A Note of Gratitude to Readers and Correspondents

Hopefully the occasional amusements offered by the content partially compensate for this site's many flaws.

Thank you, readers, correspondents, contributors and subscribers for tolerating the many weaknesses of this site over the past five months--especially the lack of email response. A more rational (or simply more sane) writer would have assessed the real-world workload and schedule from August 1 to December 31 and put the blog into a 5-month hiatus on August 1.

Alas, I am neither entirely sane nor rational, and so I persisted in creating content during the morning cup of coffee or in the odd moments in between time spent away from the digital realm, and finding a few moments to post it.

It is fair and reasonable to desire a response to an email, and I apologize to all those correspondents who took the time and invested the energy to write me--thank you for sharing your thoughts, experiences and analyses with me--but did not receive a reply.

It would have been fairer in some ways to put the blog into hiatus and shut down the email address, as I have had very limited time (and access to the Internet) to respond to email. Even though I value all email from readers very highly, the physical limits of my time and energy over the past five months have simply precluded responding to more than 5% of all email.

(It didn't help that my email server crashed, wiping out all but the most recent 1,500+ emails from 11/28/13.)

It's a peculiar dilemma: if I stop writing the blog, there is no reason to email me, but if I post content on the fly in between real-world work or activities, then there is no way I can respond to email. Yet I rely on the observations, critiques and experiences of readers and correspondents to continue my own learning.

Some have suggested an auto-reply to all email, but this strikes me as even more unsatisfactory than no reply. It has also been suggested that I hire an assistant to respond to email in my stead, but a copy-and-paste email from a 20-year old college student can only be a facsimile of an authentic response. (Not to mention the awkwardness of paying someone to respond to a free blog.)

If I could program a robotic "me," that might work, but that's not an available solution. For now, I ask your forbearance of an unsatisfactory situation and your acceptance of my sincere gratitude for your willingness to email commentaries that are read, valued and occasionally excerpted (with your permission, of course) despite the lack of acknowledgement.

Some of you may feel that to post content knowing that I will be unable to respond to comments, critiques and suggestions is form of a high-handedness; if this is so, I ask for your understanding that it is not intended as high-handedness--the reality is that the blog and all related digital activity is perhaps 10% of my life. I have an hour or two to do all content, management and email. After that, I'm elsewhere in the non-digital world.

I have posted 115 essays/entries since August 1, and sent 21 Musings Reports to contributors/subscribers.

Hopefully the occasional amusements offered by this content partially compensate for the site's many flaws. Your continued readership is sincerely appreciated.


If You Seek Practical Gifts, Consider These Everyday Kitchen Tools

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The Nearly Free University and The Emerging Economy:
The Revolution in Higher Education

Reconnecting higher education, livelihoods and the economy

With the soaring cost of higher education, has the value a college degree been turned upside down? College tuition and fees are up 1000% since 1980. Half of all recent college graduates are jobless or underemployed, revealing a deep disconnect between higher education and the job market.

It is no surprise everyone is asking: Where is the return on investment? Is the assumption that higher education returns greater prosperity no longer true? And if this is the case, how does this impact you, your children and grandchildren?


We must thoroughly understand the twin revolutions now fundamentally changing our world: The true cost of higher education and an economy that seems to re-shape itself minute to minute.

The Nearly Free University and the Emerging Economy clearly describes the underlying dynamics at work - and, more importantly, lays out a new low-cost model for higher education: how digital technology is enabling a revolution in higher education that dramatically lowers costs while expanding the opportunities for students of all ages.

The Nearly Free University and the Emerging Economy provides clarity and optimism in a period of the greatest change our educational systems and society have seen, and offers everyone the tools needed to prosper in the Emerging Economy.

Read the Foreword, first section and the Table of Contents.

print edition (list $20, now $18)

Kindle edition: list $9.95 

---

Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify. We will cover the five core reasons why things are falling apart:

1. Debt and financialization
2. Crony capitalism
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy

Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).

We are not powerless. Once we accept responsibility, we become powerful.

Kindle: $9.95       print: $24

Read more...

The Case for a Crash in 2014/2015

Looking past the year-end Santa rally to 2014....

With the 2013 Santa stock market rally in full euphoric swing, any discussion of a crash in 2014 strikes a note of cognitive dissonance. With the Fed promising to keep interest rates at zero until 2099 (or whatever date signifies "forever"), the prospects of ever-higher prices in every asset class never seemed brighter.

But the nagging question remains: if everything is so great, why does the Fed need to keep interest rates at zero forever?


As a result, there are two mutually exclusive forecasts floating around: that the Great Bull Market will run for years to come, so no worries; and that markets are exhibiting bubble-like characteristics that presage another crash.
So which forecast is more likely the correct one?

Analysts of every stripe—fundamental, quantitative and technical—pump out reams of data and charts to support one forecast or another, and economists (behavioral, macro, etc.) weigh in with their prognostications as well.  All sorts of complexities are spun as a by-product of producing research that’s worth paying for, and it all becomes as clear as…mud. 

As an experiment, let’s strip away as much of the complexity as possible and look at a few charts of what many observers see as the key components of the U.S. economy and stock market.

Let’s start with a basic chart of the S&P 500 (SPX), a broad measure of U.S. stocks:

Without getting fancy, we can discern three basic phases: what we might term “the old normal,” from the late 1950s to 1982; an amazing Bull Market from 1982 to 1994 that saw the SPX more than double; and a third phase that some consider “the new normal,” a leap to the stratosphere in the 1990s, followed by sharp declines and equally sharp rises to new highs.

This third phase of extreme volatility does not look like the previous phases; that much is clear.  Is this a new form of volatile stability; i.e., are extreme bubbles and crashes now “normal”?  Or are these extremes evidence of systemic instability? About the only things we can say with confidence is that this phase is noticeably different from the previous decades and that it is characterized by repeating bubbles and crashes.

Let’s zoom in on this “new normal” from 1994 to the present. Does any pattern pop out at us?

Once again, without getting too fancy, we can’t help but notice that this phase is characterized by steeply ascending Bull markets that last around five years. These then collapse and retrace much of the previous rise within a few years.

The reasons why these Bull phases only last about five years are of course open to debate, but what is clear is that some causal factors arise at about the five-year mark that cause the market to reverse sharply.

The ensuing Bear markets have lasted between 2.5 and 1.5 years. We only have three advances and two declines to date, but the regularity of these advances and declines is noteworthy.

Next, let’s consider other potential influences on this “new normal” of wild swings up and down. Some have observed a correlation between the cycles of the sun’s activity and the stock market, and indeed, there does seem to be a close correlation—not so much with the amplitude of the market’s recent moves but with the economic tidal forces of recession and Bull/Bear sentiment.

But there is nothing here to explain why the highs and lows in the stock market have become so exaggerated in the “new normal.”

Many have attempted to correlate key dynamics in the U.S. and global economy to the stock market’s gyrations.  Let’s look at a handful that are often offered up as important to the U.S. markets: the bond market (TLT, the 20-year bond index), the Japanese yen, gold, and the U.S. dollar.

If there is some correlation between the SPX and the TLT, it isn’t very visible.

How about the Japanese yen? Once again, there is no correlation to the SPX that is obvious enough to be useful.

Some analysts see the yen and gold as tightly correlated; here is GLD, a proxy for gold:

There is a clear correlation here, but as we all know, correlation is not causation, which means that some underlying forces could be causing the yen and gold to act in a similar fashion. Alternatively, the yen is acting on gold in a causal role.

In either case, the problem with correlations is that they can end without warning.  Since neither the yen nor gold correlate with the S&P 500, neither one helps us forecast a continuing Bull or a crash.

Lastly, let’s look at the U.S. dollar (DXY).

As I have noted elsewhere, the dollar doesn’t share any meaningful correlation with the S&P 500, yen, gold, or bonds in terms of trends, highs, or lows.  Here is a longer-term view of the Dollar Index, and once again we see no useful correlation to the SPX:

Proponents of cycles (17.6 years, for example) claim a high degree of correlation with actual highs and lows, but these cycles do not exhibit the fine-grained accuracy we might hope for in terms of deciding to buy, short, or sell stocks.

Analyst Sean Corrigan has described a remarkable 33-year cycle of highs and lows in the SPX:  lows in 1949, 1982, and (forecast) 2015, and highs in 1967 and 2000, (forecast of next high, 2033). While interesting on multiple levels, these cyclical data points are rather sparse foundations for decisions on whether to sell or hold major positions in the stock market, and they do not provide a forecast of the amplitude of any high or low.  Given the extremes of the “new normal,” we would prefer a forecast, not just of time, but also of amplitude.

Though it is unsatisfyingly imprecise, the “new normal” phase strongly implies that future declines will be as dramatic as the advances and that the five-year clock is ticking on the current Bull market. Forecasting an advance that lasts years beyond this five-year pattern is equivalent to forecasting that the “new normal” phase is now ending and a new phase of much longer Bull advances is beginning.

That is a bold claim, and there is little historical data to give it much weight.  Stripped of complexity, the "New Normal" chart suggests that the current run will top out within the next few months and retrace most of the advance from 2009; i.e., a crash of significant amplitude.

In Part II: The Case for Cash, we analyze the indicators that help us determine the likelihood of a coming crash similar in magnitude to 2000-02 and 2008-09, and why a strategy of selling risk assets into strength, and holding the cash until income-producing assets “go on sale” at the trough of the next market decline, seems prudent at this time.

Click here to access Part II of this report (free executive summary; enrollment required for full access).

This essay was original published on peakprosperity.com. 


If You Seek Practical Gifts, Consider These Everyday Kitchen Tools

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The Nearly Free University and The Emerging Economy:
The Revolution in Higher Education

Reconnecting higher education, livelihoods and the economyWith the soaring cost of higher education, has the value a college degree been turned upside down? College tuition and fees are up 1000% since 1980. Half of all recent college graduates are jobless or underemployed, revealing a deep disconnect between higher education and the job market.

It is no surprise everyone is asking: Where is the return on investment? Is the assumption that higher education returns greater prosperity no longer true? And if this is the case, how does this impact you, your children and grandchildren?


We must thoroughly understand the twin revolutions now fundamentally changing our world: The true cost of higher education and an economy that seems to re-shape itself minute to minute.

The Nearly Free University and the Emerging Economy clearly describes the underlying dynamics at work - and, more importantly, lays out a new low-cost model for higher education: how digital technology is enabling a revolution in higher education that dramatically lowers costs while expanding the opportunities for students of all ages.

The Nearly Free University and the Emerging Economy provides clarity and optimism in a period of the greatest change our educational systems and society have seen, and offers everyone the tools needed to prosper in the Emerging Economy.

Read the Foreword, first section and the Table of Contents.

print ($20)       Kindle ($9.95) 

---

Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify. We will cover the five core reasons why things are falling apart:

1. Debt and financialization
2. Crony capitalism
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy

Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).

We are not powerless. Once we accept responsibility, we become powerful.
Kindle: $9.95       print: $24 

Read more...

Do We Even Need a Banking Sector? Not Any More

An automated banking utility has no need for parasitic bankers or politicos or indeed, a central bank.

Do we need a banking sector dominated by politically untouchable "Too Big to Fail" (TBTF) banks? Thanks to fast-advancing technology, the answer is a resounding no. Not only do we not need a banking sector, we would be immensely better off were the banking sector to wither and vanish from the face of the Earth, along with its parasitic class of political enablers, toadies and Federal Reserve apparatchiks. 

The key to understanding why big banks have outlived their purpose is to grasp the implications of computing power, self-organizing networks and crowdsourcing. Banks came into existence to manage the accumulation of capital (savings) and distribute the capital to borrowers in a prudent manner that minimized risk and still yielded a return for savers and the bank's investors/owners.

Back in the pre-computer era, the record-keeping and risk management processes of these two core functions required a complex bureaucracy and a concentration of accounting skills and lending experience. The costs of operating this record-keeping and risk management bureaucracy was high, and these costs justified the bank's fees and interest rate spread. In an idealized scenario, a bank might pay depositors 3% annual yield on their savings and charge borrowers 5%. The 2% spread was the bank's to keep for performing the accounting, collection and risk management functions.

Today, computers running scripts/programs can perform these functions with minimal human oversight and at very low cost. The tracking and recording of millions of transactions and accounts no longer requires thousands of clerks and a large institutional bureaucracy; a relative handful of software engineers are all that's needed to maintain these services, which are in effect a low-cost utility.

Risk management and lending are also computerized; the human interface of a banker is a bow to tradition, not necessity. Crowdsourced funding is entirely computerized: those with money/capital choose to join a pool of lenders who accept the risk of lending to an individual, household, project or enterprise for a specified return.

This process of aligning excess capital (savings) with borrowers is already automated. Is there a role for regulation? Absolutely: such a system requires transparency that can be trusted. Those who violate this trust with cooked-books, lies, misinformation, etc. must suffer negative, long-lasting consequences, starting with being banned from the system.

It is an abiding irony that the present banking system's secret portfolios and processes (shadow banking, derivatives designed to fail and trigger profitable defaults, etc.) are considered core competitive advantages: in other words, eliminating transparency generates the highest-return bank profits.

And let's not overlook the political consequences of these immense profits: a political and regulatory order that is easily captured to serve the interests of big banks. The number one agenda item is of course to arrange Central State protection of the most profitable (i.e. the least transparent) parts of the banking sector's operations.

This lack of transparency distorts the financial market, rendering it systemically vulnerable to malinvestments and risky speculations and the financial crashes that result from these systemic distortions.

The other top agenda item for bank lobbyists is to arrange Central State/Federal Reserve subsidies of bank profits. These subsidies are also known as financial repression, as the Central State/Bank rigs interest rates and regulations to favor bank profits at the expense of both savers and borrowers.

Thanks to the Federal Reserve's Zero Interest Rate Policy (ZIRP), savers have been robbed of hundreds of billions of dollars in income--money that has been effectively transferred to the banks by the State. This is why I call our system State-Cartel capitalism, as the State and cartels rule in a mutually beneficial marriage at the expense of the real economy, the citizenry and especially what's left of the dwindling middle class.

Since the core functions of banks can now be performed by cheap processors and software, we can get rid of the entire parasitic banking sector, once and for all. But what about investment banking? That too can be automated. What about wealth management? In a world where index funds beat 96% of money managers over a long time-frame, that too can be automated.

But what about the tens of millions of dollars in campaign contributions politicos skim from the bankers? Now we finally reach the real reason why the parasitic banking sector is allowed to exist, even though it has outlived its purpose and value: the political class of parasites benefits immensely from the banking sector's giant state-rigged skimming machine.

An automated banking utility has no need for parasitic bankers or politicos or indeed, a central bank. The only legitimate regulatory function of the state is to enforce transparency; beyond that, its actions are all subsidies of one sort or another of politically powerful constituencies at the expense of the real economy's productive people, communities and enterprises.


If You Seek Practical Gifts, Consider These Everyday Kitchen Tools

---

The Nearly Free University and The Emerging Economy:
The Revolution in Higher Education

Reconnecting higher education, livelihoods and the economy

With the soaring cost of higher education, has the value a college degree been turned upside down? College tuition and fees are up 1000% since 1980. Half of all recent college graduates are jobless or underemployed, revealing a deep disconnect between higher education and the job market.

It is no surprise everyone is asking: Where is the return on investment? Is the assumption that higher education returns greater prosperity no longer true? And if this is the case, how does this impact you, your children and grandchildren?


We must thoroughly understand the twin revolutions now fundamentally changing our world: The true cost of higher education and an economy that seems to re-shape itself minute to minute.

The Nearly Free University and the Emerging Economy clearly describes the underlying dynamics at work - and, more importantly, lays out a new low-cost model for higher education: how digital technology is enabling a revolution in higher education that dramatically lowers costs while expanding the opportunities for students of all ages.

The Nearly Free University and the Emerging Economy provides clarity and optimism in a period of the greatest change our educational systems and society have seen, and offers everyone the tools needed to prosper in the Emerging Economy.

Read the Foreword, first section and the Table of Contents.

print edition (list $20, now $18)

Kindle edition: list $9.95 

---

Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify. We will cover the five core reasons why things are falling apart:

1. Debt and financialization
2. Crony capitalism
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy

Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).

We are not powerless. Once we accept responsibility, we become powerful.

Kindle: $9.95       print: $24

Read more...

A Quick Guide to What's Fake: Everything That's Officially Sanctioned

Neofeudal financialization and unproductive State/corporate vested interests have bled the middle class dry, yet we accept the officially sanctioned narratives. Why?

Let's cut to the chase and generalize "what's fake": everything that is officially sanctioned: narratives, policies, statistics, you name it--all fake-- massaged, packaged, gamed or manipulated to serve the interests of the ruling Elites.

Anything that might introduce a shadow of skepticism or doubt about the sustainability, fairness and transparency of the status quo (i.e. anything authentic and genuine) is recast or repackaged into a fake that can be substituted for the authentic when everyone's gaze is distracted by the latest fad/media sensation/scandal.

ObamaCare: fake, a simulacrum of insurance and healthcare.

The National Security State: fake, a cover for global Empire.

The Patriot Act: Orwellian cover for state-corporate fascism.

Student loans: parasitic, exploitive loan-sharking enforced by the Central State for often worthless "higher education."

And so on.

Yesterday I explored the peculiar dynamic that motivates us to accept forgeries, fakes and illusions as authentic: What's Real? What's Fake?. If the fake enables our fantasy (of free money, of owning an authentic canvas by a famous artist, that rising wealth inequality is just a side-effect of freewheeling capitalism, etc. etc. etc.), then we wantto believe it so badly that we overlook all the evidence of chicanery, forgery, illusion and fakery.


Consider our willingness to accept the conventional narrative about why the Great American Middle Class has been in decline since 1973: rising energy costs, globalization, and the declining purchasing power of the U.S. dollar.

While these trends have certainly undermined middle-class wealth and income, there are five other more politically combustible dynamics at work:

1. The divergence of State/corporate vested interests and the interests of the middle class
2. The emergence of financialization as the key driver of profits and political power
3. The neofeudal “colonization” of the “home market” by ascendant financial Elites
4. The increasing burden of indirect “taxes” as productive enterprises and people involuntarily subsidize unproductive, parasitic, corrupt, but politically dominant vested interests
5. The emergence of crony capitalism as the lowest-risk, highest-profit business model in the U.S. economy

The non-fake narratives are considerably different from the status quo ones. Please consider two: The Neofeudal Colonization of Home Markets and the Happy Marriage of the Parasitic Central State and Crony Capitalist Cartels.

The Neofeudal Colonization of Home Markets

The use of credit to garner outsized profits and political power is well-established in Neoliberal Capitalism.  In what we might call the Neoliberal Colonial Model (NCM) of financialization, credit-poor developing world economies are suddenly offered unlimited credit at very low or even negative interest rates. It is “an offer that’s too good to refuse” and the resultant explosion of private credit feeds what appears to be a “virtuous cycle” of rampant consumption and rapidly rising assets such as equities, land and housing.

Essential to the appeal of this colonialist model is the broad-based access to credit: everyone and his sister can suddenly afford to speculate in housing, stocks, commodities, etc., and to live a consumption-based lifestyle that was once the exclusive preserve of the upper class and State Elites (in developing nations, this is often the same group of people).

In the 19^th century colonialist model, the immensely profitable consumables being marketed by global cartels were sugar (rum), tea, coffee, and tobacco—all highly addictive, and all complementary:   tea goes with sugar, and so on.  (For more, please refer to Sidney Mintz’s landmark study, Sweetness and Power: The Place of Sugar in Modern History).

In the Neoliberal Colonial Model, the addictive substance is credit and the speculative consumerist fever it fosters.

In the financialization model, the opportunities to exploit “home markets" were even better than those found abroad, for the simple reason that the U.S. government itself stood ready to guarantee there would be no messy expropriations of capital or repudiation of debt by local authorities who decided to throw off the yokes of credit colonization.

In the U.S. “home market,” the government guaranteed lenders would not lose money, even when they loaned to marginal borrowers who could never qualify for a mortgage under any prudent risk management system.  This was the ultimate purpose of Freddie Mac, Fannie Mae, and now the FHA, which is currently guaranteeing the next wave of mortgages that are entering default.

In my analysis, the Status Quo of “private profits, public losses” and the incentivization of gargantuan household debt amounts to a modern financialized version of feudalism, in which the middle class now toils as debt-serfs.  Their debt cannot be repudiated (see student loans), their stagnating disposable income is largely devoted to debt service, and their assets have evaporated as the phantom wealth created by serial credit bubbles vanishes as soon as the asset/credit bubble du jour bursts.

The Status Quo: A Happy Marriage of the Parasitic Central State and Crony Capitalist Cartels

In broad brush, financialization enabled the explosive rise of politically dominant cartels (crony capitalism) that reap profits from graft, legalized fraud, embezzlement, collusion, price-fixing, misrepresentation of risk, shadow systems of governance and the use of phantom assets as collateral.  This systemic allocation of resources and the national income to serve their interests also serves the interests of the protected fiefdoms of the State that enable and protect the parasitic sectors of the economy.

The productive, efficient private sectors of the economy are in effect subsidizing the most inefficient, unproductive parts of the economy.  Productivity has been siphoned off to financialized corporate profits, politically powerful cartels, and bloated State fiefdoms.  The current attempts to “restart growth” via the same old financialization tricks of more debt, more leverage and more speculative excess backstopped by a captured Central State are failing.

Neofeudal financialization and unproductive State/corporate vested interests have bled the middle class dry.

Yet we accept the officially sanctioned narratives as authentic and meaningful. Why?Perhaps the truth is simply too painful to accept, so we will reject it until we have no other alternative.

Of related interest:

Financialization and Crony Capitalism Have Gutted the Middle Class (July 13, 2012) 


If You Seek Practical Gifts, Consider These Everyday Kitchen Tools 

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The Nearly Free University and The Emerging Economy:
The Revolution in Higher Education

Reconnecting higher education, livelihoods and the economyWith the soaring cost of higher education, has the value a college degree been turned upside down? College tuition and fees are up 1000% since 1980. Half of all recent college graduates are jobless or underemployed, revealing a deep disconnect between higher education and the job market.

It is no surprise everyone is asking: Where is the return on investment? Is the assumption that higher education returns greater prosperity no longer true? And if this is the case, how does this impact you, your children and grandchildren?


We must thoroughly understand the twin revolutions now fundamentally changing our world: The true cost of higher education and an economy that seems to re-shape itself minute to minute.

The Nearly Free University and the Emerging Economy clearly describes the underlying dynamics at work - and, more importantly, lays out a new low-cost model for higher education: how digital technology is enabling a revolution in higher education that dramatically lowers costs while expanding the opportunities for students of all ages.

The Nearly Free University and the Emerging Economy provides clarity and optimism in a period of the greatest change our educational systems and society have seen, and offers everyone the tools needed to prosper in the Emerging Economy.

Read the Foreword, first section and the Table of Contents.

print ($20)       Kindle ($9.95) 

---

Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify. We will cover the five core reasons why things are falling apart:

1. Debt and financialization
2. Crony capitalism
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy

Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).

We are not powerless. Once we accept responsibility, we become powerful.
Kindle: $9.95       print: $24 

Thank you, Michael M. (Yuja Wang music CD), for your artfully generous contribution to this site-- I am greatly honored by your steadfast support and readership.

Read more...

What's Real? What's Fake?

Is the unemployment rate real or fake? It is obviously fake, but we want to believe the fake is real for a variety of reasons.

We like to think we know the difference between what's real and what's fake. When we're fooled by a fake Rolex watch purchased for $20 on some humid Asian street corner, we shrug it off: it's no big deal because the fake isn't harming anyone.

And when it's difficult to discern the fake from the legitimate, as in fine art paintings and financial policy, we rely on experts to differentiate between the two.

But what if the "experts" are as clueless as the rest of us? What if they've been corrupted by easy money to authenticate the fake as legitimate? Consider ObamaCare, an extraordinarily complex policy that "experts" assure us is a phenomenal advancement that is "working well."

But what if ObamaCare is a fake? What if it is really not insurance at all, but a giant skimming machine designed to enrich and solidify the power of the state-cartel that operates the sickcare system?

"Experts" (PhDs and Federal Reserve economists) assure us our financial system is the core engine of "growth" in our economy. But what if this assertion is simply a useful illusion, and the reality is that the U.S. financial system is a giant skimming operation that harvests immense profits off the real economy to the benefit of the few, the financial cartels and their lapdogs in the Central State?

"Experts" in the Federal government assure us the unemployment rate is 7%. But if we include the 91.5 million people of working age who could be working (and would be working in a work-fare economy), then the real unemployment rate is double the official rate: 14% or even higher.

Is the unemployment rate real or fake? It is obviously fake, but we want to believe the fake is real for a variety of reasons.

The 1974 Orson Welles documentary (recommended by correspondent K.K.) F For Fake helps elucidate this peculiar dynamic of human nature.

The master art forger who plays a central role in F For Fake noted (self-servingly, but amusingly so) that his addition of a few fake Modigliani paintings into the world's collections did no damage to Modigliani (long since deceased) or the collectors, who benefited from the opportunity buy a Modigliani masterpiece.

We want to believe the fake unemployment rate of 7% rather than the real rate of 14+% because the officially sanctioned forgery feeds our belief that our bloated, corrupt Empire of Debt is sustainable, fair and working well. To accept that we've been bamboozled, ripped off, taken advantage of and ultimately cheated out of an authentic economy and life by swindlers is too painful.

How is the Federal Reserve's creation of money out of thin air not officially sanctioned forgery, a forgery we accept because we are like the collectors who are willing to buy forgeries as masterpieces, as long as they're good forgeries, rather than forego the joy of owning a masterpiece?

Just as the belief in the provenance of a masterpiece creates its value in the marketplace, so it is with money: if it is created by a central bank and ultimately backed by the State's right to tax its citizenry, we consider it legitimate, even though it is clearly an intrinsically worthless forgery of real value (i.e. gold, silver, land, cans of beans, machine tools, etc.).

And just as the value of a masterpiece is shattered by the loss of faith in its value, so it is with money: should the belief that creates the value fade, so to will the practical utility of the money.

Any doubts about the value of the euro, yuan, yen or dollar are dismissed by the mainstream as the confused ravings of a lunatic fringe, because maintaining the faith in the provenance of paper money is essential to the power created by financial engineering. But it's worth keeping in mind that this belief in the value of money created out of thin air by the conjurer's wand is just that, a belief.


If You Seek Practical Gifts, Consider These Everyday Kitchen Tools

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The Nearly Free University and The Emerging Economy:
The Revolution in Higher Education

Reconnecting higher education, livelihoods and the economyWith the soaring cost of higher education, has the value a college degree been turned upside down? College tuition and fees are up 1000% since 1980. Half of all recent college graduates are jobless or underemployed, revealing a deep disconnect between higher education and the job market.

It is no surprise everyone is asking: Where is the return on investment? Is the assumption that higher education returns greater prosperity no longer true? And if this is the case, how does this impact you, your children and grandchildren?


We must thoroughly understand the twin revolutions now fundamentally changing our world: The true cost of higher education and an economy that seems to re-shape itself minute to minute.

The Nearly Free University and the Emerging Economy clearly describes the underlying dynamics at work - and, more importantly, lays out a new low-cost model for higher education: how digital technology is enabling a revolution in higher education that dramatically lowers costs while expanding the opportunities for students of all ages.

The Nearly Free University and the Emerging Economy provides clarity and optimism in a period of the greatest change our educational systems and society have seen, and offers everyone the tools needed to prosper in the Emerging Economy.

Read the Foreword, first section and the Table of Contents.

print ($20)       Kindle ($9.95) 

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Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify. We will cover the five core reasons why things are falling apart:

1. Debt and financialization
2. Crony capitalism
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy

Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).

We are not powerless. Once we accept responsibility, we become powerful.
Kindle: $9.95       print: $24 

Thank you, Mike G. ($60), for your phenomenally generous contribution to this site-- I am greatly honored by your steadfast support and readership.

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