Wednesday, November 20, 2019

What's Been Normalized? Nothing Good or Positive

What's been normalized are policies and cultural norms that seek to enrich and protect the few at the expense of the many.
When the initially extraordinary fades into the unremarkable background of everyday life, we say it's been normalized. Put another way, we quickly habituate to new conditions, and rationalize our ready acceptance of what was previously unacceptable.
Technology offers many examples of extraordinary advances quickly becoming normalized as we habituate to new devices and behaviors, but my focus today is on policies and cultural norms that were radical departures from accepted norms at their introduction but which are now accepted as "normal."
This normalization of extreme policies conceals the often equally extreme unintended consequences of the new policies and norms.
Let's start with two examples which have unleashed unintended consequences that have completely distorted markets: allowing pharmaceutical companies to advertise directly to "consumers" and allowing corporations to buy back their own shares. Each of these activities had been banned for self-evident reasons, yet were allowed in the neoliberal rush to deregulate industries without regard for the long-term consequences.
Now Big Pharma dominates advertising in late-night TV and various print publications, directing "consumers" to "ask their doctor about".... The ads all feature a comical parody of disclosure, with a fast-talking voice talent listing all the horrific side-effects as quickly as possible in the hopes "consumers" won't hear the real-world consequences of the oh-so-pricey med being promoted.
I've long mocked this Big Pharma profiteering via my parody ads for imaginary meds such as Delusionol:
Meanwhile, enabling corporations to buy their own stocks has incentivized borrowing billions to buy back shares, boosting the earnings per share even as sales and profits stagnated. This trick pushed shares prices higher, enriching managers and major owners.
Rather than invest in risky new products, corporate managers have enriched themselves by blowing billions on stock buybacks, distorting valuations while creating fabulous wealth for themselves and major shareholders while crippling the company with debt. (For an example, consider GE.)
More recently, central banks' ceaseless interventions to prop up market valuations have been normalized to the degree that what was once unimaginable-- central bank balance sheets in the trillions of dollars and outright purchases of trillions of dollars in mortgages, bonds and stocks--is now accepted as "normal."
This flood of currency and credit has enriched private banks, financiers, super-wealthy families and corporations, vastly widening the wealth-income gap between the top 0.1% and the bottom 99.9% (see chart below).
The Federal Reserve's policy of giving trillions in low-cost credit to the super-wealthy in the absurd hope some tiny rivulets would trickle down to the bottom 99% has been revealed as the greatest engine of wealth-income inequality in modern history.
Unintended or not, this consequence cannot be "fixed" by issuing even more trillions to the financial Oligarchy. Rather, the Fed's favorite "fix" only makes the inequality more politically explosive.
Then there's the normalization of government-issued statistics that purposefully misrepresent reality for political purposes, with Exhibit #1 being the completely fabricated Consumer Price Index (CPI) inflation rate, which has been a laughable 2% or less for a decade while big-ticket expenses such as rent, healthcare, childcare and college tuition have registered in double-digit increases year after year.
An accurate admission of real-world inflation for the unprotected class would be political dynamite, so the corporate media plays along, announcing the Soviet-Propaganda like phony inflation numbers with a straight face.
The resulting loss of trust in government and institutions is eating away at the social contract and social order, with potentially disastrous consequences. There is no alternative (TINA) until the entire flim-flam collapses and takes the social order with it.
Guilty until proven innocent is another recent development. Completely fabricated charges are heavily promoted in the corporate media, based on outright lies, second-hand innuendo, unsubstantiated claims and carefully constructed narratives supported by thin tissues of cherry-picked tidbits.
A wide spectrum of alternative-media sites, progressive and conservative, have been gutted by just such guilty until proven innocent charges which are then instantiated in the platform monopolies of Twitter, Facebook and Google without any evidence or any avenue of redress / recourse.
That this is extra-legal suppression of free speech--who cares? The suppression of free speech that is politically inconvenient has now been normalized, hidden behind the faceless corporate monopolies of Twitter, Facebook and Google and the corporate media that insists non-approved websites are by definition fake news, an Orwellian reversal of their own role as Elitist purveyors of officially sanctioned fake news such as the bogus inflation rate, the bogus employment rate, and so on.
Put this in your pipe and smoke it: wealth and income inequality is driving social and political disorder on a global scale as the politically and socially disenfranchised are driven to extremes by extremely repressive policies that have been normalized, even as their unintended consequences stripmine the bottom 90% and fracture the social order.
What's been normalized are policies and cultural norms that seek to enrich and protect the few at the expense of the many. Unfortunately for the few, the unintended consequences are bringing down the entire status quo they depend on for their wealth and power.


My recent books:
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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, William F. ($5/month), for your magnificently generous pledge to this site-- I am greatly honored by your support and readership.
 

Read more...

Monday, November 18, 2019

Political and Social Conflict Is Accelerating: Here's Why

All the status quo "fixes" only hasten the collapse of the status quo.
That economic, social and political conflict is accelerating is self-evident. What's open to debate are the core drivers of conflict / disorder /unraveling.
Here's the core self-reinforcing dynamic in my view:
1. The status quo elites can no longer mask soaring costs of essentials nor soaring wealth / income inequality between the top .01% (Oligarchs), the top 9.99% who enrich the Oligarchs with their discretionary spending and technocratic/managerial labor, and the bottom 90% who are rapidly losing ground on all fronts: economic, social and political.
2. The elites' "fixes" to the social / political conflicts unleashed by the rigged financial system and winner take most economic order are politically expedient, meaning they don't actually address the sources of conflict, they merely paper them over with PR as a means of preserving the elites' wealth and power.
3. The elites' fundamental financial "fix" is to create trillions in newly issued currency and distribute it to the banks, financiers, super-wealthy families and global corporations-- the top .01% Oligarchs.
4. This "fix" accelerates the asymmetric distribution of wealth by enabling the already-wealthy to buy more productive assets, fund stock buybacks, etc., while forcing the bottom 90% to borrow money from the Oligarchs to make ends meet: the rich get richer, the poor get more indebted.
5. The only possible output of these inputs (political expediency to preserve the elites' wealth and power, the creation and distribution to the Oligarch class of trillions in new currency) is the acceleration of the very erosion that fueled social / political conflicts in the first place. In effect, the elites' "fixes" are accelerating the conflicts that will ultimately lead to their downfall.
This is why the unraveling cannot be reversed or stopped: all the enormous efforts being expended by the elites to maintain the status quo exactly as it is now, with the vast majority of wealth and power in their hands, preclude the structural changes needed to re-set the status quo onto a more sustainable (i.e. more transparent, productive, efficient and decentralized) and less rigged-to-benefit-the-few path.
All the status quo "fixes" only hasten the collapse of the status quo. My longtime colleague Gordon T. Long has laid out the stages of this inevitable descent into conflict and collapse in a series of charts which we discuss in our latest video conversation Coming Era of Political & Social Conflict (29:13).
These stages are predictable because human nature is predictable. That elites will follow a pathway of expediency to preserve their wealth and power is predictable, and this pathway includes the debauchment of currency (printing ever greater sums to add to their wealth and placate the masses), the substitution of credit for capital, the political disenfranchisement of the masses, increasingly oppressive financial repression and social / political conflicts that spiral out of control as the inherently unstable financial house of cards collapses.
Since the elites won't allow an orderly re-set that reduces their wealth and power, the re-set will result from spiraling conflicts and the collapse of all that is viewed as permanent, i.e. the financial and political status quo.
Don't think it won't happen just because it hasn't happened yet.


My recent books:
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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, Brenda W. ($50), for your marvelously generous contribution to this site-- I am greatly honored by your steadfast support and readership.
 

Read more...

Sunday, November 17, 2019

If Not-QE Is QE, then is Not-a-Blowoff-Top a Blowoff Top?

Can $300 billion, or $600 billion, or even $1 trillion continue to prop up an increasingly risk-riddled, fragile $330 trillion global bubble in overvalued assets?
When is "Not-QE" QE? When Federal Reserve Chairperson Jerome Powell declares QE is not QE. We can constructively recall the story that Abraham Lincoln famously recounted in 1862: 'If I should call a sheep's tail a leg, how many legs would it have?'
'Five.'
'No, only four; for my calling the tail a leg would not make it so.'
Calling QE not-QE doesn't make it different than QE, but it does communicate the Fed's panicky desire to mask its stupendous injection of financial cocaine into the financial system. The Fed's level of panic is noteworthy, as is the absurd transparency of its laughable attempt to conceal its panic.
In the same fashion, the financial media is loudly declaring the current blowoff top in stocks is not a blowoff top. The delicious irony here is these denials are reliable markers of blowoff tops: the louder the denials, the greater the odds that this is in fact the blowoff top that many pundits have been expecting for some time, but always in the future.
Garsh darn it, maybe the future has arrived. The financial media denied the Q4 1999 - Q1 2000 blowoff top was a blowoff top, and it repeated its denial of a blowoff top in housing in 2006-2007. The pundits of 1929 also denied the Q3 blowoff top in stocks was a blowoff top.
If you want a reliable signal that the blowoff top has peaked, listen to the screechy adamance of the deniers. The list of reasons why blowoff tops can't be blowoff tops is practically endless: sentiment isn't bullish enough, there's a Wall of Worry for stocks to climb (overlooking the inconvenient reality that there is always a Wall of Worry), the consumer is still looking good, corporate earnings will rebound, the soft patch is behind us, the Internet will grow for decades to come, they're not making any more land, capital flows favor higher asset prices, we owe it to ourselves (paging Paul Krugman--the Keynesian Cargo Cult is about to dance the humba-humba around the campfire and you're needed...), debt doesn't matter (it never matters until it does), price-earning ratios have plenty of room to move higher, and everyone's favorite, don't fight the all-powerful Fed (and we command you not to look behind the curtain while we worship false gods and wave dead chickens).
But nonetheless, blowoff tops in asset bubbles remain a feature of asset overvaluation, which by the way has once again reached historic extremes (GDP to equity valuation, etc.)
This introduces the other reliable indicator of blowoff tops: this time it's different. It's always different at blowoff tops, but not in the way that proponents of eternally rising asset valuations imagine.
Even geniuses misread blowoff tops. Popular culture has it that Isaac Newton made money in the South Sea Company bubble, sold for a handsome profit and then re-entered at a much higher price, losing a fortune when the blowoff top collapsed. Some historians have argued that this account is not accurate, but new research verifies that Newton did miscalculate and lose a fortune: Newton's financial misadventures in the South Sea Bubble:
This paper presents extensive new evidence that while Newton was a successful investor before this event, the folk tale about his making large gains but then being drawn back into that mania and suffering large losses is almost certainly correct. It probably even understates the extent of his financial miscalculations.
Which brings us to the present blowoff top that is widely presented as not-a-blowoff-top because of XYZ, with XYZ boiling down to the omnipotence and omniscience of the Federal Reserve. The implicit belief currently holding sway (just as various implicit beliefs enabled the South Sea Bubble in 1720 and the bubbles in 1929, 2000 and 2008, to name but a few of a rogue's gallery of blowoff tops) is the Fed has complete control of interest rates and the stock and bond markets, and the evidence for this belief is the Fed's unparalleled success in inflating asset bubbles in stocks, bonds and real estate for a decade, a managerial feat now in its 11th year.
The possibilities that the Fed's manipulation--oops, management--of markets might suffer from diminishing returns, or that markets might still be prone to nonlinear events generated by emergent properties of complex systems are dismissed as so unlikely that there's no point in even discussing them.
All of which brings us to the Fed's painfully obvious panic and pathetic attempt to conceal their panic, factors that are illustrated on this chart of the Fed balance sheet, which has suddenly exploded higher by $300 billion.
If everything's just peachy in global banking and the U.S. economy, why the sudden mainlining of $300 billion of financial cocaine into the collapsing veins of the financial system?
Just for context, that $300 billion is more than the entire GDP of Chile and a host of other nations. While the Fed's $4 trillion balance sheet (up from a mere $800 billion prior to the Global Financial Meltdown in 2008) has jaded us to large numbers, $300 billion is still a monumental sum of "money" (i.e. currency created out of thin air by the Fed to distribute to banks, financiers, the super-wealthy and corporations.)
We might want to recall here that the global asset bubble the Fed is attempting to keep inflating is several orders of magnitude larger: well north of $300 trillion in 2018. (It's also worth recalling here that the Fed is not just the central bank of the USA, it's also the central bank of last resort for the entire global economy. Much of the $23 trillion in loans, guarantees and backstops the Fed issued in 2008-2009 propped up non-U.S. banks and institutions.)
Can $300 billion, or $600 billion, or even $1 trillion continue to prop up an increasingly risk-riddled, fragile $330 trillion global bubble in overvalued assets? Just as a matter of scale, the answer is "not likely." The key variable here the belief of participants in the omnipotence and omniscience of the Fed.
If the Fed can no longer keep the global bubbles inflating, then the bubble-sustaining belief that the Fed is in effect a new god will lose its self-predictive feedback loop: stocks go up because we believe the Fed will push them higher, so we buy stocks and our buying pushes stocks higher, doing the Fed's work for it.
Blowoff tops are rarely identified in the present. Even geniuses get fooled. But if we look at one simple indicator--the number of financial types denying this is a blowoff top and the number calling this the blowoff top of the entire 11-year Fed-induced frenzy of over-valuation-- we have to conclude that the odds favor this being the blowoff top nobody expected until some far-off moment in the future. Well just maybe the future has arrived, but nobody noticed.


My recent books:
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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, Abel G. ($10/month), for your outrageously generous subscription to this site-- I am greatly honored by your support and readership.
 

Read more...

Friday, November 15, 2019

Medicare-for-All "Socialism" Is Just Another Racket

The entire system of health needs to be re-organized from the ground up, and funding the rackets will only speed the collapse of the system.
The core problem with "socialist" proposals such as Medicare-for-All is that they don't actually fix what's broken--they just expand existing rackets such as the healthcare/sickcare racket, the higher education racket, and so on.
Let's start by separating "real socialism" (state ownership of the means of production) from "faux socialism" (the state borrows trillions of dollars to fund self-serving public-private rackets).
The basic idea of classic socialism is that state ownership of the means of production enables the state to harvest the surplus production and invest it in the public good. If the state is organized as a democracy, then the public gets a say in defining "the public good" and changing course if the national surplus is being mal-invested or diverted into the hands of the few under the guise of "the public good."
What's being labeled "socialist" in present-day U.S.A. is nothing more than the state borrowing from future generations to fund profiteering rackets today. It's hardly a secret that the U.S. spends twice as much per person on healthcare but trails the pack of other developed nations in actual health. (See infographic below for the facts, which I have discussed here for 14 years.)
Problem #1 is robust health isn't profitable, while managing chronic lifestyle diseases and pushing needless/harmful medications and procedures are immensely profitable.
Problem #2 is the external costs of destructive but oh-so-profitable products are not paid by either producers or consumers at the point of purchase. The tobacco industry offers an example of this decoupling of "price discovery" and externalities that manifest years or decades later.
Selling tobacco was and is an enormously profitable venture, but only because the full costs of tobacco use manifest many years after the products are purchased and consumed, and these costs do not fall on the tobacco producers but on the consumers (who suffer terrible health consequences and early death), and on the healthcare system and society at large, which must absorb the staggering direct cost of dealing with the diseases caused by tobacco addiction and the indirect costs of lost productivity and early death.
For every $1 of profit the tobacco companies earned, $100 of future external costs were imposed on the consumers of tobacco and society at large. If the full external costs were levied at the point of sale, tobacco would be extremely expensive, and if the true risks had been advertised as heavily as the products themselves, the tobacco companies' liability exposure would have made the packaging and selling of tobacco an unprofitable business.
To maintain profitability, the tobacco companies engaged in a decades-long campaign to mask the real-world health consequences of using their products. The goal was three-fold: hide the well-known consequences of tobacco addiction, maintain that tobacco wasn't addictive, and maintain that it wasn't unhealthy, decoupling the sale of tobacco from the eventual costs.
The same dynamic is in play with America's food industry. Garbage in, garbage out: garbage "food" in, garbage health out.
This plays perfectly into sickcare's PR, which is that there is a magic handful of oh-so-profitable pills one can swallow to "fix" all the disorders caused by a garbage diet and near-zero fitness. And in case your doctor didn't adequately explain the wunnerful benefits of the magic handful of oh-so-profitable pills, Big Pharma helpfully spends billions of dollars on ads to promote a magical-thinking belief that some new med or procedure will "fix" complex, inter-connected metabolic disorders created by poor diet and an absence of fitness.
Medicare-for-All is simply a way to fund the racket as painlessly as possible, which is to borrow from future generations to fund profiteering rackets in Big Ag, Big Pharma, Big Packaged Food/Fast Food, and so on--the equivalents of Big Tobacco.
Just as smokers were encouraged to kill themselves without being aware of the eventual consequences of tobacco addiction, consumers of highly processed foods are killing themselves without being aware of the eventual consequences.
The promoters of Medicare-for-All offer a Band-Aid to fund the racketeering nature of U.S. healthcare: we're gonna tax the billionaires and they'll pay for the racket. It would be comical if it wasn't so painfully obvious that in our pay-to-play political circus, any new tax bill will be larded with exceptions and loopholes.
Let's say the "tax the rich" proposals raise $50 billion -- woohoo. But this is a drop in the bucket of additional costs incurred by Medicare-for-All, which could easily top $500 billion a year.
Nobody pushing Medicare-for-All dares connect the dots between garbage in, garbage out lifestyles and an unsustainably costly healthcare system of gargantuan waste, fraud, shameless profiteering, needless/harmful med and procedures, etc., a system which consumes twice as much money per person as our developed-world competitors for a measure of national health that is, if we're honest with ourselves (gasp), actually declining.
The entire system of health needs to be re-organized from the ground up, and funding the rackets will only speed the collapse of the system.
U.S. Healthcare Spending
U.S. Healthcare Spending, courtesy of Peter G. Peterson Foundation



My recent books:
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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, David S. ($10/month), for your outrageously generous subscription to this site-- I am greatly honored by your steadfast support and readership.

Read more...

Terms of Service

All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.

Our Privacy Policy:

Correspondents' email is strictly confidential. This site does not collect digital data from visitors or distribute cookies. Advertisements served by third-party advertising networks such as Adsense and Investing Channel may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative)
If you have other privacy concerns relating to advertisements, please contact advertisers directly. Websites and blog links on the site's blog roll are posted at my discretion.

Our Commission Policy:

As an Amazon Associate I earn from qualifying purchases. I also earn a commission on purchases of precious metals via BullionVault. I receive no fees or compensation for any other non-advertising links or content posted
on my site.

  © Blogger templates Newspaper III by Ourblogtemplates.com 2008

Back to TOP