Fantasy of Economic Models

It takes a high I.Q. and lots of hard work to get a PHD in economics, especially from an Ivy League School. Yet a third grader with common sense could debunk almost anything that comes of their mouths in thirty seconds are less.
Economic models and forecasts fail for the same reason chain letters fail. Erroneous assumptions are made about human behavior and character. Also, provisions are never made as to new incentives that will be created and old incentives that will be destroyed. Government is always assumed to make economic decision when it is impossible to for it do so. Does self interest disappear when government takes on a task? Only in the minds of learned economists do government agents work towards the best interests of ordinary citizens.
Fantasy is a major cause of happiness. Some fantasies continue throughout life without interruption. Those that deal with money and survival cause great sadness when they collide with reality and cause misery and poverty. Where there are fantasies about economics, there is always a reckoning day and a sad ending.
There is nothing ignorant about the American Public. Most work to many hours and have too much responsibility to keep up with the numerous ways they lose money due to economic policy. Still, there will be great distress when average folks discover just how much Quantitative Easing has cost them. The price has not yet been paid.
As a political initiative Quantitative easing has been successful in transferring massive wealth from the politically naïve to the politically powerful. As an economic initiative it has destroyed the economy.

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Truth About Fiat Money

Common Sense Economics as of October 7 is recognizing the most recent record highs as marking the end of the bull market that started in 2009. Unlike all other bull markets in history this one was politically created and maintained with organized support.
The bear market we are about to experience will be far more destructive than most are currently able to fathom. The coinciding depression may be worse than the one during the 1930s.
Guaranteed, all will hear about the evils of fiat money. Don’t believe it isn’t true. There will be calls to return to the gold standard. Few realized that gold certificates were fiat money also. How is that? They were redeemable in only one commodity and government controlled the price. Regular fiat money is also convertible into gold but government doesn’t control the price. It can also be converted into anything else. It is more accurate to call it deregulated money.
So, what is the problem? Governments cannot maintain stable currencies. Why? Governments can’t make economic decisions. They make political decisions so the amount of money in circulation always reflects the needs of the politically elite. The gold standard was constantly tampered with politically. The asset bubbles of the 1920s were directly caused tampering with the gold backed pound following WWI.
Money creation gets out of hand because citizens are unwilling to control government. Chances are good that within the next 50 years a new currency will emerge in the private sector. There is no chance a government will sponsor a trouble free currency. In all of history it has never been done.

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How the Biggest Lies Are Told

Suppose person A want to tell a lie to person B. It is hard to get someone else to believe a lie unless they are already lying to themselves. One common denominator among all people is that of believing one is special. The best liars know how to nurture and exploit this universal false belief.
Notice when a politician begins a speech, the first order of business is to acknowledge and patronize the “special” nature of the audience. Tell a man what he wants to hear and it registers as the truth. Who would lie to a person who is held in such high regard?
There are over 7 billion humans on the planet. Below is a link to a world population clock. There are special people being born almost faster than they can be counted. Each one of these people is born with a sense of being special.

http://www.worldometers.info/world-population/

One staple in the science of lie telling is that once a person believes the first lie, the ones that follow are believed a lot easier. The trick is to tell a lie the person already believes and start adding on. With election day coming up in November, take note of the technique.

The Grazin’ is Good is a Curbside Jimmy tune is focused on human behavior in the modern era.

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Bull Market Over

During the 1980s, while Ronald Reagan was president, government began tampering with the financial markets. In the spring of 2003 government started working aggressively with Wall Street to elevate asset prices. In spring of 2006, when asset prices were showing signs of weakness, Henry Paulson was named Treasury Secretary for the purpose building a larger and more active consortium to keep housing and stocks on an upward path. When this effort failed, TARP was passed partly as a face saving effort and partly to save the remaining assets of the politically privileged upper class.
Quantitative easing first under Ben Bernanke and now Janet Yellen provided unlimited funds for stock purchases. Laws prohibiting manipulation were not enforced. Friends of the Federal Reserve have traded risk free for three years. The U.S. Government has been reduced to an income redistribution engine. All laws that come before congress are for the purpose of rigging one market or another.
The poor and middle class have been robbed blind. Most are still clueless as to how the process has worked.
One by one the pillars of our free market system have been discarded. Central economic planning has allocated the nation’s resources so inefficiently that genuine growth is no longer possible. Government at all levels requires a high rate of growth in order to produce enough tax revenue to continue operating.
The bull market that began in 2009 has been politically engineered without much regard for the consequences. A hand full of billionaires has benefited and will never have any regrets. For all others, their financial futures have been destroyed. Most who haven’t already are going to lose everything they have.
But, it does look as if all efforts by all of the governments in the world are no longer enough to keep the market from falling. I do believe the bull market is now over.

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War Tax and Myth of Self Government

It is hard not to be at war when hardly a soul cares. American citizens eventually absorb the burden of a war  even if they are unaware it is being fought. Since embracing the mercenary army concept it is easy to drop bombs or deploy troops to support the agendas of large financial interests.

Americans would be wise to insist congress pass a war tax that would be extracted out of each paycheck of every American. The war tax would be listed separately along with other payroll taxes. I would be surprised if even half of Americans even know we are involved in a new military adventure in Syria.

One of the ways self government is circumvented is to limit the information citizens have for making decisions.  A war tax would keep folks abreast of what a war is costing them personally.

Most people believe citizens are in charge of government when they are not.

People in China love the song “The Grazin’ is Good.” It is about the American mindset and modern values.

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Some Things to Remember

Given the assumptions mainstream economics makes about human nature, economic outcomes such as are experienced today could not occur. Rid your mind of these fantasies and all that transpires in the economic and political arenas make perfect sense.
Mainstream economics assigns such attributes as industrious, independent minded, autonomous and morally upright to each human inhabiting our planet. In real life, work is a second choice. Were the motive to live off of others not so great, economies around the world would not be so over financed.
Because the U.S. is defined as a republic, academics act on the basis that it is. They also treat the economy as if it were free market based.
There is no way to come close to understanding behavior when the very basis of all observations are false from the beginning.
Because all people bargain away freedom as comfort seekers, self government is not practiced. The value of voting is rendered impotent by the more powerful right to manage public opinion. Individual voters have never shown an interest in controlling the activities of those they elect. Instead they search for messiahs who will champion good causes. Of course politicians run for office out of self interest and end up working for those who help them achieve their personal ambitions.
In a free market government cannot be used to rig markets. Today, governments around the world are used for nothing else.
How can so many people be fooled. It is actually simple. It is all about living fantasy based lives. There is one fantasy that seems to be the basis of all others. That is the fantasy of being special. Every one of the more than 7 billion people in the world feels special. Not one knows what life is or why he is alive, but feels special of course.
I estimate that about three percent of any population has sociopathic personalities. Sociopaths become world leaders and rise to the top of other large institutions as well. They are adept at nurturing ordinary people’s sense of being special. Once assured of being special folks are more than happy to give money, life and limb to any number of “noble” causes. After all, who would lie to someone who is special? Notice that when a politician visits a city, the speech always starts out by acknowledging how special all of the local people are. Tell someone what they want to here and it gets accepted as the truth.
Given the human instinct to worship leaders, this is a bad combination.
I encourage everyone as an experiment to give up the fantasy of being special just for a day. It is really hard to be a sucker and rightfully humble at the same time.
Curbside Jimmy has a tune out called Euphemism Mountain.

We all love our homes on Euphemism Mountain but sometimes it makes sense to be realistic for a while, especially on the eve of a giant economic collapse.

Music For The Hard Times Coming

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Definition of Economics

Investopedia defines the study of economics as follows.

“A social science that studies how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants.”

This definition is typical but it is not exactly right.

A better definition is the study of survival. The commonly used definitions are right but they are incomplete. The most critical economic behaviors occur outside of what is normally deemed a market. The first transaction everyone born makes over and over throughout life is to trade freedom for comfort.
This is one reason why economic models do not work. The decision making process does not occur as it is popularlly explained.

Human beings are all capable of individual thought but they default to herd thinking. Most of what passes as a personal opinion is a notion the mind hears and records. The notion is only a notion but it is mistaken for a self generated idea.

One of the ingredients of a free market and a high standard of living is freedom. What throws mainstream economists off is that the rank and file in any economy trade their freedom for comfort out of instinct. A political system based on democracy is assumed necessary to support free markets. In order to have genuine self government it would be necessary to impose freedom on a population faster than the individuals can bargain away their freedom.

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What Would Adam Smith Say Today?

What is known and understood is often discarded out of convenience. Adam Smith was an economist. Janet Yellen and Ben Bernanke are accountants and economists in name only. Adam Smith understood incentives. Ivy League economists are lost on the subject of incentives.
Below are some quotes from Adam Smith that are highly relevant in today’s world.

“Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all.”
Adam Smith

No society can surely be flourishing and happy of which by far the greater part of the numbers are poor and miserable. ”
Adam Smith

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
Adam Smith, The Wealth of Nations: An Inquiry into the Nature & Causes of the Wealth of Nations

Free market economics is a discipline that must be imposed on a society if a land is to be prosperous. The good of free markets cannot be noticed in the present moment but the good is always there. The role of government is to enforce free market discipline and of course government must not be allowed to be used to rig markets.


Music For The Hard Times Coming

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What exactly is the Federal Open Market Committee?

The Federal Reserve Web Site defines the committee as follows.

“The term “monetary policy” refers to the actions undertaken by a central bank, such as the Federal Reserve, to influence the availability and cost of money and credit to help promote national economic goals. The Federal Reserve Act of 1913 gave the Federal Reserve responsibility for setting monetary policy.”

Common Sense Economics defines institutions according to how they function in real life.
In real life the Open Market Committee consists of twelve sociopaths, currently only ten, all attempting to accomplish personal agendas. Anything done in the public interest is incidental. Only sociopaths have the manipulative skills necessary to gain an appointment to such a high committee.
Who does the Open Market Committee serve? It serves those help the members accomplish their personal agendas.
In short, the Federal Open Market Committee operates the world’s largest wealth and income redistribution engine.
Who benefits? Most benefit goes to friends of the Fed and a friend is one who supports the power hungry members in their pursuit of personal ambitions.
If the official definition provided on the Federal Reserve web Site was accurate, there would be no asset bubbles. Use the description provided by Common Sense Economics and everything they do makes perfect sense.

Music For The Hard Times Coming

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Ahead of the Fed

Talk ahead of the Federal Reserve meeting is that the central bank may make noise about increasing rates. Americans are trained to believe government, especially the Federal Reserve, have magical powers. Such beliefs are easy to come by since human beings are hard wired to serve kings and prone to worship those they elect instead of exercising authority over them.
The Federal Reserve has been able to reduce interest rates because there has been no natural force causing them to move higher. If demand for money for buying plant and equipment was high or if borrowers were defaulting on loans in high numbers, rates would move up regardless.
Thinking errors abound. Credentials are universally accepted as competence, even when those who own credentials go their entire lives without making a single accurate forecast or implementing a successful policy. No matter what, citizens are going to believe these folks are highly adept.
Economists like Janet Yellen and Ben Bernanke experience the kind of success alchemists in the middle achieved when trying to turn base metals into gold. Kings were excited about the work the alchemists were doing and leaders today hang on every word that comes from a Federal Reserve Chairman. Neither has ever had even a little success in accomplishing the tasks they have attempted.
What I am expecting this week out of the Open Market Committee are emerging face saving initiatives. The public is starting gain awareness, that there has been no economic stimulus and that they have been robbed blind instead. It is human nature to believe anything coming from authority but there is one caveat. The believers must be comfortable. Americans are beginning to suffer some on account of all of the money that has been stolen from them by Fed policy. They are also learning that their chances of doing well in the future are greatly reduced.
Another thinking error is that of insisting that all are innocent until proven guilty. As true as that is in a court of law it is destructive to use that logic in day to day life. Only sociopaths have the manipulative skills to gain an appointment to the Open Market Committee. There is not an honest bone in any of the bodies who participate in Federal Reserve meetings.
Americans are starting to figure these things out. I expect face saving efforts to begin accelerating.

Music For The Hard Times Coming

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