Friends of the Federal Reserve

Those using common sense know that over time government and crime merge. Of course one must set aside all euphemisms of survival long enough make that observation. Absent of euphemisms, we also see that those in elected office are sociopaths as are the criminals who make use of government. In the absence of deterrents incentives are always followed. Exceptions? We are interested in dominant behaviors. There is always an incentive to rig a market. Government gets used as a means of living above the law. Organized crime not only has significant control over Federal Reserve policy, crime gets information in advance and much the public never sees.
Friends of the Federal Reserve trade risk free.
How do we know crime and government merge? First there is an incentive for it to turn out that way. A look at a 50,000 year timeline of history and it has never failed to happen. Citizens fool themselves into thinking they are practicing self government. There is not a day in history where citizens have made an attempt to exercise control over government. American’s opinion of themselves is dishonest. The right to control public opinion is more powerful than the right to vote.
I say that friends of the Federal Reserve trade risk free. That of course is true only until the economy is destroyed.

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Where did we go wrong?

Common sense economics provides a way to know such things as what should the government do with respect to economic policy? What should citizens do with respect to the government? Ivy League economists answer these questions constantly and folks are forever confounded as to why nothing ever gets better. How could such smart educated people be wrong with so many forecasts and implement so many failed policies? Being smart is no advantage when ones basic assumptions are misguided.
Economics as a discipline along with all of the other social sciences makes fatal errors in the very beginning. The wrong assumptions guarantee mostly bad outcomes. A few positive outcomes occur as a result of luck. Economics assumes people make unique individual decisions. Economics assumes people are genetically identical. Economics assumes all incentives that affect markets are pecuniary in nature. All Ivy League economic models take these assumptions as given but none of them are true. So, if Ivy League Economic Models turn out to be accurate, which they never do, it is by coincidence.
Common Sense Economics makes no such fatal reasoning errors. Common Sense Economics studies society and markets in terms of the true nature existence. So, what is so special about that approach? Happiness and truth turn out to be incompatible. To make life bearable human beings define themselves, institutions and all they encounter with euphemisms. Each person is assumed to be a special creature, independent, freedom seeking and almost divine in nature. Intellect of mankind is treated as so advanced that instinct if any is unimportant. These notions are completely wrong but without them people in mass would be depressed and suicidal.
In reality instinct is with few exceptions is the cause of human behavior. People are not independent. Very few even have original thoughts. The mind records what it hears and sees, then treats that as unique and personal. The freedom one is born with is bartered like an asset for comfort. The positions in life people occupy are highly influenced by genetics and personality characteristics. A small number are born with leadership personality characteristics which are similar to those of a sociopath. Only sociopath types are ruthless enough to rise to the top in politics and business.
Because the very subjects of study are wrongly identified, Ivy League Economists have no chance of being right, unless by luck.
To be right all of the time all one needs is an understanding of basic economic ideas, like those of Adam Smith and the ability and willingness to discard society’s euphemisms long enough to piece together what is going on in the world.
Suddenly we discover that although the United States is defined as a republic, it functions as something entirely different. Common Sense Economics studies politics in terms of the actual political system in operation which does not qualify as a republic. Citizens actually have no representation in congress. Ivy League Economics expects outcomes that a republic would produce and that is not the outcome they get. Common Sense Economics studies what we have, not what we think we have. Humans are assumed to behave with autonomy, but their herding instinct is overwhelming. Elected leaders represent voters only when and if they are forced to. Elected leaders are sociopaths holding office for their own benefit, and usually an insatiable thirst for power.
Put together a mental model that is free of euphemisms, and get it right every time. Ivy League Economics is like the study of alchemy was during the middle ages. The smartest people in the world worked as alchemists. They were highly respected but they had no utility to society

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World’s Greatest Economist

Who is the world’s greatest economist? For just a little while, that would be me, James Quillian of Common Sense Economics. This situation will change as soon as just one smart person grasps some basic ideas and expands on them. It turns out that economics has failed to identify mankind’s most relevant and common transaction. A smart person will grab this principle and expand on it. Then there will be a new world’s greatest economist.
A bargaining process begins at birth. Baby starts trading freedom for comfort and continues doing the same thing until death. Economics assumes the autonomy of each individual. Certainly autonomy is possible for every person but the default mode is to bargain it away. Economic and political policies all assume individuals are freedom lovers. In our nation building endeavors the expectation is always that the natives will take liberty and run with it. There is great surprise when it doesn’t happen that way. People only do what comes natural. They bargain off their freedom time and time again because there are advantages in doing it that way. A better chance of surviving is one of them. A way to deal with the extreme stress of living is another.
So, what does it matter? It guarantees the failure of every macroeconomic model. It alters the nature of entire political systems. People are assumed to behave one way in the economy but their behavior is something else. The results of nation building efforts are confounding. The expectation is that when given liberty people will take freedom and run with it. They immediately begin trading freedom for comfort. Words like democracy and liberty are used to describe systems of self government but citizens expect leaders to act as messiahs. Being free translates into choosing one’s own master.
Self government breaks down because; leaders take office not to serve constituents but to further their own interests. What citizens expect and what they get are two different things. This is all human nature which takes thousands of years to change or improve upon.

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The Language no One Speaks

Other animals seem to communicate with a system of transmitting and receiving mental images. When my wife is out shopping, the dog will go sit by the window and wait, and in about ten minutes she will pull into the driveway. Apparently the dog picks up a mental impression when my wife decides to come home. Many dog owners have noticed their pets seem to have psychic abilities.
It makes sense that animals communicate psychically and there is good reason why people do not. Suppose people picked up mental images from one another. If person A had negative feelings about person B, person B would have an incentive to launch a preemptive attack on person A. It would be a detriment to survival for others to know our thoughts about them.
Most likely, early on in the evolutionary process, as intelligence increased, verbal language evolved and the wordless communication was diminished. Surely some of it has survived but few recognize the thoughts and impressions that it produces. The impressions come in as non specific.
Who has not had the experience of a wave of fear or despondency coming upon them out of nowhere? Where such things come form is treated as a mystery. Perhaps mental pictures do come from other people. It may be more than a coincidence that thoughts and ideas become very synchronized and standardized within given populations.
Perhaps we all broadcast a basic image of who we are and what we are about and that is why some are charismatic and others are perceived as dull and boring. It may be possible then to change the image one projects.

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Something is About to Happen

People really are driven by herding instincts. As long as they are comfortable they will believe anything and cooperate with authority totally. Make them uncomfortable and they won’t believe anything and will stop cooperating.

In herd living there is a particular universal transaction people make throughout their lives. They trade freedom for comfort. The population here is extremely comfortable and a big part of that is that they have bargained away their freedom. When they become uncomfortable all hell is going to break loose.

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Does the End Justify the Means?

Actually it is the means that determines the end. Where the end is expected to justify the means, the end is only a fantasy. Good never comes out of a crime. An immoral means never creates anything good. Where the economy is concerned all that can be done is to create a free market environment. In that case the end will turn out as good as possible.

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Heads Coming out of the Sand

The following is a quote from Zerohedge. Finally there is an emerging awareness that the Federal Reserve makes use of hft to manicure stock prices higher. So, from what authority is this written? There is no authority. It’s just an observation.
“Because while what HFT does is or should be illegal, in performing its daily duties, it actively facilitates and assists the Fed’s underlying purpose: to boost asset prices to ever greater record highs in hopes that some of this paper wealth will eventually trickle down, contrary to five years of evidence that the wealth is merely being concentrated making the wealthiest even richer.”
It took a number of decades for crime to rise above the law by making use of government. Regular asset enhancement initiatives, with respect to equities, began in the spring of 2003.
In summer of 2006 Henry Paulson was appointed as an activist treasury secretary for the purpose of maintaining uptrend’s in both real estate and equity prices. That initiative failed and TARP was passed as an emergency measure. The QE’s have been an extension of efforts that have been underway for years.
Constant asset enhancement initiatives have destroyed the world’s capital markets and the global economy is ready to collapse. Damage is unavoidable and will be devastating to investors and non-investors.
I still don’t have a date for a collapse, but you can count on it. And, of course, I will be the first to say I told you so.

http://curbsidejimmy.com/radio/Hard%20Times%

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The Universal Transaction of Economics

Do you ever wonder why economists are only right on occasion and by accident? As a discipline, economics only acknowledges a handful of laws and principles, and ignores countless natural laws and issues which are even more relevant.
Every human being starts engaging in an ongoing transaction at birth and repeats the behavior constantly until death.
The Universal Law of Economics: All people trade freedom for comfort. This is the main reason why macroeconomic models never generate the kinds of results their creators expect get. The main motivating factor of is not a part of the discipline.

http://curbsidejimmy.com/radio/Hard%20Times%

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Dealing With Russia, The Real Deal

Hopefully, leaders in Washington are not so naïve as to believe American Citizens will support them in their desires to confront Russia. The American public is quiet but not completely stupid. Americans can easily recognize that their own government is a bigger threat to them than Russian military activities.
The U.S. is a republic in name only. All bills passed in congress are for the purpose of rigging one market or another. The government’s quantitative easing initiatives are described as stimulus, but in truth serves as a public assistance program for the rich. Real income of wage earners is dropping big time and fast. In a nutshell, Americans are getting fleeced by the same government that frequently expects to get citizen’s support for military interventions, not all of which are worthwhile.
Why would Americans expect their government to do right by them in dealing with Russia? I hope Washington is not expecting support from citizens with respect to the situation in the Ukraine. They won’t get it.

http://curbsidejimmy.com/radio/Hard%20Times%

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Crime on Wall Street

Almost always it is possible to reduce an economic problem along with a solution down to one sentence. Most people sense that there are negative issues with Wall Street and the rest of the financial sector that are starting to emerge.
Is there anything wrong with the way things are done on Wall Street that might cause economic hardships to the rest of the country? The answer of course is a resounding yes.
In its current form, Wall Street has no utility to society. Derivatives trading produce negative externalities to society. How is that? Derivatives derive their value from the underlying security on which a derivative is based. The percentage change in the price of a derivative is always much greater than the percentage change in price the underlying security. Any problem here? As a matter of fact yes there is a huge problem but not one that is likely to be seen with a casual glance.
Derivatives trading creates an incentive to buy derivatives and then manipulate the price of the underlying security. Unless there is a counterforce to prevent it, people act on any incentive they have. Stop enforcing securities laws and all stock trading becomes focused on manipulating stock prices. This is the exact situation that exists on Wall Street today.
This activity actually is a huge problem for Main Street because it interferes with the necessary process of putting capital to its highest and best use. Any less than efficient allocation of resources over a long period of time will destroy an economy.
Lets define the problem in one sentence and then provide a one sentence solution .
Problem: Manipulating securities prices is causing an inefficient allocation of capital and is causing economic hardships. (Inefficient allocation of resources is actually a major cause of unemployment.)
Solution: Since the existence of derivatives creates an incentive to manipulate securities prices, ban derivatives trading.
Is that simple enough? No, even if banning derivatives is the only solution to saving the world, it won’t happen. The solution is not popular so it will get dismissed and called unrealistic or something.


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