EconomicsJunkie

From a Cato panel:

In a Thursday panel at Cato on conservatism and war, U.S. Reps. Dana Rohrabacher (R-Calif.) Tom McClintock (R-Calif.) and John Duncan (R-Tenn.) revealed that the vast majority of GOP members of Congress now think it was wrong for the U.S. to invade Iraq in 2003.

The discussion was moderated by Grover Norquist, who asked the congressmen how many of their colleagues now think the war was a mistake.

Rohrabacher:

“I will say that the decision to go in, in retrospect, almost all of us think that was a horrible mistake. …Now that we know that it cost a trillion dollars, and all of these years, and all of these lives, and all of this blood… all I can say is everyone I know thinks it was a mistake to go in now.”

McClintock:

“I think everyone [in Congress] would agree that Iraq was a mistake.”

Watch the clip:

… and see, because they were so abysmally wrong and foolish, it is very important for you to listen to everything they have to say now about Afghanistan. THAT war was stupid, THIS war is good. :)

Haha, Republocrats are such an adorable and funny little bunch …

New data is in for the final weeks of February 2010:

The annual rate of decline is now at 6.7%

I just wanted to post the moving and instructive 11 part series about Gordon Kahl, a tax protester and victim of pure evil and corruption. I wanted to write a brief indroduction about how people don’t want to see the violence of the state they live under and how maybe something like this story will at least give them a little bit of a different perspective on things. But that brief introduction took on a life of its own and is now a solitary post about childhood scar tissues. Who’da thunk? :)

Anyway, here’s the documentary:

People’s perception of government and religion is quite an interesting phenomenon.

Not so much with the younger generation (and by young I mean the young at heart, meaning those who are curious, open-minded, self-searching, truth-seeking, and still capable of rational thinking), but definitely with those whose minds have stopped accepting new or alien ideas and whose only aim it is to jam every concept and observation into their immutable and eternal mental box.

The scar tissue of an abusive childhood remains so long as one does not confront it openly and honestly. All of us have been subject to moral corruption at one point or another in our childhood. Bullying parents, teachers, and priests are those who lay the groundwork and fertilize the soil for obedient and irrational adults in the future.

To most of us, the fact that those who preached to us when we were young were morally corrupt individuals of the first order, is probably one of the scariest and most challenging things to admit. The more emotionally offended and upset one gets when confronted with such ideas, the more likely it is that he is suffering from this scar tissue. But from this unfortunately follows that those who have been most brutally corrupted, are actually least likely to confront their past!

This is why, when people exalt the imaginary concepts of the state and of God, all they really seek is justification for the irrationality and mental or even physical abuses experienced in their childhoods.

For if the state’s brutal depredations of mass murder and mass-theft are justified, then surely the moments when your mommy snapped and hit her completely powerless little one, or when daddy took your favorite toys away from you, were all comparatively minor and necessary means to getting you back in line … right?

If the faith in an all-knowing yet all-powerful, non-material yet conscious, living yet never born or ceasing, murderous yet virtuous, and thus completely contradictory and unproven entity is rational, moral and beyond questioning, then surely the moments when your parents told you to “Shut up!”, “You do what I say, not what you think is right!”, “Don’t ask!”, “Don’t think!”, and the like, were just consistent applications of the superiority of faith over logic and empirical evidence … right?

There is no better way to break a the development of a curious and reasoning spirit!

Thus, when you outline to such scarred people the rather simple truths as to what it is that people who call themselves “The State” actually do day in day out, that they obtain their resources from people by shooting them if they resist the collection thereof, you will always confront immediate denial and aggressive rejection and complete ridicule of the idea. This is as sure as night follows day.

When you press people who suffer from religiousness on very simple logical and empirical inconsistencies and shortcomings about their belief in God and other superstitions, you can expect very similar reactions.

(To be sure: I am not saying this to offend people. Quite the opposite! I fully appreciate and understand that it is asking a lot of somebody to give up concepts that have served as the foundation of one’s entire world view. In fact, I am not sure there is a harder thing one could ask of somebody!!)

But it is impossible to evade simple truths. People will bombard you with everything conceivable to try and bend reality and justify the unjustifiable, reason out the unreasonable. They will come up with ten different tangents, all with the objective to get off the topic at hand as quickly as possible.

Why is that? Because they are in their subconscious not talking about “The State”, or “God”. They are talking about their childhood, their family and other authority figures who have molded and whipped their minds into obedience and conformity.

To them, it is not about discovering the truth. Their entire quest for supposed understanding, philosophical thoughts, and political positions are centered around the justification of the injustice and the reasoning for the un-reason that they suffered in their upbringing and their education.

Keep this in mind when talking to pretty much the majority of people around you. They will never be open to dealing with serious questions in a logical and consistent manner until they have dealt with and found closure about the injustice and irrationality that have dominated their own upbringings.

This is the Communist Maifesto’s 10 point program (from Wikipedia), I marked in green all those points that the US federal and state governments can proudly check off on:

1. Abolition of property in land and of all rents of land to public purposes.

2. A heavy progressive or graduated income tax. [x] DONE!

3. Abolition of all right of inheritance.

4. Confiscation of the property of all emigrants and rebels. [x] DONE!

5. Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly. [x] DONE!

6. Centralisation of the means of communication and transport in the hands of the State. [x] DONE!

7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of wastelands, and the improvement of the soil generally in accordance with a common plan.

8. Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.

9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equitable distribution of the population over the country.

10. Free education for all children in public schools. Abolition of children’s factory labour in its present form. Combination of education with industrial production. [x] DONE!

Good job comrades, 5 points done, only 5 more to go!

I want to follow up on something Marc Faber said the other day in the second clip.

He said that it is true that private credit is contracting, but it is being offset by a government credit expansion.

Let’s examine this suggestion a little more closely.

I regularly publish the total contraction of total private loans and credit:

This is, however, only a subset of the total credit picture. What is missing are things like corporate and government bonds, and probably some other non financial obligations.

The most comprehensive data on the total of pretty much ALL credit issued in the US is really the Federal Reserve’s Flow of Funds Report, in particular the subsection “Level tables”.

The current flow of funds report can always be accessed here and for March 11, the latest release shows us the following:

Based on these numbers we can see that total credit, when measured across all sectors, has indeed been declining throughout 2009, by roughly $466 billion, in spite of a massive ramp up in public debt.

This simply shows us the magnitude of the deflationary forces in action.

I would also add to this that we could easily double the total credit outstanding above if we included the federal government’s Medicare and Social Security obligations which nominally amount up to $43 trillion and will never be fully paid back. There is no official number to track for this since these obligations are not reported on any balance sheet and are not traded on any markets. Thus we can only assume that their present value is declining by at least the current rate of decline in the remaining credit volume (about 0.8% through 2009).

This would bring the total contraction in credit up to around $810 billion through 2009.

I’m also not sure to what extent other municipal and state pensions are covered in the flow of funds number, but I rather doubt they are included at all. A lot of those lavish union pension plans are going to have to cut back on their commitments soon, probably the next big events to shake the markets, along with commercial real estate defaults and property values declining.

And last but not least, it is rather unlikely that the current numbers are all marked to market. Government regulations across the board have ensured that banks and corporations can be rather creative in their reporting.

Either way, all this is a rather strong indication that Marc Faber’s assertion may not me correct.

Once in a while you can observe a few minutes where people on mainstream news speak the truth. I treasure these moments …

Part 1: Mish & Faber discuss market outlook and see value in Japan

Part 2: Mish & Faber on Inflation or Deflation

In case you care about my humble views in next to these two brilliant titans, read my Inflation & Deflation Revisited.

Part 3: Mish and Faber agree “It’s too late to fix things”

True GDP Q4 2009

True GDP in Q4 2009 has fallen to $10,655 million gold ounces, a 15.2% drop from the previous quarter.

True Consumption as Percentage of GDP

The true consumption ratio will need to come down significantly before a true alignment of resources in the production structure toward a recovery will be possible.

A close up to the years 2000 through now:

Government stimulus and bailout programs since the beginning of 2008 have fundamentally accomplished one thing: The ratio of the production of consumer goods versus factors of production has been bumped up for a little while.

Road to Recovery?

Contrary what the government says, they have not lead us onto a “path to recovery”. In fact, they have done the exact opposite! They have used all means at their disposal and all the force and dedication in the world to pull us away from this path.

This is the outcome of all the corporate bailouts, the cash for clunkers program, the 10,000 tax credit for homebuyers and what have you. Instead of abstaining from producing overproduced consumer goods and re-aligning toward capital goods, businesses have thus continued to produce excess trash and continued to engage in overly risky activities.

The payback for supporting this nonsense will be a double dip recession, Uncle Sam sends his regards.

The true money supply has dropped by $72 billion from $2,253 billion in January to $2,181 billion in February 2010.

The annual growth rate has again leveled off to now 5.5%.