Today’s Reality Gaps

Happiness is a fantasy based state of mind. There are many happy economists in the world today. I am not one of the happy ones. Give up fantasy and happiness disappears with it. That is not the end of the world. As you live without fantasy, peace takes its place so there is no net loss. It takes a while. Is it worth it? Who is to say?

What is a reality gap? A reality gap is the difference between fantasy based ideas, notions and what is actually true. Often a reality gap is based on believing what we would like to be true. Other times a belief can be based on an instinctive belief in something that in the past bolstered the species chances of survival. Eons ago, kings were defined as having divine rights. Royalty was assumed to be like a bridge between humans and God. Kings were assumed to have powers other people did not have. In today’s world, people act on the basis that world leaders, experts of all kinds and governments have magical powers. This is a reality gap. There are no special people. Still, citizens put child like faith in leaders. Leaders have their own agendas, completely separate and detached from those of their constituents. This is an instinctive thing.

People need to believe there are experts in charge who are there to protect them from danger and to solve problems for them with their superior knowledge. Federal Reserve policy lives off of this human weakness. The public imagines these economists have some degree of insight. They don’t. The theories they rely on have no chance of producing a positive outcome. Why? The theories are fantasy based just as are the notions that cause the public to have confidence in them.  Economists assume objectivity in government. They believe people are sentient beings in every aspect of their lives. They treat individuals as being independent minded and making independent decisions. They remove variables from their models if leaving a variable in it will keep it from working mathematically. In general, belief in the Keynes’s idea of a straw man is a critical part of any aggregate economics theory. Nature provides no such entity as a straw man.

Putting economists in charge of the economy is like giving an army of blind men guns and sending them off the fight a battle.

By 2008, the Federal Reserve had all but destroyed the country. From then until now, the Federal Reserve has saved the country for a while by transferring wealth and income from the bottom of the food chain to to the top. Markets, financial and all others have not been allowed to clear for decades. Stimulus is theft. It has never been anything else and it never will be.

Economic issues have only one solution, free markets. Free markets create optimums. A population is worse off to the degree a country deviates from a free market situation. Prosperity cannot survive without recessions because recessions are the mechanism by which waste is eliminated.

There are multitudes of reality gaps at any given time. The ones that matter now are those where experts are deemed competent arbitrarily and where leaders are deemed to be special people.

A number of fantasies are always in play. One of those is that human beings are freedom seekers by nature. Will a human opt for freedom given the choice? The answer is sometimes but almost never. It depends upon what the freedom costs. Freedom is handled like an asset and is bargained away as a means of enhancing chances of survival. The brain as an organ optimizes survival and reproduction.

Another big fantasy that is always relevant is the belief in the incentive to serve. People who are elected or who even work for government are deemed as motivated by wanting to serve others. There is no truth to that notion whatsoever. All people, politicians, “civil servants and those in the private sector are all guided by self interest. Lets not leave out the fantasy that government is benevolent.

As many as 100 years can pass without the indulgence in fantasy being of critical importance. From time to time life gets real serious. We are currently entering into one of time periods. People who live fantasy based lives are currently at a serious disadvantage.

The truth is a hard sell. Fantasy Free Economics gains readers one at a time. Major search engines simply do not list blogs which disagree with their political agenda. As long as folks share the link to this blog and others speaking out against the grain, the truth will at least trickle into the public consciousness.

Fantasy Free Economics recommends the following blogs.

Of Two Minds Liberty Blitzkrieg Mises Institute Straight Line Logic Paul Craig Roberts

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As I am writing this, the stock market is getting massive organized support. In saying that I am not revealing a big secret. Still there are multitudes waiting for traditional forces of supply to overtake demand, thinking that is how the bull market will end. That will never happen. One of the pillars of manipulation must break. What does it take to move stocks higher independently of natural market forces? These are the necessary ingredients.

1.) Ignorance: The public is not aware of what is going on and is clueless as to what it costs them in terms of real income.

2.) Media: Although it is a remote chance, parts of the media, could start reporting the financial news honestly.

3.) Central Banks: Central banks are under political directives to keep stock prices moving higher. Political directives don’t necessarily come form sovereign nations. Wealthy interests put pressure on central banks independently of any government. With tensions rising around the world, one or more countries could reign in their central banks and use them instead for purposes of economic warfare. This is a remote possibility.

4.) Friends of the Fed: Friends of the Fed range from the algos and other firms which get advanced information from the central banks. Central banks must insure these firms of risk free profits in order to make their participation worthwhile. These are the organizations which orchestrate short squeezes, hold volume down and in general manufacture artificial demand for stocks. There is a genuine chance that these firms are having trouble making profits. If their profits cannot be guaranteed, they will cut and run. These firms are the weakest links in the chain.

5.) Corporate Buybacks: Corporations must be provided cost free funds in order to buy back their own shares. The latest source is from the Trump corporate tax cuts. This is a very weak link also although it has been completely reliable. Sources of funds for buybacks may run dry. Profits will not be used for buying back shares. This source of demand could dry up.

Deterioration of the Economy: The economy actually is unraveling but the damage is occurring at the bottom of the food chain and moving higher every day. This is what happens when political power rather than price is used to allocate resources and ration goods and services.

For the market to fall in a meaningful way, one of these factors must change. As long as the world’s political structure holds together, when stocks actually do fall, every attempt will be made to pass losses from rich stockholders onto the backs of the public. Chances are real good that central banks will start buying stocks openly for the purpose of as of “saving the world.”

The one thing I am sure of is that natural economic forces alone will not cause a meaningful market decline until damage to the economy is beyond repair. Something will have to break and it will.

I have written extensively about stock market manipulation. To read these other articles, type manipulation in the search bar and they will all show up.

The truth is a hard sell. Fantasy Free Economics gains readers one at a time. Major search engines simply do not list blogs which disagree with their political agenda. As long as folks share the link to this blog and others speaking out against the grain, the truth will at least trickle into the public consciousness.

Fantasy Free Economics recommends the following blogs.

Of Two Minds Liberty Blitzkrieg Mises Institute Straight Line Logic Paul Craig Roberts

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The Upside to Kneeling

Few Americans today are willing to protest much of anything. Who today is stretching the limits of First Amendment rights? If there is an injustice in the country, does anybody care?

Plenty of American are actually concerned about the direction law enforcement is taking in the United States. But they Continue reading

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How You Are Subsidized

There are subsidies or entitlements we can all see. These are programs like food stamps, Medicaid and regular welfare. Normally these kinds are treated as the only subsidies  in the economy. So, being against government subsides comes down to opposing food stamps and other subsidies for the poor. especially when the recipients are in the country illegally.

Compared to subsidies and entitlements overall, programs for the poor are only a small portion of the total. So, what subsidies are received by the middle class and above? These subsidies are camouflaged just below the surface of what citizens are prone to notice.

Probably the biggest subsidy higher income citizens receive is that of discounted interest rates on borrowed money. Due to government policy upper income borrowers are subsidized approximately $120 per month on their interest expense for every $100,000 they borrow. When an upper income American owes $500,000 on a mortgage he is paying around $600 per month less than would be his cost were he paying the free market rate. The low interest rate policy of the Federal Reserve is a huge subsidy to everyone with a high enough income to borrow money. Government created low interest rates also keep profit margins elevated so that all consumers pay more for everything they buy. The beneficiaries are the businesses which provide the goods and services. Their profit would be a lot less in a free market setting. Interest rates are only one item on which higher income Americans receive government benefits.  Many industries lobby and have laws passed for the purpose of forcing everyone to buy what they produce.

The wealthy are in fact subsidized more so than are the poor. There are many ways I am not taking the time to mention. A typical higher income conservative household in Texas is a two income family. Almost without fail one or both husband and wife have a high income government job. Government work now days pays more than the same work in the private sector. So, while Texas is a conservative red state, hardly a soul has a personal incentive to reduce the size of government.

In Texas and in other states, it is a mistake to think of conservatives as wanting less government and liberals wanting more in government benefits. The truth is that there is no meaningful incentive to use free market principles. Both sides work endlessly to extract personal benefits out of government. In red states, liberals are just not effective at using government as the source of their essence. Although, they do try very hard.

Sadly, when the the free market system is dismantled it is not the poor who benefit. The fastest way to eliminate poverty in the United States is to use government to enforce free market discipline. Were this done today, the comfort level at the bottom of the food chain would be lifted to a much higher level. The first beneficiaries of free market principles are those with little or no political power. With political power benefits go first to those who personally prosper from dismantling the free market system.

So, why is it that there are no ongoing conservative initiatives in the world today? The ones who have the power and money to reduce the size of government benefit from its growth.

The truth is a hard sell. Fantasy Free Economics gains readers one at a time. Major search engines simply do not list blogs which disagree with their political agenda. As long as folks share the link to this blog and others speaking out against the grain, the truth will at least trickle into the public consciousness.

Fantasy Free Economics recommends the following blogs.

Of Two Minds Liberty Blitzkrieg Mises Institute Straight Line Logic Paul Craig Roberts

 

 

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Beto O’rourke Vs. Ted Cruz

Beto O’rourke is the type of candidate who wins elections. It is my opinion that he will beat Ted Cruz in the Texas senate seat election this November.

Never forget that the race is between two sociopaths. How do I know these two candidates are sociopaths? Only a sociopath has the skills required to compete in such a competitive contest. Texas is cited as a conservative state. Texas is a red state. There is nothing conservative about either siting senators from Texas. Beto O’rourke is a much more appealing candidate than Ted Cruz. I think he will win. I don’t support either candidate. O’rourke is a master at both telling voters what they want to hear and making folks who disagree feel good about voting for him anyway.

What are the issues in the race? The only issues you will hear anything about are the ones being talked about today in the conservative and liberal echo chambers. Are there any other issues? The biggest issues are the trade war and the new income transferring ballooning deficit spending stimulus initiative. There is the war for profit issue. There are other issues we know nothing of. Congress hordes information and keeps it from the public constantly. Formal elections are for the comfort of the citizens. Most of what happens in government is the result of who has or doesn’t have political power in the informal system. Expect all of the political dialog to focus on superficial issues with superficial information.

O’rourke has taken ownership of the legalize cannabis issue. That will help him a great deal. Chances are good that Trump will find a way to reschedule marijuana and or make other legalization overtures before election day. O’rourke is first with the issue, and that will help him.

Do not mistake Texas voters as conservatives. The average Republican in Texas, depends far more on government than Democratic counterparts. There is not one conservative initiative in the State right now. Elections today are about which candidate is perceived as delivering the most essence from government. Republicans generally benefit hugely but indirectly from government policy. Democrats are perceived as getting direct benefits like welfare or food stamps. In no case at all is price the preferred method of deciding who gets what in terms of goods and services. Texans like all others today expect to get their essence first from government.

The Cruz/O’rourke race is not about being a conservative or a liberal. The difference is in the style of extracting benefits out of the overall population.

The truth is a hard sell. Fantasy Free Economics gains readers one at a time. Major search engines simply do not list blogs which disagree with their political agenda. As long as folks share the link to this blog and others speaking out against the grain, the truth will at least trickle into the public consciousness.

Fantasy Free Economics recommends the following blogs.

Of Two Minds Liberty Blitzkrieg Mises Institute Straight Line Logic Paul Craig Roberts

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Taking the Stock Market Private

So the stock market gets organized support. Is the news bad? If it is the market gets extra support.  Is the news good? Then the market get just enough support.  I have written a lot to the effect that there are advantages to centralizing and concentrating stock ownership into strong cooperative hands. Each day that goes by, corporate buybacks and central bank purchases take trade-able stock out of circulation. With every passing day, the task of elevating stock prices gets easier. There is less supply so moving stocks higher gets easier and easier. What is the end game here?

The stock market is being taken private. Don’t misunderstand. Ordinary people still own stock and quite a lot as a group. The plan is for the elite of the world to own a controlling interest in all of the world’s major corporations. That is not as hard to do as it first sounds. Free money from the government is limitless. What we are witnessing is the wealthiest segment of the world finding ways to own or control the factors of production globally. Wars for profit control land. The media as an opinion management service controls the reasoning of the general population. That leaves the capital markets of which the stock market is the most significant part.

The important point I am going to make is that there is no point at which manipulation of the stock market will be discontinued. That is because there is more to the stock market agenda than just churning out profits in the immediate time frame. Profits are a big deal but the goal of privatizing the stock market is bigger than that.

No one who understands markets or economics seriously believes it is reasonable to expect rising asset prices to generate aggregate demand indefinitely. In terms of independent and dependent variables, economic activity is the independent variable. Asset prices are the independent variable. These kinds of variables are not like wild cards in a poker game. Demand driven by increased asset prices is a reversal of the dependent and independent variable relationship. So, that process has a lifespan. No smart person believes this is a permanent situation.

The goal of privatizing the stock market is separate and independent from efforts make trading profits or using the wealth effect to generate temporary GDP numbers. The goal is to concentrate and centralize stock ownership. That effort will not be abandoned willingly.
The truth is a hard sell. Fantasy Free Economics gains readers one at a time. Major search engines simply do not list blogs which disagree with their political agenda. As long as folks share the link to this blog and others speaking out against the grain, the truth will at least trickle into the public consciousness.

Fantasy Free Economics recommends the following blogs.

Of Two Minds Liberty Blitzkrieg Mises Institute Straight Line Logic Paul Craig Roberts

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The Good News Economy and Stock Market of Course

Moving into the fall season, all countries, world leaders and elected leaders in the United States, have the same focus. That is to keep asset prices, mainly U.S. equities, from falling. Every incumbent running for re-election in November benefits from a strong stock market. No effort will be spared in supporting the financial markets through early November. Expect nothing but good good news for the next few weeks.

The link below is an article from earlier this month. The quotes below are from the article.

Good News is Coming Soon (from 8-14-2008)

“Very close to Labor Day, September 3, five days before or after, good game changing news will hit the press and the airways. What kind of good news?”

“Odds are the trade war will be called off.”

When I make a forecast like this, I never expect to be 100% right. The only criteria I have is of knowing the incentives of the various players and observations of previous behaviors. There is no clairvoyance. I have no complex statistical models. What I can forecast is the intention and level of interest in manipulating the stock market. The only thing I can say with respect to how successful the efforts will be is that these kinds of efforts have worked very well up to this point. Never forget that the economy is in the process of rotting from the bottom up. In time, the whole system will collapse as a result. I have no way to say on what day or in what hour that will be.

The good news now being released is of amazing progress in trade talks with Mexico. It is a few days earlier than I expected. It frankly is not all that profound. Rest assured, there is more to come.

What is the business of every country in the world today? It is to enhance the wellbeing of each country’s most wealth citizens. Actually folks above a certain income level may be citizens of one given country or another but they have a global presence and interests which know no national boundaries.

I have explained previously that our world is a huge game of dominance and subservience. Does that sound awful? Of course it does and that is why people indulge in fantasy. Fantasy, euphemisms and wishing however don’t make it anything other than what it is. Who benefits from big government? It is the few who are currently winning in the game of dominance and subservience. Is there a conspiracy in operation. No, there doesn’t have to be. People with common interests work together naturally.

What do the world’s richest citizens want from government? They want high asset prices. They want wealth and income independently of any output. Don’t misunderstand, output is fine but income without it is even better. Actually that is the same thing the poor, the middle class and everyone else wants. The rich have the money and the political power to get what they want out of government. So, for the immediate future all of the worlds resources are going to be focused on elevating the U.S. stock market.

Please notice. Even with all of the criticism Donald Trump gets from the media and the democrats, there is no push back at all on his ballooned up deficit spending, huge tax cuts for corporations and inflation creating tariffs. Wars for profit are never mentioned either. When it comes to transferring wealth and income from the bottom of the food chain to the top, Democrats, Republicans, media and all other world leaders are on the same page., The argument is over technique and precisely who gets the spoils. But, all of the above agree on moving wealth and income from the bottom of the food chain to the top.

The truth is a hard sell. Fantasy Free Economics gains readers one at a time. Major search engines simply do not list blogs which disagree with their political agenda. As long as folks share the link to this blog and others speaking out against the grain, the truth will at least trickle into the public consciousness.

 

Fantasy Free Economics recommends the following blogs.

Of Two Minds Liberty Blitzkrieg Mises Institute Straight Line Logic Paul Craig Roberts

 

 

 

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The Truth About Presidents

How much difference does it make if the president of the United States has been a whoremonger for most of his life? In my opinion it would make a world of difference except that with presidents, a thing like whore mongering is perfectly normal. The president of the United States is the person who is the current winner of life’s ongoing dominance and subservience competition. Winning at the dominance and subservience game requires certain personality attributes ordinary people don’t have. One of those is a sense of entitlement as in everything in the world is his. He just has to figure out how to get it. Continue reading

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The Centrally Planned Stock Market

Government tampering with the financial markets started during the Reagan administration after the stock market crash of 1987. The President’s Working Group on Financial Markets (Plunge Protection Team) was created ostensibly to prevent crashes like occurred in 1987.  Notice the word ostensibly. Government initiatives do not begin for apparent reasons.  It was true in 1987 just as it is true today. Self interests generates public policy, not concern for the overall population. The President’s Working Group on Financial Markets was created as a means for anointed human beings to make trading profits regardless of natural market forces. Over time, the Working Group became more of a stalking horse that could be pointed to as inactive as a clandestine organization evolved and has been totally active in elevating asset prices.

In today’s trading arena, despites fancy words from Federal Reserve Chairs and others, QE and other named activities have only one objective and that is to elevate asset prices, especially stocks. Government economic policy, especially that of the central bank has been totally focused on that one goal, higher stock prices. Gross Domestic Product has increased for no other reason than artificially created asset values. The result has been government created wealth at the top echelons of economic power. That wealth has translated into high spending by all at the upper end of the food chain ladder.

The incomes and lifestyles toward the lower end of the food chain have suffered just as if the recession of 2009 had not ended. Actually recessions never end until and if markets are allowed to clear. The natural process of out with the old and in with the new never occurred. That doesn’t mean it will never occur. It means that when it does occur, it will be a disaster. Stimulus never serves a purpose other than to enrich a small part of the population at the expense of all others.

As time is rolling forward, the rot at the bottom of the economic ladder has become massive. The only means of generating positive GDP numbers here and in the rest of the world is for the wealth and income of the worlds richest citizens to continue increasing. So, all of the worlds resources are now focused on preventing even a minor correction in the stock market. All other markets which would have cleared had the 2009 recession been allowed to reach completion. Today we still have the imbalances that created the situation in 2009 plus a guarantee that a fall in asset prices, especially stocks, will user in a bigger recession/depression than the first one.

The only way to save the United States is to allow markets to function pristinely. Saving the economy in the short run is not as important as saving it permanently. Just know that creating artificial value in the assets of politically powerful people may have already destroyed both the economy and our political system. If the process is allowed to continue the country and our way of life will indeed be destroyed.

The truth is a hard sell. Fantasy Free Economics gains readers one at a time. Major search engines simply do not list blogs which disagree with their political agenda. As long as folks share the link to this blog and others speaking out against the grain, the truth will at least trickle into the public consciousness.

Comments can also be left on the Fantasy Free Economics Facebook Page.

Fantasy Free Economics recommends the following blogs.

Of Two Minds Liberty Blitzkrieg Mises Institute Straight Line Logic Paul Craig Roberts

 

 

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Alternatives to Legalization

There are a at least two reasons why it would be good to legalize marijuana all across the country. The number one reason is that legalization would take away the profit margin that makes the illegal drug trade attractive.  The second is that no law is enforceable if not even a plurality of the population is offended by the behavior a law is designed to prohibit. The cost of efforts at enforcement is enormous and people disobey the law anyway.

Does cannabis have medical uses? Probably it does. That is an additional reason.

What is gained by having a completely ineffective law on the books as it can serve as a social statement for people who want to be seen on the right side of the issue. Laws which serve only as social statements are extremely expensive to maintain just for that one advantage.

All of that being said, that still does not mean that outright sudden legalization is a good idea. Why? It depends upon the terms of the legalization. There are cannabis users who just want it legal right now no matter what the cost. Deferred gratification is a foreign concept that is not even understood by today’s youth and most elders as well. When passing or repealing a law, it is best to ask the question, “and then?” before making the change.

The important question in legalizing marijuana is, what kind of bureaucracy is going to be born and maintained for the next several centuries? Is it legalized so as to serve as a source of tax revenue? Are laws going to be passed so that profits on the industry only go to the top of the food chain? The way legalization is occurring state by state is not a good deal and may end up restricting freedom more than any misguided statutes.

There are approaches other than outright legalization which would prevent the growth of a huge bureaucracy. Texas is not a friendly cannabis state. Suppose people across the state petitioned their city and county governments to pass resolutions directing local law enforcement agencies to prioritize enforcement efforts. Enforcing cannabis laws could be put so low on the list that the law still served as social statement for folks who just want to be seen as opposing usage. But, law enforcement could focus on more serious violations of other laws.

The solution that would serve recreational users the most would be to make possession punishable with a $49.99 fine and still leave cannabis as illegal. Most cannabis charges are added on to other crimes like shoplifting or disturbing the peace. With only a small fine as punishment, the expense of prosecution would be limited and government could still benefit from the revenue generated. It is rare that anyone is charged for possessing marijuana only.

Anytime a law is passed or repealed, it is not done for the benefit of the overall population. Laws are more likely to be passed to create feeding frenzies by those who will benefit by the regulations or the income opportunities created. Governments are interested in sources of tax revenue. The way cannabis is being legalized now a high price to be paid for all products is guaranteed. This is not by accident. Where profit is concerned, all who have political power are accommodated first.  Make regulation stiff enough and new opportunities for organized crime are created.

Government is defined in people’s minds as a benevolent entity working tirelessly to make everyone’s life better. In reality it is a place to go to exploit problems and make profits by getting self serving laws passed.  Any time laws are passed, changed or repealed, there is a change in the bureaucratic structure. Just because people get what they want in the immediate time frame does not guarantee they will be better off over time.

The truth is a hard sell. Fantasy Free Economics gains readers one at a time. Major search engines simply do not list blogs which disagree with their political agenda. As long as folks share the link to this blog and others speaking out against the grain, the truth will at least trickle into the public consciousness.

Comments can also be left on the Fantasy Free Economics Facebook Page.

Fantasy Free Economics recommends the following blogs.

Of Two Minds Liberty Blitzkrieg Mises Institute Straight Line Logic Paul Craig Roberts

 

 

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