It is said that death and taxation are the only certainties in life.
Expanding on that list, however, we also know there are "physical laws" derived from extensive observations, in some cases dating back to antiquity. For example, sticking fingers in fires will result in unpleasantness.
Then there is the realm of what one might call "common knowledge." For example, the historical record makes it appear certain that, universally, power corrupts the human mind, and the greater the power, the greater the corruption.
For a relevant example, look no further than Kim Jong-Il, who at an early age evidenced what psychologists term the "big six" personality disorders commonly shared by dictators: sadistic, paranoid, anti-social, narcissistic, with schizoid and schizotypal thrown in for good measure.
Without the power devolved to him by his equally degraded father, Kim Jong-Il would have been hard pressed to get a date anywhere else in the world. As supreme leader, on the other hand, he was unhesitant in pressing into service a "Mansions Special Volunteer Corps" – a harem of attractive women plucked out of the population to attend to his every prurient whim.
Tangling things up in this area of common knowledge is that we humans are quite adroit at adopting unproven ideas as certainties, even though they may be anything but. While the list of entries in this particular ledger are almost infinite, as just one example, I would point to the absolute certainty with which so many people view the notion that humans are the biggest culprits in climate change (previously referred to as "weather").
Another of these false certainties is that a government can create currency units out of thin air in unlimited amounts without triggering a subsequent devaluation of the currency units already in circulation. Furthermore, these days it is taken almost as common knowledge by a large swath of the population (at least by those who pay any attention at all to such things) that flooding a country with unbacked money is a good thing.
Not to go on, as I am wont to do, but I would also mention the misconception by many that the United States, the most powerful country in the world (see reference to Kim Jong-Il above), remains the Land of the Free and the Home of the Brave.
While one might subscribe to a different definition of the words "Free" and "Brave," from where I sit, the United States is increasingly looking like a large Club Fed populated by a people whose re-education as serfs laboring on behalf of the state is almost complete.
Recently, support for that contention was provided when Phil Mickelson pointed out that his taxes had reached 63% of his annual income and that, as a result, he was contemplating moving to a lower-tax state than California. For daring to want to keep more of his earnings than the state, which sinks not a single putt for its share, he was soundly pilloried in the press.
Sadly, rather than telling his many critics to bugger off, he issued a series of apologies for speaking out against his tax-slave status.
But the hour is growing late, and so enough of this rambling on.
Moving along, I thought it worth trying to divine something approaching certainty about a few of the key aspects of today's world that have the very real potential to affect us all in ways most profound.
In no particular order, here are just a few important aspects of today's world that appear to be true to me.
The biggest consequence of this sloppy Forever War is that the helpless (and some would chirp, hapless) Western governments and the military-industrial complex that props them up are at liberty to improvise countermeasures and strategies without any real limitations.
Thus, every new attack, or perceived new threat, results in a new set of actions pretty much made up on the spot to punish the perps and counter the next attack. To name one relatively tame example, the act of a single Jihadist fitting a bomb in his sneakers resulted in the loss of countless of hours, and more than a little dignity, when the bureaucrats instituted a requirement that John Q. Sheeple must remove his shoes in order to board a plane.
In addition, because these governments have no idea where the next attack is likely to occur or what form it will take, the perfect-worlder bureaucrats increasingly in charge of Western governments have begun to exercise the precautionary principle to the point of dangerous absurdity.
In the event you are not familiar with the term, the precautionary principle basically holds that if there is a threat to the public, even though it is not proven, the burden of proof that it is not a threat falls to those claiming that it is not a threat.
Thus, for example, if the military states that it sees a threat emanating from, say, Iraq and certain analysts disagree, the burden of proof falls upon the dissenting analysts. Because as often as not the perceived threats are little more than abstractions that are virtually unprovable, the threat-seers invariably win out, and off go the jets.
Hoping to make the point clear, one might counter the gun waving of today's military by theorizing that the most effective way of eliminating the Jihadist threat would be to pull all the troops out of the Middle East and to stop the constant meddling in the affairs of those countries. As this thesis is unprovable without actually taking the measure in order to gauge its effectiveness, the military-industrial complex and the headline-grabbing politicians and their bureaucratic stooges are free to dismiss it out of hand and continue to layer on the countermeasures they believe will head off the threats of further attacks.
Unfortunately, many of those countermeasures are not just inane and ineffective, but require stomping on personal liberties. But, for the reasons just mentioned, there is no effective argument against them.
"Why do you want me to go through an X-Ray machine in order to travel?" you might ask a TSA agent.
"Because we're at war with the terrorists, and it's our job to keep the public safe!"
"But I'm not a terrorist!"
"Oh, yeah? Prove it. Starting by stepping into the X-Ray machine."
Likewise, arguments against building electronic files on everyone, including all their communications and Facebook contacts, fall on the deaf ears of bureaucrats who are charged with heading off the next attack.
And because of the nature of the crusade, in the absence of a radical change of direction, the hit to personal freedoms will only get worse. Because this "war" is never-ending and has no hard targets of any consequence, which means that the tentacles of the government's countermeasures will grow until they reach into every corner of our lives.
The real consequences, however, will be felt only after the next large-scale attack. After that, the ardent advocates of the precautionary principle will kick their machinations into high gear, and you won't be able to sneeze without first getting permission.
(Somewhat related is the idea that schools should be turned into day-visit penitentiaries complete with metal detectors, bullet-proof glass, and armed guards, further inculcating the culture of paranoia and fear that now exists in the US. Managing by exception, a key tenet of the precautionary principle – and attacks on schools are very much the exception – is never a good idea. But that won't stop the US from turning its schools into mini-Camp Feds.)
Any way of ending the crusades and turning this terrible trend back?
Not that I can see. Well, I suppose the better-armed Western governments could really take off the gloves, turn the Middle East into the proverbial parking lot, then round up anyone within their borders unwilling to denounce Islam and throw them into
gas chambersre-education camps. But that's not going to happen (and, lest you get the wrong idea, I am not advocating it in the slightest), which means that there is no way to end the Crusade.
Instead, all you can really do is recognize it for what it is and, more importantly, recognize the direct consequences to you and your family in the months and years just ahead. Personally, I opted out from a seat within ground zero and, along with Doug Casey, plan on watching events unfold on CNN while sipping on a nice Malbec here in Cafayate.
(Speaking of which, the next Harvest Event and Casey Research conference at La Estancia de Cafayate is coming up March 14-19. This is the single best opportunity to find out for yourself what's going on in this up-and-coming wine-growing town. For details and a registration form, write Dave Norden a note at dnorden@LaEst.com today.)
So, what else do we know now?
The U.S. Consumer Financial Protection Bureau is weighing whether it should take on a role in helping Americans manage the $19.4 trillion they have put into retirement savings, a move that would be the agency's first foray into consumer investments.Here's the link...
"That's one of the things we've been exploring and are interested in in terms of whether and what authority we have," bureau director Richard Cordray said in an interview. He didn't provide additional details.
By Bud Conrad
Expectations were for GDP growth of about 1.6%, but a negative growth of minus 0.1% was a surprise.
(Click on image to enlarge)
Is a negative print indicating a possible recession ahead? Stocks were down in the US, but only by 44 points on the Dow, so the surprise was not so big a worry to the market. What's going on?
I'm reminded of the saying, "There are lies, damned lies, and (government) statistics."
This is the advance estimate of GDP, which will be revised two more times before it becomes official. It relies mostly on the first two months of the quarter and will change when December data is added. So the small negative is not really a meaningful number yet, as it will be revised.
The cause of the drop was that national defense spending fell a whopping 22% in the quarter. When filtered through the various other effects on the economy, that made the real GDP 1.3% weaker than it would have been if defense were unchanged.
I don't think military spending gives us societal benefits, so I question if it should even be in GDP, but it is, and in the past it has made the economy look stronger, especially during its growth under Bush. There is also a tendency for military spending to grow in the third quarter, as that is the last quarter of the government's calendar. The story is that once money is allocated, you have to spend it before you lose it. So a drop in relative spending in the fourth quarter is not uncommon.
It was probably made worse by plans to implement the sequester at the beginning of the year (now delayed).
There will be a new budget battle coming up over whether to go ahead with the sequester (cut) of defense spending in the next few months. There may be an argument that we can't afford cuts when the economy is weak. I have my own bias that the government is too big and that, when you include the social programs that induce household spending, the GDP is far too dependent on the government for its growth. The combined effects of government are something like 40% of GDP, and that will be with us for a long time.
The market is not taking the negative GDP as indicating a new recession, because other parts of the economy are continuing along with reasonable growth. Consumer spending, the main engine of US growth, rose 2.2%. Construction on new homes and apartments jumped 15.3%. Business spending on equipment and software was up. So the private-sector economy was not appearing weak.
By one interpretation, the GDP number is probably a little worse than the headline because the inflation, as measured by the implicit price deflator, was also down.
(Click on image to enlarge)
If the deflator were 2%, as it has been reported in recent months, rather than the Q4 number of 0.6%, then the real GDP would have been 1.6% worse, at a negative 1.7%.
In the face of the deficit crises, I have often shared my opinion that the government would "kick the can," as it consistently has. The tax rise on the wealthy was also Obama's political promise and had been expected. Raising taxes, including the payroll tax, which was just accomplished, could cut household spending and hurt the GDP. If the economy is too weak to cut spending, then we will continue with the huge deficits that we cannot afford.
Going forward, the debt ceiling will have no effect except to elicit hot air from politicians. It is their own shell game that goes back to the fig leaf that was instigated to replace the requirement that the administration had to get approval from Congress for each new debt offering in the early part of the last century.
My prediction going forward is that Congress will make no major changes to the deficit until the dollar weakens and interest rates rise, forcing action. The Fed is monetizing at the rate of a trillion dollars a year, which covers 80% of the deficit. For now, the Fed has bailed out the federal deficit so politicians don't need to do anything.
The economy has been driven by Fed bubble blowing: first the stock market dot-com bubble (Internet stocks attracted day traders), then the housing bubble (flippers and the meme that real estate never goes down), and now a massive bond bubble (there's no other safe place to put your money). The collapse of the biggest bubble ever in bonds will start once confidence in the Fed is lost in seeing that they can't keep rates suppressed forever.
The weak GDP report suggests the Fed will keep its attempt to pump up the economy, even as each QE program is having less and less effect. Simply put, as the government won't cut its deficits, the Fed will keep up the QE because there is no exit strategy from this mess. As rates begin to rise, the deficit will become unmanageable due to the rising scale of interest payments. But this debt bubble will burst because low interest rates cannot be forced forever. If history is any guide, the time will come when Fed stimulus will decrease confidence in the dollar more than it helps the economy, and at that point the deficit-boosted economy will collapse. The slowing GDP is an early warning we will be keeping a close eye on.
Ed. Note: How much would it be worth to you personally to be thoroughly informed on the bubble in bonds, when it is likely to burst, and how you can profit – or avoid the losses? Bud Conrad will be providing his comprehensive analysis of the bond bubble in the upcoming issue of The Casey Report. You don't want to miss it, and don't have to… just take us up on our fully guaranteed trial offer for The Casey Report. If you don't love the publication, simply cancel for a full refund within the first 90 days – and keep all the issues you've received as our way of saying thanks for giving it a try. Learning more is as easy as clicking here now.
David again. Given the highly politicized nature of today's world, it is important to take the effort to understand the fundamental realities, rather than blindly accept the fictions that spew forth from officialdom and its quislings on Wall Street and in the media.
Things have reached the point where the reality gap between those deluded souls living in North Korea under the rule of Kim Jong Wu Ever and those living in the degraded Western democracies is rapidly narrowing. In North Korea, they are told that the South Koreans want to eat their babies or some such; in the United States, people are told that just across the border in Mexico, the streets are paved with headless corpses.
(You might find the map linked to here of interest as it compares the murder rates of various countries against those in US cities. Let's see, there are approximately 10 murders per 100,000 people in Mexico… half that of Washington and less than a third of that in Baltimore.)
In North Korea, the people are told that the Jong family are one tick off from being deities and believe it. In the US and Europe, people are told that debt issuance and money printing without end is the "solution" to the financial crisis and believe that too.
The bottom line on today's musings is that it really behooves us all to revisit our beliefs and kick the tires on our assumptions, looking for some kernel of observable truth that we can use to guide us through the challenges ahead.
One such reality is that gold has been considered sound money around the globe for most of recorded human history. While it's been in a consolidation phase for over a year now, and could remain flat to down for a while longer, you have to ask yourself what's more likely to retain its value? Currency units created out of thin air or an ounce of gold?
Wherever possible, try to align your finances and your life with reality. While that may make you subject to periodic losses and inconveniences as popular delusions and the madness of crowds push markets, and countries, in unsustainable directions – in time, you'll come out on top.
If you're not familiar with the work of Steven Wright, he's the humorist who once said, "I woke up one morning, and all of my stuff had been stolen and replaced by exact duplicates." His mind sees things differently than most of us do; here are some of his gems:
1 - I'd kill for a Nobel Peace Prize.
2 - Borrow money from pessimists – they don't expect it back.
3 - Half the people you know are below average.
4 - 99% of lawyers give the rest a bad name.
5 - 82.7% of all statistics are made up on the spot.
6 - A conscience is what hurts when all your other parts feel so good.
7 - A clear conscience is usually the sign of a bad memory.
8 - If you want the rainbow, you got to put up with the rain.
9 - All those who believe in psychokinesis, raise my hand.
10 - The early bird may get the worm, but the second mouse gets the cheese.
11 - I almost had a psychic girlfriend… but she left me before we met.
12 - OK, so what's the speed of dark?
13 - How do you tell when you're out of invisible ink?
14 - If everything seems to be going well, you have obviously overlooked something.
15 - Depression is merely anger without enthusiasm.
16 - When everything is coming your way, you're in the wrong lane.
17 - Ambition is a poor excuse for not having enough sense to be lazy.
18 - Hard work pays off in the future; laziness pays off now.
19 - I intend to live forever... so far, so good.
20 - If Barbie is so popular, why do you have to buy her friends?
21 - Eagles may soar, but weasels don't get sucked into jet engines.
22 - What happens if you get scared half to death twice?
23 - My mechanic told me, "I couldn't repair your brakes, so I made your horn louder."
24 - Why do psychics have to ask you for your name?
25 - If at first you don't succeed, destroy all evidence that you tried.
26 - A conclusion is the place where you got tired of thinking.
27 - Experience is something you don't get until just after you need it.
28 - The hardness of the butter is proportional to the softness of the bread.
29 - To steal ideas from one person is plagiarism; to steal from many is research.
30 - The problem with the gene pool is that there is no lifeguard.
31 - The sooner you fall behind, the more time you'll have to catch up.
32 - The colder the x-ray table, the more of your body is required to be on it.
33 - Everyone has a photographic memory; some just don't have film.
34 - If at first you don't succeed, skydiving is not for you.
And the all-time favorite –
35 - If your car could travel at the speed of light, would your headlights work?
Interview with Dennis Miller. Earlier this week, our own Dennis Miller sat for an interview with Kerry Lutz of the Financial Survival Network. It's a good interview as it provides insights into the scale of the problems now facing retirees and those who would like to retire, and some of the solutions Dennis has uncovered. Here's the link to the interview.
Busy-Bodies of the Month. I really like Reason TV. In this installment, they reveal their busy-bodies of the month – in this case an absolutely mind-boggling new proposal to criminalize nicotine. Here's the link.
Perfect-Worlders Try to Kill Bambi. Along a similar line, this morning Dennis Miller sent me a link to a ridiculous story about a former police officer and his wife facing jail time for rescuing an injured deer. Here's the link.
Live Again. Earlier I mentioned the upcoming Harvest Celebration at La Estancia de Cafayate, March 14 - 19. For those of you who haven't yet seen it, a short film titled Live Again was made at La Estancia that will give you a sense of the place. Here's the link.
Sorry for going on a bit long this week. Starting work well before the crack of dawn and trying to compensate by getting juiced up on mate and coffee and ramped up with loud music has that effect on me.
Before signing off, however, I want to mention that there are two new Casey Phyles forming – one in Nashville, TN, and one in Cleveland, OH. If you would like to join one of these meet-up groups, or one in your area, drop us a note at email@example.com.
I also want to mention that we’ve nailed down the dates for our fall Casey Research Summit in Tucson, Arizona: If you are interested in participating, mark October 4 – 6, 2013 on your calendar. We’re still working on the details, but you’ll hear from us as soon as more information becomes available. If you want to stay up to date and be the first to learn when registration opens for the Summit, simply get on our waitlist (being on the list doesn’t oblige you to attend the Summit).
And with that, I will bid you farewell for the week by thanking you for reading and for being a subscriber to a Casey Research publication.
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