Truth? We Don’t Need No Stinkin’ Truth

Submitted by Dr. Paul Craig Roberts – Institute for Public Economy

In the previous posting, The Grand Manipulation, I again wrote about the false reality that government manipulation of information and control over explanations creates for Americans and others who have subordinated themselves to Washington.

Consider the “war on terror.” According to a Nobel economist and a Harvard University budget expert, Washington’s 14 years of war on terror has cost Americans a minimum of $6 trillion. That’s 6,000 billion dollars. This sum, together with the current PayRoll tax revenues is enough to keep Social Security and Medicare in the black for years to come. Without the vast sum wasted on the war on terror, Republicans would not have an excuse to be trying to cut Social Security and Medicare for budget reasons and to privatize the old age pensions and health care of people, thus turning Medicare and Social Security pensions into fee income for Wall Street.

Combatting terrorism is the excuse for squandering a minimum of $6,000 billion dollars.
What were the terrorist events that serve as a basis for this expenditure?

There are five: 9/11, the London transport system bombings, the Spanish train bombing, the Boston Marathon Bombing, and the French Charlie Hebdo rifle attack.

In other words, 5 events in 14 years.

The loss of life in all these events combined is minuscule compared to the loss of life in the war on terror. Even the deaths of our own soldiers is greater. Washington’s wars against terror have caused more deaths of Americans than the alleged terrorist events themselves.

But were they terrorist events?

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Narayana Havenstein and the Lunacy of Price Stability Policy

Submitted by Pater Tenebrarum  –  The Acting Man Blog

Central Bank Madness is Contagious

Lately central banks around the world are busy slashing interest rates (if they still have any to slash), or printing money more or less outright if they have bumped into the much-dreaded zero-bound. In fact, the newest fad is to cut interest rates even if there aren’t any left to cut. The minus sign on the keyboard has turned out to be useful after all!

Not only are the Keynesian dunderheads running the SNB at it (there is absolutely no reason to elevate them to quasi-sainthood just because they kicked an untenable peg out from under the euro), but lately also Denmark’s central bank. Note here that Denmark is home to one of the biggest household and mortgage debtbergs on the planet, relative to economic output. We somehow doubt that the credit bubble will be kept in check by slashing interest rates to minus 75 basis points.

1-Denmark, Household debt to GDP-annThe Danish situation – Denmark’s household debt to GDP ratio and the central bank’s crazy negative benchmark interest rate. Note how two tiny baby-step rate increases were enough to send the credit bubble into wobble mode – click to enlartge.

As an aside to this, Denmark is also considered a major showpiece of socialism. If you feel the urge to let the State nanny you from the cradle to the grave and take most of your income if you dare to earn more than three crowns, Denmark is the place for you (some additional color on this topic can be found here: “Socialism’s Prize Nation Slave State”). The Danes, incidentally, seem to be very nice people. We know a handful of Danes personally, and they are all intelligent, witty and extremely likeable. It could of course well be that we simply know the wrong Danes, this is to say, atypical ones. Nevertheless, we keep wondering how their country landed in this socialist mess. Continue reading

Swiss National Bank Hints At Capital Controls

Submitted by Tyler Durden  –  ZeroHedge

Even as the whispers that the imposition of capital controls by Greece, which is now running out of both time, negotiating leverage and tax money is just a matter of time, get louder with every passing day if not acknowledged by Greek officials yet, it was none other than one of the supposedly most “rock-solid” central banks in the world that fired a shot across the bow of global financial stability when it hinted that not Greece but another country may be the first to engage in capital controls. The country: Switzerland.

The revelation came during an interview by SNB head Thomas Jordan who, as reported by Reuters, told Swiss radio station SRF on Saturday that “the Swiss National Bank is prepared to intervene in foreign exchange markets and has room to lower already negative interest rates if necessary to weaken the franc, the central bank’s chairman said.  “We are observing the exchange rate situation as a whole. If necessary we are active but as I said we do not speak about our transactions.”

Or as Bloomberg paraphrased it “negative rates haven’t yet hit rock bottom.” Of course they haven’t: by definition negative rates can go down to infinity, although the system will collapse long before the “rock bottom” is hit. The problem is what happens in the meantime. As a reminder, the NY Fed was kind enough to break down some of the scariest possible outcomes as NIRP becomes NIRPer becomes NIRPest and so on:

  • if rates go negative, the U.S. Treasury Department’s Bureau of Engraving and Printing [or any other nation’s Treasury] will likely be called upon to print a lot more currency as individuals and small businesses substitute cash for at least some of their bank balances.
  • I might even go to my bank and withdraw funds in the form of a certified check made payable to myself, and then put that check in a drawer.
  • If bank liabilities shifted from deposits to certified checks to a significant degree, banks might be less willing to extend loans, because certified checks are likely to be less stable than deposits as a source of funding.
  • As interest rates go more negative, market participants will have increasing incentives to make payments quickly and to receive payments in forms that can be collected slowly
  • if interest rates go negative, the incentives reverse: people receiving payments will prefer checks (which can be held back from collection) to electronic transfers
  • we may see an epochal outburst of socially unproductive—even if individually beneficial—financial innovation

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The Cowardly and Despicable American Presstitutes

Submitted by Dr. Paul Craig Roberts – Institute for Public Economy

February 5, 2015. There is a brouhaha underway about an American journalist who told a story about being in a helicopter in a war zone. The helicopter was hit and had to land. Which war zone and when I don’t know. The US has created so many war zones that it is difficult to keep up with them all, and as you will see, I am not interested in the story for its own sake.

It turns out that the journalist has remembered incorrectly. He was in a helicopter in a war zone, but it wasn’t hit and didn’t have to land. The journalist has been accused of lying in order to make himself seem to be “a more seasoned war correspondent than he is.”

The journalist’s presstitute colleagues are all over him with accusations. He has even had to apologize to the troops. Which troops and why is unclear. The American requirement that everyone apologize for every word reminds me of the old Soviet practice, real or alleged by anti-communists, that required Soviet citizens to self-criticize.

National Public Radio (2-5-15) thought this story of the American journalist was so important that the program played a recording of the journalist telling his story. It sounded like a good story to me. The audience enjoyed it and was laughing. The journalist telling the story did not claim any heroism on his part or any failure on the part of the helicopter crew. It is normal for helicopters to take hits in war zones.

Having established that the journalist had actually stated that the helicopter was hit when in fact it wasn’t, NPR brought on the program a psychologist at the University of California, Irvine, an expert on “false memory.” The psychologist explained various reasons a person might have false memories, making the point that it is far from uncommon and that the journalist is most likely just another example. But the NPR presstitute still wanted to know if the journalist had intentionally lied in order to make himself look good. It was never explained why it made a journalist look good to be in a helicopter forced to land. But few presstitutes get to this depth of questioning. Continue reading

A Measure of Perfection, But Which One?

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

Today’s employment release has been described, in numerous places, as “perfect.” I am hard-pressed to disagree, as the report itself contained absolutely everything an economist would want to show payroll strength (economic strength is another matter entirely). The Establishment Survey itself was overshadowed, though satisfying, by the Household Survey and especially a jump in the labor force.

By the numbers:

ABOOK Feb 2015 Employ Report Numbers

It was that latter that completed the run of perfection for January, as the calculated official labor force expanded by as astounding 1,051,000 people – in the same month that raw employment sees its greatest decline. The last time we saw anything even close to that was April 2010, when 668k thousand joined the job market at what was the nadir of the employment disaster (thus making sense). The only other months in the past thirty years with greater than 1 million were January 2000 and January 1990 (notice the pattern here).

The more these great figures stand out, especially for a January month, the more they attain statistical questions.

ABOOK Feb 2015 Employ LF YY

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Fourth Incrementum Fund Advisory Board Discussion

Submitted by Pater Tenebrarum  –  The Acting Man Blog

Oil Prices, Deflationary Pressures, Bonds and Gold

The transcript of the Incrementum Fund’s fourth advisory board discussion is available for download below. The fund is managed by Ronald-Peter Stoeferle (formerly of Erste Bank, author of the annual “In Gold We Trust” report) and Mark J. Valek, employing a strategy focused on the effects of monetary policy on asset prices, with the help of proprietary indicators based on the monetary theory of the Austrian School of Economics. Here is Ronald’s brief summary of the discussion:

“The main topic of the discussion was the increasing deflationary pressure and its consequences on markets and central bank policy. We discussed the consequences of collapsing oil prices, a potential case for new all-time highs in treasury bonds, the impeding currency wars and the consequences for gold. As readers of our previous Advisory Board transcripts may remember, we already discussed the possibility of another round of quantitative easing in the US in our last advisory board meeting. It seems, as if the odds of such an event have increased since then, but generally still are considered as a highly improbable event by most market participants.

Perhaps the whole discussion can be accompanied by this quote by the great Ludwig von Mises:“No very deep knowledge of economics is usually needed for grasping the immediate effects of a measure; but the task of economics is to foretell the remoter effects, and so to allow us to avoid such acts as attempt to remedy a present ill by sowing the seeds of a much greater ill for the future.”

ludwig-von-mises

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The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

Currency Devaluations Are an Undeclared War (Bloomberg)
The PBOC – How To Fail In Business Without Really Flying (Russell Napier)
The Diverging Fates of China’s Provinces (Bloomberg)
Goldman Raises Alarm Over The Scariest Chart In The Jobs Report (Zero Hedge)
Stop Squeezing Syriza. We Can’t Afford Another Wrong Turn In Europe (Guardian)
Troika Trojan Horse: Will Syriza Capitulate In Greece? (Pepe Escobar)
Greece Seeks Plan C After Eurogroup Rules Out Bridge Loan (Bloomberg)
Syriza Vows To Fight Pressure To Stick To Bailout Terms (Guardian)
Greece: We Want No More Bailout With Strings (Reuters)
Defiance and Charm: A Measured First Week for New Greek Leader (Spiegel)
It’s Merkel Legacy Moment (Bloomberg)
Irish Fighting Bankers Show It’s Not Just Greeks Protesting Debt (Bloomberg)
The Biggest Loss for Scotland Since Independence Fail (Bloomberg)
Oil Production Increases Ahead: Alberta Premier (CNBC)
A Modest Proposal To Save The World (Charles Gave)
The TTIP US-EU Trade Deal -A Briefing (Guardian)
Pentagon 2008 Study Claims Putin Has Asperger’s Syndrome (USA Today)
US Navy Sailors Search for Justice after Fukushima Mission (Spiegel)
The Stuff Paradox: Dealing With Clutter (BBC)
American Sniper Is A Movie Hitler ‘Would Have Been Proud To Have Made’ (Ind.)

Much more here: Debt Rattle February 7 2015 – TheAutomaticEarth.com