Aug 032018
 
 August 3, 2018  Posted by at 12:31 pm Finance Tagged with: , , , , , , , , , ,  


George Caleb Bingham The verdict of the people 1854

 

 

It’s been a while since we last heard from Dr. D, but here he’s back explaining why neither gold nor the yuan nor cryptocurrencies can or will replace the dollar as the reserve currency, but together they just might:

 

 

Dr. D: “Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” –Ogden Nash

Over the last year or two there’s been discussion about the U.S. Federal spending moving beyond $4 TRILLION dollars, and whether a $1+ trillion dollar annual deficit, on top of a $20 Trillion national debt – Federal only – is sustainable. It isn’t.

“What can’t go on, doesn’t” is the famous quote of economist Herbert Stein. Since a spiraling deficit of $1 trillion deficit on a $20 trillion debt can’t go on, what will we replace it with when it very soon doesn’t? Historically gold. Whatever gold exists in the nation’s coffers, whether one coin or 8,000 tons, is used to as the national wealth, and fronted by paper to re-boot the currency. With some additions such as oil and real estate, this was the solution in Spain, France, Germany, and the Soviet Union among hundreds of fiat defaults. Why? Because at a time of broken promises — real goods, commodities that can be seen, touched, and used – are the tangible proof of wealth, requiring no trust, and from which the human trust system of paper and letters of credit can be rebuilt.

But in these complicated, digital times perhaps that’s too simplistic. Perhaps we have grown smarter than all our fathers and this time it will be different. Will it really be the same? Let’s look at how the system works now.

Before WWI, the world was on the gold standard. This had variations, exceptions, corruptions, but on the whole there was gold in the back that was fronted by paper promises issued by private banks. The paper moved, the promises were delivered by telegraph and telephone, and the gold remained in the vaults. It was only when men felt unsure of the truth of the promise they could and did demand delivery, called the bluff, and the bank did – or ominously didn’t – deliver the gold, and thereby keep the paper system in line with reality, with real wealth, and with the economy. This method kept men and nations honest, mostly.

The main part is that the gold didn’t move: it stayed in the same vaults and its ownership changed, just like today. It didn’t matter how much gold existed: it simply changed price, just like today.

All this changed after WWI. The nations had so impoverished themselves that they could no longer repay their real debts and restore their currencies following a 1,000 year tradition of inflating during wars and deflating after. The deflation was too high for Britain and France even while removing the total wealth of Germany, and they began to cheat, double-counting the gold on their books to relieve the pressure. And so the non-gold system began. With other causes, the inflation of this change began to be felt through the Roaring 20’s, until when the phantom money was called on – as was tradition when people began to suspect that the paper they owned was no longer backed with adequate real goods – the illusion popped.

The inflation was shown to be a fraud supported by the highest powers in government and finance, and the real economy withdrew their lack of trust until the matter was fixed. It wasn’t. As the system was fundamentally unchanged and no trust was restored, the rich were protected and law and property rights were trampled in a decade of Tom Joads, the economy never recovered. Although destroying half the nations on earth restored the real balance between paper fantasy and real production, the unemployment that never existed before WWI was never cured and has continued, ever worsening to this day. But note: before, during, and after the Depression, there was the same amount of gold. The gold did nothing, it was meaningless, only the paper promises over it expanded and contracted.

With the systemic dishonesty still in place preventing the books from matching the real wealth and production, the economy soon returned to a diseased state. While gold was illegal for men to own, the rich do as they please and as tradition, removed the gold of the United States to hold them to truth and honesty from printing too much fake money for guns and butter. They withstood the 12 year bank run until, in 1971, they folded, having lost 2/3s of the national savings, gold.

 

The world was now in uncharted territory. Much more than they never returned to honesty and a gold standard after WWI, they never attempted it after WWII, going to the -Bretton Woods” standard: the world would use the US$ as the standard, and the US$ would be backed with their 20,000 tonnes of gold. Now there was no gold, no gold standard, only unbacked US$ paper, a debt you could neither call on nor prove. As Nixon’s Treasury Secretary Connally said: “the dollar may be our currency, but it’s your problem.’

Inflation started immediately, and as the U.S. still resisted re-establishing physical trust, the connection between the books and reality, they quickly spiraled into South American malaise and high inflation, as seen in the gold price. From $20/oz, or rather a dollar value of 0.029, the dollar ran to 0.0011 – 1/26th of its former price — and looked to disappear altogether. This was not unexpected as fiat currencies on average live 40 years before collapsing. If you take 1941 as the start date, the unbacked US$ would have collapsed in 1981, exactly when it did. What to do? How to re-start the system without having to actually reform, give up war, be honest, and return to trust?

Henry Kissinger had the plan. As no one on earth was on the gold standard – not really – the US$ had only two legs, its worldwide use and military force. He made use of them both by demanding the Saudis accept only US$ for oil transactions. Although U.S. production was diminishing, the U.S. and Saudi Arabia were still the two largest oil producers at that time. Most other nations imported oil, especially Europe.

To have assurity of access to that oil — and not run afoul of the U.S. military – they needed to keep a substantial portion of their national accounts in US$, or more technically U.S. Treasury debt, sparking not just the ability, but the REQUIREMENT of a massive U.S. deficit. Kissinger just discovered social media: the truth that virtual things have value simply because other people use them. This was for all practical purposes the first virtual currency, existing only in room-sized mainframes in central banks worldwide. The world’s currency now looked like this:

 


(Courtesy of Dr. Willie)

A virtual currency backed by nothing, based on the usage in trade. But that isn’t a full chart and isn’t meant to be. On the side, back in the corners, the US$ was still convertible to gold for the “right kind of people”, using delivery in NY and London to banks in Switzerland. The volumes of US$ grew to trillions while the gold component withered to billions, yet still the Saudis banked billions in gold before it was recently stolen from their Swiss accounts, lawsuits pending. Why? Because there is still no trust between nations and billionaires who have a long history of cheating each other. The gold-in-hand safety valve existed to retain some trust, however distant, in the now-digital system.

 

“Gold is a currency. It is still, by all evidence, a premier currency, where no fiat currency, including the dollar, can match it.” –Alan Greenspan, 2014 interview of the Council on Foreign Relations.

So is the system still gold backed with gold as the “premier”, that is, first, real, and primary currency as Greenspan said? You tell me:


Apart from the Iraq war, the price of oil has been stable for 50 years. In 1950, two silver dimes would buy a gallon of gas. In 2018 two silver dimes are worth $2.22, or the price of a gallon of gas, minus the new taxes. Meanwhile the US$ value has dropped steadily:


Doesn’t that mean that it’s still gold and not the dollar that is the standard, the “store of value”, and the “reserve currency”, however unspoken? If not and it’s a relic, a rounding error we cannot return to, why, as Ben Bernanke was asked, do all the banks and nations still own it?

 

Back to the $20,000,000,000,000 debt the U.S. as reserve currency was REQUIRED to issue, it’s now been 40 years since 1978: what happens when the U.S. Dollar disappears as all fiat currencies do? Because it seems we would have to do something. It may be that even before 1988, people already knew this conversion, this transfer, must happen roundabout 2018:

If the old currency burns as predicted 30 years ago, what next? Will it be replaced by a gold coin or a “zero” coin, chained under the fleur-de-lis? It would seem the new currency must be trusted, which is the original problem, must be a replacement in trade, and must be large enough to handle what are now multi-billion trade and multi-trillion Forex flows. Is the answer gold? Well yes…and no. Certainly China thinks so:

And Russia:


And for that matter Germany and Holland and even Texas, who have repatriated their gold back home. But there’s one little problem:

These are the official western gold reserves; however, while the gold base remained stable, the overall financial system has expanded. This can be seen in all paper assets, but a good example can be found here:

That’s what? A 20,000-fold rise? And this is only marking “credit”, not equities or cash. We are indeed in an inflationary period: inflation in assets owned by the 1%. How out of line is this? Here’s the kindred chart in productive terms, GDP:

A 9-fold increase in ability versus 20,000-fold increase in promises. Sounds like someone won’t get paid. And you know what bankers and economists call that?

Default. Massive, system ending default, the size of WWI or the Great Depression. That’s how fiat standards end.

How big would that be? Here are some relative sizes:

Actually, that’s pretty understated. Derivatives in 2018 may be as much as $2 QUADRILLION. No one knows. Compare to this:

$3 Trillion in gold. Now that’s “official” gold and we already showed that “official” Chinese gold is 4,000 tonnes when it may be as high as 30,000 tonnes, but the principle is the same: gold is wildly smaller than the needs of the financial system. Or is it? In previous financial inflations…which I just showed we have had since 1971, in 20,000x scale…gold simply rose until it became the right size.

It’s perfectly simple. Gold rises 20,000 times or however much it must to re-back the system. It always has before, even in 1979 when the price rocketed from $35 to $880 where US debt to gold holdings ratio stabilized at a very reasonable 10:1…the classic level of fractional reserve trust. If China officially owns 5,000 tonnes, and Russia 2,000, with the west also 15,000 collectively, we have 22,000 tonnes over what BusinessInsider says is $160 Trillion in assets, and you get $7.27B/tonne or $226,000/oz.

That’s a 188x increase. 1979 was a 25x increase on an awful lot less trouble, inflation, and fraud. That’s only 7x larger. Is that unreasonable? With 40 years of inflation and very little comparative rise in gold, why shouldn’t it catch up as it did in 1979? So gold will rise and we’ll have a $200,000 gold standard? That’s what will happen?

Not so fast. We COULD have a gold standard, and China, Russia and other major nations appear ready to do so if necessary, but remember we didn’t return to the gold standard last time either. Instead, we cheated and moved to a digital standard stored in ancient mainframes. Why wouldn’t we just cheat again? Back to this:

The two problems in the original chart are trust and price. The price must restore a connection between reality -real value and real production- and price; and the “reserve currency”, the medium of exchange, must be a trusted agent or method. Why would we need coins in our pockets to make that happen? For that matter, why would we need banks, who have widely proven to be the most corrupt, untrustworthy element in the whole system? We can’t go to a new system if it’s the same as the old: that’s WHY the system failed and cycles from gold to silver, silver to paper, paper to gold. We can’t go from paper to paper, that won’t work; but we also can’t so easily go to gold, asking an 800-fold increase since 2000. It would have the same disruptions Weimar had that brought Hitler, or the Jacobins had that brought Napoleon, or that Venezuela has today. And why should we? There’s no need.

The chart above has the US/Saudi oil as the critical mass of trade that allows the US$ reserve. But that isn’t necessarily true today. Today the mass of trade is in goods to and from China. But China isn’t large enough, deep enough, or trusted enough to be the new world currency. And why should they? The reserve currency is what just hollowed out and bankrupted the United States: they would just be imitating our faults. We’d also be moving from one untrusted, unbacked currency to another, and history says that doesn’t happen. So why don’t we do this:


(Courtesy Dr. Willie)

China demands not US Treasuries in NY as collateral to ship goods as presently, and not Yuan bonds, but gold bullion posted in their hot new Shanghai market, which allows physical delivery on demand. This bullion never moves as collateral, but is simply posted by one party then released on delivery. Shanghai is already larger than London, and the largest banks are already in China, which probably has the largest economy. The West and their banks are a has-been: we’re only admitting to a reality that happened years ago.

This solves our two problems: how do we know we’re returning to fair trade, like-for-like? Real goods on container ships are trading for real goods in vaults. How do we know it’s fair, mostly? You can convert the Yuan-sponsored, gold trade note to physical delivery from Shanghai, a thing which is no longer truly possible in London and NY. Will this reversion increase the gold price? Probably. How much? Every number is a state secret, but assuming the 10:1 ratio the United States showed in 1980, let’s say it’s 1:10 of our $226,000 number above or $22,600/oz. That’s reasonable, practicable, and neither stops business nor starts wars. We can do it today, and given China, Russia, Japan, Asia, Australia, and even London appear to be joining China’s AIIB front bank, I would say it already IS happening.

Which leads to one more problem. Certainly TODAY you can take gold delivery in Shanghai, but as London, NY, and the Saudis discovered, the first thing that happens once you build a system of trust is to close the doors and cheat on it. How do we know the gold is there? Even though Shanghai is a “third party” allowing delivery, who’s to say they will be tomorrow? The banks are notorious for “hypothecating”, doubling, tripling the gold on their books with accounting fraud backed by the full faith and credibility of governments, and no one’s in the mood for trusting the Chinese any more than Wells Fargo or DeutscheBank. That would drop us back to a hard gold standard, a $220,000 price, a halt to world trade, and possible world war we were trying to avoid. We need an accounting method that is better trusted and can’t be gamed. How to fix it?

 

The gold in Shanghai has a chain of custody, no different from “London Deliverable” standards we have today. An original audit, adjusted for receipts and deliveries is all we need. Which is where we add the blockchain. With it, Shanghai cannot double the gold on their books like Europe did in 1922 or the CME does today, marking it both received and loaned, because the blockchain only allows one position, one state at a time. Gold assayed and entered by refiner is tagged to a kilo, and you can follow that kilo bar through the system, not with double counts and vanishing, ever-changing serial numbers as the Federal Reserve and the GLD ETF showed.

Can it be cheated? All systems can be cheated, that’s the nature of men. But it makes it much harder, hard enough to establish adequate trust in banks and governments that otherwise would go to war. Will it be tied to Bitcoin? Yes, but no differently than it will be tradable to the Thai bhat or the ruble. With near-zero cost conversions, all currencies, crypto or otherwise, will be far more interchangeable and thus to some extent identical. They may even disappear, as happened when Jackson closed the 2nd central bank 182 years ago and the nation essentially moved to private currencies.

What will happen to the Dollar? It will still exist, but in some new, revised form. But the US$ today is transferring 3% of the nation’s wealth from the poor to the rich via inflation. Do we really want to keep it? And if it’s not a store of value and it’s already not the reserve currency — we just showed it’s a diluted proxy for gold and oil — why should the reformed US$ be any different? The dollar will be our national currency, still diluted and still referring to the real currency: gold, the attached Trade Note, and its crypto accounting. Until the next fraud and next crisis, perhaps in 2058.

 

And that’s the long story of how we leave the present debt-backed U.S. paper dollar and move to a Yuan-sponsored gold trade note that is a gold-backed cryptocurrency. In some ways we already have. Watch and see as they have the public opening of a structure planned and established years ago.

 

 

Jan 132017
 
 January 13, 2017  Posted by at 10:28 am Finance Tagged with: , , , , , , , , , , ,  


Edgar Degas Dancers in Blue 1895

Assange Agrees To Extradition If US Releases Chelsea Manning (AFP)
China Posts Worst Export Fall Since 2009 As Fears Of US Trade War Loom (R.)
Fiat Chrysler Shares Plunge 13% After EPA Cheat Software Accusation (CNBC)
Wages For Lowest-Paid UK Men Have Been Stagnant For Two Decades (Ind.)
Abolish Central Banks And Slay The Zombies (Planet Ponzi)
WHO Warns Of Outbreak Of Virulent New ‘Economic Reality’ Virus (Steve Keen)
The Utter Stupidity Of The New Cold War (SCF)
Obama’s “Farewell To Arms” As War Presidency Ends (SCF)
Massive Security Preparations Under Way For Inauguration (Fox)
Germany’s Schaeuble Urges ECB To Start Unwinding Stimulus This Year (CNBC)
Germany To Return New Asylum Seekers To Greece From March (AFP)
Greece’s Healthcare System: Train Wreck In Slow Motion (Occupy)
Weitergeleiteter Spendenaufruf für Griechenland (Das Gelbe Forum)

 

 

What does it say about us if our best and brightest feel compelled to sacrifice themselves? Where is this going to leave us? Where would we be without Assange, Snowden and Manning? Certainly not in a better place.

Assange Agrees To Extradition If US Releases Chelsea Manning (AFP)

WikiLeaks founder Julian Assange will agree to be extradited to the United States if President Barack Obama grants clemency to the former US soldier Chelsea Manning, jailed for leaking documents, the company said on Thursday. “If Obama grants Manning clemency Assange will agree to US extradition despite clear unconstitutionality of DoJ (US Department of Justice) case,” WikiLeaks wrote on Twitter. Assange has been living in the Ecuadoran embassy in London since June 2012 to avoid extradition to Sweden to face sexual assault allegations. The Australian former computer hacker said he fears Stockholm will in turn extradite him to the US, where he angered Washington over WikiLeaks’ publication of thousands of US military and diplomatic documents leaked by former US soldier Manning.

Manning is currently serving a 35-year sentence in solitary confinement for handing over the 700,000 sensitive documents from the US State Department. Supporters of the transgender soldier are putting their hopes in a pardon by Obama before he leaves office later this month, although the White House has said the president will not be granting her clemency. Manning has already made two suicide attempts and currently has an appeal pending before a military court. Washington has maintained the threat of prosecuting Assange over the 2010 leak, though no charges have been filed. WikiLeaks’ post on Twitter was accompanied by a letter addressed to US Attorney General Loretta Lynch, in which Assange’s lawyer Barry Pollack argues there is no legitimate basis for continuing the investigation into the WikiLeaks founder.

Read more …

“The trend of anti-globalization is becoming increasingly evident, and China is the biggest victim of this trend..”

China Posts Worst Export Fall Since 2009 As Fears Of US Trade War Loom (R.)

China’s massive export engine sputtered for the second year in a row in 2016, with shipments falling in the face of persistently weak global demand and officials voicing fears of a trade war with the United States that is clouding the outlook for 2017. In one week, China’s leaders will see if President-elect Donald Trump makes good on a campaign pledge to brand Beijing a currency manipulator on his first day in office, and starts to follow up on a threat to slap high tariffs on Chinese goods. Even if the Trump administration takes no concrete action immediately, analysts say the specter of deteriorating U.S.-China trade and political ties is likely to weigh on the confidence of exporters and investors worldwide.

The world’s largest trading nation posted gloomy data on Friday, with 2016 exports falling 7.7% and imports down 5.5%. The export drop was the second annual decline in a row and the worst since the depths of the global crisis in 2009. It will be tough for foreign trade to improve this year, especially if the inauguration of Trump and other major political changes limit the growth of China’s exports due to greater protectionist measures, the country’s customs agency said on Friday. “The trend of anti-globalization is becoming increasingly evident, and China is the biggest victim of this trend,” customs spokesman Huang Songping told reporters. “We will pay close attention to foreign trade policy after Trump is inaugurated president,” Huang said.

China’s trade surplus with the United States was $366 billion in 2015, according to U.S. customs data, which Trump could seize on in a bid to bring Beijing to the negotiating table to press for concessions, economists at Bank of America Merrill Lynch said in a recent research note. A sustained trade surplus of more than $20 billion against the United States is one of three criteria used by the U.S. Treasury to designate another country as a currency manipulator. China is likely to point out that its own data showed the surplus fell to $250.79 billion in 2016 from $260.91 billion in 2015, but that may get short shrift in Washington. “Our worry is that Trump’s stance towards China’s trade could bring about long-term structural weakness in China’s exports,” economists at ANZ said in a note.

Read more …

And now for the rest…

Fiat Chrysler Shares Plunge 13% After EPA Cheat Software Accusation (CNBC)

Shares of Fiat Chrysler fell Thursday after the U.S. Environmental Protection Agency accused the automaker of using software that allowed excess diesel emissions in about 104,000 vehicles. The U.S.-listed shares of Fiat Chrysler plunged as much as 19% Thursday after Reuters first reported the news. The automaker’s stock was briefly halted after the EPA made the announcement. The stock later recovered some of those losses and ended the day about 10% lower. The agency alleged Fiat Chrysler violated the Clean Air Act by installing and failing to disclose “engine management software in light-duty model year 2014, 2015 and 2016 Jeep Grand Cherokees and Dodge Ram 1500 trucks with 3.0 liter diesel engines sold in the United States.”

The undisclosed software results increased nitrogen oxide emissions from the vehicles, the EPA said. The Justice Department is reportedly working with the EPA on this issue. The company could be liable for civil penalties and injunctive relief for the alleged violations, the EPA said. It said it is also investigating whether the auxiliary emission control devices constitute “defeat devices,” which are illegal. On Thursday, Attorney General Eric Schneiderman said in a statement he was deeply troubled by the evidence the EPA presented. “My office was proud to take a leading role in the multi-state investigation of Volkswagen that uncovered flagrant abuses of New York’s environmental laws and, in the case of VW, a culture of corruption that enabled blatantly illegal conduct to persist over many years,” he said.

Read more …

Huge move towards part-time work.

Wages For Lowest-Paid UK Men Have Been Stagnant For Two Decades (Ind.)

Pay for the poorest fifth of men has been flat for twenty years, according to a new report for the Institute for Fiscal Studies. At the same time the proportion of this low-paid group working part time, rather than full time, has shot up from 10% to 25% over the same period. The research helps explain what has become something of an inequality puzzle in the UK, in which official headline gauges have shown flat-lining income inequality since the early 1990s and yet there is simultaneously a widespread impression that inequality has been rising strongly.

The IFS research shows that average inflation-adjusted annualised weekly pay growth for the lowest fifth of the male income distribution was zero or less between 1994-95 and 2014-15, while for men further up the income distribution real weekly pay has grown. And while part-time work among the lowest paid men has ballooned, rates have not changed for better paid men. This all means that among working men wage inequality has increased over the past two decades. “The rise in household earnings inequality has been the product of a complex set of interactions between trends in hours and wages for men and women, but it is largely due to a rise in male earnings inequality,” said the IFS report.

Read more …

Mitch with the obvious.

Abolish Central Banks And Slay The Zombies (Planet Ponzi)

Have the [BOE]-enabled grotesque bubbles in the bond, stock and property markets or the eight years of “temporary emergency measures” and zero-interest-rate policies created infrastructure investment? Job creation? Savings? No, no and no. It has killed savers, students and seniors while generating record bonuses for chief executives. While earnings may have peaked almost 18 months ago, stock prices keep bubbling and wealth inequality continues to surge to record highs — along with homelessness and underemployment. Will Carney blame Brexit, Putin or Trump for the upcoming problems? Why not? Certainly, extreme valuations enabled by the Bank recklessly allowing debt, credit and leverage to skyrocket out of this universe had nothing to do with the coming collapse — nothing to see here, look away.

It is not only the UK but also global central bank policies that have broken our financial system beyond repair. The world’s oldest bank, Banca Monte dei Paschi di Siena, founded in 1472, is now an insolvent zombie bank thanks to the handiwork of JPMorgan, Deutsche Bank and Nomura. They sold Monte billions of dollars of derivative trades it did not understand. These predictably exploded, leaving the bank bust. JPMorgan, Deutsche and Nomura made a fortune — and Monte’s shareholders and depositors, and EU taxpayers, will get slammed with the massive bailout tab. The new normal is apparently a world of financial fraud where the only rules which apply are too big to fail, bail or jail and too connected to prosecute —steal all you can, while you can, with impunity.

After the financial crisis, I wrote extensively exposing the toxic “culture of fraud” at Deutsche, JPMorgan, Goldman Sachs, RBS, Lloyds and Barclays. So what was done? Can you guess the number of staff at these banks jailed for the numerous frauds committed during the Great Financial Crises? Zero. That’s not capitalism! Capitalism doesn’t have zero accountability or zero transparency. This is ethically, financially and socially wrong. Much of it is also, in my opinion, illegal and should be punished by long jail terms. No need for new regulation — we need to enforce existing rules rather than repeatedly turning a blind eye.

Market manipulation by central banks has destroyed price discovery in every asset class and market. This has crushed the basic concept of capitalism. Central banks now pick winners and losers rather than letting free markets decide. The Swiss National Bank holds $140 billion in stocks, including shares in Apple, Google and Amazon. Valuations, growth projections and normal business cycles are all unnecessary. The central banking bubble factory forces investors to chase yields resulting in zombie corporations and zombie banks that inhibit growth, infrastructure spending and the creation of productive assets.

Read more …

‘The WHO therefore recommends complete avoidance of “Reality” as the only effective strategy for those wishing to remain as Mainstream Economists’.

WHO Warns Of Outbreak Of Virulent New ‘Economic Reality’ Virus (Steve Keen)

The WHO today warned of a virulent new virus affecting vulnerable groups in the Mid-West and Eastern USA. The outbreak, which began in the Mid-West’s extensive Great Lakes ‘Freshwater’ river system, has recently jumped the ‘Saltwater’ barrier, meaning that the entire population of its target species – ‘Mainstream’ economists – is now at risk. Speaking on behalf of the WHO, Dr Cahuc explained that the virus works by turning off the one genetic marker that distinguishes this species from the rest of its genus, the Human Race. This is the so-called ‘Milton’ gene (Friedman 1953), which goes dormant in other Humans as they pass through puberty. Its inactivity reduces their imaginative capacity, making it impossible for them to continue believing in such endearing infantile fantasies as the Tooth Fairy and Santa Claus. While regrettable, this drop in imagination is necessary to prepare Humans for the adult phase of their existence.

‘Professor Milton Friedman found a way to re-activate this gene during PhD training, using his “as if” gene splicing technique’, Dr Zylberberg elaborated. ‘This enabled a wonderful outpouring of imaginative beliefs by Mainstream Economists, which gave birth to concepts like NAIRU, Money Neutrality, Rational Expectations, and eventually even DSGE models. This wealth of imagination was regarded by Mainstream Economists as a more than sufficient compensation for returning to the child-like phase of the Human species.’ The Milton gene conferred other advantages on Mainstream Economists, which have been highly important to their success in competition against their rival species, the Heterodox Economists. ‘Being endowed with a child-like nature, the arguments of Mainstream Economists were treated with the low level of critical evaluation that adult humans normally reserve for conversations with their infant stage’, said Dr Cahuc.

‘This made their policy recommendations much more likely to be adopted, instead of the more complicated proposals put forward by their niche rivals’, he said. The new virus – named ‘Reality’ – de-activates the Milton gene once more. ‘Consequently’, Dr Cahuc warned, ‘the very beliefs that define this unique species are at risk. Unless we are very careful, it may become extinct!’. Unfortunately, there is as yet no known cure to this virus. ‘The WHO therefore recommends complete avoidance of “Reality” as the only effective strategy for those wishing to remain as Mainstream Economists’, Dr Cahuc concluded. However, this strategy is made extremely difficult by one cunning characteristic of the Reality virus: after an initial phase of disorientation and distress, its sufferers begin to experience pleasure, and actually want to pass the virus on to others. ‘Its transmission mechanism is a particularly insidious aspect of this disease’, Dr Cahuc lamented.

Read more …

Amen.

The Utter Stupidity Of The New Cold War (SCF)

It seems so strange, twenty-seven years after the fall of the Berlin Wall, to be living through a new Cold War with (as it happens, capitalist) Russia. The Russian president is attacked by the U.S. political class and media as they never attacked Soviet leaders; he is personally vilified as a corrupt, venal dictator, who arrests or assassinates political opponents and dissident journalists, and is hell-bent on the restoration of the USSR. (The latter claim rests largely on Vladimir Putin’s comment that the dissolution of the Soviet Union was a “catastrophe” and “tragedy” – which in many respects it was. The press chooses to ignore his comment that “Anyone who does not miss the Soviet Union has no heart, while anyone who wants to restore it has no brain.” It conflicts with the simple talking-point that Putin misses the imperial Russia of the tsars if not the commissars and, burning with resentment over the west’s triumph in the Cold War, plans to exact revenge through wars of aggression and territorial expansion.)

The U.S. media following its State Department script depicts Russia as an expansionist power. That it can do so, so successfully, such that even rather progressive people—such as those appalled by Trump’s victory who feel inclined to blame it on an external force—believe it, is testimony to the lingering power and utility of the Cold War mindset. The military brass keep reminding us: We are up against an existential threat! One wants to say that this — obviously — makes no sense! Russia is twice the size of the U.S. with half its population. Its foreign bases can be counted on two hands. The U.S. has 800 or so bases abroad. Russia’s military budget is 14% of the U.S. figure. It does not claim to be the exceptional nation appointed by God to preserve “security” on its terms anywhere on the globe.

Since the dissolution of the USSR in 1991, the U.S. has waged war (sometimes creating new client-states) in Bosnia (1994-5), Serbia (1999), Afghanistan (2001- ), Iraq (2003- ), Libya (2011), and Syria (2014- ), while raining down drone strikes from Pakistan to Yemen to North Africa. These wars-based-on-lies have produced hundreds of thousands of civilian deaths, millions of refugees, and general ongoing catastrophe throughout the “Greater Middle East.” There is no understating their evil. The U.S. heads an expanding military alliance formed in 1949 to confront the Soviet Union and global communism in general. Its raison d’être has been dead for many years. Yet it has expanded from 16 to 28 members since 1999, and new members Estonia and Latvia share borders with Russia. (Imagine the Warsaw Pact expanding to include Mexico. But no, the Warsaw Pact of the USSR and six European allies was dissolved 26 years ago in the idealistic expectation that NATO would follow in a new era of cooperation and peace.)

And this NATO alliance, in theory designed to defend the North Atlantic, was only first deployed after the long (and peaceful) first Cold War, in what had been neutral Yugoslavia (never a member of either the Warsaw Pact nor NATO), Afghanistan (over 3000 miles from the North Atlantic), and the North African country of Libya. Last summer NATO held its most massive military drills since the collapse of the Soviet Union, involving 31,000 troops in Poland, rehearsing war with Russia. (The German foreign minister Frank-Walter Steinmeier actually criticized this exercise as “warmongering.”)

Read more …

it’s time to let this sink in. Tearful goodbyes or not.

Obama’s “Farewell To Arms” As War Presidency Ends (SCF)

Eight straight years of warmongering come to an end as US President Barack Obama bows out with his «farewell to the nation» speech this week, as fawning American media dubbed his valediction. In reality, Obama’s outgoing address should have been billed as a «farewell to arms» made by arguably one of the most belligerent presidents to ever have occupied the White House. Only in exceptionally delusional America could such a pernicious paradox be presented as something honorable and sentimental. Obama, the 44th US president, may have been the first black president and winner of a Nobel peace prize during his first year in office in 2009. But apart from those dubious accolades – championed by supposedly liberal Hollywood celebrities and media pundits – his actual record in office is one of blood-soaked disgrace.

Instead of ending American overseas wars as he had promised back in 2008, Obama expanded on his predecessor George W Bush’s criminal foreign interventions. At least seven countries – Iraq, Afghanistan, Pakistan, Libya, Syria, Yemen and Somalia – have been routinely bombed under Obama’s watch as the US Commander-in-Chief. That’s one repugnant record. Last year alone, the US military reportedly dropped over 26,000 bombs around the world killing countless thousands of people, the exact number buried under official secrecy and American mainstream media indifference. At that rate, American anti-war campaigner Medea Benjamin estimates that US forces deployed three bombs every hour of every day for the whole of 2016. This death from the skies included Obama’s personal ordering of drone assassinations during his weekly Terror Tuesday briefings from Pentagon chiefs, the use of which increased 10-fold under his command, killing thousands of innocent civilians as «collateral damage».

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Could be quite the party.

Massive Security Preparations Under Way For Inauguration (Fox)

The stage is set for President-elect Donald Trump’s inauguration – not just the traditional swearing-in platform on Capitol Hill, but a massive security presence amid protest plans to “shut down” the nation’s capital. Most crowd estimates for the Jan. 20 festivities are far short of the record-setting 1.8 million visitors for President Obama’s historic 2009 inauguration. But the throngs of spectators and protesters alike are enough to create transit, security and hospitality challenges. “Security is my greatest concern,” Missouri GOP Sen. Roy Blunt, chairman of the Joint Congressional Committee on Inaugural Ceremonies, recently said. “No question that on inaugural day, this would be the most appealing target in the world.” He suggested the city could have as many as 750,000 demonstrators alone.

More than three-dozen law enforcement agencies are working together on security and safety plans in anticipation, including the Capitol Police, FBI, Secret Service and National Guard. Roughly 7,500 Guardsmen from across the country will come to Washington, along with about 3,000 police officers from various states, with the Secret Service taking the lead on security. Essentially everybody involved already is rehearsing for the big weekend, which kicks off next Friday morning with the swearings-in on the Capitol’s West Front, followed by official events including the traditional parade on Pennsylvania Avenue to the White House and the inaugural balls. The Joint Task Force – National Capital Region – 58th Presidential Inauguration has held several “table top” sessions in which agencies plot strategy over a large-scale, three-dimensional map.

“It’s a rehearsal, but in the military we call it a drill,” Navy Cmdr. Jonathan Blyth, the group’s spokesman, told FoxNews.com on Wednesday. “We’ve been preparing for this since the last inauguration. We’re focused to protecting and honoring a new commander in chief.” The task force and its Capitol Hill counterpart are holding a “dress rehearsal” this weekend for the swearings-in, the Presidential Review of troops and the parade along the roughly 2.5-mile stretch of Pennsylvania Avenue. Several protest groups planning large-scale demonstrations have permits in place and have already held organizational meetings, among them the collaborative DisruptJ20. “We’re planning a series of massive, direct actions that will shut down the inauguration ceremonies and any related celebrations,” the group says. “We’re also planning to paralyze the city.”

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“Schaeuble and other German lawmakers have warned the ECB risks fuelling support for eurosceptic parties..” No, it’s Schaeuble who fuels that support.

Germany’s Schaeuble Urges ECB To Start Unwinding Stimulus This Year (CNBC)

The ECB should start unwinding its ultra-loose monetary policy this year, German Finance Minister Wolfgang Schaeuble said in an interview to be published on Friday, adding that it would not be easy. “The ECB will have the tough task of getting out of the ultra-expansionary monetary policy,” Schaeuble told the Sueddeutsche Zeitung newspaper. “It would presumably be right if the ECB dared to exit this year”. Schaeuble added it was “possible and necessary” for the next government to lower taxes after Germany’s general election in September. He said forecasts that inflation could reach 3% in Germany this year would exacerbate concerns about current low interest rates. While admitting he was no fan of the ECB’s monetary policy, he added, “The ECB has a mandate for the eurozone, and it carries it out well.”

Schaeuble said the core issue was that a number of eurozone countries had not been able to boost competitiveness as required. “The problem is the weakness of the other countries, not Germany’s strength,” he said. The conservative minister said it would take a great effort to convince German citizens that the common currency provided more employment, social and business benefits than risks and negative consequences. To help Germany make the argument, he said it was essential that Italy and other countries stuck to the agreed rules. Schaeuble’s deputy Jens Spahn told Reuters last week that a “prudent start to the exit” of the ECB’s expansive monetary policy was desirable. The ECB aims for inflation of just under 2%, but it has undershot its target for years. To fight off deflation, the central bank has cut interest rates to zero and launched a massive but controversial bond-buying programme. Schaeuble and other German lawmakers have warned the ECB risks fuelling support for eurosceptic parties if it does not change course soon.

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There are new lows to be achieved out there. But go ahead, this too will make the EU crumble.

Germany To Return New Asylum Seekers To Greece From March (AFP)

Germany will begin returning asylum seekers to Greece from mid-March, an interior ministry spokesman told AFP on Thursday, essentially lifting a five-year suspension on such transfers because of poor conditions there. Under the EU’s so-called Dublin rules, would-be refugees must file for asylum in the first member-state of the bloc they enter, often the Mediterranean nations of Greece and Italy. If asylum seekers have travelled on to other EU nations, they are to be returned to their first port of call. But that requirement had been halted for Greece, which together with Italy has been the main point of entry for the more than one million immigrants who have entered the bloc since 2015 fleeing war and poverty in the Middle East and Africa.

A German interior ministry spokesman told AFP that Germany would reinstate the Dublin rule in two months’ time and return newly arrived asylum seekers to their first EU port of call. “In line with the recommendation from the European Commission, Germany believes that such transfers will be possible from March 15th,” said the spokesman, Tobias Plate. The EU recommended on December 8th that member states resume sending asylum seekers back to Greece from March next year, after such transfers were halted since 2011. Athens has criticized the EU’s assessment, with Migration Minister Yannis Mouzalas saying the current legal framework was “unable to respond to the historic migration flows and leaves the burden to the member states that migrants first arrive in”.

German refugee relief group Pro Asyl has also raised concerns, warning that the measure would put the asylum system in Greece, a country still recovering from a deep debt and economic crisis, under further pressure. Photos of refugees living in tents amid heavy snowfall in Greece caused outrage recently, and the European Commission on Monday called such conditions “untenable”.

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This is just too sad.

Greece’s Healthcare System: Train Wreck In Slow Motion (Occupy)

In 2014, the Greek health department cut off its cancer screening prevention program, despite a number of warnings issued by professionals both within the country and abroad that such an action would lead to an explosion in otherwise preventable cases turning serious. According to a statement by Evgenia Thanou, general manager for Doctors of the World, “There are people with tumors who can’t afford the cost of chemotherapy, which costs €2,500 for a single dose. As a result there are people who have died because they have not been able to get the correct treatment from the point of diagnosis.” The rationale was that the budget cutbacks, in the range of 55%, would only take place on a short term basis, just long enough to allow for the country to recuperate from recently imposed austerity measures.

Charges for outpatient visits were also increased by 50% per visit, and almost 200 medicines were de-stocked by pharmacies. A further consequence was the artificial drug shortage, caused by companies like Novo Nordisk, which halted insulin shipments to Greece unless the retail prices were raised in a supposed effort to curb hoarding and black market export by professionals. Almost three years later, this policy is still in effect. The result was the gradual closure of 850 medical clinics, both in the capital Athens as well as in the countryside. Ten thousand beds have been shut down across the country, and 30,000 healthcare professionals removed from frontline positions. Those who remained saw their wages cut by at least 50%.

Among 11 hospitals that have shut down, three are psychiatric while the rest include rural clinics in remote parts of the country, leaving locals without access to a professional in the event of an emergency. The crisis led to the creation of numerous volunteer healthcare organizations in 2015, but their contributions couldn’t put a dent in the number of patients unable to afford any healthcare options. That same year saw the mass migration of thousands of recently graduated or established Greek healthcare professionals across Europe, with almost 4,000 headed for Germany and the Nordic countries seeking steadier employment in a more welcoming professional environment. The results of the brain drain haven’t yet been entirely felt, but experts agree the long-term effects could cripple the country’s prospects for decades to come.

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Taking my Automatic Earth for Athens fund directly to Germany.

Weitergeleiteter Spendenaufruf für Griechenland (Das Gelbe Forum)

Raul Ilargi Meijer von The Automatic Earth ist wieder in Athen und versucht, die schwierigen Bedingungen zu erleichtern, die in Griechenland bestehen. Die Aufmerksamkeit der Medien und der Welt ist abgelenkt, obwohl sich selbst diese Bedingungen zunehmend verschlechtern. Akute Probleme ziehen kollektive Aufmerksamkeit an, chronische aber leider nicht. Griechenland steckt tief in volkswirtschaftlicher Depression mit ausgewachsenem Liquiditätsengpass, Kapitalkontrollen, Massenarbeitslosigkeit, fehlender medizinischer Versorgung, Hungerepidemien und vielen anderen Schwierigkeiten.

Die von außen bereitgestellten Resourcen fließen zum größten Teil durch offizielle Kanäle, aber die Körperschaften, die mit der Auslieferung der Hilfen beauftragt sind, sind oft zu groß um zu erkennen, wo die wahren Bedürfnisse liegen, um dann rechtzeitig darauf zu reagieren, oder um die Mittel effektiv und effizient einzusetzen. Einfach gesagt neigen große Organisationen dazu, bürokratisch zu sein, und einen großen administrativen Wasserkopf zu haben, der viele Resourcen intern verschlingt. Als Außenseiter fehlen ihnen auch oft die kulturellen Verbindungen, welche notwendig sind um informelle Brücken zu bauen und Hilfmittelverteilung zu lenken. Die Regeln, welche die intitutionalisierte Hilfsindustrie befolgen muß, zum Beispiel die Bedingung für Hungernde, sich auszuweisen, bevor man berechtig ist, Lebensmittel zu erhalten, kann zu großen Hindernissen führen.

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