Update on the Possibility of War

Earlier this month, I put out a notice that based on the various cross currents in play, there would be no war. At that time, I saw a better chance the rumblings would be used to draw short sellers into the stock market, to squeeze in order to help generate a huge rally. News would be the Catalyst. I worked out that way. I have made new fantasy free observations and need to make an update.

I am Forecasting no War  from April 10, 2017

Now chances are are that there actually will be war of some kind or some kind of devastating economic development, perhaps both. What has changed?

First understand that I have no meaningful information. You have none either. Congress and the rest of government do not disseminate information to the public. An ignorant population is no threat to those engaged in the power and money grab free for all.

Despite claims to the contrary, government’s most prominent and overriding function is to keep asset prices high and moving higher. The shock of even a normal stock market correction, not to mention a crash would throw the economy into a major tailspin. War may or may not be inevitable but it is very very likely. Strings of economic disappointments and major events are an absolute certainty. Timing on these things is hard. It is like trying to predict the exact date an obese person with a damaged heart is going to die. Exactly when is not knowable.

Certainly an event or a number of events are in the offing for the immediate future. Just because you have no information does not mean there is none. It means it is not desirable to have ordinary people know the ins and outs about what is really going on.

If asset prices are going to fall it is advantageous to the consortium which manipulates markets to have them drop from the highest possible level. After the decline begins no effort will be spared in trying to stabilize  prices and reverse the decline. Look first for central banks to control the rate of decline and then try to make a consolidation the first moment volume moderates. From a consolidation efforts will then be focused on slowly ratcheting prices higher, drawing in shorts to squeeze and finally attempting to rally the market back into an uptrend.

How do I know these things? I don’t know anymore than you do. I do understand the incentive of the folks involved and know what to expect from them.

Keep this in mind. Any stock market decline has the chance of snowballing. There is no guarantee the tools of manipulation will continue to work given a big enough issue. What I am describing is how the manipulators will try to deal with the downturn.

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The United States Economy is Doomed

Long sideways consolidations along with negative stories in the financial media are encouraged in order to draw in short sellers to squeeze in creating the next rally

A great number of poor and middle class have already noticed.  The easiest way to make the most money in the shortest period of time is to use money and power to buy the government. After that just make sure that the policies paid for are those which make keep you rich and make you richer. rich. The most prolific money gusher of all times is that of controlling central bank’s  policies so as to create an endless bull market in asset prices with money created out of thin air.

If you want to look at a bunch of charts and numbers and get a different explanation. find a Harvard trained economist. Any of them will do. Any of them can convince you that I am wrong and a nut case. Their credentials are impressive.  There are a number of reasons I don’t rely on statistics and numbers. The biggest reason is that numbers are useless in the present moment. Understand the incentives that create the numbers and it is easy enough to know what is going on and with more precision. Go to a Harvard trained economist to get bedazzled. Read my articles to find out how the future is most likely to unfold. I am completely fantasy free. Their work is heavily dependent on assumptions that are completely untrue.

How do I know the U.S. economy is doomed? Saving the status quo over and over again guarantees an allocation of resources that gets more and more inefficient with every passing moment. Show me you say. I am sorry, there are no numbers that show human beings acting on incentives they possess. No precise numbers are necessary. No charts are needed. The behavior is what counts.

Any good economic numbers are occurring as a result of rising asset prices. The rich spend a lot of their newly acquired treasure. Take that away and the economy collapses.

Here is the problem with funding an economy by delivering to the powerful a continuous stream of unearned wealth and income. Any positive incentives the rich have with respect to economics are changed. There is no reason to invest in plant and equipment if government is sponsoring an increase in value for everything you own without you having to lift a finger. Corporations become lately.

Central banks have no political incentives to back off of their asset enhancement initiatives. They won’t unless there is a breakdown in civil order and somehow they are force to quit by political will. Traders in the financial markets are still using old dogma which was developed to be used in a free market setting. All these techniques do is generate losses and confound the people who use them.

With central banks in charge of elevating asset prices, using unearned money; any international event, war, threat of war or strange election result is used to draw in short sellers who are subsequently squeezed out of positions to create a surprise rally. There is absolutely nothing in the news currently which will cause a market crash.

If necessary, central banks will buy up enough stock to have controlling interest in the world’s largest corporations. If that plays out, the corporations acquired will become fat, lazy and falter. They will be replaced privately with new emerging corporations which produce and earn. In such a case, economies world wide will take many years to reset. Poverty will increase and goodwill that has not already disappeared from consumer markets will be gone completely.

One thing that will be hard to ignore will be when Gross Domestic Product turns negative and stays that way. That alone will not put an end to Federal Reserve tyranny. What it will do is cause ordinary citizens to override their instinctive propensity to trust government. That is a rare occurrence but given enough stress, individuals can and will opt for individual thought. Herd behavior is the path of least resistance. Given enough pain and stress folks will break away from herding behavior.

Regardless of the exact path followed, the United States economy is being held together by driving asset prices into the stratosphere. The collapse will come when asset prices fall. If there is a way to prevent that from happening, the investor class will do everything under the sun to keep it from happening. Just know that it will collapse.

Central banks are buying stocks with both hands. They won’t stop until they have to. Don’t count on international events to make a difference. Be it war, a change in government somewhere or anything else, central banks will just buy more. Remember, you can only trade with money you have earned. Central banks have unlimited sums, restricted not by God or anyone. They will use that money as they always have to take what little you have and divert to others with political power.

 

 

 

 

 

Central banks are buying stocks with both hands. They won’t stop until they have to. Don’t count on international events to make a difference. Be it war, a change in government somewhere or anything else, central banks will just buy more. Remember, you can only trade with money you have earned. Central banks have unlimited sums, restricted not by God or anyone. They will use that money as they always have to take what little you have and divert to others with political power.

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The Imaginary Incentive to Serve

The world we live in is governed by the laws of dominance and subservience. There is no way to escape the system until our tenure here is complete.

Most people are unwilling to entertain the idea that most of what we do in aggregations of people is instinctive and that we have inborn propensities that are always present. `

Two of the instincts are to exalt our species and exalt ourselves as we interact with others in in the various aggregations we belong to. Because we are so important and special to ourselves, it is normal to expect that others view us in a similar light.

The idea that an elected representative will have our interests at heart and work in our behalf seems perfectly reasonable. Out of that is derived the imaginary incentive to serve. Such an incentive exist nowhere in humanity or in any other species. It doesn’t work that way. Elected representatives see voters as their resource and out of self interest use the office to further their personal agendas.

Everyone in the world seems shocked that governments around the world are ignoring the people they have been elected to serve. I am not surprised in the slightest. I would be totally confounded if it was the other way around. Nature provides only one incentive, self interest. When representatives end up serving corporations and billionaires while actually taking from their constituents that is normal behavior.

Mainstream economists pack the imaginary incentive to serve into their models. That and many other reasons are why their models have no utility to society. Do not expect representation in government unless you force the issue.

Since I don’t engage in fantasy and honor no euphemisms, I can answer questions that no other economist can just by looking out my window.

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Assessing Damage From Federal Reserve Policy

Over the course of its 103 year existence the Federal Reserve has been like a wrecking ball to the wellbeing of the average American. I am not the only economist to say such a thing.  I am the only economist to dispute the notion that the Federal Open Market Committee consists of honest folks who are just misguided in what they are doing. I am calling them dishonest and just getting it out in the open. That gets right to the point and explains why what they do only makes sense to Federal Reserve members and the very few Americans who benefit from their dishonesty.

Using monetary policy to stimulate an economy is like physicists claiming to make a suspended animation machine. Monetary policy is good for increasing and protecting asset values of wealthy Americans.  The problem is not that they are inept. It is that they are dishonest. The Federal Reserve has never done anything other than carry out a political agenda. Pay no mind to testimony, notes from meetings, press releases or testimony before congress. The Federal Reserves only job is elevating asset prices for Americans rich enough to dictate policy to the politicians they support. To save the country, the economy needs to reset. The Federal Reserve prevents that from happening.

Here is the damage, Surely there is more but this is what comes to mind right off the cuff.

Rich people, especially corporate insiders are now lazy. Riding stocks to new highs independently of earnings sure beats innovating and working.  As part of the political asset enhancement initiative, using the wink and nod system, the Federal Reserve lets corporations know, that if they buy back their own stock, their backs are covered. This boosts stock prices. The wealthy truly do benefit financially from the Fed’s asset enhancement initiative. Any good economic numbers come from the spending of the country’s financially elite. Now the health of the economy depends on the level of the stock market. When it crashes, it will take the economy down with it.

Loose money keeps profits high and real wages low. The poor have grown in number. The buying power of the lower middle class on down has been severely reduced. Since loose money is so effective in elevating stock prices, corporate insiders get paid a lot more and a lot faster just by riding the price of their stock into the stratosphere. There is no incentive to invest in plant and equipment or try new ideas so job opportunities disappear.

Retired people with savings have been devastated. They are earning just a fraction on their savings compared to what they would receive in a free market setting.

Pensions by most will not be received in their entirety. Some will lose everything they have saved for retirement.

Most importantly, the economy has been destroyed. Market forces are invisible but they are always working. Government intervention always has the result of markets never clearing. There is a system of out with the old and in with the new that is prevented from working. The longer a stimulus plan is in effect, the more inefficiently resources are allocated. Eventually the economy is so inefficient that GDP actually turns negative. Any genuine control the Federal Reserve has over interest rates is lost. Governments of all sizes face huge interest costs as rates start to be determined by the diminishing probability that loans will be repaid.

Appearances are that Central banks plan to continue supporting stock prices. Theoretically they can continue this practice forever. Central banks do not have to earn money in order to invest. All they have to do is buy buy buy. Central banks could actually buy up a controlling interest of all of the world’s largest corporations. No taxes need be levied and no income needs to be earned. As GDP turns negative, that probably won’t happen. Civil order will probably break down and public sentiment is bound to turn against them.

These are just a few of the negative consequences the country faces due to Federal Reserve policy. There will be others that I haven’t even thought of yet. War is almost guaranteed. Only free markets prevent warfare. Free markets are gone so war is largely a given.

It is time an economist stepped up and spoke the truth about Federal Reserve policy. There has never been a chance that the overall economy would benefit. The Federal Open Market Committee member know this. They are liars and thieves. They are carrying out a political agenda. Federal Reserve policy has nothing to do with economics.

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Where Fantasy Free Begins

Mainstream economists are studying the behavior of a species that doesn’t exist. How is that?

I understand that most behavior, including what applies to economics is instinctive. Part of human instinctive behavior is to exalt the species and exalt one’s self also.

Mainstream economists opt in favor of the typical definition of human beings as having intrinsic value and being just a step away from being divine. Ideas that could diminish the exalted version of humanity are off limits. Individual persons are assumed to be angelical in nature until they are convicted of a crime or something,

Certain individuals get to wear halos.

Being fantasy free I observe how mankind functions in nature. Just by observing collective behavior, I don’t see anything that would indicate that mankind is anything other than another animal trying to survive and procreate in a universe that is governed by a system of dominance and subservience. Every human behavior I observe has a parallel in the behaviors of lower animals. So I am studying how an animal survives based simply on what I see.

This doesn’t mean there is nothing special or spiritual about human beings. Observation shows that there is no evidence, based on behavior, that would indicate that mankind is anything but an animal. For purpose of analysis, I study what I see and don’t arbitrarily assign lofty attributes to the species that can’t be observed or verified. I am sorry that human beings behave like animals when it comes to economics. That is the way it is, so it doesn’t help to pretend it is otherwise.

Mainstream economists focus on what they would like for human beings to be like rather than focusing on the behavior they really exhibit.

Guess what? Mainstream economists are almost never right about anything. I am almost never wrong. It has to be that way because the others are actually studying an entity that doesn’t even exist outside of their imaginations.

I will write more about the foundation of Fantasy Free Economics but I am keeping this short. Why? I understand human nature and folks just don’t read long blog articles.

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We Need To Get Rid of Donald Trump

We had poor choices in the last presidential election. I picked Donald Trump only as an alternative to Hillary Clinton who had already shown her dark side. That probably was not a mistake.

Donald Trump has turned out to be a very bad president. Governments do not create jobs. Donald Trump cannot create a job. He says he will create jobs. That is fine for mindless campaign rhetoric. He is still saying it. He is collecting worshipers faster than a an army of homeless folks can pick up empty aluminum cans. He is not only collecting worshipers for himself. He is collecting them for his family.  It is very dangerous when citizens worship a leader. When a man can make others feel like they need his approval, that is extremely dangerous.

Protectionist economic policies have the capability of making a leader look good for a maximum of eighteen months. After that havoc is reeked upon the overall population. Make America Great Again is something that sounds good but there is no specific point in history he is referring to. It is just garbage rhetoric. His tax and spending plans are gifts to the rich just like all stimulus ideas.

There is no plan to introduce free market forces into the healthcare market. All he has done is try to push through another insurance bill. One insurance bill is about as bad as another. All of them destroy the incentives of doctors to actually treat patients.  What they do is guarantee the insurance industry and some others a piece of every dollar spent on healthcare.

I really don’t think he understands economics. He does know how to make a profit for himself. That is what is learned in business administration school.

Government policy, for years, has provided an asset enhancement initiative by way of the Federal Reserve to bolster the wealth and income of the richest Americans. Trump is o.k. with business as usual with our Federal Reserve Bank, foreign central banks, Wall Street and the international banks.

The only real expectation I had of Trump is that he might break up the status quo which is fleecing ordinary Americans. He has made peace with the elites and is now assisting in keeping the whole mess sowed together.

Trump worshipers are suckers. Suckers are what every president needs. Government is for taking not for giving. Trump is very good at taking. I can’t even imagine all that he will walk away with after serving as president of the United States. Folks need his approval and they worship him and he will take from them all that he can. Some Americans, working Americans, have nothing left to take.

Once the possibility of breaking up the fascist economy is taken off the table, Trump becomes a hazard. Just for the record, from now on I will be doing everything I can to get him out of office.

I still don’t care who he called fat or anything else. He has turned bad where it counts.

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I am Forecasting no War

Who starts wars? Wars start when industrialists disagree. With nothing to gain by war, industrialists will sue for  for peace. Billionaires work the international market. The war in Syria is being fought  over economic issues just as are all wars.  The war in Syria mostly relates to petroleum and pipeline issues. The non-petroleum industrialists have nothing to gain from a world war. Probably the industrialists on both sides which are behind the various countries war efforts would rather lose their initiative in Syria than lose even more in the event of an all out world war.

Americans mostly believe that even though they have no representation in congress, our government is controlled from within the United States. In the light of reality, that is not true. The moneyed interest which control the government in the U.S. also control the Russian government. They are highly influential in China also. These folks are not going to let the world’s militaries destroy their markets.

The biggest cash cow the billionaire class has are the asset enhancement initiatives being carried out by our Federal Reserve and the rest of the world’s central banks. The money made by virtue of having government drive up their investments is so great, the rich are even losing the incentive to innovate. Who really needs to do anything if government is going to pay you for just being rich?

A crisis or a potential crisis causes traders who unwittingly think they are participating in an actual market to take bearish positions in the stock market. Short positions are initiated in anticipation of a decline as the crisis worsens. Short sellers must buy back the shares they have sold without owning them at some point. They cover very quickly when the market goes against them. They become the fuel that launches the market into recovery.

Most likely the almost at war crises will be converted into an attempt to launch the stock averages to new highs. Watch for a sudden resolution to the issues in Syria and for that to be accompanied by some of the most wonderful news possible.  The chances are all of this will be used as an opportunity to create huge gains for the financially elite who are the only group your government actually serves.

 

 

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Stock Market in a Crisis

This is what to expect in any crisis this week or for that matter during any week while central banks are tampering with the financial markets. There is no market. Regardless, investors and traders from amateurs to seasoned professionals are still buying and selling as if this was a normal market. The same trading tools that were developed for use in a free markets are still being used as a basis for making trades. So, if a crisis situation develops, short positions are taken and all kinds of bearish bets are made.

Most of the volume in the market still takes place in trades which last from a few seconds to perhaps one minute. Very few long term positions are bought and sold. The long term positions are what actually determine the direction of the market. Without much of this kind of volume, manipulating sucker traders is a piece of cake.

So, here comes a crisis. Traders everywhere reason, “This is it.” They short in the morning. It looks like they are right. Central banks buy to slow the decline. The market stabilizes. Friends of the Fed who are part of the wink and nod system buy derivatives and the squeeze the averages back into the green by the end of the trading day.

Does this sound like a broken record? Of course it does but it still works. It doesn’t work as well as it used to. One of these days it will stop working but that time is probably not here. The most dangerous time to short a stock is at one of these crisis moments.

I don’t know how the new military tensions are going to be regarded by the financial marketx. But if there is a sell off what I just described is likely to play out.

Before long corporate earnings will start dropping as well as GDP numbers. It looks like the bottom will fall out from under the U.S. economy before the stock market collapses. I have been basically in cash since 2013. I have been trading and investing since 1968. I know better than to trade in a rigged market.

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The Video Game of War

Only individual citizens banding together can keep a country from going to war. Sometimes that happens but only when there is a personal cost attached to war. When a country can keep its citizens comfortable and occupied, a world leader can do just about anything he pleases. The happiest world leader is the one with the most docile citizens. The world leaders the United States contributes to the national stage are number one in happiness. Let the folks suffer a little and all of that changes. Worse still for the leaders is when citizens start to grasp the cause of their suffering.

As it is, the United States has opted for an all voluntary military which is a kind word for mercenary. The troops can be used to fight wars to further the business goals of American corporations. There is no point in the average Joe thinking about that or even throwing up an objection. There is plenty of virtue signaling with words and actions about supporting the troops, yea for the heroes and all of that.  To an American citizen, war is like a video game. The United States always wins.

In the meantime, all of the countries in the world are planning contingencies for war with the United States. Even NATO allies may not be willing to lend support to support American political agendas. Some may even switch sides. China and Russia, not necessarily working together certainly each have a plan for attacking the United States. What do we know about these plans? Who is to say? Regardless, we don’t know as much as we think we do and we might be completely in the dark.

Any knowledge we have comes from our intelligence agencies which currently give the impression of being self serving and lazy. Free markets have disappeared across the globe. Economics by force has replace the free market system. Remove the only economic system that makes peace possible and what do you wind up with?

For for decades United States economic policy has been fleecing ordinary citizens. By using government as a tool corporations have finally destroyed their main market. A serious reckoning is starting and face saving strategies are being implementing. A timely war is always a great way to divert attention away from a critical issue.

A major war gets everyone off the hook.

 

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How to End Wars

Prior to the advent of the free market concept, there was no peace in the world. When the adoption of free market principles expands the level of world peace increases. When free market principles are replaced by other systems of resource allocation world peace decreases.

In a free market system all trade is voluntary. Every other economic system relies on force of some kind.  In command style economies political power is used to extract resources from one and give to another.

Where entire nations are concerned, a country can use free market principles within its own borders but use economics by force where trade with other countries is concerned. Free markets between nations amount to free trade. By free trade, I mean no restrictions at all on on goods and services entering and leaving the country. Any other system of managing trade results in small wars breaking out eventually a large war. The United States makes trade agreements that are claimed to promote free trade, but they are actually always something else.

So, does the United States want peace or war? It doesn’t matter what the preferences, is since belief in free market ideology is waning, there will war and plenty of it. There are at least two best practices that must be followed by any country which claims to be an agent of peace.

Foreign policy must be based on principles of morality. All but a few wars are war for profit.

Free trade must be initiated unilaterally. In the U.S. there should be no restrictions on foreign good leaving and entering the country, provided they are legal. Where free trade is concerned there are winners and loser but net prosperity is always at an optimum and the possibility of war is always at a minimum.

Basically, if the United States genuinely wants peace, the best thing to do is move back to the free market ideology.  National defense begins by using the economic system that is the only source of peace mankind has ever known

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