Dynamics Of Censorship

It has been 246 years since the American
Revolution. For all but the last five or so years,
citizens saw and heard all that they were exposed to. Now there is a fear that folks in general might be exposed to wrong ideas and that would be harmful to the country and themselves. The common man now must be protected from being misguided, ostensibly for his own good. His protectors are deemed to know all that is worthy of his attention and knowledge base.

It must be noted that government is not censoring anyone, at least not the official government. The corporate structure has been around for a long time. Continue reading

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Student Loan Forgiveness Explained

So, where did the idea for the current student loan system come from? Do you remember the
multitudes of American citizens, with signs
demanding that government facilitate students
getting loans for education?

Don’t feel bad if you can’t remember the
multitudes demanding a student loan program. I
can’t remember either, because that never happened.
On the other hand, lobbyists working on behalf of lending institution, did what the citizens didn’t do? They lobbied for years to get congress to pass the law that created our system of financing student loans. They got the bill passed.
What lenders did was to have congress create for them a risk free investment. There was
virtually no way for a borrower to default on a student loan. Student loans cannot be written off in a bankruptcy. Student loans exploded. Colleges geared up got more and more expensive.
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Stock Market Manipulation 101

Here are two images which illustrate what I describe as the eternal daily chart pattern that is generated by the ALGOS as they go about their daily practices of creating and maintaining uptrends.
One reason it is hard to get folks to understand that financial markets are perpetually manipulated second by second is that the lives of Americans are totally manipulated in almost every aspect of their being independently of markets anyway.
The same mechanical trading pattern occurring virtually every trading day with very few exceptions is not possible in a free market. It is completely absurd to conclude that patterns such as these could occur every day unless they are created mechanically.Watch out when this breaks..
One thing I will point out is that the market can be manipulated only if volume is low. This pattern holds best if there is heavy volume only at the opening and  close, with volume in the body of the day making a smooth parabola. When there are surges of volume at various times throughout the day, the market is vulnerable. Lately, this has been the case. That is one reason I am expecting increased weakness in stocks.

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Modern Money Explained

Money has always been around. At the time barter was used, whatever was produced in excess of what the producer used, served as money. It was traded directly for something else another person produced, that was deemed worth a trade.

All kinds of commodities have been used for money. Six characteristics of money are:
durability, portability, acceptability, scarcity,
divisibility and uniformity. Gold served as money for eons because it posses all of these six characteristics. Interfere with any of these six attributes and whatever serves as money functions less efficiently as money.

I use the term natural money supply to describe the optimum amount of money in an economy. The natural money supply consists of money earned by means of work or production plus what can be borrowed based on the credit of borrowers and reserve requirements. But, is that enough money in circulation? It is in a free market economy and constitutes an optimum.

One way to dismantle a free market economy is to increase the money supply by means of political money. Quantitative easing and other such practices amount to political money. Add that money that the good money attribute of scarcity is diminished. Drop the reserve requirement close to zero and the scarcity of money is eliminated.
All who work possess natural money. That is based on work done and whatever can borrowed and logically be expected to be repaid. Few who work have access to political money.

Access to political money is obtained by way of political power. How do we end up with political money? Suppose there is a basically a free market economy and things are going along as well as possible. “The economy is growing but deemed not to be growing fast enough. Never mind that given technology, productivity of labor and resources, everything is being put to its highest and best use. Gee, but given the prowess of our intellectuals, government can stimulate the economy and we can out do the tired old free market system.”

By increasing the money supply, it is assumed that we can have more of everything faster on awin win basis. So, the Federal Reserve is commissioned to create political money in order accomplish this. Wow, it works, lets do even more of it.

When I was driving a taxi, I picked up an air force pilot at the San Antonio International Airport. I took him to Randolph Air Force Base. We had a pleasant half hour long conversation. He was here to fly a jet back to Colorado Springs. He wasn’t looking forward to it. It would be a boring four hour flight. I naively asked him why it would take him so long since the jet he was picking up could easily make the trip in 45 minutes. He said that his mission required him to optimize fuel usage and if he went at maximum speed, there might not even be enough fuel to finish the

Stimulating the economy works in a similar fashion. Initial results may be stellar but that is not going to last. First, the stimulus goes to those with enough political power to demand and receive it. Second, the money is used by the receivers to make the most money in the shortest period of time. Expectations are that the money will be unselfishly used to promote a national interest. Instead, resources become inefficiently allocated because the out with the old and in with the new aspect of free markets eliminated. Wealth is transferred from the bottom of the economy to the top. A severe recession or depression ensues to correct the imbalances created by the stimulus. GDP numbers can look good for years, but like the jet plane, the economy runs out of
fuel. In the end the economy would have been better off at the end of economic hard times, had stimulus never been used.

Mindless stimulus, both monetary and fiscal stimulus. have been used constantly since the
Reagan Administration. Keynes, the father of economic stimulus, was clear in insisting that his theory should seldom be used and that complete objectivity must be used when it is. Since government, can only make political decisions and Keynes methods require governmental decisions, his theories are guaranteed not to work as intended anyway.

There is no objectivity in government decisions. Constant stimulus has destroyed our free market system. Political power has replaced price in its rationing role. Our economy has been destroyed. So, the economy will crash, just like the pilot’s jet would have crashed had he flown full speed on his flight from San Antonio to Denver.

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Flaws In Demand

In a recent post, I showed how all money doesn’t
function in the same way.There is natural money
which is rooted in work. Then there is political
money which is parasitic. Those who wish to reap where they don’t sow lobby for the creation of political money.
Political money is then used to take a portion of natural money from those who work without producing much of anything or nothing at
all. Political money enables rent seeking. Rent in
this sense is not the same as what an honest landlord receives on a home he owns. The term rentier means one who is positioned to extract income from society without working or making a contribution to

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Permanent Depression

I want to make sure I am on record in forecasting a permanent depression. This is while others are calling for a recession or a simple depression. Few have not heard the news that we have had two quarters of negative GDP growth. That by most is deemed to be a recession. Government statistics are always as positive is they possibly can be. Surely the real situation is much worse.

Now, some are challenging this time honored definition of what constitutes a recession. Why call it a recession if we don’t have to? Certainly we shouldn’t want Americans to be discouraged.

I don’t follow government statistics. Continue reading

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