We would like to welcome William White to A Patriots Manifest. We should have an autobiography soon. I am sure that you will find his articles compelling and some controversial. The views expressed by william as his and his alone and may not be the views expressed by A Patriots Manifest. Thank you .... Michael Roller...
Hyperinflation and Bullion So far the estimates of total planned and completed bailouts I have seen run just under 2T. Since money supply data (M1) is no longer published I cannot give you an exact idea of how much inflation will result from the bailouts but something like a 2/3 increase in price levels over the next 18 months should be in the ballpark. This has people mad at Wall Street when they should be mad at Pennsylvania Avenue. A few simple points:
Bird-brained Candidates and Wind power T. Boone Pickens is a very smart man who knows the energy industry very well indeed and the antics of PETA and ALF no better than any other intelligent layman and he certainly knows less about politics than the presidential candidates who endorsed his plan. Wind power comes in four broad flavors:
The Coming American Brezhnev Era; Seeking Stagnation Ideally the Dems and Reps would prefer a nice placid economic and foreign policy situation where the winners could boink their opposite sex or in some cases same sex staff and admirers while the bureaucracy runs everything. Domestically this requires a few things to be true:
A competent bureaucracy. This criterion is good enough to work and slightly better than necessary. When incompetence is discovered it is rooted out rapidly while everyone denies it ever existed.
The Coming American Brezhnev Era; The Book Cooking The accounting and legal gimmicks that have accumulated since Carter was sworn in are many and a few of them include:
The Coming American Brezhnev Era; Voting Manipulation Politicians everywhere face similar problems. You get to the top in order to get more nookie and thus more offspring because females of every species want children by high status males. Nice simple situation for a primitive tribe with three problems: warlike neighbors, backstabbing subordinates and the occasional leader with more charisma than brains/sanity.
The Coming American Brezhnev Era; The Bailouts The recent Freddie Mac and Fannie Mae bail outs are part of a long list of bail outs and nationalizations going back to at least Nixon’s founding of Amtrak and quite possibly much further than that. This type of crap is a result of the Progressive movement of Cleveland, Teddy Roosevelt and Wilson acting on the proposition that innovation boom and bust is the same as financial boom and bust.
William White's Autobiography I have led a happily boring life. I have been writing since age 8. My goal is and has been to do fiction but there is more interest in my non-fiction. I have been investing well enough to support my writing habit for the past 15 years without my wife sticking me in a 12 step program. (For my fellow addicts the fees on Direct Stock Purchase [DSP] plans go up and down with the Dow. .......
Non-Technical Preparation At 13T GDP and a 3% average growth rate total US capital is around 433 trillion current dollars and about 75% of it is some form of debt. For tax reasons a lot of that debt doesn’t get recorded as debt but rather is listed as lease payments: the car; contract payments: cable bills; and a long list of less common dodges. So how much debt has to be tanked in order to get down to get down to the normal average of 50% or less leverage? $217 trillion worth. That’s going to send a whole bunch of people into catatonic shock and that in turn will disrupt a lot of services not to mention the entitled rioting and raising hell.
Revolution Why will a great depression lead to revolution rather than foreign war? I hold to the position that the diffusion of technology worldwide has changed the economic landscape so much that the old systems leading to a New World Order no longer work. Toynbee and Spenglar among others showed that this was the path the world was on up until 1918 and possibly as late as 1960 when the diffusion of transistor radios caused an irreversible decline in colonial empires.
Timing is Critical There is a technical term for being right too soon that term is “Wrong!”. Like missing a question on a multiple guess test and thus having the right answers for questions 25-100 listed on the answer sheet in the spaces for questions 24-99 being right too soon causes compounding problems. So here some timing cues:
Economic Ammo In a thread on another forum dealing with inflation it became clear that the simple explanations from the 70s of why inflation doesn’t work had been forgotten. So here are some reminders for when you run into someone who believes in the Philip’s curve: that jacking up prices so everybody needs a second job is a good idea.
October Surprise I was replying to one of Mike’s 9/11 posts on a forum and it occurred to me that there is an interesting unexplored implication.
Where Are We? Currently the US is an imperial nation but pretty much everyone is operating on the assumption that we are transitioning to something else. So here are the possible outcomes:
Too Simple While writing I looked around to see what was not available when I was born in 1952 and the list does seem small: computer and peripherals; calculator; screw in fluorescent bulbs; CDs and player; a wireless phone; and a remote for my stereo. In other words I have more computing power than the entire world I was born in. I have more access to better information as well. Since I am not real heavy into computers I did some double-checking in addition to bits of memory/$ increasing at 41%/year there appears to be a 5% /$/year improvement in the software that runs the hardware. In real money, say 1990 dollars, hardware and software has been dropping like a rock all of my lifetime. This has driven quality improvements in other products.
The Praetorian Guard Must be Paid As everyone from Washington to Mao Zedong and all frank politicians at points in between have been saying for years: Government is ultimately based on force. But if a government doesn’t want to be replaced the survival of the politicians running it depends on using force lightly and wisely. The failure points are:
Voluntary Buy Outs While Social Security is the main income program there are tons of them and solutions from on high are not going to work. They will not work because there are too many hidden assumptions that are just plain wrong. Rather than go into the details of all the different plans for saving social security let’s just assume that a conversion to the British/Chilean system is worked out: the same amount of money is taken out each pay-packet but the individual invests it themselves. For small economies and especially over short periods of time this works out very well. In the US about 1-2 trillion dollars would go into the investment markets annually for roughly 43-86+ trillion dollars carrying capacity. That’s based on a 45 year working life and 3% gdp growth rate. Besides obvious questions of timing: are the accounts credited monthly, quarterly or some other way that can make hedge fund investors very rich, very fast at very low risk there are other problems besides what to do with enough money to terraform Mars and Venus thus creating wealth literally beyond imagination.
The Inscrutable meets the Unknowable In 2010 Roth conversion year rolls around. The beneficiary of a Roth IRA, 401-k or 403-b will pay no taxes under current law. What does this mean politically? That’s currently unknowable. The reason it is unknowable is one you, my readers, are acquainted with. Capital flight from the future taxing of retirement accounts has been a thriving industry on the web for years: “Buy Costa Rican Real Estate”; “Off Shore Banking” and “Protect Your Capital with ETFs”
Math and Welfare The money for welfare, or if you want to get technical income maintenance programs, is taken by force and extortion, its disbursement is Byzantine and the ROI on reserves lousy. How bad is it? Taxes in excess of 100% have been reported for both France and Sweden; the UK and the Netherlands are blanketed by security cams and (not a joke) microphones; and police and tax evasion is so pervasive that France, Italy, Spain, Bulgaria and Romania are used as tax havens. (The tax schedules for those last five countries read like they were devised by an occupying army but no one pays those taxes.)
Unasked Questions Economics and political science tend to neglect these simple points because they have been solved twice: once based on individual selection during the enlightenment and then again based on group selection after Darwin. So here’s one aspect of our ignorance:
The Praetorian Guard Must be Paid As everyone from Washington to Mao Zedong and all frank politicians at points in between have been saying for years: Government is ultimately based on force. But if a government doesn’t want to be replaced the survival of the politicians running it depends on using force lightly and wisely. The failure points are:
Politics is the Art of the Possible That is trite because it is true. But it begs several questions. In simplest form policies have to be legally, politically, economically and technically possible. Take modern police work, I would argue that police in the form of Bobby Peel’s coppers are quickly becoming technologically obsolete.
The Product Life Cycle Up until the 1920s politicians were certain that they could predict the economic future forever. Economic policies based on these assumptions are a major part of why the Republicans are discredited and the Democrats will be under an Obama administration. And if close attention is not paid to the cause of these failures a constitutionalist /libertarian regime will also be discredited.
Product Life Cycle II Engines of innovation such as computers provide new services and products while reducing the costs of old services and products.
Telling the hits from the **its is a fool’s game. Japan ended up in the tank for nearly a decade trying to do this.
Let’s get Stupid About College loans The housing bust is well underway, a stock market bust is probably on its way. But what about the exit strategy of education and retraining? Can it go bust? Yes it will go bust. The Public Service Ads about how much more money you will make if you get a degree leave out a hell of a lot of relevant information such as what type of degree are you getting?