Monday, August 29, 2016

Central Banks = Welfare for the Wealthy

Central banks can only do one thing, and that's provide monetary welfare for the wealthy.
The fact that central banks provide welfare for the wealthy is now entering the mainstream. The fact that all central bank policies since 2008 have dramatically increased wealth and income inequality is now grudgingly being accepted as reality by mainstream economists and the financial media.
The central banks' PR facade of noble omniscience on behalf of the great unwashed masses has cracked wide open. Even The Wall Street Journal is publishing critiques of Federal Reserve policies that suggest the Fed has no idea how the U.S. economy actually works because their policies have failed to help the bottom 95%.
The grudging admission that central bank policies have enriched the rich while failing to benefit the bottom 95% is a breakthrough--the stone wall of denial has finally been pierced. The mainstream media and the Establishment have resolutely clung to the self-serving fantasy that the Federal Reserve 1) knows what's it's doing and 2) is boosting a "recovery" that will soon achieve self-sustaining "escape velocity"--that is, the economy will generate its own growth and the Fed can dial back its zero-interest rate policy and all its other unprecedented monetary easing measures.
But like a strung-out junkie that needs ever-stronger injections of smack just to stay alive, the U.S. economy is now totally and completely dependent on central bank heroin to keep from crashing. Rather then wean the economy of central bank largesse, the Fed has made the entire economy dependent on zero interest rates, central bank asset purchases and quantitative easing.
At the mere hint that rates might rise or the Fed might cease buying assets and goosing liquidity, the stock market swoons and every sector that's dependent on cheap, abundant credit faints dead away.
We now have the charade of Chief Heroin Pusher Janet Yellen claiming the addict is "recovering" while she shoves another needle of monetary smack into the comatose U.S. economy. The Fed fantasy was that boosting the wealth of the obscenely wealthy would "trickle down" to the bottom 95% via "the wealth effect"--as stocks and bonds rose in value, households would feel wealthier and happily plunge deeper into debt.
Apparently the hordes of PhDs and "professional" economists in the Fed were incapable of observing that 3/4 of all financial wealth is held by the top 5%: the top 1% owns 43% and the next 4% own another 30%. The upper-middle class owns 15% and the bottom 80% own what little is left: "wealth" such household belongings and equity in homes that can no longer be extracted.
Globally, the top .7% (less than 1%) own 45% of all wealth and the top 8% own 85% of all wealth:
While the spending of the bottom 95% stagnates, spending by the top 5% that have benefited from the Fed's welfare for the rich has soared.
If you glance at this chart, it's no longer a mystery why most of the new jobs in the "recovery" are low-paying service-sector jobs waiting on the top 5%:bussing their dishes in fancy bistros, delivering meals to their luxe condos/homes, walking their dogs, etc.
As for "reforming" the central bank or the status quo--real reform is impossible, as I explain in my book Why Our Status Quo Failed and Is Beyond Reform. All "reform" is just PR cover for more of the same.
Central banks can only do one thing, and that's provide monetary welfare for the wealthy. Now that the central bank has enriched the obscenely wealthy, distorted markets globally and addicted the economy to cheap credit, the servile toadies and lackeys in the mainstream media and the Cargo Cult of economic "professionals" is finally admitting that it was all a fraud, a racket that favored the rich.
Wake up, America. The only way to stop widening wealth and income inequality and kick your smack addiction is to eliminate the pusher.


My new book is #9 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, $8.95 print edition)For more, please visit the book's website.

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Sunday, August 28, 2016

Trump By a Landslide?

Based on this analytic structure, Trump may not just win the election in November--he might win by a landslide.
If we believe the mainstream media and the Establishment it protects and promotes, Trump has no chance of winning the presidential election. For starters, Trump supporters are all Confederate-flag waving hillbillies, bigots, fascists and misogynists. In other words, "good people" can't possibly vote for Trump.
Even cartoon character Mike Doonesbury is fleeing to Vancouver to escape Trumpism. (Memo to the Doonesbury family: selling your Seattle home will barely net the down payment on a decent crib in Vancouver.)
For another, Trump alienates the entire planet every time he speaks.
The list goes on, of course, continuing with his lack of qualifications.
But suppose this election isn't about Trump or Hillary at all. Suppose, as political scientists Allan J. Lichtman and Ken DeCell claimed in their 1988 book, Thirteen Keys to the Presidency, that all presidential elections from 1860 to the present are referendums on the sitting president and his party.
If the public views the sitting president's second term favorably, the candidate from his party will win the election. If the public views the sitting president's second term unfavorably, the candidate from the other party will win the election.
(Lichtman published another book on his system in 2008, The Keys to the White House: A Surefire Guide to Predicting the Next President.)
Author/historian Robert W. Merry sorts through the 13 analytic keys in the current issue of The American Conservative magazine and concludes they "could pose bad news for Clinton."
If five or fewer are negative for the incumbent, the incumbent party will win the election. If six or more are negative, the incumbent party loses the election. Merry counts eight negatives for President Obama's second term, which if true spells defeat for the Clinton ticket.
Whether the 13 issues are positive or negative for the candidates is of course open to debate, but consider what it means that Trump won the Republican nomination despite the near-universal opposition of the Establishment.
Consider that some polls found that 68 percent of adults think the country is on the wrong track and a recent average of six polls on the subject concluded that 64% of adults feel the nation is moving in the wrong direction.
This means 2/3 of the nation's adults no longer buy into the Establishment/ mainstream media's narrative that the economy is expanding nicely, things are going in the right direction and Hillary Clinton has a lock on the presidency.
Merry scored the economy as a positive for the incumbent party, but based on the public's view of where the nation is heading, I suspect the reality that the economy is weakening rapidly can no longer be hidden from the voting public. If we score the economy as a negative, that's nine negative keys for the incumbent party, well above the six minimum.
Based on this analytic structure, Trump may not just win the election in November--he might win by a landslide--with landslide usually being defined by an overwhelming advantage in electoral college votes or 60% of the popular vote.
As improbable as this may seem at the moment, consider the improbability of Trump capturing the Republican nomination. Consider the nature of Clinton's support: a mile wide (encompassing the entire Establishment) but only an inch deep.
If the mainstream media has failed to persuade the American public that everything's going in the right direction, why should anyone remain confident that they can persuade the American pubic that Hillary will be their president come heck or high water?
As I have noted before, there are very few ways left to stick your thumb in the eye of the elitist, predatory, self-serving Establishment that won't get you tossed in prison other than voting against their candidate, which in this election is Hillary Clinton.
Memo to Clinton supporters: if you want to persuade the American public the nation is going in the right direction, you'll have to actually change the direction rather than just promise more of the same.


My new book is #9 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, $8.95 print edition)For more, please visit the book's website.

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Saturday, August 27, 2016

What's Been Cooking at Our House? Summer 2016

It's better, cheaper and healthier to just make what you want to eat at home.
One of the core concepts here at oftwominds.com is control what you can. We can't control very much of the world around us, but we can control what we put in our bodies, what fitness we provide our bodies and what thoughts we feed our minds.
As to what food we prepare and put in our bodies: what's been cooking at your house? Here's a semi-random selection of photos of things that have been prepared in our kitchen or gifted to our table by good friends.
Let's start with the healthy stuff and then move to the baked goodies. Here's a salad that is mostly greens from our garden. Note the purslane on top, which "contains more omega-3 fatty acids (alpha-linolenic acid in particular) than any other leafy vegetable plant." Purslane typically grows on its own as a volunteer-- before we knew its health/taste benefits, we pulled it out as a weed (dumb--it's a nutritional powerhouse!).
Art that you can eat! Incredible vegetarian spring rolls, courtesy of our good friends:
Musubi (also known as onigiri) with a piece of fried ono (a type of fish) with stir-fried zucchini and green beans from our garden:
Ulua (a type of fish in Hawaii) sashimi with a Lagunitas IPA beer. Onolicious! (The ulua came from a relative who caught it, and we reciprocated with an ohelo-apple pie--see below.)
The baked goods section starts with collecting (legally) wild ohelo berries.
The ohelo berries being mixed into raw sliced apples.
The mouth-watering result: ohelo-apple pie, with a scoop of ice cream:
When fresh cherries were in season early in the summer, I made a number of clafoutis (claw-foo-tee) to bring to parties and pot-lucks. I love this baked custard dessert because it looks impressive but is easy to prepare:
Our good friend Katharine K. conjured up this amazing homemade strawberry shortcake for a dinner party at our house:
And as a bonus to a family meal shared in Honolulu: a full late-afternoon rainbow:
Many of the things we like to eat are not available elsewhere at any price; no store or bistro makes spring rolls or pies like this on a regular basis. Maybe some $100-per-person restaurant makes an approximation of these dishes from time to time, but who has the time or money to go searching for what may well be inferior to the homemade version?
It's better, cheaper and healthier to just make what you want to eat at home, and give any surplus to those who gift you wonderful ingredients, dishes and treats.


My new book is #9 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, $8.95 print edition)For more, please visit the book's website.

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Thursday, August 25, 2016

China's Great Divide: A New Cultural Revolution?

The only question left for China (and every other debt/bubble-dependent nation) is what socio-political consequences will manifest when the credit bubble finally bursts?
In Asia, it's generally seen as unpatriotic to criticize one's country in public, even if you disagree with its direction and leadership. The cultural norm is to maintain the "face" of one's country by hiding its ills from outsiders.
This reticence is especially evident in China, which suffers from the memory of being subjugated by the Western imperialist powers in the late 19th century and early 20th century.
As a general rule, you will rarely hear any profound criticism of China unless you are considered a trusted friend; giving China a black eye in public is frowned upon, even by its domestic critics.
For this reason, the majority of the Western media has very little grasp of what worries Chinese people. Recently, I have heard fears of a Second Cultural Revolution being expressed in private.
There is a Great Divide between generations in China: on the one side is the older generation that remembers the Maoist era with some nostalgia and the terrible adversities of the Cultural Revolution (1966 - 1976). On the other side is the young educated, prosperous generation which has only known consumerist prosperity and personal advancement.
The ideals of the old communes are an abstraction to the young generation, as are the terrible costs of the Cultural Revolution.
A resurgence of devotion to Mao has caught authorities off-guard; they can't very well suppress public displays of secular worship of the Party's founder, but raising Mao's revolutionary ideals from the dustbin of history implicitly challenges the Party's current leadership.
The older generation resents the young consumer-obsessed generation, and some would like to purge China of the excesses of wealth and consumerism.
It's not too difficult to see how rising unemployment (China's Hidden Unemployment Rate) and China's enormous wealth inequality could spark a new Cultural Revolution that would target Party leaders who have benefited from the state-managed neoliberal capitalism that has greatly enriched the leaders and their family dynasties.
In effect, a return to the party's Maoist roots would open divisive fissures in the Party and the nation. Farfetched? Perhaps not as much as the conventional sugar-coated media representation would suggest.
The status quo solution (in China, the U.S., Japan, the E.U., etc. etc.) to a weakening bubble-dependent economy is to inflate another even bigger bubble.If debt reached extremes that imploded, the solution is to expand debt far beyond the levels that triggered the implosion.
If fudging the numbers triggered a loss of confidence, the solution is to fudge the numbers even more, so they no longer reflect reality at all.
If the masses protest their powerlessness, the solution is to push them further from the centers of power.
And so on.
This blowing new bubbles to replace the ones that popped works for a while, but at the expense of systemic stability. Each new bubble requires pushing the system to new extremes that increase the risk of instability and collapse.
In other words, the stability of the new bubble is temporary and thus illusory.
The processes used to inflate the new bubble suffer from diminishing returns.The nature of stimulus-response is that overuse of the stimulus leads to diminishing responses. This is a structural feature that cannot be massaged away.
Goosing public confidence in the status quo with phony statistics and rigged markets works splendidly the first time, less so the second time, and barely at all the third time. Why is this so? The distance between reality and the bubble construct is now so great that the disconnection from reality is self-evident to anyone not marveling at the finery of the Emperor's non-existent clothing.
The system habituates to the higher stimulus. If the drug/debt has lost its effectiveness, a higher dose is needed. This is the progression of serial bubbles. Then the system habituates to the higher dose/debt, and the next expansion of debt must be even greater.
This dynamic can be visualized as The Rising Wedge Model of Breakdown, which builds on the well-known Ratchet Effect: the system is greased for easy expansion of debt, leverage, employees, etc., but it has no mechanism to allow contraction. Any contraction triggers systemic collapse.
The only question left for China (and every other debt/bubble-dependent nation) is what socio-political consequences will manifest when the credit bubble finally bursts?
The answer will arise from the unique interplay of history, social norms and central-state actions in each nation-state as the crisis deepens. In China, the two revolutions--the Communist victory of 1949 and the now-suppressed Cultural Revolution of 1966 - 1976-- will both loom large--perhaps far larger than the current regime would like.
This essay was drawn from Musings Report 28. The Musings Reports are emailed weekly to subscribers ($5/month) and major contributors ($50+ annually). If you'd like to support this blog, please consider subscribing (links below or in the right sidebar).


My new book is #9 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, $8.95 print edition)For more, please visit the book's website.

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Wednesday, August 24, 2016

What Can We Say About a System that Criminalizes a Safe Painkiller (0 Deaths) and Promotes Big Pharma Opiates that Have Killed 165,000 Americans?

So when will the citizens wake up to the criminality of their government in favoring killer corporate opiates over safe natural painkillers?
Set your mindset to objective and come with me to the little-known but plucky nation of Lower Slobovia. The residents of Lower Slobovia have two choices when they are suffering from chronic pain:
1. A natural, non-addictive medication that they can grow themselves that has never caused a single fatality due to overdose, adverse reactions or mixing with other drugs (polypharmacy), or
2. synthetic opiates manufactured by pharmaceutical corporations that are highly addictive, trigger multiple adverse reactions, manifest dangerous polypharmaceutical attributes and have killed over 165,000 people in the past 15 years-- 28 times the nation's 5,790 combat deaths in recent military conflicts.
The corporations manufacturing and distributing the synthetic opiates as "safe" hid the truth about their medications from doctors, patients and the media: 'You Want a Description of Hell?' Oxycontin's 12-Hour Problem (via John F.) OxyContin’s stunning success masked a fundamental problem: The drug wears off hours early in many people, a Los Angeles Times investigation found. OxyContin is a chemical cousin of heroin, and when it doesn’t last, patients can experience excruciating symptoms of withdrawal, including an intense craving for the drug.
So take a guess which class of drugs is perfectly legal and widely promoted by Lower Slobovia's healthcare system, and which one is classified as a restricted Schedule 1 drug by the nation's Drug Enforcement Agency (DEA), i.e. as dangerous as heroin?
I suspect you saw this coming, right? The natural painkiller that never killed a single soul and can be grown at home is criminalized, while the drugs that have already killed 165,000 people (a number that grossly understates the total number of deaths at least partly attributable to synthetic opiates) and addicted and/or harmed millions of other users is perfectly legal, declared "safe" by the pushers (oops, I mean pharmaceutical manufacturers) and the government, and distributed in the tens of millions of doses by the "healthcare" system.
Lower Slobovia's DEA, the corporate manufacturers of the killer-opiates and its healthcare system that slavishly distributes millions of the killer pills should be immediately escorted to Devil's Island and left to rot, right? And the insane laws reversed so the killer corporate synthetic opiates are declared Schedule 1 and heavily criminalized, and the natural nobody-dies painkiller legalized and distributed, right?
Isn't this obvious? Yes, I realize cannabis and opiates are not apples to apples, but you get the point--the drugs that have killed more than 165,000 people and ruined the lives of hundreds of thousands of others should be on Lower Slobovia DEA's Schedule 1 of criminalized drugs instead of being passed out like candy by its "healthcare" system-- a distribtion that has reaped tens of billions of dollars in sales and profits for the pharmaceutical sector.
If you need some official statement to accept the obvious, well then, here you go: Could Medical Cannabis Break the Painkiller Epidemic? (Scientific American, September 2016 issue) A body of research suggests yes, but scientists are having to fight red tape to study whether medical marijuana could substitute for opioid drugs.
The U.S. “is in the midst of an unprecedented opioid epidemic,” according to the Department of Health and Human Services. Prescription opioid overdoses killed more than 165,000 Americans between 1999 and 2014, and the health and social costs of abusing such drugs are estimated to be as much as $55 billion a year. The problem has led experts to scramble for a less dangerous alternative for pain relie--and some research points to medical marijuana.
Published in 2014, the study revealed an intriguing trend: between 1999 and 2010, states that permitted medical marijuana had an average of almost 25 percent fewer opioid overdose deaths each year than states where cannabis remained illegal.
So when will the citizens of Lower Slobovia wake up to the criminality of their government in favoring killer corporate opiates over safe natural painkillers, the criminality of the pharmaceutical racketeers who hid the truth from doctors and patients, and the complicity of a "healthcare" industry that has been happy to pass out deadly drugs like candy--at a profit, of course.
As you might have guessed, there is no Lower Slobovia. There is only the U.S.A., a nation "in the midst of an unprecedented opioid epidemic,” a nation blind to the lethality of its Destruction Enforcement Agency (DEA), its corporate pushers and its government-funded and enforced "healthcare" system.
Disclosure: I am not a user of either recreational or medicinal cannabis or any corporate opiate. I just think it's time we finally confront the terrible, needless cost in human lives and suffering from our nation's insane, benighted drug laws and our needlessly costly, destructive but oh-so-profitable "healthcare" system.


My new book is #9 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, $8.95 print edition)For more, please visit the book's website.

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
Thank you, Albert B. ($20), for yet another splendidly generous contribution to this site-- I am greatly honored by your steadfast support and readership.

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