wednesday that foreign central banks could be the true source of liquidity floating stocks to record heights. While the Federal Reserve is goosing rates and preparing to tuck into its $4.5 trillion balance sheet... Foreign central banks have flooded markets with a record $1.5 trillion of liquidity so far this year. Bank of America terms it a “supernova of liquidity”… and the “flow that conquers all.”

But if stocks have risen on the cresting waters, atop the “flow that conquers all,” mustn’t they fall when the flooding recedes? That is, when central banks start draining liquidity out the sluices… it seems stocks should wash away with it. Ah, but when… when does the liquidity start draining away? We have the all-important answer, revealed shortly.

A deluge of central bank liquidity post-2008 lifted the Dow from 7,000 in early 2009… to over 21,600 last week. That is why, as Zero Hedge notes: "It is safe to say that the topic of the liquidity injection by central banks, or rather its removal, has become one of the most discussed topics within the financial community. Citigroup reminds us that the market’s been at flood tide for nearly a decade - the combined balance sheets of the world’s main central banks haven’t contracted since 2008. Not for a minute."

But maybe not for much longer... As we noted last Wednesday, the Federal Reserve intends to start draining its oceanic post-crisis balance sheet in September.  This, as word comes that foreign central bank asset purchases (which add liquidity to the financial system) are beginning to slacken. For example, Bank of America's top strategist, Michael Hartnett, notes that central bank asset purchases have fallen from $350 billion in April... to $300 billion in May… to less than $100 billion last month. The Bank of Japan’s (BoJ) asset purchases in particular have fallen substantially in recent months.

Now our well-placed agents forward us unconfirmed rumors… salacious whispers… and snatches of overheard conversation indicating the European Central Bank (ECB) will begin tapering its asset purchases in September. September, once again, happens to be when the Fed starts draining its own balance sheet.

So the “flow that conquers all” will soon slow to a trickle. Declining central bank liquidity means the tide will eventually stop rising, level off, and finally recede. But again, when? At what point does the tide finally reverse?

The answer, coming by way of Credit Suisse's Andrew Garthwaite: "The inflection in central bank balance sheets comes in Q3 2018. Q3 2018, sometime between next July 1 and Sept. 30." That’s when this Garthwaite fellow says: "The contraction in the Fed's balance sheet will start to exceed the purchase of assets by the ECB and BoJ."

“As Credit Suisse pointed out and as Citi confirms,” says Zero Hedge, “In roughly 12 months, the world is about to have its first period of aggregate central bank balance sheet contraction, even as the flow is already shrinking at a rapid pace.” At that point, the tidal “flow that conquers all” will start receding, possibly dragging stocks out with the ebbing tide.

But the before-mentioned Michael Hartnett thinks a rout could start long before the tide rolls out Q3 next year. Beware not the 12–18 months, says he, but the next three–four months. He thinks peaking liquidity - twinned with peaking corporate profits - is leading right to peak market: The most dangerous moment for markets will be when rising rates combine in three or four months’ time with an inflection point in corporate profits. Big [market] top likely occurs when peak liquidity meets peak profits. We think that's an autumn, not summer, story. Then Harnett thinks investors will finally see what lies ahead in Q3 2018… and get out ahead of the tide, before it washes away their money.

Jim Rickards also turns his gaze to the shorter view…Markets are complacent right now and are not expecting any sudden moves to the downside. But it’s when markets are most complacent that sudden drops are most likely.  Another drop could be right around the corner.

Do we forecast a stock market collapse in Q3 2018… or within the next four months? We shall not rise to that bait, dear reader. We’ve been hooked too many times before by gaudy but false lures. No, the answer is on the knees of the fickle gods, where it shall remain, until the gods themselves render their verdict. But this much is certain: We’ll be keeping a watchful eye on the tides for the next several months. You may want to as well.

Below, Jim Rickards shows you why elites are “privately warning about a crash.” Read on."
"The Elites Are Privately Warning About a Crash"
By Jim Rickards

"Many everyday citizens assume powerful global financial elites operate behind closed doors in secret conclaves, like the scene of a Spectre board meeting in the recent James Bond film. Actually, the opposite is true. Most of what the power elite does is hidden in plain sight in speeches, seminars, webcasts and technical papers. These are readily available from institutional websites and media channels.

It’s true that private meetings occur on the sidelines of Davos, the IMF annual meeting and G-20 summits of the kind just concluded. But the results of even those secret meetings are typically announced or leaked or can be reasonably inferred based on subsequent policy coordination.

What the elites rely on is not secrecy but lack of proficiency by the media. The elites communicate in an intentionally boring style with lots of technical jargon and publish in channels non-experts have never heard of and are unlikely to find. In effect, the elites are communicating with each other in their own language and hoping that no one else notices.

Still, there are some exceptions. Mohamed A. El-Erian is a bona fide member of the global power elite (a former deputy director of the IMF and president of the Harvard Management Co.). Yet he writes in a fairly accessible style on the popular Bloomberg website. When El-Erian talks, we should all listen.

In a recent article he raises serious doubts about the sustainability of the bull market in stocks because of reduced liquidity resulting from simultaneous policy tightening by the Fed, European Central Bank (ECB) and the Bank of England. He says stocks rose on a sea of liquidity and they may crash when that liquidity is removed. This is a warning to other elites, but it’s also a warning to you. But it’s not just El-Erian who’s sounding the alarm...

You’ve heard the expression “the big money.” This is a reference to the largest and most plugged-in investors on Earth. Some are mega-rich individuals and some are large banks and institutional investors with a dense network of contacts and inside information.

At the top of the food chain when it comes to big money are the sovereign wealth funds. These are funds sponsored by mostly wealthy nations to invest a country’s reserves from trade or natural resources in stocks, bonds, private equity and hedge funds. As a result, sovereign wealth fund managers have the best information networks of any investors. The chief investment officer of a sovereign wealth fund can pick up the phone and speak to the CEO of any major corporation, private equity fund or hedge fund in the world.

Among sovereign wealth funds, the Government of Singapore Investment Corp. (GIC) is one of the largest, with over $354 billion in assets. So what does the head of GIC say about markets today? Lim Chow Kiat, CEO of GIC, warns that “valuations are stretched, policy uncertainty is high” and investors are being too complacent. GIC allocates 40% of its assets to cash or highly liquid bonds and only 27% of its assets to developed economy equities.

Meanwhile, the typical American small retail investor probably has 60% or more of her 401(k) in developed economy equities, mostly U.S. But it may be time for everyday investors to listen to the big money. They are the ones who see financial crashes coming first.

The bottom line is, a financial crisis is certainly coming. In my latest book “The Road to Ruin,” I use 2018 as a target date primarily because the two prior systemic crises, 1998 and 2008, were 10 years apart. I extended the timeline 10 years into the future from the 2008 crisis to maintain the 10-year tempo, and this is how I arrived at 2018.

Yet I make the point in the book that the exact date is unimportant. What is most important is that the crisis is coming and the time to prepare is now. It could happen in 2018, 2019, or it could happen tomorrow. The conditions for collapse are all in place.

It’s simply a matter of the right catalyst and array of factors in the critical state. Likely triggers could include a major bank failure, a failure to deliver physical gold, a war, a natural disaster, a cyber–financial attack and many other events. The trigger itself does not really matter. The exact timing does not matter. What matters is that the crisis is inevitable and coming sooner rather than later in my view. That’s why people need to prepare ahead of time.

The new crisis will be of unprecedented scale. This is because the system itself is of unprecedented scale and interconnectedness. Capital markets and economies are complex systems. Collapse in complex systems is an exponential function of systemic scale. In complex dynamic systems that reach the critical state, the most catastrophic event that can occur is an exponential function of scale. This means that if you double the system, you do not double the risk; you increase it by a factor of five or 10.

Since we have vastly increased the scale of the financial system since 2008, with larger banks, greater concentration of banking assets in fewer institutions, larger derivatives positions, and over $70 trillion of new debt, we should expect the next crisis to be much worse than the last. For these reasons the next crisis will be of unprecedented scale and damage. The only clean balance sheet and source of liquidity left in the world will be the International Monetary Fund, which can make an emergency issuance of Special Drawing Rights, which you can think of as world money.

On the level of the individual investor, losers will fall into two groups when the next crisis strikes...

The first are those who hold wealth in digital form, such as stocks, bonds, money-market funds and bank accounts. This type of wealth is the easiest to freeze in a panic. You will not be able to access this wealth, except perhaps in very small amounts for gas and groceries, in the next panic. The solution is to have hard assets outside the digital system such as gold, silver, fine art, land and private equity where you rely on written contracts and not digital records.

The second group are those who rely on fixed-income returns such as life insurance, annuities, retirement accounts, social security and bank interest. These income streams are likely to lose value, since governments will have to resort to inflation to deal with the overwhelming mountain of debt collapsing upon them. The solution to this is to allocate 10% of your investable assets to physical gold or silver. That will be your insurance when the time comes.

Meanwhile, demand for secure vaulting space in major financial centers like London and Frankfurt is soaring. There are plenty of bank safe deposit boxes in those cities, but investors are insisting on non-bank vaults because investors understand that the banks cannot be trusted in a panic. As a result, proprietors of non-bank vaults can’t build them fast enough.

This is one indicator that reveals three important facts. The first is that investors feel a panic may be near and the time to act is now. The second is that investors don’t trust banks. And the third is that investors are buying gold to protect themselves since that’s the main tangible that people put in their private vaults. Don’t wait until the panic hits to secure your gold and make arrangements for safe storage. The time to act is now."

Monday, July 24, 2017

X22 Report, “The Corporate News Propaganda Is Masking What's Really Going On”

X22 Report, “The Corporate News Propaganda Is Masking What's Really Going On”
Related followup report:
X22 Report, “Countries Are Ramping Up On Gold Purchases As The Dollar Takes A Dive”

Musical Interlude: Adiemus, “In Caelum Fero”

Adiemus, “In Caelum Fero”

"A Look to the Heavens"

“The Sleeping Beauty galaxy may appear peaceful at first sight but it is actually tossing and turning. In an unexpected twist, recent observations have shown that the gas in the outer regions of this photogenic spiral is rotating in the opposite direction from all of the stars! Collisions between gas in the inner and outer regions are creating many hot blue stars and pink emission nebula. 
Click image for larger size.
The above image was taken by the Hubble Space Telescope in 2001 and released in 2004. The fascinating internal motions of M64, also cataloged as NGC 4826, are thought to be the result of a collision between a small galaxy and a large galaxy where the resultant mix has not yet settled down. “

"Consider The Following..."

"Consider the following. We humans are social beings. We come into the world as the result of others' actions. We survive here in dependence on others. Whether we like it or not, there is hardly a moment of our lives when we do not benefit from others' activities. For this reason it is hardly surprising that most of our happiness arises in the context of our relationships with others.

Nor is it so remarkable that our greatest joy should come when we are motivated by concern for others. But that is not all. We find that not only do altruistic actions bring about happiness but they also lessen our experience of suffering. Here I am not suggesting that the individual whose actions are motivated by the wish to bring others' happiness necessarily meets with less misfortune than the one who does not. Sickness, old age, mishaps of one sort or another are the same for us all. But the sufferings which undermine our internal peace- anxiety, doubt, disappointment- these things are definitely less. In our concern for others, we worry less about ourselves. When we worry less about ourselves an experience of our own suffering is less intense.

What does this tell us? Firstly, because our every action has a universal dimension, a potential impact on others' happiness, ethics are necessary as a means to ensure that we do not harm others. Secondly, it tells us that genuine happiness consists in those spiritual qualities of love, compassion, patience, tolerance and forgiveness and so on. For it is these which provide both for our happiness and others' happiness. A good motivation is what is needed: compassion without dogmatism, without complicated philosophy; just understanding that others are human brothers and sisters and respecting their human rights and dignities. That we humans can help each other is one of our unique human capacities"
- Tenzin Gyatso, 14th Dalai Lama

"The Predator of Man"

"The Predator of Man"
 by Carlos Castaneda

“’Predators Mind.’ This is the Castaneda term for that which aligns man with the thought center of service to self. In “Active Side of Infinity,” Don Juan tells Castaneda of the Earth being invaded in the mists of time by creatures of condensed darkness, the so-called Flyers which use man as food. The key idea as that these cosmic predators gave man their own mind. This is reasonable in light of much other material. At the human level, a system based on exploitation and consuming and control is seen to shape people in its own image: The slave tends to dream of becoming a master rather than of abolishing slavery. Any organization based on dominance naturally takes the form of a pyramid with few at the top and most at the bottom. For man to be the bottom or in some cases intermediate level of such a system, man must have the attributes of the dominators, only at a reduced scale.

Castaneda's writings in large part deal with ways of claiming one's own in terms of energy and free will from such a system. The battle is in large part internal. One must unmask and stand up to one's internal predator first. Otherwise one's external actions, even if well motivated, take place in the paradigm and mode of the predator. The internal predator can be extremely subtle. Still, it has some general recognizable characteristics: Castaneda puts it as follows:
"The Predator of Man"

"Ah, that's the universe at large,' he said, 'incommensurable, nonlinear, outside the realm of syntax. The sorcerers of ancient Mexico were the first ones to see those fleeting shadows, so they followed them around. They saw them as you're seeing them, and they saw them as energy that flows in the universe. And they did discover something transcendental. They discovered that we have a companion for life...
We have a predator that came from the depths of the cosmos and took over the rule of our lives. Human beings are its prisoners. The predator is our lord and master. It has rendered us docile, helpless. If we want to protest, it suppresses our protest. If we want to act independently, it demands that we don't do so. You have arrived, by your effort alone, to what the shamans of ancient Mexico called the topic of topics. I have been beating around the bush all this time, insinuating to you that something is holding us prisoner. Indeed we are held prisoner! This was an energetic fact for the sorcerers of ancient Mexico.'

'Why has this predator taken over in the fashion that you're describing, don Juan?' I asked. 'There must be a logical explanation.'

'There is an explanation,' don Juan replied, 'which is the simplest explanation in the world. They took over because we are food for them, and they squeeze us mercilessly because we are their sustenance. Just as we rear chickens in chicken coops, the predators rear us in human coops. Therefore, their food is always available to them.'
I felt that my head was shaking violently from side to side. I could not express my profound sense of unease and discontentment, but my body moved to bring it to the surface. I shook from head to toe without any volition on my part. 'No, no, no, no,' I heard myself saying. 'This is absurd, don Juan. What you're saying is something monstrous. It simply can't be true, for sorcerers or for average men, or for anyone.'

'Why not?' don Juan asked calmly. 'Why not? Because it infuriates you?' 'Yes, it infuriates me,' I retorted. 'Those claims are monstrous!'

'I want to appeal to your analytical mind, ' don Juan said. 'Think for a moment, and tell me how you would explain the contradiction between the intelligence of man the engineer and the stupidity of his systems of beliefs, or the stupidity of his contradictory behavior. Sorcerers believe that the predators have given us our systems of beliefs, our ideas of good and evil, our social mores. They are the ones who set up our hopes and expectations and dreams of success or failure. They have given us covetousness, greed and cowardice. It is the predators who make us complacent, routinary, and egomaniacal.'

'But how can they do this, don Juan?' I asked, somehow angered further by what he was saying. 'Do they whisper all that in our ears while we are asleep?'

'No, they don't do it that way. That's idiotic!' don Juan said, smiling. 'They are infinitely more efficient and organized than that. In order to keep us obedient and meek and weak, the predators engaged themselves in a stupendous maneuver - stupendous, of course, from the point of view of a fighting strategist. A horrendous maneuver from the point of view of those who suffer it. They gave us their mind! Do you hear me? The predators give us their mind, which becomes our mind. The predators' mind is baroque, contradictory, morose, filled with the fear of being discovered any minute now.'

Don Juan continues: 'I know that even though you have never suffered hunger... you have food anxiety, which is none other than the anxiety of the predator who fears that any moment now its maneuver is going to be uncovered and food is going to be denied. Through the mind, which, after all, is their mind, the predators inject into the lives of human beings whatever is convenient for them. And they ensure, in this manner, a degree of security to act as a buffer against their fear.

The sorcerers of ancient Mexico were quite ill at ease with the idea of when [the predator] made its appearance on Earth. They reasoned that man must have been a complete being at one point, with stupendous insights, feats of awareness that are mythological legends nowadays. And then, everything seems to disappear, and we have now a sedated man. What I'm saying is that what we have against us is not a simple predator. It is very smart, and organized. It follows a methodical system to render us useless. Man, the magical being that he is destined to be, is no longer magical. He's an average piece of meat. There are no more dreams for man but the dreams of an animal who is being raised to become a piece of meat: trite, conventional, imbecilic."

"Hold Fast To Dreams..."

Paulo Coelho, “Convention For Those Wounded In Love”

“Convention For Those Wounded In Love”
by Paulo Coelho

“General Provisions:

A – Whereas the saying “all is fair in love and war” is absolutely correct;

B – Whereas for war we have the Geneva Convention, approved on 22 August 1864, which provides for those wounded in the battlefield, but until now no convention has been signed concerning those wounded in love, who are far greater in number;

It is hereby decreed that:

Article 1 – All lovers, of any sex, are alerted that love, besides being a blessing, is also something extremely dangerous, unpredictable and capable of causing serious damage. Consequently, anyone planning to love should be aware that they are exposing their body and soul to various types of wounds, and that they shall not be able to blame their partner at any moment, since the risk is the same for both.

Article 2 – Once struck by a stray arrow fired from Cupid’s bow, they should immediately ask the archer to shoot the same arrow in the opposite direction, so as not to be afflicted by the wound known as “unrequited love”. Should Cupid refuse to perform such a gesture, the Convention now being promulgated demands that the wounded partner remove the arrow from his/her heart and throw it in the garbage. In order to guarantee this, those concerned should avoid telephone calls, messages over the Internet, sending flowers that are always returned, or each and every means of seduction, since these may yield results in the short run but always end up wrong after a while. The Convention decrees that the wounded person should immediately seek the company of other people and try to control the obsessive thought: “this person is worth fighting for”.

Article 3 – If the wound is caused by third parties, in other words if the loved one has become interested in someone not in the script previously drafted, vengeance is expressly forbidden. In this case, it is allowed to use tears until the eyes dry up, to punch walls or pillows, to insult the ex-partner in conversations with friends, to allege his/her complete lack of taste, but without offending their honor. The Convention determines that the rule contained in Article 2 be applied: seek the company of other persons, preferably in places different from those frequented by the other party.

Article 4 – In the case of light wounds, herein classified as small treacheries, fulminating passions that are short-lived, passing sexual disinterest, the medicine called Pardon should be applied generously and quickly. Once this medicine has been applied, one should never reconsider one’s decision, not even once, and the theme must be completely forgotten and never used as an argument in a fight or in a moment of hatred.

Article 5 – In all definitive wounds, also known as “breaking up”, the only medicine capable of having an effect is called Time. It is no use seeking consolation from fortune-tellers (who always say that the lost lover will return), romantic books (which always have a happy ending), soap-operas on the television or other such things. One should suffer intensely, completely avoiding drugs, tranquilizers and praying to saints. Alcohol is only tolerated if kept to a maximum of two glasses of wine a day.

Final determination: Those wounded in love, unlike those wounded in armed conflict, are neither victims nor torturers. They chose something that is part of life, and so they have to accept both the agony and the ecstasy of their choice. And those who have never been wounded in love will never be able to say: “I have lived”. Because they haven’t.”

"The Real Damage..."

"The real damage is done by those millions who want to ‘survive.’ The honest men who just want to be left in peace. Those who don’t want their little lives disturbed by anything bigger than themselves. Those with no sides and no causes. Those who won’t take measure of their own strength, for fear of antagonizing their own weakness. Those who don’t like to make waves - or enemies. Those for whom freedom, honor, truth, and principles are only literature. Those who live small, mate small, die small. It’s the reductionist approach to life: if you keep it small, you’ll keep it under control. If you don’t make any noise, the bogeyman won’t find you. But it’s all an illusion, because they die too, those people who roll up their spirits into tiny little balls so as to be safe. Safe?! From what? Life is always on the edge of death; narrow streets lead to the same place as wide avenues, and a little candle burns itself out just like a flaming torch does. I choose my own way to burn.”
- Sophie Scholl

“I’m tired of living with cowards, I want to live with lions.”
- Rumi

Musical Interlude: Yanni, “World Dance”

Yanni, “World Dance”

The Daily "Near You?"

Butterworth, Pulau Pinang, Malaysia. Thanks for stopping by!


"There is much asked and only so much I think I can or should answer, and so, in this post I would like to give a few thoughts on what seemed to be the overwhelming question: "WHY?" And here is the best answer I can give: Because. Because sometimes, life is damned unfair. Because sometimes, we lose people we love and it hurts deeply. Because sometimes there aren't really answers to our questions except for what we discover, the meaning we assign them over time. Because acceptance is yet another of life's "here's a side of hurt" lessons and it is never truly acceptance unless it has cost us something to arrive there. Why, you ask? Because, I answer. Inadequate yet true."
- Libba Bray

"The Economic Collapse Began Long Ago"

"The Economic Collapse Began Long Ago"
by Gerold

"My forty-year old Godson was belly-aching about the lack of jobs. He whined it’s all the Boomers’ fault. I tore a few strips off him. I asked him WTF am I wasting my time researching and writing these articles if he doesn’t read them. Since I had him cornered, I told him a few things he obviously didn’t want to hear.

We are in an economic depression. It was predicted in Strauss and Howe’s 1997 book “The Fourth Turning” [Link] that occurs every four generations as a time of great turmoil. Their Generational Theory is a framework which explains where we are, how we got here and where we’re going. For more details see ‘Notes” at end.

This is a ‘Stealth Depression.’ The government is doing its utmost to hide it with fake statistics. Their ass-media handmaidens are carrying their water telling us everything is wonderful. And, if my Godson believes the ass-media, he deserves his fate.

At the bottom of it all are fake inflation (CPI) statistics. They distort everything else because most economic data is ‘inflation adjusted.’ Consequently, when other economic data such as GDP growth is adjusted with fake inflation statistics, then those numbers are also distorted.

Note: there’s a difference between inflation (increased money supply) and Consumer Price Index (CPI), but I used the terms interchangeably to make it easier for my Godson to understand.

Anyone who buys stuff or reads John Williams Shadow Stats [Link] knows that the actual inflation rate in 2017 is roughly 5% and NOT the bullshit 2% (or less) that the government claims. I say “roughly” because I rounded the numbers to make it easier for him to understand. I wish I could have shown him the ShadowStats graph below.
Consequently, every so-called 2017 statistic that’s “inflation-adjusted” is off by 3%. (Hint: 2 – 5 = -3)

The government claims that (inflation adjusted) 2017 GDP growth is roughly 2%. Since it’s understated by 3%, it means the economy is “growing” at negative 1%. In other words, the economy is SHRINKING by 1%. And, that’s only this year.

Looking at the chart again, you’ll see that since 2001, the real inflation rate (the blue line based on non-manipulated methodology) bounced between 2% and 9%. This means the government’s bullshit inflation rate was understated between 0% and 7%. The ‘mean’ (roughly average) overstatement is roughly 3% to 5% since 2001.

The “magic of compounding interest” is often called the eighth wonder of the world. If you earn a small percentage every year and keep reinvesting your earnings, the growth rate eventually goes exponential. And the sooner you start, the more you make. I wish I could have shown him the chart below that shows the difference ten years can make.
Emily (the blue line) started investing ten years before David. Emily makes a shitload more than David. That’s the magic of compounding interest.

The trouble is; it works in reverse, too. If the economy shrinks ‘only’ a couple of percent every year before too long the economic decline also goes exponential. The economy has been shrinking roughly 3% to 5% for the last sixteen years. Because of the magic of compounding interest, the economy is less than HALF what it once was when you factor in the REAL rate of inflation. More people, less than half the pie.

Now, do you see why everything’s gone to hell? Now, do you see why so many people are out of work, or if they do have jobs, why they cannot make ends meet? Even good jobs pay half what they once did. Lousy jobs pay even less. Bullshit inflation statistics hide the real decline.

Anyone waiting for “The Collapse” can stop waiting; it began years ago and will continue for a long time. There’ll be shocks and lurches along the way. The U.S. dollar will strengthen as the Euro declines and capital flees into the dollar. Cash will be banned starting with large denomination bills; it already has been in India. Years ago, Satyajit Das admitted they can’t stop the collapse; all they can do is try to engineer a soft landing.

And, never mind the ‘nominal’ pay (dollar amount) of wages. Purchasing power is declining and the Middle Class is slowly dying. Dollars are worth less every year. Zimbabwe was a perfect, if extreme, example. They were printing trillion dollar bills that couldn’t buy a loaf of bread. Everyone was a trillionaire, yet everyone was starving.

Too Much Debt: Never in history has there been so much debt worldwide; household debt, corporate debt and government debt. The graph below is consumer (household) debt.
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The graph below is corporate debt. Notice the small box showing how little corporate debt declined during the ‘Great Financial Crisis” of ’08. Now imagine what happens when the idiots at the Fed and other central banks increase interest rates and all this debt becomes more expensive to service? More on that later.
Click image for larger size.
Money is based on nothing tangible. Money is now created with debt, and they need more debt to pay the interest on the bonds that created this debt/credit/money in the first place. We’ve reached a point where there isn’t even enough money in existence to pay the interest let alone touch the principle. Consequently, everything is slowly turning to crap.

Once you understand this, many things fall into place:

Factory orders fell to where they were a decade ago [Link] Inventories (especially autos) are rising. Credit spreads can’t get much lower. The U.S. dollar is on the decline, yet commodity prices are unchanged which means they’re deflating when adjusted for the REAL inflation rate. The U.S. corporate tax rate is among the highest of industrialized nations. Some production is returning to the U.S., but it’s performed by robots.

Stock markets give the illusion of recovery, but there are fewer retail investors. In addition to the Federal Reserve-Treasury Ponzi scheme, the corporate sector has been the primary buyer of their own stocks (“buy-backs”) since the Crash of ’08 as companies take advantage of ultra-low interest rates.

Demographics is Destiny: Few people appreciate the power of demographics which is the study and analysis of population dynamics over time or space. North America has a cohort of 80 million boomers, the first of who are turning 70 this year. Millions of boomers will do so every year for the next 15 years. Many will live to age 85 or longer.

The power of this demographic is seen in the two charts below. The first one shows the U.S. population aged 70+. The second shows their share of the overall population.
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The graphs above show where we are today and, most important, where we are going.

Other than government employees, few people have a defined benefit pension plan. Most boomers have less than $100,000 in retirement savings. Given today’s low interest rates, bonds don’t pay much and even Blue Chip stock dividends are only slightly higher. Consequently, aggregate growth in incomes will decelerate and pose additional deflationary pressure on the economy.

Those who can retire will have a lot of time on their hands. They’ll spend money on experiences such as travel, tourism and restaurants, but a lot less on clothing, durables and housing. Demographics is indeed destiny. [Link]

Boomers are retiring and spending less, but younger generations are not picking up the slack. Malls are empty or closing. Stores are going bankrupt at an unprecedented rate. It’s not all because of online shopping because online shopping has not increased as much as the decrease in bricks & mortar [Link] Few people have money except the 0.1%. As George Carlin used to say “It’s a big club and you ain’t in it.”

Oil prices are plunging not because of the over-supply governments and the ass media want us to believe, but because of lack of demand. We’re in a Stealth Depression. Fewer people have money to buy gas or jobs to drive to.

Aging Work Force: Another indicator of this Stealth Depression is the aging Amerikan work force. Look at the Labor Force Participation Rate in the chart below. The greatest increase in jobs is aged 65 and older (brown line.) The biggest decline is in the youngest cohort (blue line.)
Click image for larger size.
Many Boomers can no longer afford to retire. The last two recessions (shaded gray) and the stock market crash in ’08 devastated their retirement plans. And, many who did retire have returned to work to make ends meet. I understand my Godson’s complaint; his cohort’s employment is down since 2000. However, every age group is screwed. The oldsters want to retire, but can’t and the youngsters can’t find decent jobs. Welcome to the Stealth Depression.

Fake Jobs: The U.S. Bureau of Labor Statistics (BLS) employment numbers are as fake as the so-called inflation rate. Mish reported  “that 67 percent of non-employed younger men lived with a parent or close relative in 2015, compared to 46 percent in 2000.” He says what the statistics miss are “masses of people on welfare via fraudulent disabilities, people in school wasting money in dead-end retraining exercises, people who have simply given up looking for a job…” The unemployed who have abandoned job searching are classified as “discouraged workers” and excluded from the unemployment statistics. Fake everything masks the Stealth Depression.

Adding insult to injury, the idiots at the Fed believe the government’s fake labor statistics and are using them to justify interest rate hikes discussed below. More below.

Central Bank Idiocy: The Fed and other central banks worldwide are neo-Keynesian idiots worshiping at the altar of neoclassical economics. They completely ignore the impact of debt. Their track record for explaining, predicting and controlling economies is a series of utter failures, yet they continue singing from the same song sheet. The Overton Window [Link] explains this herd mentality. Nassim Taleb uses the term “intellectuals-yet-idiots.” The collapse of Argentina, Greece, Venezuela, and Zimbabwe are their most recent catastrophes, and they won’t be their last.

The most powerful of the central banks is the U.S. Federal Reserve (the “Fed”) which manages monetary policy through interest rate manipulation that ultimately affects the global economy. They operate on the principle that the U.S. economy booms when they lower interest rates and increase the money supply. Conversely, the economy shrinks when they raise rates and reduce the money supply.

Being idiots, they repeated their mistake reacting to the international financial crisis in 1931. More oops! And, then they failed to act as a “lender of last resort” during the subsequent banking panics. Still more oops!

President Richard Nixon “closed the gold window” in 1971. This cancellation of convertibility of the U.S. dollar into gold increased inflation prompting the Fed to raise interest rates to combat the falling dollar. The result was a major recession inducing the Fed to lower rates. More see-sawing of rates caused a series of recessions from 1980 to the Great Recession of 2008. Lots more oops!

And, now the Fed, deluded by the government’s fake economic statistics is raising interest rates so they can lower them when the next Fed-induced recession hits. Once again, the government is the problem disguised as a solution. Economic growth is fake. Bill Bonner says, “Fake money produces fake prosperity. Take away the fake money… and the fake prosperity goes ‘poof,’ too.”

We’re in a Depression. Technically we did, but fundamentally we never recovered from the Great Recession of ’08, so raising rates will kill the zombie economy and induce another recession that will make the last one look like a walk in the park. The only question is “when?”

Being idiots, they either do the wrong thing or, if they do the right thing, they do it at the wrong time or too late or too long. The length, depth, and global consequences of the Great Depression of the 1930s were primarily caused by the Fed’s ineptitude.  Trying to minimize stock market speculation, they raised interest rates in 1928 and 1929. The stock market crashed, and the slowing U.S. economy triggered recessions worldwide. Oops!

Increased Risks Create Black Swans: Confidence is the glue holding our financial world together. Uncertainty undermines confidence and increases risk. Many Black Swans  are circling overhead ready to trigger a sh*t-storm:

 The recent failure of Republicans repealing Obamacare.
 Trump’s promised tax reforms unsupported by the Republicans.
 The Deep State’s war Trump.
 Further Fed rate hikes.
 Political theater raising the U.S. debt ceiling before the October deadline.
 Risk of a credit default cycle. We’re in the terminal phase of debt creation.
 The Tech bubble was $15 trillion. U.S. housing bubble was $30 trillion. Current bond bubble $100 trillion. Current derivative bubble $550 to $1,500 trillion. Bubbles burst. The numbers are going exponential.
 The VIX (“fear index”) at historic lows means unprecedented stock market complacency.
 The ass-media’s never-ending Trump Derangement Syndrome.
 Record number of Amerikans disapprove of both parties. [Link]
 North Korea is playing a dangerous ICBM game.
 Increased pressure on China to rein-in North Korea.
 Chinese presence on artificial islands in the South China Sea and a container ship mysteriously ramming the Amerikan destroyer USS Fitzgerald.
 The Neocons continue pushing for a war with Russia.
 Globally, we’re in the biggest financial bubble the world has ever seen.
 Interest rates will rise uncontrollably and increase borrowing costs when bond vigilantes overwhelm government monetizers.
 Rapefugees over-running and destabilizing Europe.
 Resource-rich trading partners like Canada and Australia won’t be spared from the next down-turn by Chinese demand like they were during the ’08 – ’09 recession. Their banks are being down-graded, yield-curves flattening, defaults increasing and real-estate in unprecedented bubbles.
 The Anglo-Amerikan empire’s destabilizing wars in the Middle East including Syria are now in the sixteenth year.
 Most of Amerika’s public pension systems are insolvent with Illinois at the epicenter.

We cannot rely on history for forecasting the outcome of all these risks. Right now, many of us are blinded by Normalcy Bias [Link] and see this as just Chicken Little “doom & gloom”. However, the sh*t will continue to hit the fan.

What Can You Do?
 Spend less than you make. Start by cutting non-essentials.
 stop spending money you don’t have to buy sh*t you don’t need to impress people you don’t like.
 Get out of debt.
 Stay out of debt.
 If you plan to sell your house in the future, do it NOW before the bubble bursts. It’s better to be a year too early than a month too late.
 Rent (I do.) Over-priced real estate is a bottomless money pit, a time-waster and a tax cow (property taxes only go up, never down.)You’ll have a deteriorating pressboard shack when the mortgage is finally paid. Wait for the bubble to burst if you insist on buying into the house hoax to satisfy the Missus’ misguided sense of security.
 Keep only enough money in the bank for bill payments to avoid Bail-ins.
 Keep several months’ cash on hand for expenses, but be prepared to abandon this strategy when they ban cash.
 Cryptocurrencies are a risky and volatile strategy. Again, don’t put all your eggs in one basket. They can be hacked, or banned by the government.
 By 1 oz. gold coins (not bars) from reputable dealers if you’re rich, silver if you’re not.
 Stockpile durable essentials like toilet paper, garbage bags, soap, etc., etc.
 Learn to shoot and safe gun-handling.
 Guns & ammo.
 Stop eating junk food and exercise more because you need to stay healthy.
 If you’re wealthy, apply the Jim Sinclair GOTS checklist. [Link]
 Invest in yourself and your skills.
 Start now if you haven’t already because time is getting short.

Afterward: My Godson found another job. It’s a step down from his last one which was a step down from the previous one, but at least it’s a job. The ingrate should be thankful he has a job. Any job! More than 20% of eligible workers don’t.

Welcome to the Stealth Depression of the Fourth Turning. When it ends, no one knows, but when it does I guarantee it’ll be unlike anything we’ve ever seen.

Remember the mantra:
We cannot borrow our way out of debt.
We cannot spend our way to prosperity.
We cannot pretend our way out of trouble.
They keep trying, but ultimately, they’ll fail."