Reading time: 8,670 words, 24 pages, 20 to 35 minutes.
I’ve been reading so much bad news lately, I’m tempted to quit reading and watch the mindless drivel on TV. So instead of depressing you and myself by summarizing everything into a book-length post, I’ve divided this into three sections:
a) Recent ShadowStats’ headlines, and
b) Linked article titles and brief intro to numerous pertinent articles so you can select and read the ones you find interesting.
c) First, some commentary.
Never Argue with a Fool
“Never argue with a fool, onlookers may not be able to tell the difference.” – Mark Twain
I often tell people things they don’t want to hear. I’ve learned long ago; never argue. The more I argue the more defensive they become; the more solid becomes their resistance and then they never change.
Instead, I’ve learned to state my case and leave it at that. It’s amazing how often, weeks or months later; someone tells me what I told them. I bite my tongue to avoid saying “That’s what I told you”. Instead, I smile and congratulate them on their wisdom.
U.S. Economic Situation
“Two Charts Show Why the Obama Economy Sucks” by Ian Welsh
He says, “All of the blather about how the unemployment rate has decreased, the stock market is up, and so on, conceals the fact that there are less jobs for ordinary people, and they pay less. Yes, the rich are doing great, but that’s all.”
U.S. Quantitative Easing (QE) Ends?
Officially the U.S. Fed has ended almost 6 years of QE aka ‘liquidity injection’ aka endlessly printing counterfeit for the ultra-rich to convert to hard assets. However, wiser heads than mine have predicted “QE 4ever.” I’m inclined to concur. They’ve got a good thing going, why would they quit until they’ve stolen it all?
As I’ve mentioned many times, the correct course of action to resolve the Great Recession should have been a cleansing period of creative destruction; allowing stronger, healthier companies to buy out the weaker, insolvent ones in addition to purging non-performing debt. Instead, the weak were bailed out and debts increased so much it prevents normal market mechanisms from producing sustainable growth just as Japan did in the beginning of their downturn in 1990. They’ve been in a 25-year Depression ever since just as we are today and we’re both loathe to admit it.
Insane central banks have been QE’ing to no effect because the solution is not liquidity injection. Japan, has recently announced another gargantuan QE. The insanity never ends!
Global economies are sinking with enormous, non-performing debt and massive structural problems such as demographics, under-capitalized banks, staggering taxation and interventionist, over-regulation as I pointed out in Demography + Debt = Doom.
Economies continue to collapse despite fraudulent accounting gimmicks producing headlines like U.S. economy’s third-quarter growth rate revised upward to 3.9% deliberately ignoring the real inflation rate of 9% thus masking the reality of endless economic collapse.
China, Japan and The EU have recently opened wide the monetary spigots and cranked up their printing presses in a desperate attempt to staunch what John Rubino describes as a, “tidal wave of industrial deflation coming down the pike—- owing to two decades of world-wide central bank financial repression that has fueled vast malinvestments in mining, manufacturing, transportation and trade. That, in turn, will trigger a monetary race to the bottom by the central banks … Stated differently, last night’s central bank announcements were the starting guns for a monetary implosion that will soon shock financial markets and real production, trade, employment and incomes on a world-wide basis.”
“The US has had a relatively smooth few years because Fed policy was relatively easy and the dollar, as a result, was relatively weak versus the yen and euro. Now both of those trends have reversed in a big way … Where the previously-strong euro and yen pushed Europe and Japan into recession, a strong dollar will impose the same headwind on the US in 2015. So there’s a decent chance that a year from now we’ll be faced with a world in which debt monetization has failed in three of the four major economies and a strong currency has sucker-punched [the U.S] the last one standing.”
In other words, the next round of QE will be rolled out because the Fed, like the other insane central bankers keep doing the same thing over and over. Jim Sinclair says, “Another name of QE is Debt Monetization so expect DM to replace QE.” I’m sure the propaganda meisters will dream up some new name appropriately soothing to the ass media and their flock of sheeple.
It’s perhaps more than ironic that Rubino mentions “a year from now” because that aligns with Martin Armstrong’s forecast of 2015.9.75 (more on this below). Stay tuned and buckle up. 2015 will be one for the history books.
Bail-ins were discussed in several past posts. This is where depositors are fleeced of their bank accounts by insolvent governments desperate to cling to power. Do you really think it’ll stop there?
Pensions are next. I covered that about a year ago in Poland Purloins Private Pensions – Yours Next. Martin Armstrong recently wrote an interesting article titled, “Polish Pension Funds Seized by Government – Who is Next?” He says, “Poland seized private pension funds and have mandated those money to be invested in government bonds last February. Beware – this is coming to a theater near you … This is another strategy we have warned is on the drawing boards. One way even the USA can break its dependence on foreign capital is to stuff the private pension funds by law with government bonds.”
Remember, the price (value) of bonds goes down when interest rates go up. So governments will tell you they’re doing you a favor by safe-guarding your pension in government bonds coincidentally about the time they lose control of their Zero Interest Rate Policy (ZIRP). They will have found new suckers (us) for their worthless IOU’s.
By the way, Argentina also did it recently. And, the Financial Times reports the British “PM accused of overlooking potential UK pension fund investment.”
He is, “overlooking billions of potential investment held by British savers while asking foreign governments to put money into UK infrastructure, according to a major pension fund …”
And the banksters won’t be left out. Wall Street is already taking their cut of U.S. pensions. Murtaza Hussain, in an article titled “WALL STREET IS TAKING OVER AMERICA’S PENSION PLANS” writes, “a key part of its agenda has been a plan to move more and more of the $3 trillion dollars in unguarded government pension funds into privately managed, high-fee investments — a shift that may well constitute the biggest financial story of our generation that you’ve never heard of … Of the $3 trillion in public assets currently in pension funds throughout the country, almost a quarter of that has already found its way into so-called “alternative investments” like hedge funds, private equity and real estate. That translates to roughly $660 billion of public money now under private management, invested in assets that are often arcane and opaque but that offer high management and placement fees to Wall Street financiers.” You can bet Canada and others aren’t too far behind.
Do you want to be a retiree on a fixed income and have the rug pulled out from under you?
Retirement Plan: there will be no retirement.
Inept central banks are trying to induce even more inflation. They say their target is 2%. Their aim is to inflate away gargantuan government debt. They keep telling us they’re unable to achieve this 2% target so they keep printing more and more counterfeit money to liquefy and induce inflation.
Inept central banks central banks either don’t know or won’t admit that REAL inflation is well above 2%. Ask anyone who shops for groceries. In the U.S. the REAL rate of inflation is about 9% according to John Williams’ ShadowStats. In Canada, it’s about 7%. Most other countries also have inflation rates well above 2%.
As inept as central banks are, they aren’t stupid. They must know that inflation is well above 2% and, with the help of the presstitutes, we are supposed to believe it’s well under 2%. As long as inflation doesn’t get out of hand, they think they can inflate away government debt.
Inflation is a stealth tax. It reduces our purchasing power by transferring wealth from our pockets to the banksters. The Deviant Investor writes “the political and financial elite want inflation and a larger supply of currency in circulation. There are more profits to skim and the debts are easier to repay under inflationary conditions. Deflation hurts indebted governments (all of them) and Wall Street. Central bankers must fight their enemy – deflation – and create more inflation.”
The banksters thank you for your ignorance and complacency. Keep up the good work.
Now you know why we have imbecilic headlines like this one from the Financial Times: ECB inflation target lacks credibility. Only the gullible would believe that.
The banksters thank you for your ignorance and complacency. Keep up the good work.
Money Velocity Situation
The reason that massive government counterfeiting has not led to hyper-inflation is the low velocity of money i.e. how fast we spend. We aren’t. That’s the problem. The graph below illustrates this.
As consumers, we simply aren’t doing our duty buying stuff we don’t need with money we don’t have to impress people we don’t like. Some of us are socking cash away at home for emergencies because we don’t trust banks. Besides, they pay zero interest anyway so we might as well stuff it under the mattress. Charles Schwab estimates Amerikan seniors lost $58 billion in savings interest over the last six years of ZIRP. And, you know it’s only a matter of time when they come after our savings so keep only as much in the banks as you need to pay bills.
Some of us are paying down debts. Ironically, this is an example of the “fallacy of composition” where what’s good for one person is bad when a lot of people do it. Our Western economies are 70% based on the consumer. When a lot of people stop spending and start saving or paying down debts; that’s bad for the economy. In two words: tuff shit! Neither you nor I are going to save this sinking ship.
If Nietzsche didn’t say this, he should have: “If it’s going to fall, give it a push.” The system will collapse anyway and you can bet when they restructure it, it won’t be to the benefit of debt slaves, so keep paying down your debts. Go on, give it a good push.
Then too, wages are stagnant compared to the official (bogus) rate of inflation and rapidly declining compared to the REAL rate of inflation (7 to 9%) so if your paycheck isn’t going up 7 to 9% a year, you’re actually making less and less money every year.
And, finally, financial institutions are not lending the money they borrow from central banks at near zero rates. They are either hording it or parking it as reserves back at these very same central banks. Although they earn a paltry 0.25% it’s still a quarter of a percent risk free on endless amounts of money for which they pay nothing. There’s talk of central banks decreasing these rates to negative to spur the bankster into lending into the economy rather than saving.
So perverse are banksters’ black hearts that retail banks have adopted the idea and are punishing their savers. One bank in Luxembourg and a couple of German banks have imposed this “punishment interest.” with negative rates on deposits. Don’t think it’ll stop there.
As Philippe Herlin sums it up, “These banks here are confessing they are putting all of their money with the ECB and this, for a very simple reason: They are certain of getting this money back, which is not necessarily the case with bank X. This precaution means that they do not have faith in the banking system, that the risk of failure remains significant. Actually, these banks are confessing that the financial crisis is far from over.”
The irony is bittersweet. He continues, “A foremost argument brought about by bankers when one wants to buy gold is that “it doesn’t yield any interest”. From now on, the banks are the ones not yielding any interest … or barely. And, as everyone knows, a bank is much less solid than a gold bar.”
Those are words to the wise. More thoughts on gold and silver below.
I covered the “why” of the Ukrainian situation last February in Ukrainians Are Their Own Worst Enemy – Behind the Uprising and the “what” (as in ‘what’s going to happen’) last March in Ukraine – All Talk, No Action.
Since events are unfolding much as I predicted, there’s nothing more to add for now.
Russian Sanctions Situation
The Terrorist Empire of America convinced Europe to commit economic suicide by imposing economic sanctions against Russia. That these sanctions hurt Europe far more than they do either the U.S. or Russia demonstrates the insanity of Euro leadership. To deliberately hurt an economy as large as Europe’s when the global economy is already collapsing into the Great Recession 2 is the height of insanity.
German Chancellor Merkel needs her head examined if she thinks she can lead Europe into economic war against Russia. She forgets that her fellow German statesman, the late Otto von Bismarck, warned against disparaging the Russian people and how painfully the Germans learned that lesson in WW II. Hitler failed with his Barbarossa campaign against Russia as did Napoleon .
This seems to be a replay of WW II. Amerika waited for everyone to beat each other to a pulp before waltzing in to mop up the remnains. Stupid Europeans are falling for it again and providing Hollywood with more movie material that will trumpet Amerika winning WW III notwithstanding that the Yanks haven’t won a real war since 1898.
In fact, the recent increase in the strength of the U.S. dollar comes from Europe’s sanctions against Russia. It’s killing European economies and helping Amerika’s. The U.S. dollar might be coming home to a financial ‘roach motel’ where it can easily get in but never get out again.
Pepe Escobar, in Washington plays Russian roulette says, “These are bleak times. I’ve been in serious conversation with some deep sources and interlocutors … They are all deeply worried.”
He says, “the logic of escalation is on. The economically devastated EU is a joke; the only thing that counts for the US is NATO – and the overwhelming majority of its members are in the bag, sharing the prevailing mood in Washington of treating Putin as if he were Milosevic, Saddam Hussein or Gaddafi. There are no signs whatsoever Team Obama is willing to de-escalate. And when the Hillarator President-in-Waiting ascends to the throne, all bets are off.” Heaven help us if Shillary is elected!
Alas, this is yet another of President Obama’s endless list of failed foreign policy initiatives. Amerika meddled in the Ukraine to deprive Russia of its Black Sea port to stop them from helping Syria thus enabling an attack on the ultimate objective: Iran.
As with all Obama’s short-sighted, overseas meddling, we now see the unintended blowback of seeking regime change in Russia. Nor, does this say much about Washington’s “Cowboy” foreign policy analysts. Unfortunately, it’s not over yet.
Global Authority Breakdown Situation
The breakdown of international authority is called “multipolarization” by LEAP/E2020 in their recent GEAB No 89. They write about, “the emergence of new very large international players challenging the world order established by the US…”
One of the emerging restructuring drives is the internet which now connects all of mankind in a way never thought possible even twenty years ago, but is now shaking the very foundation of nation-states. GEAB write that, “the world is currently witnessing this combat: the tenets of empire versus the combination of mutually independent political entities, representative democracy versus direct organized citizen participation, pyramids versus networks, militarized colonization versus globalized regulated trade, national systems versus post-national ones, oil versus renewable energy, a cumbersome economy versus a digital one, banks versus financial flows, employment versus online professional activity, UN institutions versus the BRICS club, etc.”
As I’ve written numerous times before, one of the most dangerous animals is a wounded one. The world’s power structures are not going down without a fight even if it means enticing Europe to start a war with Russia ostensibly over Russia’s annexation of Crimea. As written above, Europeans have forgotten the painful lessons of both Napoleon and Hitler’s invasion of Russia. So stupid are these Euro stooges that the sanctions they’ve enacted against Russia are hurting their own economies more than Russia’s.
Somehow, I don’t think Vladimir Putin is going to oblige them with a war. He knows that his greatest ally is Old Man Winter. And, the Western allies, thinking that falling oil prices will collapse Russia as it did the Soviet Union, have underestimated the support of China and the rest of the BRICS which were not in power during the collapse of the Soviet Union.
A strange new meme is being foisted upon us by the ass media. We are declaring well-known celebrities guilty in the court of public opinion even before charges are laid let alone before they’re tried in court or convicted. Of course, there’s nothing new about this, but it’s very curious that two very well-known and respected media personalities are being ‘railroaded’ in both Canada and the U.S. at the same time. I doubt this is just coincidence.
In Canada, Jian Gomeshi, the host of the program “Q” has been fired by the Canadian Broadcorping Castration (CBC) and tarred & feathered by the ass media (especially Macleans magazine) for rough sex which we are supposed to twist into sexual abuse about which we are conveniently never given a definition. No charges have been laid, but we’re told that since 97% of sexual abusers get off Scott-free, he must be presumed guilty.
In the U.S., the headlines are “NBC Cancels Cosby Pilot Amid Rape Accusations.” That the alleged rape occurred decades ago and no charges have been laid is beside the point. Stranger still is the growing parade of
goldiggers accusers all reading from the same song sheet.
Being both TV-free and loath to listen to the Canadian government’s CBC radio propaganda, I’m no fan of Gomeshi and I long ago stopped watching or caring about Bill Cosby. However, neither of these situations passes the smell test and it’s obvious both men are being ‘railroaded’. The people who mindlessly and uncritically watch the boob tube will no doubt be enraged at any presumption of innocence until proven guilty, but that’s their problem, not mine.
The deliberate destruction of well-known celebrities is a strange phenomenon that speaks to both the breakdown of morality as well as the desperation of the Powers-That-Be (PTB). I’m told there is a TV program extolling the virtues of pregnant teens and another about unwed mothers. The breakdown of ethics and morality did not cause the fall of the Roman Empire, but it certainly contributed to it if you read Edward Gibbon. Hey, parents; warn your children not to become media ‘groupies’.
The desperation of the PTB is understandable considering the election of Republicans in the recent mid-term elections in the U.S. and the rioting and overthrow of governments world-wide. It’s not so much that the Republicans were elected, but that the Democrats were thrown out.
Thus the negativity toward celebrities may be a PTB psychopathic strategy to compensate for their failure as seen in the global authority breakdown discussed above by dragging down popular celebrities in order to make themselves look good in comparison. This is similar to one of the coping strategies used by incompetent people. I admit it’s a stretch and if you have a better explanation, feel free to leave a comment below.
Sovereign Debt Crisis
When Long Term Capital Management (LTCM) collapsed in 1998, having been leveraged 250 to 1, Wall Street bailed them out. When Wall Street collapsed in 2008, the Federal Reserve, the government and the taxpayers bailed them out. What happens when there’s a major sovereign debt crisis among countries larger than Greece and now there’s no one left to bail them out?
We don’t know. This is uncharted territory, but we’re going to find out. Martin Armstrong, one of the world’s most accurate forecasters is predicting a sovereign debt crisis in 2015.9.75. That is, October 1st of 2015.
Brief background on Armstrong; he ran Princeton Economics and his forecasts were so accurate, he was accused of causing numerous global crises (prediction is not causation). The judge ordered him to turn over his forecasting program’s source code to the Justice Department. Knowing it would end up with his Wall Street competitors Armstrong told the judge where to go and how to get there. He was convicted of contempt of court and sentenced to 5 years in prison making him the longest prisoner for contempt in U.S. history. I used to read the newsletters he typed on a manual typewriter in prison. He’s out now and back in the forecasting and analysis business.
Endless Looting Situation
I’ve said it before. In explaining something as either conspiracy or incompetence, the likeliest answer is stupidity. In fact, I’ve said it so many times, I’ve written an article on it, The Basis of Conspiracy Thinking.
Greed is not a conspiracy; it’s a human failing, a vice and when found in psychopaths a very powerful and destructive force.
The invisible Ultra-rich families who control the banksters who control the central banks and the bought-and-paid-for politicians know the end is near. They aren’t stupid. However, like all narcissistic psychopaths, they don’t know when to stop and think they can keep looting us forever. Just one more billion, just another billion, just one more …
John Kenneth Galbraith said, “People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason. But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right. The sensitivity of the poor to injustice is a trivial thing compared with that of the rich.” Narcissism is like that.
Have you ever had a conversation with someone diagnosed as clinically depressed? I refer to the psychological condition of depression, not the economic one. I’ve known two people close to me who were admitted for treatment of depression.
Talking to them was extremely painful. I ended many of my sentences with the phrase, “yes, but …” You see, clinically depressed people often have an insight into the human condition that is astute, incisive and painfully accurate. “Yes, but …” and then I was at a loss for words.
Then they’d say something else about the futility of the human condition and I’d reply, “yes, but …” and again I was at a loss for words. I couldn’t argue with their analysis. I couldn’t offer any alternative views. I couldn’t even offer them any hope. I felt helpless ending every sentence with, “Yes, but …”
Fortunately the doctors had a solution. The doctors said, “Fake it until you make it.” And, by endlessly repeating that mantra, they both eventually improved well enough to be released.
Think about that. The only way for us to survive in the everyday world is, “Fake until we make it.” The only way to survive is self-delusion. However, complete self-delusion is a form of Normalcy Bias that becomes as dangerous as the people of Pompeii who refused to evacuate as the volcano erupted and the campers at Mount St. Helens who skirted the safety barricades before that volcano also erupted. Most died.
The other extreme is the astute, incisive and painfully accurate fatalism of clinical depression. During the continuing decline of western civilization we need to find a middle ground between these two extremes.
That middle ground is the ‘survivor’s attitude’ they teach in survival training. I’ve taken courses in wilderness survival as well as winter survival where we built and slept in quinzee huts (igloo-like snow shelters). One common element among all of these courses was the importance of attitude. And, the right attitude is easy to describe, but very difficult to do under adverse conditions. The survivor’s attitude is, NEVER GIVE UP.
All the gear in the world won’t save you if you don’t have the right attitude. And, all the training in the world won’t save you if you don’t have the right attitude. If you give up, you’re lost. If you give up, you’re dead. NEVER GIVE UP.
And, forget hope. Hope is not a plan. Hope is for the hopelessly helpless. If you sit on your butt hoping to survive you might as well bend over and kiss it good-bye. There is only one plan; NEVER GIVE UP.
Like I said, it will be easier said than done as this fake recovery drags on and on. It will be a difficult attitude to maintain when the next recession turns into a stealth depression that no one is willing to admit especially our so-called leaders and their ass media handmaidens.
It will be a difficult attitude to maintain when everyone around you succumbs to anger and despair as conditions deteriorate. And the anger and despair will be compounded by our denial about the deteriorating economic conditions.
If you’re reading this, you are probably more of a role model than you realize. People look to you for guidance so your attitude is contagious. If you allow yourself to succumb to despair, you’re not only dragging yourself down, but you’re dragging others down with you.
Here’s the plan:
1) FAKE IT UNTIL YOU MAKE IT.
2) NEVER GIVE UP.
Gold & Silver Situation
Forget the ‘gold bugs’ and their never-ending prediction of $100,000 ounce gold and $5,000 ounce silver. Economies will crumble, empires collapse and galaxies collide long before you see prices like that. In fairness, if you divided all the money in the world by all the available gold in the world, an ounce of gold would be valued between $55,000 and $100,000 an ounce depending on whose numbers you use. However, it won’t happen (remember collapsing economies, empires & galaxies) because the idiots will simply print a new brand of monopoly money and declare a new basket of reserve currencies.
As well, no matter how much toilet paper phuny muney they print, an ounce of gold will still buy about 350 loaves of real bread just like it always has back to the time of King Nebuchadnezzar of Babylon. Do the math. As I write this, November 26, 2014 the price of gold is $1,196. Divide by 350 and the result is $3.42 a loaf and I mean REAL bread not white Wonder Crap (it’s a Wonder anyone eats that dreck!).
Off topic, but here are the ingredients of a local Canadian bakery’s Rye Plus: whole rye flour, water, unbleached wheat flour, yeast, salt. Or, price a good loaf of multi-grain although you’ll be hard pressed to find such a “staff of life” in Amerika today that isn’t made with refined flour with 33 essential nutrients removed and 11 artificial ones added. They call it “enriched”. I call it impoverished, but I digress.
Gold & silver are NOT investments any more than any form of money is an investment. The main difference between these precious metals (PM’s) and fiat currency is that PM’s are also a store of value. Fiat currency is wall paper and ass-wipe. One reader suggested since I have such a low opinion of it that I send him all my ass-wipe currency. Have patience, son. You’ll see soon enough and then you’ll rue the day.
Gold & silver are insurance. They are a hedge against the devaluation of currency and the machinations and confiscation of desperate governments. It makes no difference if we have inflation, deflation, dis-inflation, hyper-inflation or whatever ‘flation they call it, gold & silver will still retain their purchasing power as they have for thousands of years.
1) Paper gold & silver certificates are ass-wipe. Only the real thing is real (physical metal).
2) Do NOT store in anyone else’s vault or safety-deposit boxes at a financial institution. If you don’t have it; you don’t have it. Recently, Deutsche Bank was publicly salivating over privately-held gold calling it “unwanted remnants of crisis-driven investments … would liberate dormant liquidity…” They’re talking about THEIR liquidity, not yours. Be warned!
3) One ounce or less coins only. Unless you’re a millionaire/billionaire, avoid bullion. When it’s time to sell it who’s gonna buy your bullion? Also, we’ve already heard of tungsten filled bars so you can bet we’ll see more as prices escalate. How do you prove what you have is real? It’s unlikely anyone will go to the trouble to produce tungsten filled coins.
4) Avoid ‘junk silver’ (pre-1964 silver dimes, quarters and dollars) although it’s better than nothing. Most people alive today either weren’t old enough or don’t remember pre-1964 silver coins or know their value because they weren’t pure silver.
5) Gold is good, but silver one-ounce coins are preferable to gold until you have so much silver that stashing it becomes difficult, then go for the gold. Silver has more survival value. True, you can’t eat either, however in a survival situation you can barter a couple ounces of silver for gas or groceries, but how do you get change for a gold coin?
6) Although there are trillions of dollars of available gold, there are only billions of dollars of available silver. Supply and Demand! Traditionally, the silver/gold ratio was around 10 to 20 and typically 16 ounces of silver could buy one ounce of gold. Today with gold at $1,196.90 an ounce and silver at $16.51 the silver/gold ratio is a whopping 72 to 1. This means silver is vastly undervalued compared to gold. This means silver is at bargain basement prices. This means you might, even sort of maybe make some money on silver when the ratio approaches something more normal. When? Who knows!
7) Forget the spot price. The official price of gold and silver is bullshit and as manipulated as the CPI and unemployment statistics. This means you’ll pay a hefty premium to buy PM’s because you’ll pay the REAL price (including mark-up) versus the bullshit official spot price.
8) Don’t forget the premium. This means the selling price is less than the buying price when you go to sell. So, don’t sell.
9) It’s on sale again. I’m always amazed at human beans. They’ll rush out and buy all sorts of stuff on sale, but do the opposite with stocks and precious metals. Dumb human beans will panic and sell PM’s when the price drops then turn around and buy when the price goes up. Don’t be a dumb human bean. PM’s are on sale again and, yes, they might even get a bit cheaper in the short run, but years from now you’ll realize you’ll never again see prices this low.
10) As always, pay down debt and stock-pile food and essentials before buying PM’s because you can’t eat gold & silver.
The ass media keeps trumpeting the so-called recovery as if we could pretend our way out of debt. Endless Quantitative Easing and trillions in government spending have merely slowed the rate of decline and ensured the eventual economic collapse.
Every borrowed dollar has a diminishing return to the point where we’ve almost reached zero effect. For further details, see No Recovery, Ever.
Canada’s Oil Bust Situation
Last March, I predicted that Canada would see the end of our 15 year oil boom in the article Canada’s Next Great Recession summarized as follows:
a) China’s economy is slowing
b) The West is overdue for another recession
c) Canada’s economy is already slowing down
d) Canada’s oil patch boosted jobs and disguised the unemployment rate
e) House prices didn’t collapse because oil patch job commuters kept their homes
f) The global shale boom will kill Canada’s oil industry
g) Canada’s real estate market will collapse as unemployment increases
h) Governments are over-indebted and out of ammunition from the last recession
i) Social collapse
j) Black swans
We are at the doorstep of “f) The global shale boom will kill Canada’s oil industry”. Macleans magazine recently covered this in their October 25 edition BUSTED: WHY OUR OIL BOOM IS OVER. They write, “Doug Porter, chief economist at BMO Capital Markets, calls the collapse the “single most important development for the Canadian economy.” Since my post seven months prior, now “there’s more crude sloshing around than there is demand for it—the non-technical term for it would be a big, fat oil glut … American oil production skyrockets to levels not seen in a generation, even as China’s massive economy shows signs of slipping into a long-term lower growth funk.”
“The job vacancy rate for the mining, oil and gas sector has since fallen to its lowest level since Statistics Canada began tracking it in 2011. At least one multi-billion dollar oil sands project, proposed by Norway’s Statoil, has been shelved … The prolonged slump in Europe’s economy is partly to blame, but the bigger problem is concern about the slowdown in China.”
It must be remembered that the average, inflation-adjusted price of oil has been about $40 U.S. for the last half century. The break-even point for various oil sands projects ranges from $50 to $80 a barrel.
Quoting David Jacks, a professor of economics at Simon Fraser University, Macleans writes, “The end of the boom and a return to a more normal commodity market will leave a deep and lasting mark on this country. ‘This is going to have large effects on Canada’s terms of trade, on exchange rates and on the general growth of the Canadian economy,’ he says. ‘We’ve experienced a tremendous and wonderful 15 years, and with the backdrop of a very large leverage and mortgage cycle, we’ve had a tripling of home prices. But the upswing is behind us. Now we’re on the downward side of the cycle.’”
“But a commodity bust will have a far wider impact than just in Alberta. Close to half of all Canada’s exports are tied to commodities, while oil and gas alone account for roughly 20 per cent. At the same time, the natural resources sector makes up about 15 per cent of Canada’s GDP. Any slowdown in Alberta would also have a ripple effect across the country, particularly in the Maritime provinces, which have supplied so many of the young workers in the oil patch.”
It’s doubtful OPEC, in their upcoming meeting will agree to production cuts to increase prices. Even if they did, non-OPEC producers like Russia, Norway and Mexico would increase their production to take advantage and look after their own interests. Saudi Arabia’s (Sunni) nose is out of joint because the U.S. is encouraging Iran (Shiite) to become the new Mid-East cop-on-the-block.
As well, OPEC has a vested interest in seeing lower prices shut down the high-cost U.S. Ponzi shale fracking ‘miracle’ and other oil projects which compete with them. Lower oil prices are inevitable and that will hurt Alberta’s economy and by extension Canada’s not to mention putting the kibosh on Keystone.
The graph below is inflation adjusted price of U.S. gasoline.
Geopolitical crises often affect gas price. Notice the downward sloping red trendline since the Great Recession. How can anyone believe we’re in a so-called recovery?
Reduced oil prices will benefit motorists with lower pump prices to help us buy more cheap Chinese crap, but that increased disposable income will not be enough to offset the decline in jobs, wages and tax revenue. Nor, will it relieve the large number of Albertans who are deep in hock with new vehicles, over-priced homes and their increased spending on alcohol, games and jewelry.
In the 1980’s, after the last oil bust, Albertans sported bumper stickers that read, “Please God, let there be another oil boom. I promise not to piss it all away next time.” You can always tell an Albertan, but you can’t tell them much. And, this time the whole country will feel the pain.
Canadian Economic Situation
The U.S. isn’t the only country trying to pretend its way to recovery from the last Great Recession. Canada lost fewer jobs than the U.S. but the growth of Canadian full-time jobs has been lackluster. In fact, most new Canadian jobs are low-wage, part-time jobs as seen in the graph below.
According to Global News, “Canada continues to bleed full-time jobs this year, while part-time work is rushing in to fill the void … Canada is becoming a nation of part-time workers.”
If all this isn’t depressing enough, below are some recent ShadowStat headlines
Here are a number of recent headlines by John Williams’ ShadowStats courtesy of Jim Sinclair’s JSMineset They provide a glimpse of our continuing economic deterioration contrary to the ass media’s endless cheerleading. ShadowStats numbers are based on real statistics rather than the government’s fraudulent accounting chicanery that fudges inflation statistics with substitution, hedonics, smaller package size, etc. and skews unemployment numbers with unrealistic U3 and ignores those kicked off the dole or have stopped looking for work or part-timers wanting full time work.
– September Retail Sales Declined, August and September Activity Revised Lower and Third-Quarter Broad Growth Slowed Sharply
– Unstable Seasonal Factors Helped Push Headline PPI Lower
“No. 665: September Retail Sales, PPI”
– Third-Quarter Production Growth Slowed Sharply
– Falling Auto Production in September More than Offset by Defense Industry Output, Oil and Gas Production and Weather-Related Utility Surge
“No. 666: September Industrial Production”
– Third-Quarter 2014 Economic Growth Slowed Sharply
– Long-Term Stagnation in Housing Starts Continued at Low Level of Activity
– Social Security COLA Should Notch Slightly Higher from Last Year’s Adjustment, Remaining Far Shy of Common Experience
“No. 667: September Housing Starts, Prospective Third-Quarter GDP ”
– U.S. Government Prepares to Use Reduced-Inflation Index for Cost of Living Adjustments (COLA)
– 2015 Social Security COLA at 1.7% Would Have Been 9.4% without Existing
Gimmicks for Understating Inflation
– September Annual Inflation: 1.7% (CPI-U), 1.6% (CPI-W), 9.4% (ShadowStats)
– September Real Retail Sales Fell by 0.4%
– September Real Earnings Fell by 0.4%
– Existing-Home Sales Headline Gain Dominated by Surge in Distressed Properties; Year-to-Year Sales Contracted for Eleventh Straight Month
– Real-World Indication of Faltering Third-Quarter Economic Activity
“No. 668: September CPI, Real Retail Sales and Earnings, New-Home Sales,
– Broad Weakness in September Durable Goods Orders
– New-Home Sales Remained Stagnant, Despite Nonsensical Reporting Volatility
– Expanding Scope of Data-Falsification Issues at the Census Bureau?
“No. 669: September Durable Goods Orders, New-Home Sales ”
– GDP up by 3.5% (+/- 3.5% Range of Reporting-Confidence), Boosted by Guessed-At Trade Numbers and Resurgent Defense Spending
– Significant Downside Revisions Loom for Third-Quarter Growth
– End of Declining Velocity of Money Disappointing October Jobs Growth?
“No. 670: Third-Quarter 2014 GDP, Money Velocity ”
– October’s Labor Numbers Skewed by Seasonal-Factors Distorted by Last Year’s Government Shutdown
– Resulting Understated October 2014 Unemployment Rates: 5.8% (U.3), 11.5% (U.6), 23.0% (ShadowStats)
– Election Polling Again Indicated No Economic Recovery, With Pocketbook Issues Dominating the Voting – New Proprietary Analyses
– GAAP-Based 2014 Federal Deficit Was About $6 Trillion, Versus Headline Cash-Based $0.5 Trillion Shortfall
– 2014 Net Federal Obligations Approached $100 Trillion, GAAP-Based, Net Present Value
– Reporting Shenanigans: Headline Deficit Well Shy of Jump in Debt
– Fed Monetized 78% of Headline 2014 Federal Deficit
– Annual Money Supply M3 Growth Held at 4.2%
“No. 672: October Labor Data, Money Supply M3, Federal Deficit, Election 2014”
– October RetailSales Were Near Consensus, with Minimal Revisions and A Sharply-Slowing Pace of Fourth-Quarter 2014 Growth
– Negative Surpriseson the Economy and in the Political Arena Are Among Imminent Top Threats to U.S. Dollar
“No. 673: October Retail Sales, Consumer Liquidity, Updated Hyperinflation and DollarRisks”
– Unexpected Production Decline Was on Top of Downside Revisions
– Annual Growth Dropped to Six-Month Low
– Implied Fourth-Quarter Production Pace Slowed Sharply
– Continued Contractions in, and Downside Revisions to, Auto Production Should Hammer Inventory and Third- and Fourth-Quarter-GDP Estimates
“No. 674: October Industrial Production”
– October Housing Starts Indicated Fourth-Quarter Contraction
– PPI Headline Inflation of 0.2% Reflected Peculiarities of New Reporting Approach
– October PPI Will Dampen Real Growth in New Orders for Durable Goods and Construction Spending
“No. 675: October Housing Starts, PPI”
– October Annual Inflation: 1.7% (CPI-U), 1.5% (CPI-W), 9.4% (ShadowStats)
– Inflation Held at 1.7% for Third Month, Despite Tumbling Oil Prices That Reduced CPI-U by 0.5%
– Annual Real Retail Sales Growth Fell Back to Recession Level, Amidst Suggestions of Much-Slower Fourth-Quarter Activity
– Third-Quarter GDP Headline Growth of 3.5% Should Revise to Below 2.5%; Fourth-Quarter GDP Activity Fair Bet for Outright Contraction
– Existing-Home Sales Gained 1.5% for the Month, 2.5% Year-to-Year, But Fell 3.7% in the Trailing 12 Months of Activity
“No. 676: October CPI, Real Retail Sales and Earnings, Existing-Home Sales”
November Alt Press Headlines
Below are linked titles & intro’s to numerous eye-opening articles during this month. Select and read the ones you find interesting. Warning: this is scary stuff.
Could Collapse At Anytime: “When It Ends, All Hell Is Going To Break Loose”
Michael Snyder – “Most People Cannot Even Imagine That An Economic Collapse Is Coming. Most of our long-term economic problems have gotten even worse.” Nov. 3
Jim Rickards Exclusive Interview: The Fed Basically Still Uses LTCM’s Financial Models
Bill Bonner – “I expect a collapse in the value of currencies relative to real goods, real assets and real services. This will happen to all currencies, not just the dollar.” Nov. 3
It’s 2007 All Over … Except the Fed is Effectively Out of Ammo
Phoenix Capital – “The Fed has succeeded in recreating the same environment that existed in 2007. Once again we have rampant risk taking, excessive leverage, and a stock market bubble. The only difference is that WHEN (it’s no longer a question of IF), stocks collapse this time around, the Fed has already spent just about ALL of its ammunition.” Nov. 3
Why Housing Is Dead: First-Time Buyers Collapse To 27-Year Lows
Tyler Durden – “The Millennials (one of the biggest generations in US history) are just not getting with the status quo program. As we detailed previously, with lower credit scores, less disposable income, and a soaring number of people living with their parents; so it should be no surprise…” Nov. 3
Paul Singer Slams The Fake World: “Fake Growth, Fake Money, Fake Jobs, Fake Stability, Fake Inflation Numbers”
Tyler Durden – “Nobody knows when reality will overtake the rhetoric, lies, phony statistics, wishful thinking, fake prices and tiresome poseurs pretending to be world leaders. The situation is universal, a consequence of incompetent leaders and careless (or ignorant) citizenry.” Nov. 4
Singer’s Elliott Says U.S. Growth Optimism Unwarranted as Data ‘Cooked’
Kelly Bit – “Nobody can predict how long governments can get away with fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers and fake income growth … When confidence is lost, that loss can be severe, sudden and simultaneous across a number of markets and sectors.” Nov. 4
Survey: Percentage of First-Time Home Buyers Drops to Lowest Since 1987
Dan Weil – “The portion of home purchasers who are first time buyers dropped to 33 percent for the 12 months through June, the lowest since 1987, and down from 38 percent a year earlier.” Nov. 4
The Trouble With Mass Delusions
Tyler Durden – “The trouble with mass delusions is that they are recognized as such only when they are over – when the dazzling absurdity of certain widely held beliefs is unmasked by subsequent events… the disbelievers were (and always are) discredited, demoralized and ignored while the delusions were alive.” Nov. 5
A Signal of Coming Collapse
Keith Weiner – “I proposed seven drivers of financial implosion” Nov. 5
Gordon Long – “Financial Repression is a massive wealth transfer from the savers to the borrowers, where the borrowers are primarily the government and Wall Street. It is done so subtly that the vast majority of people are unaware of their loss of purchasing power over the years of true financial repression.
It is simply about real negative interest rates which are worse than most realize if you use John Williams’ ShadowStats inflation rate of close to 10% in the US.” Nov. 5
Central Planners Are In A State of Panic
Chris Martenson – “The central planners are in a state of fear and panic. They are trying everything and anything to create market validation for their policies, watching with trepidation as their favored economic metrics fail to respond to all of their frenzied efforts.” Nov. 6
10 Economic Trends that Spell Doom for America’s Workers
Alternet – “We’re becoming an industrialized nation marked by an ultra-wealthy minority and widespread poverty.” Nov. 7
Climate Model Predicts Very Cold Winter in Northern Hemisphere; Another Record Breaker?
Bloomberg – “There is a huge buildup up of snow in Siberia this year like last. Meteorologists believe that portends another brutal winter.” Nov. 8
Permanent gold backwardation = global meltdown ahead
Dr Fraser Murrell – “Antal Fekete warned many years ago that a “permanent gold backwardation” would act as a financial black hole that would consume the entire global financial system.” Nov. 9
Currency wars fail to spark global growth
Komal Sri Kumar – “Policy makers have relied too much on QE rather than structural reform … Six years after the financial crisis ended, the global economic recovery remains anaemic.” Nov. 10
The oxymoron of the labor force when labor means not working: 92 million Americans are not in the labor force with 12 million of those being added only in the last 4 years.
MyBudget360 – “In the last 4 years alone we have added 12 million Americans to the not in the labor force category. This measure is used to calculate the unemployment rate and given this group is not factored in, the unemployment rate looks much better than it truly is. The oxymoron that we have is we have a labor force that“ Nov. 11
The Instability Express
James Howard Kunstler – “The global economy has caught the equivalent of financial Ebola: deflation, which is the recognition that debts can’t be repaid, obligations can’t be met, and contracts won’t be honored. Credit evaporates and actual business declines steeply…” Nov. 17
“$1.6 Trillion in Defaults Coming,” Legend Says
Wolf Richter – “Junk Bond Guru Martin Fridson Predicts $1.6 Trillion In Defaults During Next Implosion.” Nov. 17
Gold & Future – Looking Brighter?
Martin Armstrong – “Gold is NOT systemically manipulated for it was, there would be no point in even buying it … That said, gold has its rightful place in every portfolio and it will come into its own in the due course of time.” Nov. 18
Sell, Sell, Sell…….The Central Bank Madmen Are Raging
David Stockman – “The global financial system has come unglued. Everywhere the real world evidence points to cooling growth, faltering investment, slowing trade, vast excess industrial capacity, peak private debt, public fiscal exhaustion, currency wars, intensified politico-military conflict and an unprecedented disconnect between debt-saturated real economies and irrationally exuberant financial markets.” Nov. 21
On The Looming Wall Of Chinese Defaults, Restructuring Firm Warns “You Know It’s Coming”
Tyler Durden – “Bad debts in China are well underestimated because authorities persist in propping up weak companies and bailing out local investors … when you see restructuring advisers getting hired by SOEs… you know it’s coming.” Nov. 22
Go Figure—– 86 Million Full-Time Workers, 148 Million Govt. Beneficiaries
Lance Roberts – “According to the Congressional Budget Office study that was just released, approximately 60 percent of all U.S. households get more in transfer payments from the government than they pay in taxes.” Nov. 23
Global Business Outlook: “Darkest Picture since Financial Crisis.” US Deterioration “of Greatest Concern”
Wolf Richter – “The plunging price of oil since June has been a leading indicator: global economic growth is in trouble, despite six years of unprecedented central-bank free-money policies that caused asset prices to soar but has accomplished little else.” Nov. 24
Brent Plunge To $60 If OPEC Fails To Cut, Junk Bond Rout, Default Cycle, “Profit Recession” To Follow
Tyler Durden – “a failure by OPEC to implement a significant output cut could send oil prices plunging to $60 a barrel.” Nov. 24
“It’s Different This Time?” What Happened To US Oil Drillers During The Last Price War
Tyler Durden – “the last time that U.S. oil drillers got caught up in a price war orchestrated by Saudi Arabia, it ended badly…” Nov. 26
For The World’s Largest Rig Operator, The “Recovery” Is Now Worse Than The Post-Lehman Crash
Tyler Durden – “The last time the world’s largest oil and gas drill operator, Seadrill, halted its dividend payment was in 2009, shortly after Lehman had filed and the world was engulfed in a massive depression.” Nov. 26
David Stockman summed it up well when he wrote, “the global financial system has come unglued. Everywhere the real world evidence points to cooling growth, faltering investment, slowing trade, vast excess industrial capacity, peak private debt, public fiscal exhaustion, currency wars, intensified politico-military conflict and an unprecedented disconnect between debt-saturated real economies and irrationally exuberant financial markets.”
Sheesh, it looks like this became a book-length post after all. Sorry, but it’s obvious we are circling ever closer to the drain so all this had to be said to demonstrate how serious the situation has become.
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.
November 26, 2014
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You may also want to look into this:
As you say, the system has many laws and this makes things astonishingly complex. This leads to the development of analysts and others who produce nothing physical, but who need subsidies to function.
Pay attention to the last few lines of the social complexity section. It says that the collapse benefited certain people and that health actually increased during the collapse. In addition, the enemies of the state were later considered liberators.
I don’t know if you heard of Cardinal Richelieu, but I studied him for a time. Perhaps the most relevant thing he said is that foresight is the most necessary attribute of government. When a problem is small, it can be solved easily. When it becomes a main issue, solutions are hard to come by and inevitably will hurt those involved.
Thanks for the interesting link to Tainter and his concept of the collapse of social complexity. I knew many professors from my university days, but having since trained in 6 Sigma, particularly problem solving, I’m convinced most professors (like most people) couldn’t tell ‘cause’ from ‘effect’ if it kicked them in the butt. I’m not sure if the breakdown of complexity necessarily leads to collapse or if collapse (from other indeterminate causes) leads to the breakdown of complexity. Cause and effect is more difficult to determine than most people realize.
I’m inclined to think Jared Diamond was on to something in his book, “Collapse: How Societies Choose to Fail or Succeed” insofar as the human element; either top down or bottom-up plays a significant role. In that “foresight is the most necessary attribute of government” Richelieu (remarkable man) was correct because lack of foresight hastens collapse as seen in Corporate Amerika unable to see beyond the next quarter.
I’m no historian, but I suspect Rome never evolved beyond an agrarian economy based on agriculture and slavery thus they needed endless conquests and tribute (loot) from faraway lands. Eventually, logistics became self-limiting as it took more of the Army’s resources to guard the wagons of loot headed for Rome. I think it was Bill Bonner who speculated that Constantine saw Christianity as Rome’s economic salvation because a village or town with one or two priests could safeguard the tithe much cheaper than a garrison of troops. That’s likely why he made it Rome’s official religion, but he didn’t convert until he was on his deathbed.
I also have my doubts about Tainter’s diminishing returns of increasing complexity causing collapse. That may be more correlation than cause. I suspect collapse starts at the turning point where the focus of government shifts from solving problems to self-preservation and starts to see its own citizens as adversaries instead of just tax slaves. That’s when the cancer starts enfeebling the body politic and weakening complexity.
Tainter’s right about collapse having benefits. I read about a study comparing hunter-gatherers with nearby farmers. The hunter-gatherers lived longer, healthier lives and did less work in a day than the farmers who worked themselves into an early grave.
It’ll be interesting to see if Tainter’s idea whether nearby powerful states affects collapse in the modern era: whether proximity matters in an age when ships sail the ocean in days, jets fly in hours and the internet communicates instantly.
We’ll have to watch and see. After all, we have ringside seats.
Can it be complexity is both the cause and effect? It is the cause in the sense that virtually no one understands how the system works completely, resulting in incomplete answers to problems, while the breakdown of complexity occurs as a result of this.
I am curious, do you credit Richelieu with the strengthening and modernizing of France in the early 1600s? Because it is said that when he came to power, that France was largely seen as backwards, and after him and his colleague Mazarin, France seemed to become the predominate nation of Europe.
The law I think also has something to do with all this. It is complex and maybe the complexity of the system developed alongside that of the law. The old schools said that complex law systems would result in confusion and very little in terms of punishment, as everyone could find an angle of defense. This was one of the reasons laws were kept simple, but it seems we know best.
I always liked your analysis of these issues and look forward to your next article on the topic of soft despotism.
Good question, Paul. Getting beyond linear thinking, I think it’s possible for complexity to be both cause and effect in a feedback loop where collapse weakens complexity and weakened complexity hastens collapse.
I know only enough history to avoid subscribing to the ‘great man’ theory. A lot of great men remain obscure because conditions didn’t need them to act and rise to prominence. At other times, conditions favored those who were able to take advantage and lead the crowd in the direction it was going anyway which is also similar to a feedback loop.
What little I know about Richelieu indicates he was the right man at the right time. He was smart enough to navigate palace intrigues and he rose through the ranks. Richelieu didn’t engineer the Huguenot rebellion, but like any crafty statesman, he didn’t let a good crisis go to waste and thus became an indispensable adviser to the king. He understood power politics and although a Catholic Cardinal, he was not above allying with Protestant powers to further his aims.
Centralization of royal power by crushing rebellions and restraining the nobility was one of his primary aims. Perhaps his greatest achievement was changing the focus of the Thirty Years war from Protestant vs Catholic to French nationalism vs the Hapsburgs which eventually weakened and bankrupted the Hapsburgs thus leaving France a dominant power.
Nothing stands still not least of which is historical change and I think France was well on its way emerging as a dominant power. Richelieu steered the ship of state by taking advantage of the prevailing wind. However, like King Canute showed us, no man, no matter how powerful, can stop the tide.
I intend to do more research on ‘soft despotism’. I think it’s an important concept that can help people gain greater understanding.
Furthermore, I know that when the recession of 2008 occurred, it wasn’t until it was over that the governments and economists admitted we were in a recession. So, when the roof comes down we know they will say, “Don’t panic! Everything is under control.”
This reminds me of the boiling frog story as well.
Also, I am interested, do you consider the entire situation murder or suicide? Murder on the part of banks or suicide on the part of everyone?
You’re right, Paul. They’ll keep pretending as long as they can and as long as we keep believing their lies so they can buy as much time as possible to keep fleecing us. Paul Singer, in a letter to his fund investors. slammed the Fake World as “Fake Growth, Fake Money, Fake Jobs, Fake Stability, Fake Inflation Numbers”.
And, because it’s so gradual it is very much the boiling frog story that you mention. Most people won’t realize their predicament until it’s too late. It’s said, you can get used to hanging if you hang long enough.
It’s both murder by the banksters as well as suicide by everybody for allowing the banksters’ brazen theft. As the late Ann Landers said, “Nobody can take advantage of you without your permission.” And the worst of it is those of us who can see what’s happening and prepare for it will be either robbed by those who fiddled or else they’ll beg the government to rob us in the name of ‘fairness’.
Expect it to get a lot uglier.
Have you heard of “Soft despotism”?
No, I’ve never heard of it, Paul, but I’m glad you asked.
I searched the term in Wiki
and was pleased to see it was coined by one of my favorite political analysts and social commentators, Alexis de Tocqueville who always had an interesting perspective on Amerikan politics and culture.
I shall give the concept some thought and, now that I’m aware of it, may be more likely to identify it. For instance, here in Canada, we have over 110,000 laws and by-laws yet we’re told that “ignorance of the law is no excuse” notwithstanding that no human could possibly know them all, thus making all Canadians criminals 24/7/365.
I pretty sure all law systems are now like this. That way if someone rebels, they can blame the person for going against some unheard of law. Plus, it gives those who understand the law a way to control those that don’t and use the law to suit their own purposes.
Interestingly, the harsh laws of Draco (The guy who inspired the term “draconian”) were actually very popular with the people, for it treated everyone equally under the law, even the rich. He was so popular, that it was said that Draco was killed by being buried alive by capes that people would throw at him to show approval.
The Chinese legalists thought the same as Draco. They existed before Christ was even born and argued that laws had to be clear, simple, and consistent. They argued that the the law was the foundation of a state and that good law can make the nation supreme, while corrupt law can ruin a nation. They argued that if law was corrupt, then officials would be corrupt (As there would be nothing to stop them), which would make the people weary, then lead to disunity, disorder and finally chaos.
They were also very pragmatic and believed morality a lie. They argued that morality fluctuates and therefore this meant that humans were not inherently good. They relate that when people have wealth, they share it, when they do not, these same people would steal it. Therefore, they argued morality was based on one’s circumstances and not some inherit goodness. Thus, the law was needed to correct this.
Paul, I’m indebted to you for introducing me to ‘soft despotism’ because I now see it everywhere from ‘hate crimes’ to ‘political correctness’. Today, I obtained a Material Safety Data Sheet (MSDS) on rocks, more specifically quartz (“Quartzite). Who would have thought there could be 8 pages of data on rock?
Apparently ingesting more than a tablespoon of rock “may cause gastrointestinal irritation and blockage.” Also, did you know that you should “not stand on piles of materials; it may be unstable.” And, rock is not flammable. Admittedly, there was some useful information like preventing Silicosis from inhaling rock dust.
I can only imagine how much time was spent telling us the obvious such as eating rocks gives you a belly-ache, falling off a rock pile can give you a boo-boo and rocks don’t burn. The worst of it is that it’s not the government that creates MSDS’s but manufacturers are required by the government to produce them. Another example of soft despotism!
In any case, I think more research might lead to a blog post on soft despotism. People need to know that a man is not free if he willingly chains himself though he himself holds the end of the chain.
You say that the Chinese, “argued that if law was corrupt, then officials would be corrupt (As there would be nothing to stop them), which would make the people weary, then lead to disunity, disorder and finally chaos.” I fear we see this as Amerika turns into a corrupt oligarchy.
I think Alexis de Tocqueville would be very disappointed in Amerika today compared to government’s apparent absence when he toured it in the 1830’s. I believe it was Montesquieu that said, “Useless laws weaken the necessary laws.”
Yes, I feel a blog post in the offing. Thanks, again.
Have you heard of the Kuhn cycle? It explains the situation very simply. It was used to describe scientific revolutions, but it can easily be exported to other things like economics. We are currently in 3.
0. Prescience – The field has no workable paradigm to successfully guide its work.
1. Normal Science – The normal step, where the field has a scientifically based model of understanding (a paradigm) that works.
2. Model Drift – The model of understanding starts to drift, due to accumulation of anomalies, phenomenon the model cannot explain.
3. Model Crisis – The Model Drift becomes so excessive the model is broken. It can no longer serve as a reliable guide to problem solving. Attempts to patch the model up to make it work fail. The field is in anguish.
4. Model Revolution – This begins when serious candidates for a new model emerge. It’s a revolution because the new model is so radically different from the old one.
5. Paradigm Change – A single new paradigm emerges and the field changes from the old to the new paradigm. When this step ends the new paradigm becomes the new Normal Science and the Kuhn Cycle is complete.
Some believe that when phase 4 emerges, we will either be heading towards a dictatorship or a better democracy. The latter is less likely though, given the inability of people to think. After all, the Nazis came to power after the Great Depression, while Napoleon after the French Revolution.
That’s interesting, Paul. Been so long since I read Thomas Kuhn’s “The Structure of Scientific Revolutions” I wouldn’t have seen the parallels, but I think you’re right.
I’d say we’re firmly at stage 3 and it’ll be interesting what comes out of this at stage 4. Unfortunately, I agree with you about the unlikelihood of a better democracy. Given the lengthy build-up and current trajectory I see war and dictatorship as inevitable. Any so-called ‘saviour’ on the horizon will likely be a dictator.