Monday, September 30, 2019

"Interest Rates Should Be Discovered, Not Made"

"Interest Rates Should Be Discovered, Not Made"
By Bill Bonner

YOUGHAL, IRELAND – "With nothing in the news to distract us, we get right to work. And we begin by turning to G.K. Chesterton, who described a crazy person as one who had nothing left other than his power of reason. If you’ve ever spoken at length to a lunatic, you see how reason runs amok:
“The two-headed aliens come all the time. I kill them with my zapper gun.”
“Oh… I’ve never seen any aliens.”
“Of course not, I kill them all.”
“I’ve never seen any dead aliens either.”
“They disappear when I zap them.”

Insane people have an answer for everything. Like Ms. Elizabeth Warren, they’ve “got a plan for that.” It is those plans… and where they come from… that we begin looking at today.

Great Leap: We saw last week that being able to produce vast quantities of steel and oil didn’t make the Soviets rich. We saw too that being able to buy cheap steel (along with 49 other “foundational” commodities) doesn’t make the average American rich either.

Economists Gale Pooley and Marian Tupy claim that innovation and invention over the last 40 years have reduced the cost of 50 foundational commodities, in terms of the time needed on the job to pay for them, by 64%. This they hail as a great leap forward for humankind. But they base their calculations on “planetary” averages. The biggest gains have come in China, where in 1980, the economy was still communist, with real wages of only a couple hundred dollars per year. Now, the average Chinese fellow makes about $15,000 per year – the most spectacular economic growth story in biped history.

In the U.S., alas, wages have been stagnant. As we saw on Friday, the U.S. working stiff is in many ways worse off than he was in the 1970s. He spends twice as much time to put a roof over his head and wheels under his feet. His medical care is 28 times more expensive in cash, and four times more in terms of his time.

Real Wealth: Stocks represent real wealth. In 1969, an average person could work 225 hours and earn enough to buy shares in all 30 Dow companies. Today, he has to work 1,125 hours. The only wealth that matters is relative, not absolute. And, compared to much of the rest of the world abroad… and to his own elites at home… he has gotten poorer.

Nevertheless, Pooley and Tupy insist that the American proletarian is better off. He has less capital. He has less time. But he has an iPhone! Gale Pooley: When Apple introduced the first version in 2007 at $500, the blue-collar hourly compensation was $25.07. That would put the iPhone time price at 19.94 hours or 1,196 minutes.

The iPhone 11 is $1,000 and is 120 times more powerful, [by my rough metric of the increase in the number of transistors in its CPU, gg], which would mean the comparable price is really $8.33 ($1,000 ÷ 120). Blue-collar hourly compensation today is around $32.06. The time-price today is 0.26 hours or around 16 minutes. The time price has decreased by 98.7%. The time required to buy one iPhone in 2007 will buy almost 75 today.

In 1980, iPhones didn’t exist. Now, we all have phone calls, trivia, distractions, and porn right at our fingertips – 24/7. And each model is more powerful than the last. We also have Facebook… and (money-losing) Tesla… and (money-losing) Uber… and (money-losing) WeWork. But that is not the only thing that is new… and, judged by consumer preferences… better. Instead of bell-bottom jeans, we have skinny jeans. And instead of listening to Sinatra, we now listen to Justin Bieber.

Hapless Academics: Are we better off? Pooley, Tupy, and the Bureau of Labor Statistics think so. Here at the Diary? Uh-uh. Not only that, but Pooley, Tupy et al. go on to make an extraordinary assertion. In view of all this pullulating progress, they say, savers should be happy to lend at negative rates of interest.

When we first saw this, we were staggered by it. What pit of darkness have these hapless academics wandered into, we wondered. Here is what Mr. Pooley actually said: One of the first equations we learn in Economics is: Nominal Interest Rate = Real Interest Rate + Inflation

If we assume the real interest rate is 3% and we have 3% inflation, then the nominal rate should be 6%. But what if we have negative inflation or deflation? If the real rate is 3% and we have 3% deflation, then the nominal rate could be zero. If the real rate is 3% and we have 6% deflation, then the nominal rate would be negative 3%.

The problem is people are mis-measuring inflation. People are trying to use money to measure money. They should be using time prices. Since 1980, on the average, time prices for our 50 foundational commodities have been falling around 3.4% a year. So if the real rate is 3.4%, then the nominal rate should be zero. Negative nominal interest rates could be perfectly rational.

Oh my… reason runs amok. According to Pooley/Tupy, their signal prices have been coming down by 3.4% per year since the Reagan administration. And we presume – since growth rates are lower today than they were in the past – that prices of these foundational commodities must have been dropping even faster in the past… ever since the debut of the Industrial Revolution.

You can imagine, for example, how fast the price of wheat declined when Kansas farmers replaced horses with tractors and mechanical harvesters. You can guess, too, that the price of steel must have taken a big slide after Andrew Carnegie put in the first Bessemer converter on the banks of the Monongahela River in Pennsylvania in the 1880s.

But not once during that time – more than 150 years – did lenders lend at negative rates. Why not? The obvious answer: There is no necessary connection between interest rates and the planetary averages of prices for 50 foundational commodities.

Never Rational: Interest rates show where lenders and borrowers come together. They are never “rational.” They are evolutionary… discovered, not made. You can no more reason your way to a correct interest rate than you can reason your way into love… or into appendicitis. It just happens, no matter what you think.

There was a time when economists realized this. They spent their time observing the economy, the way a naturalist might watch a beehive, just to see how it worked. But then, the lure of power and money got the better of them. And so, they began to imagine that they could not merely observe, but control. After all, an economy was a rational thing, they argued. They could use the left sides of their brains to make the economy work, well, more rationally. The results so far? Always harmful… sometimes amusing… occasionally disastrous. Stay tuned…"

Free Download: Hermann Hesse, "Steppenwolf"

"And even the unhappiest life has its sunny moments and its little flowers of happiness between sand and stone. So it was then with the Steppenwolf too. It cannot be denied that he was generally very unhappy; and he could make others unhappy also, that is, when he loved them or they him. For all who got to love him saw always only the one side of him. Many loved him as a refined and clever and interesting man, and were horrified and disappointed when they had come upon the wolf in him. And they had to because Harry wished, as every sentient being does, to be loved as a whole and therefore it was just with those whose love he most valued that he could least of all conceal and belie the wolf. There were those, however, who loved precisely the wolf in him, the free, the savage, the untamable, the dangerous and strong, and these found it peculiarly disappointing and deplorable when suddenly the wild and wicked wolf was also a man, and had hankerings after goodness and refinement, and wanted to hear Mozart, to read poetry and to cherish human ideals. Usually these were the most disappointed and angry of all; and so it was that the Steppenwolf brought his own dual and divided nature into the destinies of others besides himself whenever he came into contact with them."
~ Hermann Hesse, "Steppenwolf"
Freely download "Steppenwolf", by Hermann Hesse, here:

Musical Interlude: Suzanne Ciani, "Anthem"

Suzanne Ciani, "Anthem"

"A Look to the Heavens"

“How massive can a normal star be? Estimates made from distance, brightness and standard solar models had given one star in the open cluster Pismis 24 over 200 times the mass of our Sun, nearly making it the record holder. This star is the brightest object located just above the gas front in the above below.
Click image for larger size.
Close inspection of images taken with the Hubble Space Telescope, however, have shown that Pismis 24-1 derives its brilliant luminosity not from a single star but from three at least. Component stars would still remain near 100 solar masses, making them among the more massive stars currently on record. Toward the bottom of the image, stars are still forming in the associated emission nebula NGC 6357. Appearing perhaps like a Gothic cathedral, energetic stars near the center appear to be breaking out and illuminating a spectacular cocoon.”

"Don't Wonder..."

"Don't wonder why people go crazy. Wonder why they don't.
In the face of what we can lose in a day, in an instant,
wonder what the hell it is that makes us hold it together."
- "Grey's Anatomy"

The Poet: Mary Oliver, “Wild Geese”

“Wild Geese”

"You do not have to be good.
You do not have to walk on your knees
for a hundred miles through the desert repenting.
You only have to let the soft animal of your body
love what it loves.
Tell me about despair, yours, and I will tell you mine.
Meanwhile the world goes on.
Meanwhile the sun and the clear pebbles of the rain
are moving across the landscapes,
over the prairies and the deep trees,
the mountains and the rivers.
Meanwhile the wild geese, high in the clean blue air,
are heading home again.
Whoever you are, no matter how lonely,
the world offers itself to your imagination,
calls to you like the wild geese, harsh and exciting
over and over announcing your place
in the family of things."

- Mary Oliver

"A Voice Within..."

“How do the geese know when to fly to the sun?  Who tells them the seasons?  How do we, humans, know when it is time to move on?  As with the migrant birds, so surely with us; there is a voice within, if only we would listen to it, that tells us so certainly when to go forth into the unknown.”
- Elisabeth Kuebler-Ross

"Three Musts..."

"There are three musts that hold us back:
 I must do well.
 You must treat me well.
 And the world must be easy."
- Albert Ellis

"Economic Market Snapshot PM 9/30/19"

Gregory Mannarino,
"Post Market: The Fed Is About To Go Full Nuclear"
MarketWatch Market Summary, Live Updates
CNN Market Data:

CNN Fear And Greed Index:
For the very latest factual news and information please visit ZeroHedge, often.

"Gathering Darkness"

"Gathering Darkness"
by David Stockman 

"For they have sown the wind, and they shall reap the whirlwind: it hath no stalk;
 the bud shall yield no meal: If so be it yield, the strangers shall swallow it up."
– Hosea 8:7 (King James Version)

"The Tweeter-in-Chief is agitated… well, more so than usual. Impeachment does that to presidents. This one, though, has an unmatched capacity for chaos – both the creating and the surviving of it. Witness the president tweet-quoting a Dallas pastor’s declaration on Fox News that impeachment could lead to a “civil war like fracture.” At this stage of American Empire, given the way the Warfare State extends itself abroad, it might be the ultimate case of chickens coming home to roost.

Jacob Hornberger provided some fascinating context for the Donald’s current state of siege: "Notice something important about the hoopla regarding President’s Trump withholding of U.S. foreign aid to Ukraine while he was requesting Ukrainian officials to investigate Joe Biden and his son Hunter Biden for possible corruption: Nobody in Washington, D.C., or within the establishment press is questioning the concept of foreign aid itself. Foreign aid has become such an established and accepted way of inducing foreign regimes to comply with the dictates of U.S. officials that the thought of ending it entirely doesn’t even enter the minds of Republicans, Democrats, or member of the mainstream media."

The Donald doesn’t know what he’s doing. But he still may get the important work of unwinding the American Empire done. 
Indeed, American democracy and capitalist prosperity are dying on the vine of empire. The infamous mid-September drone attack on the largest oil processing facility on the planet is graphic evidence. So is this scene…
These are Yemenis burying a busload of children who were obliterated by American-made bombs delivered by American-made Saudi aircraft navigated to target by U.S. command-and-control assets. These are the consequences of just one of thousands of sorties launched by the Saudis since 2015. Altogether, they’ve resulted in upwards of 100,000 civilian deaths in northern Yemen as well as the virtual destruction of its economy. Horrific outbreaks of starvation, cholera, and other diseases are commonplace.

The cost to the Yemenis in misery and human life is incalculable. Nor can the stain of these genocidal attacks on America’s moral stature be gainsaid. Yet Imperial Washington’s collaboration in this mayhem is based on not even a smidgen of national interest or homeland security.

To the contrary, the Houthi who took control of Yemen’s capital, Sana’a, and who dominate the population of northern Yemen, are a second cousin practitioner of the Shiite confession of Islam. Accordingly, they’re aligned with the Shiite regime of Iran. They’ve received modest aid and weapons from Tehran in support of their struggle for independence from the Saudi-supported government in exile and its alignment with a motly array of Sunni-jihadist, Muslim Brotherhood, and other anti-Shiite factions in southern Yemen.

Of course, given the fact that Yemen was divided into two countries – North Yemen and South Yemen – for nearly three decades between the early 1960s and early 1990s, it’s obvious that no war, bloodshed, or devastation is needed at all to solve the religious and ethnic enmities of that godforsaken armpit of the world.

All that’s needed is repartition. It’s simple. Two countries. No war. No misery. No genocide. In fact, back in 2015, Imperial Washington could have told new-to-the-Saudi-throne King Salman to accept partition or it would cut off resupply of spare parts and technical support for the Saudi military’s advanced American-made weaponry. Without American military support, of course, the House of Saud would have to relocate to Switzerland.

Alas, Imperial Washington’s interventionists would have none of letting the world go its own way by staying out of other people’s quarrels. And, indeed, neocons on Capitol Hill and in the national security bureaucracy, dead set on war with Iran, saw an attack on the Houthi as a way to administer a bloody nose to Tehran. And they could do it with no muss or fuss by nominal Saudi proxies.

At the time, President Obama was on the verge of his single greatest foreign policy achievement, the nuclear deal with Iran. But Barry was a weak double-talker when push came to shove. He failed to deter the Saudis from their own folly. And, thus, a bone was thrown to Israeli Prime Minister Benjamin Netanyahu’s fifth column in Imperial Washington, who were otherwise dead-set against the deal. They even invited Bibi to give a speech to a joint session of Congress, a hideous affront to the American president.

Ultimately, the Saudis were manipulated into massive but wholly unnecessary military attacks on their southern neighbor. They became unwitting mercenaries – handmaids of Empire – because it suited Imperial Washington’s purposes. Someday, they may learn that Imperial Washington’s “friendship” is a many-edged sword.

But, in the end, it’s based on mobilizing “allies” to buy its weapons. And it’s about getting them to march into conflicts that keeps America’s Warfare State in fiscal clover. The Duopoly has managed to get us squarely in the middle of a 1,300-year-old Shiite-Sunni conflict, one that’s now being waged between Saudi Arabia and Iran. That conflict has no bearing whatsoever on America’s security.

The Persian Gulf is on the verge of an apocalyptic eruption. No producer that borders its waters – Iraq, Kuwait, Iran, Saudi Arabia, UAE, Bahrain, Qatar – will benefit from what could be unleashed. But events often overtake sanity. And the one person who could forestall the impending catastrophe is busy tweeting proof that he’s dangerously ignorant of the issues and stakes involved – here, there, and everywhere. This, too, is what makes the Donald the Great Disruptor."

"The Latest Plot To Topple Trump: Politics According To (Groucho) Marx"

"The Latest Plot To Topple Trump: 
Politics According To (Groucho) Marx"
by Martin Sieff 

"The US political, intelligence and media establishments have made even greater asses of themselves before the entire world by cooking up their latest wild concoction of a plot to topple President Donald Trump and – while they’re at it – knock his most plausible challenger former Vice President Joe Biden out of the race as well.

Washington has become a buffoonish theater of the absurd. It is politics according to Marx: But not Karl Marx. The latest scandal is pure Groucho Marx. It is straight out of the Marx Brothers 1933 comic movie masterpiece “Duck Soup.”

Freedonia is a chaotic joke of a nation that has just gone bankrupt. This of course fits modern America perfectly. The country’s financial benefactor Mrs. Teasdale (obviously a stand in for the International Monetary Fund which had not been created yet) then insists that her favorite, the wild and ludicrous Rufus T. Firefly, a con man with no dignity whatsoever but a surprising amount of wit and street smarts becomes its president.  However, Firefly – a natural stand in for President Donald Trump – must then survive one sinister scheme to topple him from power after another. All of them ineptly executed.

Russiagate was such a scheme. A big lie of such staggering inherit absurdity lacking any hard evidence whatsoever that a six year old child with Downs’ Syndrome would not have been believed it. But around half the adult population of the United States apparently did.

Now, within weeks, hardly even days after absurd and now half-senile Special Prosecutor Robert Mueller (a perfect foil for the Marx Brothers to be played by any comic actor specializing in befuddlement) bit the dust in his own ludicrous congressional testimony, a new Outrageous Accusation has been thrown at Trump, even more non-existent than the previous one. Right after being falsely accused of conspiring with Russia for the past two and a half years, Trump is suddenly accused of the opposite – of conspiring with Ukraine instead!

This Reversal of Fortune – and of accusations – demands that the American public be as stupid and brainwashed as the oppressed population of Oceania in George Orwell’s dark and prophetic classic dystopia “1984.”

“We are at War with Eurasia! We have always been at War with Eurasia!”

“No! We LOVE Eurasia! We are at War with EASTAsia! We have always been at war with Eastasia!”

Clearly, the readers and viewers of the New York Times, the Washington Post, MSNBC, CNN and all the rest of America’s media “Powers That Be” have already been well trained in Orwellian Doublethink and witless stupidity.

Suddenly, President Vladimir Putin of Russia is no longer the Evil Bad Guy plotting with Trump. Now it is new President of Ukraine Volodymyr Zelenskyy, himself a former professional comic actor on television. The Marx Brothers would have loved to co-star with him. Perhaps after being forced out of the presidency Trump, himself a former hit TV star across America, could hire Zelenskyy as his sidekick in a revival of his famous reality television show “The Apprentice.”

As the late great British satirist Michael Wharton, who wrote under the nom de plume Peter Simple liked to say – the wilder the fantasy, the more rapidly it was bound to ‘collapse” into the realm which we naively and inaccurately describe as “reality.”

And what is the latest terrible crime that the President of the United States is now –suddenly and without warning – accused of? He dared to investigate whether Hunter Biden, the son of another eminent politician, former vice president Joe Biden was guilty of corruption.

Just think of the consequences if Trump and his officials were allowed to continue their investigation unhindered: They might – shockingly! – put some other corrupt former US politicians out of business. Obviously, that would be the most terrible threat imaginable to the Home of the Brave and the Land of the Free. No wonder the US Deep State hates Donald Trump!

But there is another goal for this concocted scandal. It’s a twofer – a two for one scandal – intended to topple Trump and remove Biden from serious consideration at the same time, clearing the way for the Deep State’s True Candidate – Senator Elizabeth Warren. The shamelessness of this latest concocted scandal would leave Josef Goebbels green with envy and laughing uncontrollably. Unfortunately, it isn’t a joke."

Musical Interlude: Deuter, “Uno”

Deuter, “Uno”

The Daily "Near You?"

Wolverhampton, United Kingdom. Thanks for stopping by!

“Marginal Steps Toward a Better Life”

“Marginal Steps Toward a Better Life”
by Jeffrey Tucker

“I’m at dinner and the hostess serves me pie for dessert. I gobble it up. Then the hostess says, “Would you like another piece?” I politely decline. In her head, she is thinking “he hates my pie,” but this is totally wrong. I love her pie, especially the first piece. But the second piece has slipped from A to B in my preference ranking, and “no pie” has moved from B to A. Im are not making a judgment on the whole stock of goods, I’m choosing based on my perceived value of the incremental unit. This is a gigantic difference. “So you don’t like my pie enough to have a second piece?”

“No, I absolutely adore your pie. When I had the first piece, it was the most important thing in the world, and I went wild for it. But when you offered the second piece, I evaluated it as an independent unit of pie. I still love it so much! But eating it is B — not A — on my internal preference ranking. If the option to decline the pie were not present, I would eat it and be overjoyed. It just so happens that what economists call the marginal utility of the second piece is lower than the first, too low to be a point of action for my choosing person.” “I see. You hate my pie!”
 Click image for larger size.
What’s going on here? The hostess doesn’t understand this idea of marginal utility as I do. Having been steeped in this topic now for the better part of a week — from Philip Wicksteed’s "Common Sense of Political Economy" — I can see why two generations of economists, from the 1870s-1910s, were in a total meltdown frenzy over the concept of marginal utility. This is an idea that can save the world. I have a theory that if you understand it, you will be more civil. More friendly. More subtle and understanding. You will understand yourself and those around you better. It underscores the sheer complexity of human decision-making and shows why governments are utterly incapable of wise management of the world.

The discovery of marginal utility was to this generation as significant as the discovery of flight, electricity, and the theory of evolution. It was a paradigm shift, an insight that changed everything. Until that time, economists puzzled about the value of stuff in terms of its total value to society. Water is pretty darn valuable. We have to have it to stay alive. Everyone wants it. Why, then, is it so cheap to buy, even as fripperies like lace and diamonds are so expensive? Does this mean that something is wrong with the world that needs fixing? No, the prices are determined by the marginal choice given an accessible stock of resources. That may sound like a simple point, but it has profound implications.

What these economists discovered was that value is determined not by the total stock of a good or its perceived value to the whole of society. Value is determined by the incrementally consumed unit, one choice at a time. We rank our preferences from A to infinity, but at any one time, we can only choose one. We go for A, but if that is not possible, we shift B to A, and if that is not possible, we shift C to A. At any one time, we are only choosing one thing. We choose on the margin. The book that has absolutely possessed me this week, which is why I can’t stop talking about it, Philip Wicksteed’s "Common Sense of Political Economy".

Here is another example of marginal utility in action. The girl says to the guy, “It’s not you; it’s me.” The guy thinks, I’ve heard that before; she doesn’t like me. But it turns out the girl is right. She does like him. She truly does. But the romance takes time and energy, and she would rather spend her time posting on Pinterest. Pinterest is A on her personal preference ranking. B is the guy. The guy doesn’t make the cut. Or maybe not. Maybe A is Pinterest but B is getting school work done. C is practicing piano. D is watching The Wire. E is making biscuits. F is Snapchatting goofy images to her friends. Finally we get to G, which is “date this guy.” She really does like him, and if A-F were not options, she would be all about dating him. But A-F are possible realities. Jumping in the preference ranking from A immediately to G would be an error that would diminish her total happiness from what it otherwise might be.

You see how marginal utility clarifies human decision-making? It means that we don’t think and act in black-and-white terms. It is not love or hate, embrace or reject, go for it or spit it out. We make decisions on the margin within the context of a wonderfully complex and infinite array of choices that are ultimately hidden from the view of others. It is this hidden aspect that feeds the paranoia that leads people not to think about marginal utility.

Another example. A friend invites you to his wedding. You say that you would love to go, but you have a work meeting you must attend that very day. You really want to go, but you can only do one thing at a time, and protecting your career at this point seems gigantically important. Your friend understands. For now. But then the wedding comes, and you are not there. The picture album comes out, and you are nowhere to be seen. The memories are beautiful and exciting, yet you are not part of them. Over time, your friend begins to think: Hey, I thought he was a friend, but he ditched my wedding with some lame excuse. He must not be the friend I thought he was. I hate him.

This happens all the time. It happens because people do not think about marginal utility. It is not constantly in our minds. That’s hardly a surprise, because it took humanity 500,000 years to discover it. In scientific terms, it is a fairly recent discovery. It will probably take another few hundred years before the concept is emblazoned on our hearts. Meanwhile, those who get it are better at navigating life. We begin to understand that just because our friend doesn’t go the movie with us doesn’t mean he doesn’t want to go to the movies. He really does want to go. The problem is that the desire to go to the movie ranks slightly below the top item on the list, and we can only choose one item at a time.

The commercial implications are gigantic. Let’s say you open up a donut shop. You sit there day after day trying to sell them. Over the course of a month, not one donut has sold. You conclude that people don’t want your donuts — a conclusion that at first seems entirely reasonable. But actually, it is wrong. There is a whole community out there, thousands of people, who have preference rankings in their heads. If you had access to them, you would see thousands of people walking around with the idea of donuts, donuts, DONUTS, swirling around in their heads. They live and breathe DONUTS. It’s the first thing they think about in the morning and the last thing they think about at night.

So what’s the problem? Why aren’t they buying your donuts? The problem is that each one of them has one other thing that they are thinking about more. They want to get to work on time. They worry they are getting fat. They want to save money. They are interested in playing on their smartphones and drive right by your place. Whatever it is, it is preventing them from actually acting on their donut obsession.

What is your job as a donut entrepreneur? You have to figure out a way to crawl into their heads and replace whatever their choice A is with what might be their B choice. You have to switch the top two preferences. If the donut preference is G, you have to do better than bump it up to the B slot. There is only one slot in which donuts win: A. That’s when the bell rings. So you struggle and struggle to push and push that lower preference to the higher preference.

How do you do this? You can lower your price, increase your quality, offer different flavors, or whatever, but none of this actually accomplishes the task. Why? Because no one knows you are doing this! What you have to do is get into their heads. You have to market. You have to sell. You have to advertise. You have to create buzz through social media. Whatever you do, the goal is clear: Get donuts to the A slot. That means you have to ramp it up. Maybe a bit of a nudge is all that is necessary for some people. But some people are not enough, and you don’t know that for sure anyway. You have to really win this one. So you ramp it up. If you are iPhone, you promise that everyone can be a movie producer. If you are Southwest Airlines, you promise vacation bliss. If you are Nike, you promise a new way of living. And so on.

Is this manipulative? Not in any way. What you are doing is trying to persuade people who WANT donuts anyway to actually take the step to spend money and make them part of their lives. You are helping people realize and act on their real desires, leading them to make an exchange to toward mutual betterment. You win. They win. Everyone wins.

Back to the example of the girl who says, “It’s not you; it’s me.” What should the guy do? He should realize that he might only be one tiny preference ranking below number one. He should accept that this could be temporary. He should immediately get to work thinking about how to ascend the ranking from B to A. To be on the safe side, he should be particularly amazing just in case he has to move from G to A.

In order to understand this process, you need to understand marginal utility. This is the concept that makes sense of how the world works. This is the notion that sheds light on the whole mystery of human decision-making. This is the idea that unlocks the mysteries of human interaction. Small and great evils in the world have come from absolutism, the belief that there is only one way forward, and that if that way is not what you choose, that makes you the evil enemy. Governments think this way. They don’t think on the margin. A world of billions of people acting and thinking based on marginal utility is too complicated a notion for them. So they decide to just ignore it all and divide the world between us and them.

On the other hand, if you think in terms of marginal utility, you realize that the whole world is built in tiny steps as an extension of a complex decision-making process that is ultimately subjective, and that bringing people together can never come through force, but only through small acts of persuasion, one person at a time. Through the lens of marginal utility, we see the beautiful orderliness of anarchy.”

"The Thing About The Truth..."

"You see, the thing about the truth is that it's consistent. It doesn't have
to be altered and manipulated in the face of every new piece of information 
because all the new information simply adds to the content, strength and 
credibility of the original truth." 
- Tom Dennen

"Eventually You Understand..."

"That's where it all begins. That's where we all get screwed big time as we grow up. They tell us to think, but they don't really mean it. They only want us to think within the boundaries they define. The moment you start thinking for yourself - really thinking - so many things stop making any sense. And if you keep thinking, the whole world just falls apart. Nothing makes sense anymore. All rules, traditions, expectations - they all start looking so fake, so made up. You want to just get rid of all this stuff and make things right. But the moment you say it, they tell you to shut up and be respectful. And eventually you understand that nobody wants you to really think for yourself."
- Ray N. Kuili

“The Dangerous World of Logical Fallacies”

“The Dangerous World of Logical Fallacies” 
by Mario Livio

“Thinkers in disciplines ranging from mathematics to economics, and from science to philosophy, attempt to construct theorems, theories, or scenarios, that have at least a fighting chance of being correct. Since in many cases one of the chief guides is logical reasoning, the ability to spot fallacies is an essential skill. In this piece I will briefly discuss a few such potential traps, and I hope to describe a few more in a future blog entry.

One fairly common fallacy is known as the "post-hoc" (Latin for "after this") fallacy. This is the notion that because one event happened to follow another, cause and effect are implied. This type of faulty reasoning has helped to make many "healers" and "psychics" very rich. The placebo effect notwithstanding, the fact that someone's health improved following a visit to such a healer does not imply any causal relation. Similarly, if you fell and broke your leg after a black cat had crossed your path, don't blame the cat. This is not to say, of course, that one should not investigate cases in which a certain sequence of events repeats itself multiple times.

Here is an example of a common logical fallacy known as the ad hominem argument, which is Latin for "argument against the person" or "argument toward the person". Basically, an ad hominem argument goes like this:
Person 1 makes claim X.
There is something objectionable about Person 1.
Therefore claim X is false.

Another known fallacy is that of the "false dilemma." For instance, the question: "Is mathematics an invention or a discovery?" leaves you with the impression that these are the only two options, and that the two are mutually exclusive. In fact, I believe that mathematics is an intricate combination of intertwined inventions and discoveries. Similarly, a statement such as: "The government should invest either in scientific research or in education" is false, since it could actually do both (clearly within budgetary constraints). The world isn't just black or white. In general, one should always carefully examine phrases that start with "the choice is clear," since those can potentially hide false dilemmas.

Studies show that one of the most frequently occurring fallacies involves logic flowing in the wrong direction. The argument goes like this: If P is true, then Q necessarily follows. Q is true, therefore P is true. For instance, if Earth is the only planet on which intelligent life exists, then clearly we will not find any signs of intelligent life on other planets. However, just because we have not found extraterrestrial intelligent life yet, we should not conclude that such ET life does not exist. To make things a bit closer to home, consider the following situation that probably many young (and not so young) people have experienced. A man thinks: "If she is not interested in seeing me again, she may say that she has another commitment tonight." This may be true, but if the woman in question has sent him a text message saying that she has another commitment, he should not automatically conclude that she is not interested.

Some fallacies are very seductive, and avoiding them requires a close examination of the logic involved. A famous one concerns the warning against stepping onto a "slippery slope." No one likes to embark on something that inevitably leads to disaster, but one should always investigate how likely such a slide truly is. The fact that something could happen doesn't necessarily mean that it will, or even that it is likely to happen- not every action opens the floodgates. In particular, we should never allow fear of fallacious slippery slopes to stifle our natural curiosity.”
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"So Sorry, Your Karma Ran Over Your Dogma"

"So Sorry, Your Karma Ran Over Your Dogma"
by Charles Hugh Smith

"Karma covers a lot of ground, but it boils down to consequences: consequences not just from your actions but from your convictions, schemes, obsessions, and yes, dogmas. The reason why Karma runs over Dogma is that nobody clinging to a dogma sees themselves as dogmatic. The true believer never sees their conviction as dogma, but as Revealed Truth, as self-evident, a view that is buttressed by all the other True Believers who surround the believer, reinforcing their conviction and soothing any nagging doubts by mocking, "debunking" or marginalizing heretics and critics.

In our society, the mass media serves as a soothing echo-chamber of dogmas. It must be true, the news anchor said it on TV, etc. Dogmas generate power and profits. Trillions of dollars flow into a few pockets because people believe the dogmas that "you need a college diploma to succeed" and "America's healthcare system is the best in the world."

As evidence-based doubts seep in, those at the top of the "faith" who have the most to lose become increasingly fanatical and rabid, pushing an increasingly restrictive Orthodoxy on true believers and establishing an Inquisition to excommunicate or eliminate any heretical doubts or dissenting views. As the increasingly detached-from-reality leadership senses their power waning, they double-down, exhorting the faithful to support the orthodoxy even as the orthodoxy reaches new heights of fanaticism.

As moderates drift away (or sneak away, loudly proclaiming their fealty to cover their escape), the leadership triples down, demanding unwavering loyalty of the remaining believers, who themselves triple-down by reassuring each other that they really are on the right track and the world is about to awaken to the correctness and righteousness of their cause.

The problem with dogmas is that they are detached from the real-world consequences of dogmatic convictions. So the dogma that a college degree is the difference between prosperity and poverty is running up against the reality that the actual difference between prosperity and poverty is the amount of student loan debt that's crushing the graduates.

This reality is so dangerous to the student-loan-money-machine that the leadership has ramped up the propaganda that a college diploma is absolutely necessary if you don't want to be homeless (an obvious falsity) and going through an Orwellian exercise of "lowering" tuition. (This is a fiction because the "lowered" tuition is nothing more than what the average student actually pays after the university's shell-game of "tuition credits" and other flim-flam.)

Military dogmas get discredited on the field of battle, often in dramatic fashion. Financial markets (unless they're manipulated, of course) also provide painful real-world feedback. Those predicting one side of the trade will eventually be proven correct or incorrect.

To an alarming degree, the U.S. is dominated by dogmas that benefit the few at the expense of the many, and by leaders who are doubling or tripling down to defend the dogma and their power. As already noted, dogmas support extractive systems that enrich the few by bamboozling the many. As the perverse consequences of dogmas start piling up, those paying the costs of loyalty/belief start wavering and then buckling under the weight of reality.

The leaders, safely protected from the consequences of their elitist dominance and fearing the loss of their wealth, power and prestige, ramp up the time-honored strategy of increasing demands for loyalty and public virtue-signaling, jacking up media propaganda in support of the orthodoxy, and moving to ban, shadow-ban, suppress, punish, discredit, demoralize, de-platform, demonetize and marginalize critics, i.e. heretics who challenge the status quo's foundational dogmas.

When dogmas lose their grip on believers, they collapse in spectacular fashion. The much-derided biplane sink the status quo battleship, the stock market's "permanent high plateau" crashes, and so on. (WeWork's path from an IPO worth $50 billion to a cancelled IPO and insolvency in a mere six weeks is a timely example.)

Dogmas collapse first in the minds of believers, when they slowly awaken to the reality that the dogma no longer serves them, it only serves to prop up the wealth, power and prestige of their increasingly fanatic leaders. Propping up a failed system doesn't actually fix what's broken; it only guarantees the banquet of consequences will include shackles: the option to escape the consequences will no longer exist.

So sorry, but your karma ran over your dogma. The consequences and costs inexorably pile up, and neither Inquisitions to silence heretics nor virtue-signaling one's loyalty will stop the trajectory over the cliff."

"How It Really Is"

"Civil War On"

"Civil War On"
by James Howard Kunstler

"Someone in Impeachmentville is not paying attention. Of course, diverting the rubes is exactly the point of the latest CIA operation to negate the 2016 election. Has nobody noticed that there is a treaty between Ukraine and the USA, signed at Kiev in 1998 and ratified by the US Senate in 2000. It’s an agreement on “Mutual Legal Assistance in Criminal Matters.” Here, read the cover letter for yourself:
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What part of the following do Nancy Pelosi and the news media not understand? The Treaty is self-executing. It provides for a broad range of cooperation in criminal matters. Mutual assistance available under the Treaty includes: taking of testimony or statements of persons; providing documents, records, and articles of evidence; serving documents; locating or identifying persons; transferring persons in custody for testimony or other purposes; executing requests for searches and seizures; assisting in proceedings related to restraint, confiscation, forfeiture of assets, restitution, and collection of fines; and any other form of assistance not prohibited by the laws of the requested state… ([etc].

How does this not permit Mr. Trump asking the president of Ukraine for “assistance” in criminal matters arising out of “collusion with Russia,” as specified within the scope of Robert Mueller’s special prosecutor activities? For instance, the matter of CrowdStrike. The cybersecurity firm was co-founded by Russian ex-pat Dmitri Alperovitch, who also happens to be a senior fellow at the Atlantic Council, an anti-Russian think tank funded by Ukrainian billionaire, Viktor Pinchuk, who donated at least $25 million to the Clinton Foundation before the 2016 election. Crowdstrike was the company that “examined” the supposedly hacked DNC servers, while somebody in the Obama administration prevented the FBI from ever seeing them. Does this sound a little like part of the origin story of RussiaGate? Is that not exactly the potential criminal matter that the current attorney general, Mr. Barr, is officially investigating?

Perhaps, under the year 2000 treaty, Mr. Trump was within his rights to ask the new President of Ukraine, Volodymyr Zelensky, for assistance on that. And also, the question of former vice-president Joe Biden’s levering US aid to Ukraine in his demand to fire the prosecutor investigating the company, Burisma Holdings, that just happened to hire his son, Hunter, to a $64,000-a-month seat on the board of directors, not long after the younger Mr. Biden was kicked out of the US Navy reserve for cocaine use - what a sterling fellow!

The foregoing ought to be self-evident. Speaking of failures to pay attention, Director of National Security (DNI) Joseph McGuire testified in Rep. Adam Schiff’s House Intel Committee last Thursday that the “Whistleblower” and his or her allies in the Intelligence Community who fomented the latest crisis “acted in good faith.” Admiral McGuire omitted to mention that the IC’s Whistleblower complaint rules were surreptitiously changed sometime around August 2019 to allow second-hand hearsay in Urgent Matter” complaints, where formerly it had been prohibited. The change was only posted on an IC website on Sept 24. Did Admiral McGuire not get the memo on that? Was he out of the loop? After all, he is merely in charge of the entirety of US Intelligence operations. Who kept him in the dark?

Now there is yet another new “bombshell” out of the CBS 60-Minutes show (reported by Scott Pelley) alleging that the “Whistleblower” had been placed under federal protection due to “threats” made against him or her. We’re to infer that the “Whistleblower” is in a safe space - perhaps hiding out in the CIA’s Diversity and Inclusion offices, with some teddy bears, crayons, and Chips Ahoy to keep the heebie-jeebies away. Only, one of the “Whistleblower’s” own lawyers, Mark S. Zaid released a letter today saying that the 60-Minutes report was “not accurate and misinterpreted the contents of our [earlier] letter.” Mr. Zaid added in a tweet that CBS was “literally making stuff up.”

Well, let CBS and the “Whistleblower’s” pro bono lawyers slug that one out in some safe space. More to the point, how long do you suppose the charade of protecting the “Whistleblower’s” identity will go on? If impeachment moves to a trial in the senate, Mr. Trump will enjoy the right of being faced by his accuser. But I don’t think we will have to wait that long. Rep. Schiff (D-CA) has already declared that this person will be called into a closed session of his committee. The chance is about zero that his or her identify will remain unknown. By and by, the “whistleblower’s” confederates in the CIA will also become known and the perfidy of this latest CIA operation in the ongoing coup will be understood.

UkraineGate is the equivalent of Fort Sumter in Civil War 2.0. Charges have been flying and tempers flaring for three years now, much as they did between 1858 and 1861. Once again, what seems to be at stake is the integrity of the Union. As in the previous enactment, one side is dangerously deluded, and that is liable to lead to its destruction."

Economic Market Snapshot AM 9/30/19"

Gregory Mannarino,
"Critical Updates: Stocks, Bonds, Gold, Silver, Crypto, Crude"


"Contradictions do not exist. Whenever you think you are facing a 
contradiction, check your premises. You will find that one of them is wrong."
- Ayn Rand

“When All They Have is Fear”

“When All They Have is Fear”
Be afraid, very afraid…but make sure you’re afraid of the right things.
by Robert Gore

"An institution that claims the right to initiate force and has the means to do so is an institution to be feared. History confirms the fear: government has been responsible for more deaths and destruction than any other human instrumentality. That the hallmark of government - legally sanctioned violence - produces carnage should come as no surprise. Remarkably, over the last century fear of government has been transmuted to fear of its absence, even as governments have racked up new records for carnage. The shift has been marked by a widespread psychological and moral deterioration that evades the reality of state destructiveness and insists on more of it.

While fear can be quite rational and produce a rational response - rushing to higher ground because of a looming tsunami - it is emotionally corrosive, stifles reasoned analysis or deliberation, and magnifies itself in groups. As such, it’s a lever for mass manipulation. Manipulative maestro Franklin Delano Roosevelt pivoted the US from its traditional skepticism of government to wholehearted embrace. The stock market crash of 1929 and ensuing recession were the inevitable bust of the credit-fueled boom, sponsored by the Federal Reserve, that preceded it (see "America’s Great Depression", Rothbard, 1963, and The Great Deformation, Stockman, 2013). The New Dealers claimed that capitalism had failed, but it was central bank-promoted credit, untethered from the real economy, that had failed.

Roosevelt converted that failure into a fear-based demand for more government. Somehow, in a way that was never logically explained (because it was impossible to do so), coercive redistribution would ensure economic security. It self-evidently diminished the economic security of the coerced, but it didn’t do much for the beneficiaries either; the economy in 1938 was in worse shape than when Roosevelt took office in 1933. The many New Deal programs, regulatory agencies, taxes, laws, and regulations meant to improve upon “failed” capitalism distorted or destroyed the regulation inherent in competition, took money from productive individuals and businesses for nonproductive purposes, created a class of agents dependent on rent seeking from the government, and burdened the economy with uneconomic mandates.

World War II was another instance of government failure—the punitive terms imposed by the victors of World War I on Germany - leading to another frightening outcome, the rise of Adolf Hitler and the Axis alliance (see "Churchill, Hitler, and the Unnecessary War," Buchanan, 2008). After Pearl Harbor, the demand for the US to join the Allies was overwhelming. The end of the war seemed to confirm the proposition that the US government was the best guarantor of a good night’s sleep. It reigned over the only major economy not destroyed in the war, it had the most powerful weapon the world had ever seen, and was the leader of the western democracies. For the tiny remnant who still believed that the biggest thing we had to fear was government itself, the unrivaled power of the US government evoked nothing but terror.

The New Deal and the war had left a mixed economy of residual private incentives and activity overridden by arbitrary government control. To call that system capitalism was a fallacious wave to the past. Other legacies from the Roosevelt years: the welfare state, confiscatory tax rates, and deficit finance. The first two put into practice the Marxian bromide, taking from the able and productive to give to the needy. Perpetual deficits levied a growing call on future production. Unmet “needs” and deficits, with their attendant debt service, generally grew faster than underlying production. That has been the case in the US. It didn’t take prodigious foresight to see that its economic arrangements - the basis of its so-called economic security - were inherently unstable, but that insight was rarely publicly expressed. After all, expected consequences are far less fearful than “unexpected” surprises.

Nothing is scarier than an enemy bent on your annihilation, which the US has supposedly had since the end of World War II. The Soviet Union and then Islamic extremism have justified maintenance of a confederated empire, foreign intervention, ever more intrusive domestic surveillance, and military and intelligence budgets that dwarf the rest of the world’s. All this security has created various insecurities. It has been expensive, no small consideration for a nation $22.5 trillion in the hole with at least $210 trillion in unfunded liabilities. Little noted, the relative costs have shifted against offensive strategies in foreign lands and in favor of domestic insurgencies. Thus, a string of US and friends military engagements in southeast Asia, the Middle East, and northern Africa have failed to defeat local insurgencies, and have been interminable and costly.

And destabilizing. Foreign intervention by the US and members of its confederated empire have decimated entire regions and created a flow of refugees to Europe and the US. The confederation says it has taken the war on terrorism to the terrorists, but the terrorists have reciprocated, taking the war on interventionism to the interventionists. In the western nations, people now live under a constant cloud, fearful of random violence inflicted by Islamic extremists. The real risk is far less than many risks that are routinely accepted, like getting in a car, but the government and media don’t fill their propaganda and news cycles with stories of those who die in auto accidents. Draconian restrictions on civil liberties, accepted as necessary to fight terrorism, have been mostly ineffectual, but fear is fear. Each new incident creates a demand for more intervention and repression.

Fear corrodes character and morals, and we live in an age of government-promulgated fear. Beneficiaries of government largess, from the proverbial welfare queens to bankers and defense contractors, seldom ask themselves from where it comes or why they should receive it. They instead bend every effort to ensure that it’s never withdrawn, a terrifying outcome. The productive who involuntarily supply that largess dread the next regulation, tax, or government caprice, but for the most part stay silent, fearing retribution. People around the world dread war, and the US, the country most prone to waging it, fears their retaliation. Even those who control governments fear the inevitable consequences of their arrogant ineptitude, and the risk they will lose their power, privilege, payola, and perhaps, their lives.

Brexit is dangerous; Donald Trump is dangerous; separatist parties are dangerous; nationalism is dangerous; devolution is dangerous; liberty is dangerous; anything that challenges the legitimacy of the world’s most dangerous institution, and the power of the people in control, is dangerous. However, when you boil it down, that’s all they’ve got, all they’ve ever had: fear. Threats, subterfuge, and coercion produce regress, not progress, and their consequences are the fiscally and morally bankrupt world we know today, a world that could be on the brink of cataclysmic war.

Fear cannot and should not be vanquished. It has its evolutionary place, increasing humans’ and other species’ chances of survival. However, the object of fear must be correctly identified. A herd of wildebeests that runs from ant hills but cozies up to lions will not last long. The widespread embrace of that which should be feared the most dramatically reduces humanity’s odds of continuance. The inevitable tsunami approaches. Get yourself and those you care about to higher ground.”

"US Military Suicides Surge to Record High Among Active Duty Troops"

"US Military Suicides Surge to Record 
High Among Active Duty Troops"
by The Guardian

"US military suicides surged this year to a record high among active duty troops, continuing a deadly trend that Pentagon officials say is frustrating and they are struggling to counter. The Army, Navy and Marine Corps all saw the rate of suicides go up as well as the overall numbers, with only the air force showing a decrease, according to data newly released by the Pentagon. Suicides among members of the reserves and the national guard also grew.

The difficulties involved in identifying service members with possible problems and finding ways to prevent suicides were underscored earlier this month when the Navy reported that three crew members who served on the USS George HW Bush took their own lives within a week. Asked about the deaths in the crew of the aircraft carrier, the defense secretary, Mark Esper, said: “I wish I could tell you we have an answer to prevent further, future suicides in the armed services. We don’t. We are caught up in what some call a national epidemic of suicide among our youth.”

The number of suicides across the military increased from 511 in 2017 to 541 in 2018. According to the Pentagon, the most at-risk population is young enlisted men, and at least 60% of the time they chose a gun as their suicide method. Army suicides went from 114 to 139, while the Marines went from 43 to 58 and the Navy went from 65 to 68. The Air Force dipped from 63 to 60.

“Our numbers are not moving in the right direction,” said Elizabeth Van Winkle, director of the Pentagon’s office of force resiliency. She said that most of the military rates are comparable to civilians, but added, “that’s hardly comforting”.

The rate of suicide among active-duty troops was 24.8 per 100,000 people in 2018. In 2017, that figure was 21.9 per 100,000 troops. Five years ago, the suicide rate among troops was 18.5 per 100,000 service members. That compares with 18.2 people per 100,000 for all Americans ages 17 to 59. The report maintains that, adjusting for age and gender, the military’s rate is roughly the same as American society.

Military and defense leaders expressed dismay and a resolve to do more to increase resilience in the force, train service members how to handle stress better and encourage troops to seek help when they need it. Van Winkle said the military is also looking at increasing efforts to train troops on the safe storage of firearms and medication.

She and Karen Orvis, director of the suicide prevention office, said recognizing service members who may be struggling or at risk of taking their own lives is very difficult, and that sometimes suicide is a sudden, impulsive decision with little warning.

They also acknowledged that service members are still reluctant to come forward and seek help. “Just as we talk about physical fitness, marksmanship, training and education, Marines must also be comfortable discussing life’s struggles, mental wellness and suicide,” said Gen David Berger, commandant of the Marine Corps. “We must create a community where seeking help and assistance are simply normal, important decisions Marines and sailors make.”

This year for the first time, the Pentagon included statistics for suicides by military spouses and dependents. Van Winkle said the most recent numbers available were for 2017, but officials are working to get better at collecting family data. According to the report, there were 186 families that had suicides – 123 were spouses and 63 were dependents between the ages of 12 and 23."
Not just for veterans...
Get help now: If you are in a crisis or any other person may be
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