oftwominds-Charles Hugh Smith: 6/1/23

Friday, June 30, 2023

The Make-or-Break Fork in the Road Ahead

We either make the future or break the future, so choose wisely.

There is a make-or-break financial fork in the road ahead for the United States: there are only three options:

1. Slash trillions of dollars in annual federal spending to align with current tax revenues.

2. Raise trillions in additional tax revenue from the only entities able to pay more, corporations and the top 5%

3. Monetize the soaring federal debt by the central bank "printing money" and using this new money to buy Treasury bonds, as issuing new Treasury bonds for sale is the way the federal government funds its stupendous deficit spending.

One approach might be to do some of each, but there are political obstacles to any rational response to unsustainable federal debt expansion. Any cuts in spending large enough to be consequential will slash-and-burn either the cash overflowing in the federal trough that politically powerful cartels are gorging on, or entitlements that buy the complicity / passivity of the general populace. Neither is politically viable.

Those who can afford to pay more taxes--corporations and the top 5%--are (surprise) the most politically powerful groups in the nation, and they will never accede to tax increases high enough to be consequential.

Politically, the only viable option is the politically painless one of monetizing the soaring federal debt via the Federal Reserve creating $2 trillion a year with a few keystrokes and using this $2 trillion to buy virtually all the newly issued Treasury bonds.

If private owners of existing Treasury debt find the yield they're receiving doesn't even keep up with inflation, they will sell their Treasuries, forcing the Fed to print additional trillions every year to monetize portions of the existing $30 trillion in debt.

Recall that a significant percentage of state and local government spending is funded by the issuance of municipal bonds. This other governmental debt competes with Treasury issued bonds for scarce private capital. Other nations' bonds are also competitors for private capital.

Since capital flows to the highest and lowest-risk yields, yields have to rise to attract private capital. This creates another problem: as yields rise, so does the interest paid on the entire portfolio of bonds.

Higher interest payments then pressure other government spending. The politically painless solution is to monetize not just the newly issued debt but the rising interest payments due on the soaring debt.

Monetizing government debt is what I call the perpetual money motion machine. Just create another trillion to buy newly issued bonds, an additional trillion to pay higher interest and more trillions to buy up old debt that private owners are selling.

Is there anything that could break the perpetual money motion machine? Those pointing to Japan's deflationary stagflation of the past 30+ years claim there are no impediments to ever-greater monetization. The Federal Reserve can expand its balance sheet by $10 trillion or $50 trillion without any structural problems arising.

Interesting, that $50 trillion number. That's the amount that the top 5% skimmed from labor in the past 45 years. The Bill for America's $50 Trillion Gluttony of Inequality Is Overdue (September 21, 2020)

Trends in Income From 1975 to 2018 (RAND Corporation)

The Top 1% of Americans Have Taken $50 Trillion From the Bottom 90% -- And That's Made the U.S. Less Secure (Time.com)

Setting aside the political veto of the wealthiest corporate interests and households, clawing back this $50 trillion via higher taxes on those who gained the $50 trillion would be karmic justice and present fewer risks that the insane scheme of just "printing more money" to satisfy every cartel, entrenched interest and entitlement.

Let's ask a simple question of history: if monetizing debt works so wondrously, why hasn't it been the go-to solution for every free-spending government? In the good old days, creating money out of thin air was accomplished by replacing the silver or gold in coins with lead or other base metals.

Alas, people catch on to this devaluation of money, and inflation skyrockets accordingly. Proponents of adding $50 trillion to the Fed's balance sheet (i.e. monetizing the soaring debt and interest payments) claim this hocus-pocus won't spark inflation. But since all that newly issued currency enters the economy one way or another, how can it not generate inflation?

The status quo answer is: if it only inflates assets owned by the wealthy, that inflation is really rather grand. But suppose inflation leaks into Cheetos instead of Big Tech stocks? Since "We can't eat iPhones," that eventually matters.

In other words, there is a governor built into the perpetual money motion machine: real-world inflation. There is also a social governor built into the "painless" expansion of asset bubbles that favor the already-wealthy: eventually this systemic inequality distorts and destabilizes the social and economic order.

This in one reason why history shows government debt in excess of 100% of GDP (the real economy) eventually leads to disorder, default and bankruptcy. Or revolution. Take your pick. (Chart courtesy of David Sommers.)

If $50 trillion were clawed back from the wealthiest corporations and households, that would only return total assets owned by the wealthy to levels that were considered excessive a decade ago. But since this is politically unviable, the "painless" option of monetizing debt will be pursued.

But since the only possible outcomes of this option are disorder, insolvency or revolution, the wealthy may well regret their short-sighted greed. Nemesis can take various forms, but eventually the pendulum swings from one extreme (monetary hocus-pocus and staggering inequality) to the other extreme (clawback of central-bank-bubble "wealth" and a balance of revenues and expenditures).

The meteor that will obliterate the financial hocus-pocus is already visible and cannot be diverted by dancing the humba-humba and waving dead chickens around the campfire, i.e. Federal Reserve policies. Claiming god-like powers doesn't grant one god-like powers.

There's no going back once we select a pathway. The systemic damage cannot be reversed, regardless of what happy stories are told around the campfire by credulous believers in the magical powers of waving dead chickens around. We either make the future or break the future, so choose wisely.

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Thursday, June 29, 2023

Breaking/Broken News You Might Have Missed

Sometimes the news isn't breaking, it's broken.

Breaking/Broken News You Might Have Missed: sometimes the news isn't breaking, it's broken:

1. Las Vegas Raiders Traded for the Nation of Chad.

The owners of the Las Vegas Raiders have traded the storied football franchise for the country of Chad.

After announcing the trade--the first of a sports team for an entire nation--the spokesperson said, "The 16.8 million people of Chad will reap tremendous financial rewards from a great football franchise, and from the managerial expertise of the Raiders team."

Chad's incoming Management Team promised local elections will still be held in villages and urban neighborhoods, though all national policies will be in the hands of Management.

Once the Raiders' new stadium has been completed, Chad's Management Team has promised a national lottery in which the winners will be flown to Las Vegas and given box seats to a Raiders game and comped rooms and $100 in gambling chips at one of the city's casinos.

"Manchester United was also in the running," an unidentified source disclosed, "but the people of Chad wisely chose the Raiders."

Chad's incoming Management Team issued a statement regarding their plans for the nation. "We see a bright future for Chad as the gaming capital of Africa, a future that will greatly improve the incomes of Chad's impoverished citizens." The spokesperson also noted the "fantastic opportunities for local firms in Chad to manufacture Raiders swag and Raiders-branded clothing," merchandise which is currently made elsewhere.

According to public opinion surveys, Chad's citizens are unfamiliar with American football and would have preferred trading their nation for the Los Angeles Lakers.

2. Overloaded Ferry Capsizes in Indonesia, all Passengers Miraculously Saved

It looked like yet another capsizing-ferry tragedy in the making in rough Indonesian waters until a billionaire's super-yacht altered course to pluck the 248 passengers and crew from the water.

The yacht's captain relayed the good news that not only were all passengers and crew rescued despite the rough seas, "We not only were able to accommodate all passengers and crew in our guest cabins, we have a number of guest quarters that are still vacant and available for media and government visitors."

The super-yacht's chef is preparing a meal for the grateful survivors of lobster tail, caviar, quinoa with sliced truffles and fresh blueberry sorbet. "Luckily we just restocked in Bahrain," the chef said. "Our entire staff is honored to serve the survivors a delightful gourmet meal to boost their spirits."

Unfortunately, two pigs and six chickens appear to have been lost when the ferry sank.

3. Big Tech Voluntarily Agrees to Compensate All Content Creators Who They Banned or Shadow-Banned

In a stunning reversal of the usual corporate stonewalling and greed, America's Big Tech firms--social media and search--have voluntarily agreed to fund a $1 billion fund to compensate those content creators who the firms banned, shadow-banned and demonetized without any legal precedent or foundation.

"Given the information supplied to us by the FBI and other federal agencies, we thought we were serving the national interest," the consortium spokesperson said. "We regret accepting these instructions without considering the grave Constitutional violations that compliance incurred."

Off the record, the spokesperson admitted that many of those who will receive compensation "went from enjoying a middle-class income for their creative content to eating cat-food beneath a freeway underpass" after their content was demonetized.

The announcement noted that the compensation does not reflect any admission of wrong-doing or liability for the untold damage Big Tech needlessly inflicted on the Constitution, the national interest and content creators who were shadow-banned and demonetized without any evidence or recourse.

In a coincidence that might offer those destroyed by Big Tech's unconstitutional censorship some ironic amusement, the consortium's administrators' names are H. Kafka and J. Orwell.

This post is a parody.

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Wednesday, June 28, 2023

Dear Aliens: Could You Please Stop Fooling Around and Take Over Earth?

Dematerialize all the "heroes" foolishly trying to get back control of Earth so they can continue killing, plundering, and destroying the planet and its many lifeforms for their own private gain under the guise of glorifying their ideology.

Dear Aliens: please stop playing footsie with us. Conquer the Earth and get on with it. We're tired of the hide-and-seek. Quit jerking around: take over the Earth and do what any experienced dominant power does in newly conquered territories:

1. Scrap all the tools of war and aggression in your new acquisition. The last thing a colonial administration needs is quarrelsome cliques creating needless mayhem. So scrap all the nukes, tanks, small arms, military aircraft, all of it, and punish those miscreants who pursue any aggression.

2. Transfer ultimate control from Earth's governments to your Federation, or whatever you call it. Like the Roman Empire, allow petty elites to continue running the day-to-day bits, but all the big decisions are yours.

3. Share whatever amazing energy sources you have and scrap all the coal-fired plants. Give us a leg up to 21st century technology so we can finally let go of the 19th century stuff.

4. Transfer all private and state wealth above family dwellings and household possessions to the Federation. Expropriating the wealth of elites ends destabilizing inequality in one fell swoop. This makes for much less troublesome administration of the colony.

5. Put an end to the destruction of Earth's biosphere and the plunder of its resources for private greed. In economic terms put an end to externalizing environmental costs, globalization and financialization.

Globalization's Few Winners and Many Losers (July 20, 2016)

6. Dematerialize all the "heroes" foolishly trying to get back control of Earth so they can continue killing, plundering, and destroying the planet and its many lifeforms for their own private gain under the guise of glorifying their ideology.

You may have other administrative goals, but by all means, start with these six.

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Sunday, June 25, 2023

The Corruption of POTUS, SCOTUS and SCROTUS

Until we reach that point of social transformation, we're passengers on a ship of state doomed by rampant, systemic corruption and the collapse of moral standards and the rule of law.

Political corruption isn't hard to define: confidentially leveraging the power of one's position in the State for private gain. This covers the spectrum of using State power for personal gain from freebies, bribes, sweetheart deals, obtaining insider information, revolving doors between private sector and state positions, influence-peddling, selling tax breaks, subsidies, permits, etc., bloated speaking fees and so on, in a nearly limitless profusion of private financial gains generated solely by one's position of power within the State--the legislative and regulatory government, central bank, military and judiciary--gains that are cloaked from public disclosure and scrutiny.

One example is employees in building-planning departments taking bribes from applicants to bypass lengthy permit reviews. Money changes hands privately to gain some state-issued benefit.

Public trust in institutions, the rule of law and basic fairness are all undermined by corruption. This is why even the hint of impropriety must be promptly investigated and the results made public.

But there is more to corruption than just investigating improprieties. The larger questions are:

1. Is corruption a rare occurrence or has it become business as usual, i.e. endemic, embedded, taken for granted as "the way things work"?

2. Is there any sense of sincere shame or wrong-doing when those reaping private gains from their positions in the State are publicly exposed? Or do the guilty disclaim any notions of sin or shame for betraying the Public Trust?

3. Are there two completely different Standards of Justice, Criminality and Punishment, one applied ferociously to the general public and another applied with the lightest of feathers to insiders, financial elites and the politically influential?

I submit that all three conditions are true: corruption is now BAU, business as usual; there is no sense of shame or wrongdoing when the corrupt are exposed, and there are two judicial standards, one for the bottom 99.9% and another for insiders, the well-connected, the influential, the politically protected and the super-wealthy, what I call America's Aristocracy or Royalty.

Consider the cover-ups and obstruction of justice swirling around the family of POTUS the President of the United States: "Blatant Political Corruption": The Rot In America's Democracy Explained In Under 1000 Words.

In a nation that regarded the Public Trust as sacred, even the hint of impropriety at this level of government would have sparked an immediate and thorough-going investigation, and calls for resignation and indictment.

Instead, nothing happens except the BAU of Corruption: the usual cover-ups, wrist-slaps for lesser violations, zero admission of guilt, zero display of shame, zero punishment.

Despite a flood of partisan weeping and gnashing of teeth, SCOTUS is equally without shame. That the highest levels of the judiciary are blind to the impropriety of accepting gifts from super-wealthy "friends" whose interests extend deep into the dockets of the Supreme Court is evidence of just how low the sanctity of the Public Trust has sunk.

Then there's SCROTUS: the Supremely Corrupt Royalty of the United States, the corporate bigshots, the lobbyists, the billionaires, the politically influential, the financially connected, and all the elites that are protected from consequence and therefore untouchable.

Consider the thousands of corporate fines imposed for fraud and other crimes: Corporate Settlements/Fines from the early 1990s to the present, compiled by Jon Morse. All wrist-slaps, as no corporate leaders served any prison time. The fines are just a cost of doing business for Corporate America's Royalty.

I've addressed the systemic rot of corruption in America for years: No Wrongdoing Here, Just 6,300 Corporate Fines and Settlements (May 2015)

Corruption Is Now Our Way of Life (October 5, 2020)

The corruption of the rule of law and the resulting decay of the Public Trust are not partisan issues. America's wealthy and powerful enrich themselves in a sandbox of corruption, regardless of their affiliations.

I've often referenced historian Peter Turchin's work. His latest book, End Times: Elites, Counter-Elites, and the Path of Political Disintegration, outlines the dynamics that are dismantling America's future. Chief among these is the primary consequence of systemic corruption, soaring wealth-income inequality. Hope in "End Times": Peter Turchin's analysis of our coming collapse could help us avoid it:

For all its breadth and depth, there's a simple message at the core of "End Times": At the heart of our problems, Turchin writes, is "a perverse 'wealth pump' ... taking from the poor and giving to the rich," and we have to find a way to turn it off.

The core of corruption is the maximization of private gain over serving the Common Good and Public Interest. When power is sought primarily for private gain, the social fabric decays and unravels.

Critic and author Christopher Lasch described the decay of the social order when shame has vanished. In today's America, there is no sense of sin, guilt, shame or atonement. Any level of corruption is tolerated and excused, most perversely, "for the good of the country."

Lasch's last book, The Revolt of the Elites and the Betrayal of Democracy (1996) lays bare the moral and political corruption of America's elites. The decades since have confirmed his analysis.

My own modest contribution to the topic, Global Crisis, National Renewal focuses on the need for a social revolution that radically transforms what is financially and politically acceptable to the populace. A tipping point must be reached where systemic corruption and its result, destabilizing inequality, are no longer acceptable.

Until we reach that point of social transformation, we're passengers on a ship of state doomed by rampant, systemic corruption and the collapse of the Public Trust, moral standards and the rule of law.

What's blatantly wrong is dismissed as normal. This encapsulates America's collapse.

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Thursday, June 22, 2023

2023-2030: Artifice Vs. Doom-Loops

If you prefer reality to artifice, oh, you wretched doom-and-gloomer. Just look at our social media feed, that's what real.

The shift from real to fake occurs because it serves somebody's interests. The married couple who have fallen out of love continue the pretense of a "happy marriage" for a good reason: the facade of lovey-dovey normalcy plays well socially and in their careers. The kids know better, of course, and so they're told that propping up the facade presented to the outside world is "non-negotiable." They can snark to their friends privately but must dutifully play the part in public lest their warring parents make life even more miserable than it already is.

The shift from fake to fraud is an easy one, because reality cannot be allowed to break through the artifice. The artifice is the business is doing great, but the reality is the enterprise is sliding into insolvency. And so the partners start cutting corners: stop paying taxes and invoices, start borrowing money to cover expenses, and eventually, begin defrauding others to maintain the facade of success and normalcy.

It's a slippery slope, and it all starts when we decide that reality is unacceptable because it demands painful sacrifices and trade-offs. So we choose artifice over reality. At first it's just a matter of omission: we leave out the unpleasant bits and hype the happy facade. Here we are on vacation, look how luxurious it is, look how happy we are.

But artifice isn't real, it's fake, and the costs are not just financial. Living a lie saps us of integrity and moral cohesion to the point that we can no longer distinguish between the artifice being propped up and the real world. All that matters is sustaining the illusion of stability and success, and to do this as reality weighs on the fake facade demands ever larger servings of artifice.

The end-point of artifice is the emperor has no clothes: those propping up the facade insist a risibly obvious lie is the truth. Since those propping up the facade have invested everything they have in the artifice, they're now totally dependent on everyone accepting the fantasy as if it was real.

In other words, once everyone accepts the artifice as if it was real, it becomes real. But this too is artifice. Reality is not a matter of public opinion or approval. We don't decide what's real and what's fake / fraud by opinion polls. Real is real, artifice is fake.

You already know I'm talking about the US economy, and indeed, the global economy because like the onlookers suppressing their mirth at the naked emperor's supposed finery, we all know the "growth" and "prosperity" are functions of artificial stimulus, the ever-greater conjuring of "money" out of thin air, pushing interest rates underwater and fiddling with statistics.

We all know it's as fake as the luxurious lifestyles posted on social media by youths struggling to pay rent. The craving for artifice over reality has infected the entire culture and economy. What's real no longer matters, all that matters is the public facade is maintained at all costs.

The problem is those clinging to a world of artifice lose the ability to deal with the real world. They believe that maintaining their fake facade is a substitute for dealing with reality, and so they lose the practice of dealing with the real world via difficult solutions that demand sacrifices and trade-offs.

Unfortunately for all those beavering away at maintaining their world of artifice, reality is implacable, and it manifests as doom-loops which feed on artifice and become stronger until they break through the facade and the artificial construct collapses.

A current example of a doom-loop is the collapse of commercial real estate in downtowns emptied by remote work. The loop is the decline of the commuting workforce feeds the decline of demand for office space and the decline of small business that served the workforce and paid rent. As the area decays, fewer people seek office space or are willing to start a new business. The decay feeds on itself.

The facade of artifice demands a happy story solution, which is to convert all those empty office towers into luxury apartments and condos that will be inhabited by free-spending folks who will spark a renaissance with their wealth.

The problem is that it's not cheap or easy to convert office space to dwellings. It's horrendously costly and therefore risky. And since the downtown has already decayed, there is no certainty in the assumption that high-income people will flock to a barren cityscape of homeless encampments and vehicles with smashed windows.

The irony here is the doom-loops are generated by our refusal to deal with reality. We want artificial solutions that cost us nothing and require no sacrifices, fake-fixes that maintain the facade we value more than our ability to function in the real world.

Doom-loops don't occur in isolation: they interact with each other, reinforcing each other. Attempts to suppress one doom-loop by papering over the unwelcome reality accelerate other doom-loops.

There is a structure to our artifice: those benefiting the most have the most to lose should the facade crumble. Those at the top of the heap are thus fanatically devoted to propping up the illusion of stability and "growth," regardless of the damage being done behind the happy-story facade.

There is no master-plan in the desperate machinations to keep the facade intact. There is only the day-to-day plugging of holes that reality is leaking through.

And so the fraudulent farce continues: the social media facade of luxury behind the five roommates crammed into one flat struggling to pay rent, the "stability" of the banking sector, the permanence of "growth," the tired joke that "debt doesn't matter because we can always conjure more money," and the absurd confidence that speculation is a substitute for a functioning economy that doesn't depend on financial trickery for its survival.

A desire to restore our collective ability to deal with reality gets one labeled a bitter doom-and-gloomer, because this would require the collapse of artifice. And that, of course, is non-negotiable to those who have confused their artificial world with the real world.

The era of 2023 to 2030 will be a titanic struggle between the forces of artifice and the multiplying doom-loops generated by artifice. Artifice has been the official policy since the Vietnam War era, and the conventional view holds that the past 50 years are proof that artifice can be successfully maintained forever.

This confidence can only be maintained by refusing to look at the doom-loops gathering momentum behind the facade. The effort required to keep the facade intact increases geometrically, and eventually the system can no longer keep it all glued together. At that point reality intrudes and we'll have to regain our ability to deal with a world stripped of financial trickery and fraud. That won't be easy because we've spent 50 years in a world of artifice.

Those who find this hard to swallow, answer this: what would happen if the Federal Reserve ceased to exist and the federal government could only borrow 1% of its revenues for additional deficit spending? What if all the trillions in stimulus, borrowing and trickery went away tomorrow? Does anyone seriously believe the economy would chug along, unperturbed, rock-solid and stable? This is the difference between artifice and reality.

If you prefer reality to artifice, oh, you wretched doom-and-gloomer. Just look at our social media feed, that's what real. Hungry and can't eat an iPhone? No problem, just have AI conjure up an image of a banquet and post that on your public-perception feed.

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Wednesday, June 21, 2023

Doom-Loop I: "Bringing Demand Forward" Will No Longer Save Us

The fantasy is that inflation will plummet to zero and we can all go back to "Bringing Demand Forward." The reality is what's plummeting is demand.

The US economy has been saved time and again over the past two decades by this one weird trick: "Bringing Demand Forward" by lowering interest rates and lending standards so Americans could continue to buy stuff they didn't really need because the monthly payment dropped as interest rates were pushed toward zero.

Every time the economy faltered, the Federal Reserve would push interest rates down to "Bring Demand Forward" by goosing debt-based consumption: OK, so you don't actually need a new car, but come on, the new car loan is only 1.9%, you can afford the monthly nut. Or hey, it's zero-percent financing for a couple years. Just go for it, get that new vehicle. Live large, you can swing it.

Flooding the economy with low-cost credit doesn't just "Bring Demand Forward;" it also juices speculative bubbles across the entire spectrum, from cryptocurrencies to commercial real estate. As bubbles inflate, punters feel wealthier and so they're willing to borrow and spend more--the infamous "wealth effect."

Nothing "Brings Demand Forward" like a speculative bubble and so inflating credit-based bubbles is all part of the plan to encourage people to buy stuff they don't need on credit to keep GDP expanding.

"Bringing Demand Forward" with speculative bubbles is joyous until the bubble pops--and all bubbles pop. When bubbles deflate, gains are replaced by losses and the reverse wealth effect kicks in.

The solution for the past two decades has been to drop interest rates even further and expand credit even more to generate a new bubble in one asset class or another.

Now that central banks have pumped up the Everything Bubble and unleashed inflation, the weird trick of dropping interest rates / juicing liquidity no longer works. It no long works in China, Japan, Europe, the US or the developing world: diminishing returns are systemic. Economies that become dependent on zero interest rates / juicing liquidity habituate to this constant stimulus and become dependent on speculative bubbles rather than on organic growth funded by earnings, savings and the advances of productivity.

"Bringing Demand Forward" always had an expiration date. You can't bring demand forward forever. Eventually consumers tap out, bubbles pop, speculative gambles go bust, debt service eats up consumers' disposable income, credit cards get maxed out and enterprises bloated by decades of bubbles and credit-funded spending implode under their fixed costs and debt loads.

The fantasy is that inflation will plummet to zero and we can all go back to "Bringing Demand Forward." The reality is what's plummeting is demand. The Everything Bubble is popping, credit is tightening, stimulus that worked in the past is no longer saving stagnating economies and the higher cost of credit is drowning consumers and enterprises that have grown complacent after 20 years of continuous "saves" via zero interest rates and tsunamis of cheap credit.

Sure, those households bringing in $250,000 and up are doing just fine--if they bought houses and other assets ages ago and can reap the gains to subsidize their lifestyles. But everyone living off average earnings without the cushion of Everything Bubble gains--how much "demand" will they be able to afford after paying $300 for a couple bags of groceries?

It's going to hurt when we hit the rocks at the bottom and unfortunately few are taking measures to reduce their risk while such measures are still within reach.

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

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Monday, June 19, 2023

How Did Someone Like Me Get Shadow-Banned?

How did someone like me get shadow-banned? There is no way to know, and that's a problem for our society and our ability to solve the polycrisis we now face.

It seems there are many reasons to get shadow-banned, but unfortunately we're never told what "crime" we committed nor are we given a chance to defend ourselves from the "indictment" in whatever "court" found us "guilty." As in a nightmarish tale right out of Kafka, the powers making the charges, declaring the verdict "guilty as charged" and imposing the penalty are completely obscured.

Those found "guilty" discover their secret "conviction" and "sentence" when their livelihood is destroyed (i.e. they're demonetized) and their online presence suddenly diminishes or vanishes.

I call this being sent to Digital Siberia. As with the real gulag, most of those convicted in the secret digital Star Chamber are innocent of any real crime; their "crime" was challenging the approved narratives.

Which leads to my question: why was little old marginalized-blogger me shadow-banned? Those responsible are under no obligation to reveal my "crime," the evidence used against me, or offer me an opportunity to defend myself against the charges, much less file an appeal.

My astonishment at being shadow-banned (everyone in Digital Siberia claims to be innocent, heh) is based on my relatively restrained online presence, as I stick to the journalistic standards I learned as a free-lancer for mainstream print media: source data, excerpts and charts from mainstream / institutional sources and raise the questions / build the thesis on those links / data.

I avoid conspiracy-related topics (not my interest, not my expertise) and hot-button ideological / political cleavages (us vs. them is also not my interest). My go-to source for charts and data is the Federal Reserve database (FRED) and government agencies such as the Census Bureau, Bureau of Labor Statistics, IRS, etc., and respected non-governmental organizations (NGOs) such as the Pew Research Center, RAND, investment banks, etc.

Given my adherence to journalistic standards, I wonder: how did someone like me get shadow-banned?

The standard cause (or excuse) for being overtly banned is "distributing misinformation." This charge is never specific; something you posted "violates our community standards," or equivalent broad-brush language.

Shadow-banning is even more pernicious because you're not even notified that your visibility to others has been restricted or dropped to zero. You see your post, but nobody else does.

What are the precise standards for declaring a link or statement as "misinformation?" As the twitter files revealed, what qualifies as "misinformation" is constantly shifting as a sprawling ecosystem of censors share information and blacklists. This report is well worth reading: The Censorship-Industrial Complex: Top 50 Organizations To Know (Zero Hedge).

Not only do we not know what qualifies as "misinformation," we also don't know what Big Tech algorithms are flagging and what their response is to whatever's been flagged. My colleague Nate Hagens, who is equally scrupulous about using authoritative sources, posted this comment last year:

"It's both funny and scary. It was explained to me today that the new Facebook/Meta algorithm downrates users who have cookies w evidence of visiting non-mainstream news sources/blogs. Even when one uses proxy servers and incognito mode, if you frequent e.g. Aljazeera or other news sites instead of CNN or FOX the algorithms categorizes your FB content (even if it's a chicken soup recipe) as 'non-mainstream'.
Big brother is watching (and not even thinking).
Those ideas/voices outside the status quo aren't on equal footing- and the status quo (material growth/cultural values) is what's leading us down the current path, without a map or plan."

The systems that shadow-ban us are completely opaque. Who's to say that a knowledgeable human reviews who's been banned or shadow-banned? Given the scale of these Big Tech platforms and Search Engines, is that even possible?

It's well known that YouTube constantly changes its ranking algorithms so they are harder to game, i.e. manipulate to advance one's visibility.

It's also known that simply posting a link to a site flagged as "misinformation" is enough to get your post excommunicated and your site flagged in unknown ways with unknown consequences.

What I do know is that Of Two Minds was publicly identified as "Russian Propaganda" by a bogus organization with no supporting data, PropOrNot in 2016. This front's blacklist was prominently promoted by the Washington Post on page one in 2016, more or less giving it the authority of a major MSM outlet.

One might ask how a respected, trusted newspaper could publish a list from a shadowy front without specifying the exact links that were identified as "Russian Propaganda." Standard journalistic protocol requires listing sources, not just publishing unverified blacklists.

Clearly, the Washington Post should have, at a minimum, demanded a list of links from each site on the blacklist that were labeled as "Russian Propaganda" so the Post journalists could check for themselves. At a minimum, the Post should have included inks as examples of "Russian Propaganda" for each site on the list. They did neither, a catastrophic failure of the most fundamental journalistic standards. Yet no one in the media other than those wrongfully blacklisted even noted or questioned this abject failure.

In effect, the real propaganda was the unsourced, un-investigated blacklist on the front page of the Washington Post.

How did I get on a list of "Russian Propaganda" when I never wrote about Russia or anything related to Russia?

There are two plausible possibilities. One is "guilt by association." I've been interviewed by Max Keiser since 2011, and Max and his partner Stacy Herbert posted their videos on RT (Russia Today) and an Iranian media outlet. Needless to say, these sources were flagged, as was anyone associated with them. So perhaps merely having a link to an interview I did with Max and Stacy was enough to get me shadow-banned. (Shout-out to Max and Stacy in El Salvador.)

Alternatively, perhaps questioning the coronation of Queen Hillary in any way also got me on the blacklist.

Once on the blacklist, then the damage was already done, as the network of censors share blacklists without verifying the "crime"--a shadowy "crime" without any indictment, hearing or recourse, right out of Kafka.

Shadow-banning manifests in a number of ways. Readers reported that they couldn't re-tweet any of my tweets. Another reader said the Department of Commerce wouldn't load a page from my site, declaring it "dangerous," perhaps with the implication that it was a platform for computer viruses and worms--laughable because there is nothing interactive on my sites and thus no potential source for viruses other than links to legitimate sources and adverts served by Investing Channel.

Users of platforms such as Twitter and Facebook have probably noticed that your feed is populated by the same "friends" or "folks you follow." In other words, the feed you're presented with is curated by algorithms which sort and display posts / tweets / search results according to parameters that are invisible to users and regulators.

It's easy to send flagged accounts to Digital Siberia, and trouble-free to leave them there until the trouble-maker goes broke.

It's impossible to chart the extent of the shadow-banning, or who's doing it, sharing blacklists, etc. This entire ecosystem of censorship is invisible. Recall that in the Soviet gulag, having an "anti-Soviet dream" was enough to get you a tenner (10-year sentence) in the gulag. Here, posting a flagged link will get you a tenner in Digital Siberia.

When Your Own Government Confirms It Paid Censors To Silence You...

In today's zeitgeist, merely mentioning the possibility that the COVID-19 virus escaped from a lab resulted in an instant ban in 2020. How could the possibility that it escaped from a nearby lab dedicated to viral research be labeled as "disinformation" when the facts were not yet known?

The answer is of course that the lab-escape theory was "politically sensitive" and therefore verboten.

You see the problem: what's deemed "politically sensitive" changes with the wind, and so the boundaries of what qualifies as "misinformation" have no visible or definable edge. Virtually anything consequential can suddenly become "politically sensitive" and then declared "misinformation." When the guidelines of what's a "crime" and the processes of "conviction" are all opaque, and there is no hearing or recourse to being "convicted" of a shadow-"crime," we've truly entered a Kafkaesque world.

How did someone like me get shadow-banned? There is no way to know, and that's a problem for our society and our ability to solve the polycrisis we now face.

I joke that what got me shadow-banned was using Federal Reserve charts. Perhaps that's not that far from reality.

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

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Thursday, June 15, 2023

Solutions Abound, But Not Necessarily Where We Expect

Solutions abound, we just have to look for them in the right places.

Despite my reputation as a doom-and-gloomer, all of my work is about solutions. The first step in identifying realistic solutions is to dispense with the distracting clutter of fantasies, a process that is dismissed as doom-and-gloom. But if we latch onto fantasies as solutions, we can't proceed to real-world solutions.

For four generations (80 years), we've become accustomed to seeking solutions from the federal government. This reliance on large-scale solutions began with the federal responses to the Great Depression and then gathered steam in World War II and the Cold War. By the 1960s, federal programs, policies and spending were the go-to solutions for every problem.

The federal government tends to be reactive. This is the nature of government, which is naturally dominated by elites and entrenched interests whose goal is to maintain their share of wealth and power by keeping the status quo in its current configuration. Any fundamental change that threatens powerful interests is naturally shelved.

The net result is the federal government only instituted environmental-protection regulations after American rivers caught fire. It takes a tremendous level of national pain to overcome the resistance of entrenched powers in the central state.

The other reason why federal policies are the go-to solutions is the money: no other entity can borrow or print money on such a vast, sustained scale. And since the Federal Reserve / federal government can fund spending without any visible sacrifices being imposed--additional spending is cost-free other than increases in the interest due on the higher debt--then everyone turns to the federal funding-spigot as a solution to any and all problems.

Thus it's to be expected that the majority of proposed solutions center on top-down, centralized-state policies. If only we had sound money, a fair tax system, more regulations against fraud, etc.

The problem in pursuing solutions at the top level of centralization is the competition to control the levers of federal power is intense: every concentration of wealth and power is pouring money and effort into influencing federal policies, and watering down or blocking any policy changes that might diminish their share of the wealth-power pie.

The net result is the legislative "sausage-making" process in which hundreds of pages of legislation must first be approved before we know what's in the hundreds of pages of new laws / regulations. But the competition and process enables us to predict the general content: every entrenched interest affected by the legislation has inserted subsidies, tax breaks, exceptions, etc. to protect their share of the federal money-trough.

The federalist structure of the Constitution grants significant governmental powers to each state, and state governments grant significant governmental powers to counties and cities. Unlike the federal government, state, county and city governments cannot print money, and their ability to borrow via municipal bonds eventually faces limits due to credit ratings and the interest due on previously issued bonds.

This means local governments must make trade-offs and sacrifices to fund new initiatives. This incentivizes more practical problem-solving processes.

As a general rule, all solutions must be implemented at the local level, and so this is where the rubber meets the road in solutions. Cities and counties have to deal with the realities of their locale, funding, populace, etc. on a granular level, and so practical solutions become more attractive than ideological-driven policies.

This structure enables competition between states, counties and cities for capital and talent. Each proposed solution pursued on the local level is more or less successful, and capital and talent will over time be drawn to locales that manage practical, successful solutions to real-world problems. Those locales whose solutions fail to solve real-world problems while eating up tax revenues will lose capital and talent.

This feedback isn't perfect, of course. Places viewed as favorable to capital and talent will grow too fast, overwhelming infrastructure and reduce the qualities that attracted new residents in the first place.

But the systemic influence of open competition eventually encourages practical, affordable, flexible solutions and discourages costly attempts at solutions which fail to solve problems.

Citizens with little voice at the federal level have much more of a say on the local level. It's possible to gain access to local government decision-making entities and get a fair hearing. Solutions have to fit local constraints, and this encourages experimentation. Costly, cumbersome proposals are simply off the table. Creative, low-cost, low-bureaucracy solutions are more likely to get a hearing.

Then there's a vast range of personal / household solutions. If the situation is fundamentally unfavorable, then moving to a more favorable locale is one potential solution. Shifting to a more sustainable, flexible, favorable livelihood and lifestyle is also a possibility. So is reducing dependency on long supply chains and situations that can only burn us out.

All of my 18 books are efforts to delineate problems and describe the outlines of possible solutions. The most recent three are: Global Crisis, National Renewal, Self-Reliance in the 21st Century and When You Can't Go On: Burnout, Reckoning and Renewal.

Solutions abound, we just have to look for them in the right places.

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

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Tuesday, June 13, 2023

This Is Why Nobody Will Do Anything Until It's Too Late

I like a rousing story as much as anyone else, but systems aren't stories, and confusing the two won't actually fix what's not sustainable in the current system's configuration.

OK, I get it: we all like Hollywood endings: the superhero saves the world, the evil conspiracy is uncovered and the villains get their just desserts and the impossible romance overcomes all the odds. This is why there are Hollywood endings: we are hard-wired to thrill to happy endings and a successful conclusion to the Hero's / Heroine's Journey.

We will tolerate a Tragic Hero / Heroine or the occasional Anti-Hero / Heroine, but there is still a moral victory of some sort to cheer.

The real world doesn't follow a storyline, it operates according to the dictates of systems: inputs are taken up by processes which then generate outputs. If the outputs and processes don't change, the outputs don't change either.

One prevalent manifestation of human hubris is the idea that getting someone to agree with us about something or other is some sort of victory, as if human opinions matter. They don't, unless they change either inputs or processes in extremely consequential ways. Tweaking inputs or policies might make us feel warm and fuzzy ("I'm part of the solution!") but they are too modest to change the system's inputs and processes. The net result is the outputs remain the same.

Put another way: labeling something or other a hoax or an existential threat doesn't change anything in the systems that generate consequences. Whatever is going to happen as output is going to happen regardless of what humans label it or their opinions about it ("El Nino really sucks!").

Existing processes constrain our choices. This is why it's difficult to be an environmentally-sustainable saint. Let's say we're concerned about climate change and the destruction of the planet's biosphere. Let's say we want to lower our carbon footprint and "do the right things" to reduce the negative impact of our consumption and lifestyle.

This is where we substitute Hollywood endings for reality. We like to think that recycling matters. Sorry, it really doesn't change the inputs or processes enough to change the outputs in any consequential way. For example, the percentage of lithium batteries and electronic waste that are currently recycled is near-zero because the batteries and electronics aren't manufactured to be recycled in a cost-effective manner, and nobody in the system pays for costly recycling. So the really important recycling isn't being done.

I still recycle cardboard because that seems like a better choice than dumping it in the landfill, but in terms of total lifecycle costs and resource consumption of recycling versus landfill, I don't have any data. The system isn't set up to measure total lifecycle costs and resource consumption of goods, services and processes, and since we only manage what we measure, we're flying blind: the system is set up to measure "growth" (GDP) and profits, not total lifecycle costs and resource consumption.

Sorry, there's no Hollywood ending until we change the inputs (stop manufacturing lithium batteries) and/or the processes (require 99% recycling of all electronics, batteries, vehicles, etc.). This will require changing the entire manufacturing and resource supply chain systems from the ground up, globally. If we don't do that, the output can't possibly change in any consequential way.

The Hollywood ending is electric vehicles will "save the planet." Too bad this is Hollywood, not reality. Most of the consumption of resources and damage to the planet occur in the mining, smelting and manufacture of the vehicle, regardless of its fuel. Due to their massive consumption of minerals, electric vehicles consume far more of the planet's resources than an ICE (internal combustion engine) vehicle.

All vehicles are manufactured (mining, smelting, transport, factories, etc.) with hydrocarbons. There's no difference between vehicles except electric vehicles use even more hydrocarbons in their fabrication.

Then there's the source of the fuel. An electric vehicle manufactured by burning coal and charged with electricity generated by burning coal is in fact a coal-burning vehicle. Calling it "electric" fits the happy story, but it's not actually factual: a coal-burning vehicle is an environmental disaster, regardless of labels, our opinions or the happy-ending PR.

In the real world, the least destructive choice of vehicle is a small, light, old ICE vehicle that is well-maintained to conserve fuel and driven only rarely. Hey, look at me, I only drove my old 40-mile-per-gallon Civic 3,000 miles last year--I'm a saint!

Unfortunately, the real world isn't a Hollywood (or Bollywood) movie, and so I don't get to be a saint once we look at the world as a system rather than a movie. The fertilizers I use to grow food in my yard come from afar, and even the organic ones consume huge quantities of hydrocarbons in their processing, bagging and shipping. The "organic" fruit or vegetable shipped from afar is an environmental disaster compared to the organic fruit or vegetable from your own yard, but even those require inputs that are part of the system.

I stepped on airliners a few times in the past year, one long-haul and two short flights, and there is really nothing environmentally saintly about consuming immense resources by jetting around the world.

Electric aircraft won't "save the world," either. They're resource-hungry, small, slow, their range is modest and their batteries are no more recyclable or long-lasting than all the vehicle batteries destined for the landfill. And alternative fuels for jet aircraft are incapable of being produced at the scale necessary to replace jet fuel. Sorry, no Hollywood ending.

To really reduce one's consumption of the planet's resources, we would have to grow our own food, get around on our own feet or zero-fuel transport (motorless bicycle or skateboard or boat) and not buy / own / use large resource-consuming devices such as vehicles, aircraft, etc.

The system as currently configured makes it nearly impossible to do this. Even growing much of your own food requires delivery of fertilizers (organic or chemical, they still weight a lot). Very few places are bike-skateboard friendly. The world is set up for large, mass-produced fueled vehicles. Outside of a few cities, public transport is incapable of getting people where they need to go in any sort of time-efficient manner.

Consider the foundation of our lifestyle, the financial system. The story is "debt doesn't matter," because we can outgrow rising debt forever. Our bag of financial engineering tricks is bottomless, and there will always be another financial rabbit we can pull out of the hat.

This is of course a fantasy. Debt eventually eats the system alive. So do fixed costs, entitlements, demographics and declining productivity. The inputs and processes can't be changed in any material way because they have to remain in their current scale and configuration or the financial system collapses under its own weight.

This brings us to the incentives to keep the inputs and processes exactly as they are, with minor tweaks for PR purposes. The system is set up such that elites and self-serving interests have most of the wealth and political power, and if even the tiniest bit of their skim is diminished, they will instantly devote the entirety of their resources to reversing this outrage, for they all know how power works: if others manage to cut 1% from your skim, they'll sense weakness and come back for 10%.

The only incentive that counts in our stripmined world is maximizing profits and the private gains of the entrenched and powerful. To cloak this reality, the Powers That Be promote public-relations propaganda that depicts their pillage, looting, fraud and destruction as a Hollywood story we can all consume and love, just as we love our servitude once it's been properly packaged into a Hero / Heroine's Journey or a Love Story.

This is why nobody will do anything until it's too late. It's only when we run out of essential inputs and/or essential processes decay and collapse that we'll awaken to the fact that since the global system's inputs and processes materially changed, the outputs we need and love all went away.

By the time inputs and processes have materially changed, it's too late to reverse the process and go back in time. Once resource extraction processes break down, inputs are no longer available in the needed quantities to feed all the processes of globalized, industrialized production and transport. Since all these processes are tightly bound systems, that is, interconnected, the breakdown of any one supply chain or process quickly topples dominoes throughout the system.

In addition to confusing happy stories with systems, human hubris manifests in another way: we like to think that minor tweaks here and there that don't inconvenience us will magically change the negative outputs (resource depletion, environmental ruin, etc.). This is why we love the Hollywood stories about electric aircraft (our very own electric helicopter--yowza!), electric vehicles, recycling the carboard boxes from FedEx, UPS and Amazon, and so on: we get all the comforts and conveniences we're accustomed to, and we get to be environmentally-sustainable saints, too: it's all sustainable and ecological and warm and fuzzy.

Except it isn't. That's a fairy tale, not a system.

If you question the Hollywood ending, you're dismissed as a doom and gloomer, a discontent who grumbles about happy endings and techno-marvels.

I see this as confusing a story with a system. The story operates by its own rules: here are the obstacles and powerful villains, here are the Hero and Heroine, outmatched and under pressure, but then, against all odds, the villains lose their grip, justice is served and love triumphs.

Systems work by their own implacable rules. There are inputs and processes that generate outputs. The only way to change the outputs in a consequential fashion is to change the inputs and/or processes in a consequential fashion. Little face-saving PR tweaks are too small in scale to materially change either inputs or processes, and so the outputs won't change and indeed, can't possibly change, because that's how systems work.

So by all means, ignore all warnings and run the ship at full speed through an ice field. All too predictably, the ship collides with an iceberg and only then does anyone respond: OK, where's the Hollywood story of brave engineers saving the ship and noble passengers helping each other onto lifeboats? What do you mean, the ship will sink regardless of what's done?

Doesn't our happy-ending story map reality? Unfortunately, no. The current system is sinking and nobody will do anything other than more of what's failed until it's too late.

I like a rousing story as much as anyone else, but systems aren't stories, and confusing the two won't actually fix what's not sustainable in the current system's configuration.

This confusion of story with system will generate consequences and opportunities which I discuss in my books Global Crisis, National Renewal and Self-Reliance in the 21st Century.

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Paul C. ($300), for your beyond-outrageously generous contribution to this site -- I am greatly honored by your steadfast support and readership.

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Self-Reliance in the 21st Century

Burnout: Reckoning and Renewal

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