To cure a statist, give him the state!

Robert Higgs can explain …

Democracy’s Most Critical Defect

By Robert Higgs on Oct 27, 2009

Although democracy now comes closer than anything else to serving as a world religion, it has never lacked critics. For millennia those critics, such as Aristotle, had large followings among political thinkers and practicing politicians. Even as late as 1787, when a group of prominent men met in Philadelphia to compose the U.S. Constitution, democracy was viewed with trepidation, and the framers created an apparatus of government in which democracy was hemmed in on all sides, lest the country fall into the much-dreaded condition of “mob rule.”

Nowadays, democracy’s defects are more likely to be seen as relatively benign ― its devotees like to quote Winston Churchill’s quip that “democracy is the worst form of government except all those other forms that have been tried from time to time” ― or as defects not of democracy itself, but of the party shenanigans and other frictions that keep the democratic system from operating more fully. Thus, people complain of “gridlock” and bemoan a “do-nothing” Congress because these things impede the unrestricted functioning of democracy.

Public choice theorists have written countless articles and books spelling out the manifold ways in which democracy, viewed as a political decision rule for making collective choices by means of voting, may fail to aggregate the preferences of individual constituents into an outcome that represents the “will of the people.” More than fifty years ago, Kenneth Arrow showed that no such aggregation is possible, given certain seemingly appealing restrictions on the nature of people’s preferences, such as transitivity (if A is preferred to B, and B is preferred to C, then C cannot be preferred to A).

None of this theorizing had the slightest effect on the common people’s idea that democracy can and should translate the “will of the people” into collective choices; nor has it kept generations of politicians from talking as if such a translation were possible and desirable. (Political practice, in contrast to political rhetoric, has always proceeded in the usual corrupt fashion, featuring scheming plutocrats, privilege-seeking special-interest groups, and the iron law of oligarchy.)

I mention these things only by way of introduction, however, because here I wish to claim that democracy’s gravest defect has little or nothing to do with the defects traditionally ascribed to it. I maintain that its severest defect, indeed, a flaw so critical that it gives democracy the potential to destroy civilization, pertains to its effect in corrupting the people’s moral judgment.

To see how this corruption comes about, let us begin by recognizing that in many people’s eyes, certain government functionaries may legitimately take actions that would be condemned as criminal if anyone else were to take them. If you or I were to threaten a neighbor with violence unless he handed over a specified sum of money, we would  be universally recognized as engaged in extortion or attempted robbery. Yet, the functionaries of St. Tammany Parish, the state of Louisiana, and the United States of America routinely obtain money from me in precisely this manner. And although many people subject to such takings may complain that the amounts demanded are excessive, hardly anybody describes the exactions as constituting nothing more than extortion or armed robbery. Why not? Because the functionaries who assess and collect these sums of money ― which they style “taxes,” not loot, plunder, or swag ―  are democratically elected “public officials.”

From a moral point of view, I am hard pressed to see how their employment status gives them a defensible right to act in ways that everyone would recognize as criminal if undertaken by a private individual. In political theory, a representative democratic government is said to derive its just powers by delegation from the people who are governed, with their consent. I assure you that I have never consented to have the various governments rob me, especially for the financing of countless activities that I consider to be useless, destructive, or inherently criminal. Regardless of the uses to which a government puts its booty, however, the people cannot justly delegate to political representatives any rights that they do not possess. If I do not have a right to plunder my neighbor, how can I delegate that right to a government functionary who purports to represent me?

The situation is the same with regard to innumerable other actions that governments carry out, including unjust imprisonment, murder, and demands for compliance with so-called “regulations.” If you or I were to demand the same actions that regulators commonly prescribe, our demands would be plainly seen to constitute unjustified intimidation and lawless coercion, at best. Likewise, if I were to send a private Predator drone to Pakistan to fire explosive missiles into villages, killing women, children, and other innocent persons, I would be seen as a monstrous mass murderer, and demands would be made that I be apprehended and “brought to justice” or killed. Yet when President Obama causes deaths in this way, no such demands are made. How did Barack Obama come by the right to kill innocent people? By democratic election to the presidency of the United States, of course. Most people actually believe, and act on the belief, that mere election to a political office can endow a person with standing to disregard the moral requirements applicable to people in general. And not only the elected official, but all those officials beneath him in the chain of command ― nobody demands that the technician who sits comfortably in the United States and directs the exact operation of the lethal drone be brought to justice; he, as the saying goes, is “only following orders.”

In the war-crimes tribunals conducted after World War II, many defendants pleaded not guilty on the grounds that they were only following orders. This defense, however, was ruled inadmissible, because the top authorities of the Nazi regime, from Adolf Hitler on down, were themselves viewed as war criminals, albeit unavailable in many instances to stand trial as such. In contrast, none of the military officers and men who carried out the fire bombings of Tokyo, Hamburg, and Dresden were indicted; nor were those who dropped the atomic bombs on Hiroshima and Nagasaki; nor were Churchill and Truman (Franklin Roosevelt having already departed this realm of political strife). Strange to say, Hitler himself originally came to power through democratic procedures, which shows that sometimes democracy is not enough to absolve a leader of criminal acts. Winning a war may also prove decisive when innocence and guilt are being decided and punishments administered.

I fully understand how most Americans would react to the preceding observations. They would say that in wartime, certain actions that would be regarded as crimes during peacetime automatically cease to have this character. It’s an interesting theory: if the leader, especially a democratically elected one, prosecutes a war, he thereby overturns the entire basis of morality ― provided of course that his side wins the war. Killing the innocent, for example, carries no stigma; nor does wanton destruction of property, unjust punishment or imprisonment, and a thousand other actions that would be regarded as flagrant crimes during peacetime.

As the government has grown in this country (and others) during the past century, the scope of government action has widened greatly. Government officials now demand vastly greater sums of money from their subjects, and they demand compliance with vastly more regulations. They and they alone may act in these ways without bringing moral denunciation down on themselves. No wonder they sometimes deport themselves as gods: by their election they have been loosed from the moral bonds that constrain you and me, and, thus unencumbered, they have soared to ever greater heights of criminality and savagery. “When the president does it,” Richard Nixon insisted, “that means that it is not illegal.” Interviewer David Frost pursued the point, asking: “the dividing line is the president’s judgment?” To which Nixon responded, “Yes, and the dividing line and, just so that one does not get the impression, that a president can run amok in this country and get away with it, we have to have in mind that a president has to come up before the electorate.” Ah, yes, blessed election ― that “accountability moment,” as George W. Bush described it ― surely covers a multitude of sins. We may think of those sins as democracy in action.

Libertarians often argue about whether they might more successfully recruit followers by showing that a free society works best or by showing that an unfree society is unjust. Most libertarians, as I see the matter, have chosen to base their arguments on utilitarian grounds, often because they despair of ever convincing the average person that government officials chronically, or even intrinsically, violate moral strictures. Although I have no doubt whatsoever that free societies do work better than unfree ones, that they deliver, for example, greater prosperity and more rapid economic progress for the masses, I am skeptical that we can cut deeply into the current mass support for the welfare-warfare-therapeutic state unless we open people’s eyes to see that the government actions they now support ― and demand ever more of ― are utterly immoral because they violate individuals’ just rights on a gigantic scale and because the government leaders who propose and implement these measures acquire not an ounce of moral justification from their democratic selection for office. “What works best” remains ever open to dispute, as public policy debate on almost any current issue illustrates: each side has its academic experts, prestigious scientists, or other authorities to prop up its position, and although these two sides rarely offer equally compelling evidence, the lay person can scarcely be expected to see through all of the disinformation and rhetorical flimflam.

Everybody understands, however, without any advanced instruction in the matter, that murder and robbery are wrong, and that no one has a justifiable right to bully his neighbors simply because he does not like the way in which they are conducting their lives. The greatest barrier to libertarian progress continues to be that most people give a moral pass to such criminal actions when democratically elected functionaries take them. This presumed moral immunity by virtue of election to public office is the sheerest superstition ― a montrous mistake in moral reasoning ― and if people can be brought to see it for what it really is, then they will be able to act more effectively to regain some of their lost freedom.

Money when it dies.

What Is Money?
Part 10: When Money Dies

by Gary North

Recently by Gary North: When Frankie Met Johnny: The 1934 Meeting of Roosevelt and Keynes

Bottom line: “When money dies, so do people.” Hyperinflation in a modern urban nation would kill people. I think it would kill a lot of people.

Why? Because we rely on the social division of labor to feed ourselves, heat our homes, and supply everything else that we buy or sell. This requires a highly complex price system. At the heart of this system is money. It would not exist without money.

The free market coordinates the buying selling of billions of products and services. Products are tracked by an identifier called a stock keeping unit, or SKU. In the region around New York City, there are something in the range of ten billion SKUs, according to economist Eric Beinhocker (The Origin of Wealth, 2007, p. 9). This does not count services. The service sector is more than twice the size of the goods sector in the United States.

We give little thought to the intricate process that delivers the goods we want to buy at the place where we shop and at the time when we show up to buy. No system of central planning is capable of coordinating supply and demand on the scale of a modern economy. This was the heart of Ludwig von Mises’ critique of socialism in 1920. His short article, “Economic Calculation in the Socialist Commonwealth,” made the economic theoretical case against socialism by arguing that without free markets, and especially capital markets, no central planning agency can know what anything will cost in terms of forfeited opportunities. You can read the article here.

One implication of this article is that hyperinflation would collapse the division of labor. Without reliable, predictable pricing, most people would make errors most of the time in estimating what things should cost. This is as true of our decisions as producers as consumers.

Money allows us to make bids in the market for the ownership or use of scarce resources. These bids are our responses as both consumers of goods and suppliers of goods. If prices no longer convey predictable information over time, planning becomes chaotic. Producers and consumers will erroneously forecast the state of supply and demand. Our errors add up over time. We produce losses. We find that we have consumed our capital. We cannot replace what we have consumed at prices we thought would prevail.

Money is our means of assessing what it costs to pursue our goals. The less reliable the information conveyed by prices, the less efficiently we can attain our goals. Our goals shift as we find ourselves facing supply and demand conditions that we did not foresee.

No one likes to make mistakes. Mistakes are expensive. They force us to consume our reserves or else do without. Mistakes thwart our plans.

FALSE SIGNALS

Monetary inflation distorts information regarding the supply and demand of capital. It does so by lowering interest rates. Because there is more money available for entrepreneurs to borrow, lenders are forced to lower their price: interest to be repaid. The market clears the supply and demand for capital through changing prices. This is true of all other markets.

Monetary inflation either raises prices or else keeps prices from falling. This imposes losses on people who expected prices either to remain stable or else fall. Misleading price signals are a form of deception.

Civil governments approve of the short-term effects of this deception. Unemployment falls. People are hired to engage in new product creation. Demand for idle resources increases. The voters like the results, and they reward incumbent politicians by re-electing them.

But there are no free lunches in life. There is also no free information. The cost of obtaining accurate information rises, because the supply of misleading information has increased. The central bank increases the monetary base when it purchases assets with newly created money. The commercial banks extend this newly created money by making loans. The original misinformation multiplies. It spreads throughout the economy. The production of misinformation is the heart of fractional reserve banking process.

 SUSTAINING THE BOOM

The true conditions of the supply and demand of capital are revealed subsequently through competitive bidding by consumers. The consumers never decided to save more money at the pre-inflation interest rates. Now their bidding with newly created fiat money reveals that projects that had been launched on the basis of one set of price signals – lower prices – had been incorrect. The projects are abandoned. Think “shopping malls.” Think “tracts of new homes.” Consumers prefer to buy other things. Their budgets are squeezed by rising prices. They reallocate their spending. The companies they cut off go bankrupt.

Unemployment rises. The supply of unsalable products and services is greater than demand at yesterday’s prices. So, producers cut prices. This reveals to them and to their accountants that their plans had been error-filled. Losses increase.

This is bad for incumbent politicians, who had taken credit publicly for the booming economy. They are then susceptible to special-interest groups that plead for government handouts. The banks – lenders of first resort – cry for aid from the Treasury and the central bank. The central bank becomes the lender of last resort to the Treasury, and the Treasury extends loans to struggling banks, or even buys shares of these banks.

This moves the economy closer to the centrally planned economy that Mises warned could not work because it cannot assess the true conditions of supply and demand. Errors increase. This brings forth new cries from special interests for additional subsidies by the government.

If the central bank responds by purchasing more government debt, and if commercial banks lend this newly created fiat money, the money supply rises, prices rise, and a new wave of misinformation spreads through the economy. Producers and consumers make even more mistakes. When the central bank seeks to sustain the boom by pushing down interest rates through an increase of asset purchases, it moves into a mass inflation scenario: double-digit increases in the money supply, which is followed by rising prices. Only if commercial banks refuse to lend the money that they are legally entitled to lend, preferring instead to keep this money as excess reserves at the central bank, does the central bank’s actions not increase the money supply. In such a situation, the recipient of the central bank’s newly created money – the national government – increases its share in the economy. The percentage of the economy that is dependent on government planning and spending increases. So, the economy moves closer to the irrational decision-making described by Mises in 1920.

 THE STAGES OF DISINTEGRATION

The first stage is the initial boom created by the central bank’s increase in the money supply. This is offset by the subsequent recession, when property owners and money holders re-price their assets downward.

The second stage is the infusion of more fiat money by the central bank. This is done in an attempt to offset the recession, which is the outcome of individuals’ decisions to re-price their assets and adjust their budgets accordingly.

This second stage fails unless the public is misled sufficiently to re-price their assets and readjust their budgeting once again. But this re-pricing and budget readjustment are based on false information. The spread of misinformation increases, along with the fiat money.

When the deception is again discovered, the recession reappears. But the misallocation of capital is even worse at this stage than it was in the first stage. The deception has gone on longer.

So, the central bank must intervene again. And again. Prices increase. The government’s official price index rises. This is a threat to incumbent politicians.

The politicians want the central bank to intervene again. If it does, the economy will move to double-digit price inflation, the way it did in the United States in 1979 and 1980.

The central bankers must then decide whether to continue to increase the monetary base. If they do, the economy moves to mass inflation, which I define as consumer price increases above 20% but below 50%.

This is not hyperinflation. Stage three is hyperinflation, where prices rise above 50% per annum. Stage three is characterized by a flight out of money into commodities, foreign currencies, and precious metals. Because the precious metals are thin markets, their rise vastly exceeds the consumer price index or commodities in general. Only if central banks, as an international guild, sell gold into the private markets, never to return, can this outcome be postponed.

STAGE TWO POINT FIVE: PRICE CONTROLS

In between mass inflation and hyperinflation, the government may declare price ceilings. In this case, the central bank continues to buy government debt, the government continues to spend it, and recipients deposit the money in their banks. If bankers continue to lend, the money supply increases.

With rising prices in the free market – now identified as black markets – and laws against selling at market-bid prices, goods and services become more scarce. That is, at an artificially low price, there is greater demand than supply. The availability of goods erodes away.

The United States experienced this from 1942 to 1946. The government created ration cards: non-monetary tickets that supposedly allowed holders to buy a specific quantity of goods. Result: quality went down on the legal markets.

This system was described best by a Russian workers’ slogan in the Soviet era: “The bosses pretend to pay us, and we pretend to work.”

The result is reduced wealth for participants in the legal markets, increased risk for participants in the black markets, and politicians who blame black marketeers for the shortages.

There are two ways out of this stage: (1) the stabilization of money, the fall in prices, and the abolition of controls; (2) the abolition of controls and an increase in the money supply.

Let us consider the first alternative. If the controls had produced shortages on a massive scale, as they did from 1942 to 1946 in the United States, the removal of controls, coupled with stable money or even monetary deflation, does not cause a depression. The United States after 1946 is such a case.

The classic case in modern history was West Germany after the currency reform of June 1948. The economics minister, Ludwig Earhard, unilaterally abolished price and wage controls. This was on a Sunday evening. The next morning, hoarded goods began to reappear. This was the beginning of what came to be known as the German economic miracle. It was a miracle in the same sense that any modern economy is: a complex system of coordination that no civil government committee or group of committees can understand, let alone match.

Let us consider the second alternative.

STAGE THREE: HYPERINFLATION

Hyperinflation is when money dies. The official currency buys little of value. Output falls. People are reduced to selling off heirlooms and luxury goods for alternative currencies: gold coins, silver coins, and that most widely accepted currency, cigarettes.

The classic modern case of hyperinflation is Germany, 1921–23. A readable book on this social disaster is Adam Ferguson’s book, When Money Dies (1975). It is subtitled, “The Nightmare of the Weimar Collapse.” You can read it here.

An older, more academic, and widely respected book is Constantino Brresciani-Turroni’s The Economics of Inflation: A Study of Currency Depreciation in Post-War Germany (1931). It is available free here.

A fine novel on this era is Erich Remarque’s The Black Obelisk (1956). He is more famous for All Quiet on the Western Front.

Whenever a contemporary economic analyst predicts hyperinflation in the United States, he is likely to offer the German inflation as his example of how bad things can get. The problem with this approach is that it ignores the last nine decades of American urbanization. We do not live in post-World War I Germany. We do not live in the relatively low division of labor society of post-War Germany.

In 1921, Germany was a militarily defeated nation. It had gone through years of price controls and rationing. The war had destroyed urban capital. The population was still mainly rural or small town: around 70%. There were about 60 million people. The largest city was Berlin, with about two million people. No other city was over a million, and most of the dozen large ones were in the 600,000 range.

The degree of specialization in Germany in 1921 compared to the United States today was minimal. Food was available without long supply routes from farm areas into cities. Money was mainly currency. It was not fractionally reserved digital money in banks. Most people did not have bank accounts. People could barter.

Today, hyperinflation would threaten supply lines into cities: food, gasoline, coal (electrical power). It would threaten the production of crops, which is a highly mechanized business. It would make food costs central in household budgets. Instead of spending about 10% of our income on food, as Americans do today, we would likely spend half or more. Unemployment would be widespread – the people not producing vital services.

The breakdown of modern urban society is unthinkable. Central bank economists know this. They are urban. They are tenured or close to it.

I do not think central bankers will move to a hyperinflation scenario. To do so would be opposed to their personal self-interest. At some point, they will tell their respective treasury departments, “you’re on your own.”

Then will come the great default.

CONCLUSION

Money today is monetized debt. Central banks and commercial banks monetize debt.

If they move to hyperinflation, they will kill money. When money dies, urban people will die.

If they do not move toward mass inflation, they will create a new Great Depression. We almost had this in late 2008.

There is no pain-free way out of this dilemma. Central bankers want to delay the day of reckoning. So do politicians. So do investment fund managers.

The governments are all running huge deficits. Central banks follow policies of low interest rates. The extent of the prior misallocation of resources is becoming harder to conceal.

The powers that be will cease to be powers if money dies. They have based their political control and their wealth on their control of digital money. This is the line to which the hook of state power is attached. To destroy the currency is to break this line. Better a new Great Depression than hyperinflation, if you are a central banker.

If money dies, a lot more than money will die. This includes Bernanke’s pension. He knows this.

October 28, 2009

Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 20-volume series, An Economic Commentary on the Bible.

 

Let’s be fair to Franken

Here’s What Happens When You Elect a Comedian to Congress

Posted by David Kramer on October 27, 2009 08:27 AM

First of all, people go bankrupt in Europe* also. Since most European countries (especially the ones with universal health care) have higher income tax rates than the United States, there is no way of knowing which of the cost of living expenses (which include paying taxes) put those citizens who declare bankruptcy over the financial brink, since (in their minds) they get “free” health care—i.e., they don’t know how much of their tax dollars are going to the national health care system. Also, something that Brett Skinner of The Fraser Institute told me about Canadian bankruptcy laws reminded me that different countries make it easier or harder for their citizens to declare personal bankruptcy in general—i.e., Franken might be comparing apples with oranges. [By the way, we cannot tell from this short video if Franken takes into consideration (or even cares!!) whether or not those countries provide equal or better access to critical (i.e., non-routine) medical services and treatments than the United States does.]

Secondly, at the end of the video Franken chastises the woman’s statement about the U.S. having higher cancer cure rates by saying (although he doesn’t realize what he is implying) that the numbers quoted are always for easily treatable cancers. BUT THAT’S THE WHOLE POINT!! Luciano Pavarotti in Italy and Patrick Swayze in the United States both had basically no chance of surviving their form of cancer (pancreatic). But if you have a more curable type, isn’t it better to be in a country where you have better access to that treatment than in a country in which the access is scarcer but “free”? Notice that he does not give what would be a more compelling response by declaring that there are studies that show if you have a less treatable form of cancer, you have equal or more access to a cure in other countries than the United States. (I don’t know if such studies actually exist showing this.)

Read Lives at Risk. Although the authors only covered English-speaking countries (in order to be able to read each country’s own data), the last time I checked, economic laws are universal.
___________________________________
*I want to share an anecdotal story that happened to me ten years ago. I was hanging out at a trendy bar in Manhattan with some very young (in their 20s) pretty blondes from Sweden. They told me that what they were doing that night (hanging out in a bar) they would never be able to afford to do back in Sweden.

Think about that. They are able to do an ordinary activity in the most expensive city in the United States which they couldn’t afford to do back home. But I’m sure when they got the “sniffles” back home, they didn’t have to pay for the doctor’s visit to take care of them.

One way or another, people are paying for their “free” health care. Do we want to implement an even worse system than we now have, or do we want an even better, cheaper alternative to the one we now have?

MY COMMENTS:  Al is right about war I think, but completely lost on health care and probably even more lost on the issue of money.  I think George Carlin would have been good for Washington as a politician so I am not sure about the blanket warning that comedians should not be ”elected” as politicians. Getting one to turn into a statesman might be a stretch!

Flags?

Death?

Death of ‘Soul of Capitalism’: Bogle, Faber, Moore

20 reasons America has lost its soul and collapse is inevitable

By Paul B. Farrell, MarketWatch

ARROYO GRANDE, Calif. (MarketWatch) — Jack Bogle published “The Battle for the Soul of Capitalism” four years ago. The battle’s over. The sequel should be titled: “Capitalism Died a Lost Soul.” Worse, we’ve lost “America’s Soul.” And, worldwide, the consequences will be catastrophic.

That’s why a man like Hong Kong contrarian economist Marc Faber warns in his Doom, Boom & Gloom Report: “The future will be a total disaster, with a collapse of our capitalistic system as we know it today.”

Insuring against economic calamity

Gold ETFs are so popular they now hold more of the shiny stuff than most central banks. What will it take to sustain the funds’ big gains? Barron’s Clare McKeen reports.

No, not just another meltdown, another bear-market recession like the one recently triggered by Wall Street’s too-greedy-to-fail banks. Faber is warning that the entire system of capitalism will collapse. Get it? The engine driving the great “American Economic Empire” for 233 years will collapse, a total disaster, a destiny we created.

OK, deny it. But I’ll bet you have a nagging feeling that maybe he’s right, that the end may be near. I have for a long time: I wrote a column back in 1997: “Battling for the Soul of Wall Street.” My interest in “The Soul” — what Jung called the “collective unconscious” — dates back to my Ph.D. dissertation, “Modern Man in Search of His Soul,” a title borrowed from Jung’s 1933 book, “Modern Man in Search of a Soul.” This battle has been on my mind since my days at Morgan Stanley 30 years ago, witnessing the decline.

Has capitalism lost its soul? Guys like Bogle and Faber sense it. Read more about the soul in physicist Gary Zukav’s “The Seat of the Soul,” Thomas Moore’s “Care of the Soul” and sacred texts.

But for Wall Street and American capitalism, use your gut. You know something’s very wrong: A year ago, too-greedy-to-fail banks were insolvent, in a near-death experience. Now, magically, they’re back to business as usual, arrogant, pocketing outrageous bonuses while Main Street sacrifices, and unemployment and foreclosures continue rising as tight credit, inflation and skyrocketing federal debt are killing taxpayers.

Yes, Wall Street has lost its moral compass. It created the mess, but now, like vultures, Wall Streeters are capitalizing on the carcass. They have lost all sense of fiduciary duty, ethical responsibility and public obligation.

Here are the Top 20 reasons American capitalism has lost its soul:

1. Collapse is now inevitable

Capitalism has been the engine driving America and the global economies for over two centuries. Faber predicts its collapse will trigger global “wars, massive government-debt defaults, and the impoverishment of large segments of Western society.” Faber knows that capitalism is not working, capitalism has peaked, and the collapse of capitalism is “inevitable.”

When? He hesitates: “But what I don’t know is whether this final collapse, which is inevitable, will occur tomorrow, or in five or 10 years, and whether it will occur with the Dow at 100,000 and gold at $50,000 per ounce or even confiscated, or with the Dow at 3,000 and gold at $1,000.” But the end is inevitable, a historical imperative.

2. Nobody’s planning for a ‘Black Swan’

While the timing may be uncertain, the trigger is certain. Societies collapse because they fail to plan ahead, cannot act fast enough when a catastrophic crisis hits. Think “Black Swan” and read evolutionary biologist Jared Diamond’s “Collapse: How Societies Choose to Fail or Succeed.”

A crisis hits. We act surprised. Shouldn’t. But it’s too late: “Civilizations share a sharp curve of decline. Indeed, a society’s demise may begin only a decade or two after it reaches its peak population, wealth and power.”

Warnings are everywhere. Why not prepare? Why sabotage our power, our future? Why set up an entire nation to fail? Diamond says: Unfortunately “one of the choices has depended on the courage to practice long-term thinking, and to make bold, courageous, anticipatory decisions at a time when problems have become perceptible but before they reach crisis proportions.”

Sound familiar? “This type of decision-making is the opposite of the short-term reactive decision-making that too often characterizes our elected politicians,” thus setting up the “inevitable” collapse. Remember, Greenspan, Bernanke, Bush, Paulson all missed the 2007-8 meltdown: It will happen again, in a bigger crisis.

3. Wall Street sacked Washington

Bogle warned of a growing three-part threat — a “happy conspiracy” — in “The Battle for the Soul of Capitalism:” “The business and ethical standards of corporate America, of investment America, and of mutual fund America have been gravely compromised.”

But since his book, “Wall Street America” went over to the dark side, got mega-greedy and took control of “Washington America.” Their spoils of war included bailouts, bankruptcies, stimulus, nationalizations and $23.7 trillion new debt off-loaded to the Treasury, Fed and American people.

Who’s in power? Irrelevant. The “happy conspiracy” controls both parties, writes the laws to suit its needs, with absolute control of America’s fiscal and monetary policies. Sorry Jack, but the “Battle for the Soul of Capitalism” really was lost.

4. When greed was legalized

Go see Michael Moore’s documentary, “Capitalism: A Love Story.” “Disaster Capitalism” author Naomi Klein recently interviewed Moore in The Nation magazine: “Capitalism is the legalization of this greed. Greed has been with human beings forever. We have a number of things in our species that you would call the dark side, and greed is one of them. If you don’t put certain structures in place or restrictions on those parts of our being that come from that dark place, then it gets out of control.”

Greed’s OK, within limits, like the 10 Commandments. Yes, the soul can thrive around greed, if there are structures and restrictions to keep it from going out of control. But Moore warns: “Capitalism does the opposite of that. It not only doesn’t really put any structure or restrictions on it. It encourages it, it rewards” greed, creating bigger, more frequent bubble/bust cycles.

It happens because capitalism is now in “the hands of people whose only concern is their fiduciary responsibility to their shareholders or to their own pockets.” Yes, greed was legalized in America, with Wall Street running Washington.

5. Triggering the end of our ‘life cycle’

Like Diamond, Faber also sees the historical imperative: “Every successful society” grows “out of some kind of challenge.” Today, the “life cycle” of capitalism is on the decline.

He asks himself: “How are you so sure about this final collapse?” The answer: “Of all the questions I have about the future, this is the easiest one to answer. Once a society becomes successful it becomes arrogant, righteous, overconfident, corrupt, and decadent … overspends … costly wars … wealth inequity and social tensions increase; and society enters a secular decline.” Success makes us our own worst enemy.

Quoting 18th century Scottish historian Alexander Fraser Tytler: “The average life span of the world’s greatest civilizations has been 200 years” progressing from “bondage to spiritual faith … to great courage … to liberty … to abundance … to selfishness … to complacency … to apathy … to dependence and … back into bondage!”

Where is America in the cycle? “It is most unlikely that Western societies, and especially the U.S., will be an exception to this typical ’society cycle.’ … The U.S. is somewhere between the phase where it moves ‘from complacency to apathy’ and ‘from apathy to dependence.’”

In short, America is a grumpy old man with hardening of the arteries. Our capitalism is near the tipping point, unprepared for a catastrophe, set up for collapse and rapid decline.

15 more clues capitalism lost its soul … is a disaster waiting to happen

Much more evidence litters the battlefield:

1. Wall Street wealth now calls the shots in Congress, the White House
2. America’s top 1% own more than 90% of America’s wealth
3. The average worker’s income has declined in three decades while CEO compensation exploded over ten times
4. The Fed is now the ‘fourth branch of government’ operating autonomously, secretly printing money at will
5. Since Goldman and Morgan became bank holding companies, all banks are back gambling with taxpayer bailout money plus retail customer deposits
6. Bill Gross warns of a “new normal” with slow growth, low earnings and stock prices
7. While the White House’s chief economist retorts with hype of a recovery unimpeded by the “new normal”
8. Wall Street’s high-frequency junkies make billions trading zombie stocks like AIG, FNMA, FMAC that have no fundamental value beyond a Treasury guarantee
9. 401(k)s have lost 26.7% of their value in the past decade
10. Oil and energy costs will skyrocket
11. Foreign nations and sovereign funds have started dumping dollars, signaling the end of the dollar as the world’s reserve currency
12. In two years federal debt exploded from $11.2 to $23.7 trillion
13. New financial reforms will do little to prevent the next meltdown
14. The “forever war” between Western and Islamic fundamentalists will widen
15. As will environmental threats and unfunded entitlements

“America Capitalism” is a “Lost Soul” … we’ve lost our moral compass … the coming collapse is the end of an “inevitable” historical cycle stalking all great empires to their graves. Downsize your lifestyle expectations, trust no one, not even media.

Faber is uncertain about timing, we are not. There is a high probability of a crisis and collapse by 2012. The “Great Depression 2″ is dead ahead. Unfortunately, there’s absolutely nothing you can do to hide from this unfolding reality or prevent the rush of the historical imperative.

 from http://www.marketwatch.com/story/story/print?guid=47729BA0-933E-4299-92CC-EB41EEE671D2

MY COMMENTS:  Don’t confuse the capitalism as used above with free market capitalism (which doesn’t exist and hasn’t existed for over 100 years).  You can’t have free market capitalism with fiat money – to say that there is such a thing – free market capitalism with the use of fiat money – is oxymoronic. This is a decidedly secular view of the “problem” complete with huge holes in the analysis and falls far short of a complete explanation.  You cannot talk about soul survival and its compatibility with simple greed and have it pass the smell test.  History and logic in no way supports such a premise. You need the spiritual aspect to speak of the national or economic ’soul’ and a more complete historicial perspective in any rational explanation. But for the purely secular and godless mindset the above explanation is at least a good starting point.

Recall?

Fall of the Republic

Here it is folks.  The long awaited new film from Alex Jones.

A single dose correction for faulty worldviews. 

Highly recommended by those who have gone before you!

Despised?

The stranger case of being despised.

 

Most are despised for the normal and long list of human character defects when they are displayed too heavily by any such despised person; such as arrogance, pride, anger, etc.

In some cases, I am surely despised for these reasons. But I suspect a stranger and less common case.

There’s a Biblical example, but I will spare you as I think I am already arrogant enough.

The Bible should certainly be the last Word. Go there if you want the Truth and read on if you want to know what I have observed.

No one wants to listen to someone that continually points out what would serve as a warning and thus convicts them of things that they do not have in their minds and/or thus makes them aware of things that they should be doing.

That is human nature.  We want to hang with those that point out the things we are doing right and how good we look.  That big pimple on the forehead can be overlooked, right?

In normal times, perhaps.

I was made suddenly aware back in the late 90’s that we were about to enter a new and troubling time.  How I came to know this is still a mystery.  It was from my gut and I set out to discover the ‘why’ part as best I could.  I ended up with a new worldview, a new religion and eventually a pretty strong desire to share what I had learned with anyone who would listen, read and/or check out a recommended book.  Pretty thankless work.  I speak from experience.

So the definition of insanity is doing the same thing over and over again expecting a different result each time.  Sometimes I think what I am doing fits, but I think the more accurate analogy is what I call the 5% rule.  It’s like shopping for a good deal on a house, you may need to look at 100 of them to find 5 that fit the bill.

I slog on in the hopes that I can help someone with what I am doing and if there are none or none that I know about that is fine.  It has become a top down affair.  I really don’t care what others think about my message or my style of delivery because I am answering to a Higher Authority – call it God if you will. I do.

He will make me better and more humble and whatever He wants in due time. I am a hard piece of clay, but merely soft putty in His hands.  I am in for a rough road if I read the terrain correctly.

If you are ready to hear, you will.  I think it is important that there are a few of us around that still beat the drum.  When you are ready to hear you will need someone who is telling it like it is. A lot of us have given up.  There were more of us in the 90’s.  Many of us were killed off spiritually, just like the literal example of Waco. We are the minority within the minority right now.

It won’t be that way for long.  People are coming out of their slumber.  Things are happening and that is waking up people. They are asking different questions rather than giving their faulty, mainstream and worldly opinions.

Events are conspiring and new, more dramatic and devastating things will be happening and that will wake more.  It then gets to what is called a tipping point, a marketing term I think, and then it goes viral.

All the while, those who will be waking up will be persecuted. Not the version of persecution I lament, being despised.  That is small change. The persecution coming will be the real deal. Late Rome and Nazi Germany all over again.

This theory of being despised and how Christianity grows is NOT original, just personal.

What to eat?

What To Eat In A Crisis

http://nutrition-and-physical-regeneration.com/blog/1863/food-storage/what-to-eat-in-a-crisis/

Those of you who follow the meanderings of our government and its monetary policy know that things are not well with our country politically and economically speaking. The dollar is now on the verge of losing reserve currency status and that will make things even worse. True unemployment is a lot higher than the government is reporting. You don’t have to be an economist to figure this stuff out. People are uneasy and it shows in their economic behavior.

Whether this is the big enchilada I don’t know, but America is truly at a crossroads and for many of us life potentially will never be the same again. If you track the numbers you know we are in the midst of what one writer has called the greatest depression. Despite what many talking heads are saying things are not getting better. Never before in the history of the world have so many governments all at once engaged in the practice of fiat money, a practice which has without exception always led to economic and political disaster. If you don’t know what fiat money is I suggest you check my post out on ending the Federal Reserve titled $10,000,000 For A Loaf Of Bread.

The practical and potentially devastating aspect about this is that here in America (and increasingly so around the world) most of us are accustomed to “just in time” shopping. We buy enough food for a week or so. We expect when we go to the store what we need will be on the shelf. The thought of a shortage or a crisis is the farthest thing from our mind. After all, the food truck(s) for Whole Foods show up every morning at 2:00 am right on schedule, so why should I be worried?

If you have been fortunate enough to be shut in because of inclement weather, or lived in an area affected by a trucker’s strike, or lived where there was a predicted shortage of a particular item (like toilet paper), then you know there is reason to worry. I say fortunate because that experience may have taught you how tenuous your life line to food really is – a boycott, a natural disaster, inclement weather – and all of a sudden the food stops rolling and for those who are unprepared it can be a very unpleasant experience.

How and why Americans got away from the farming mentality of saving during the summer for the upcoming winter, or saving during good times for the inevitable bad times, is a story for another occasion. We who for the most part do not garden or produce our own food are extremely vulnerable to any kind of disruption in the market place – be it a trucking strike, getting snowed in, losing our job, or God forbid, a hyperinflation.

In light of the current economic woes, storing food has become very popular. The problem for traditional foodies (for whom lack of animal fats is not an option), is that there isn’t a lot of choices available in terms of what to eat. One of the basic principles of food storage is store what you eat, since an abrupt change in circumstances is likely to be exacerbated by the need to consume strange foods that you and your family wouldn’t normally be eating.

I think this principle is sound for short term crises although I don’t think it bears any relation to reality if one were involved in a long term breakdown. The greatest sauce in the world is hunger, and otherwise strange food can become pretty tasty when there is nothing else available. This is what Stefansson had to say regarding his Adventures in Diet:

 

During the first few months of my first year in the Arctic, I acquired, though I did not at the time fully realize it, the munitions of fact and experience which have within my own mind defeated those views of dietetics reviewed at the beginning of this article. I could be healthy on a diet of fish and water. The longer I followed it the better I liked it, which meant, at least inferentially and provisionally, that you never become tired of your food if you have only one thing to eat.”

 

Let us hope none of us ever find ourselves involuntarily in a situation where we are forced to eat only one thing. Stefansson further adds in relation to the men who journeyed with him:

 

Still, as just implied, the verdict depends on how long you have been on the diet. If at the end of the first ten days our men could have been miraculously rescued from the seal and brought back to their varied foods, most of them would have sworn forever after that they were about to die when rescued, and they would have vowed never to taste seal again – vows which would have been easy to keep for no doubt in such cases the thought of seal, even years later, would have been accompanied by a feeling of revulsion. If a man has been on meat exclusively for only three or four months he may or may not be reluctant to go back to it again. But if the period has been six months or over, I remember no one who was unwilling to go back to meat. Moreover, those who have gone without vegetables for an aggregate of several years usually thereafter eat a larger percentage of meat than your average citizen, if they can afford it.

 

For a traditional foodie there is currently little to store if you are out of electricity for a week and you do not have a generator to keep your electrical items running. Unless you normally eat canned meats or other canned animal products it won’t be a pretty picture. The one item that is really needed under duress for cognitive awareness is fat, and not just any old fat, but saturated fat. Going around the blogosphere is a recent excerpt from the author’s of Protein Power , Michael and Mary Dan Eades, who have written The 6-Week Cure for the Middle-Aged Middle: The Simple Plan to Flatten Your Belly Fast! , on the necessity of saturated fat:

 

1) Improved cardiovascular risk factors

Though you may not have heard of it on the front pages of your local newspaper, online news source, or local television or radio news program, saturated fat plays a couple of key roles in cardiovascular health. The addition of saturated fat to the diet reduces the levels of a substance called lipoprotein (a)—pronounced “lipoprotein little a” and abbreviated Lp(a)—that correlates strongly with risk for heart disease. Currently there are no medications to lower this substance and the only dietary means of lowering Lp(a) is eating saturated fat. Bet you didn’t hear that on the nightly news. Moreover, eating saturated (and other) fats also raises the level of HDL, the so-called good cholesterol. Lastly, research has shown that when women diet, those eating the greatest percentage of the total fat in their diets as saturated fat lose the most weight.

Editor’s note: Those of you who have read the series on this site called Slaying the Low Carb Dragon know that the same is true for men. The Kitavans, whose saturated fat intake is 80% or more of the fat they consume, are free of obesity, heart disease, and other degenerative diseases that plague the West. By the way, the Kitavans eat a high carbohydrate diet (69% by calories), although the Eades in their various bestselling books preach a low carbohydrate lifestyle. It is worth noting that the Kitavans apparently don’t need a 6 week cure for the middle aged middle.

 

2) Stronger bones

In middle age, as bone mass begins to decline, an important goal (particularly for women) is to build strong bones. You can’t turn on the television without being told you need calcium for your bones, but do you recall ever hearing that saturated fat is required for calcium to be effectively incorporated into bone?

According to one of the foremost research experts in dietary fats and human health, Mary Enig, Ph.D., there’s a case to be made for having as much as 50 percent of the fats in your diet as saturated fats for this reason. That’s a far cry from the 7 to 10 percent suggested by mainstream institutions.

If her reasoning is sound—and we believe it is— is it any wonder that the vast majority of women told to avoid saturated fat and to selectively use vegetable oils instead would begin to lose bone mass, develop osteoporosis, and get put on expensive prescription medications plus calcium to try to recover the loss in middle age?

Editor’s note: Mary Enig is a sharp lady but you can go well beyond the 50% level when it comes to saturated fats and enjoy extremely good health.

 

3) Improved liver health

Adding saturated fat to the diet has been shown in medical research to encourage the liver cells to dump their fat content. Clearing fat from the liver is the critical first step to calling a halt to middle-body fat storage. Additionally, saturated fat has been shown to protect the liver from the toxic insults of alcohol and medications, including acetaminophen and other drugs commonly used for pain and arthritis, such as nonsteroidal anti-inflammatory drugs or NSAIDs, and even to reverse the damage once it has occurred. Since the liver is the lynchpin of a healthy metabolism, anything that is good for the liver is good for getting rid of fat in the middle. Polyunsaturated vegetable fats do not offer this protection.

Editor’s note: That is an understatement regarding polyunsaturated fats. See Chris Masterjohn’s Special Report on why PUFA’s may be dangerous for your health.

 

4) Healthy lungs

For proper function, the airspaces of the lungs have to be coated with a thin layer of what’s called lung surfactant. The fat content of lung surfactant is 100 percent saturated fatty acids. Replacement of these critical fats by other types of fat makes faulty surfactant and potentially causes breathing difficulties. Absence of the correct amount and composition of this material leads to collapse of the airspaces and respiratory distress. It’s what’s missing in the lungs of premature infants who develop the breathing disorder called infant respiratory distress syndrome. Some researchers feel that the wholesale substitution of partially hydrogenated (trans) fats for naturally saturated fats in commercially prepared foods may be playing a role in the rise of asthma among children. Fortunately, the heyday of trans fats is ending and their use is on the decline. Unfortunately, however, the unreasoning fear of saturated fat leads many people to replace trans fats with an overabundance of polyunsaturated vegetable oils, which may prove just as unhealthful.

 

5) Healthy brain

You will likely be astounded to learn that your brain is mainly made of fat and cholesterol. Though many people are now familiar with the importance of the highly unsaturated essential fatty acids found in cold-water fish (EPA and DHA) for normal brain and nerve function, the lion’s share of the fatty acids in the brain are actually saturated. A diet that skimps on healthy saturated fats robs your brain of the raw materials it needs to function optimally.

Editor’s note: This is precisely what you don’t want to happen in the midst of a crisis.

 

6) Proper nerve signaling

Certain saturated fats, particularly those found in butter, lard, coconut oil, and palm oil, function directly as signaling messengers that influence the metabolism, including such critical jobs as the appropriate release of insulin. And just any old fat won’t do. Without the correct signals to tell the organs and glands what to do, the job doesn’t get done or gets done improperly.

 

7) Strong immune system

Saturated fats found in butter and coconut oil (myristic acid and lauric acid) play key roles in immune health. Loss of sufficient saturated fatty acids in the white blood cells hampers their ability to recognize and destroy foreign invaders, such as viruses, bacteria, and fungi. Human breast milk is quite rich in myristic and lauric acid, which have potent germ-killing ability. But the importance of the fats lives on beyond infancy; we need dietary replenishment of them throughout adulthood, middle age, and into seniority to keep the immune system vigilant against the development of cancerous cells as well as infectious invaders.

Editor’s note: The only readily available significant source of lauric acid after weaning for most people is coconut fat. See Mary Enig’s, Coconut: In Support of Good Health in the 21st Century.

 

As you can see your need for saturated fat doesn’t go away in a crisis, it is enhanced!

The unfortunate rub is that you will not find a food storage program that is high in traditional saturated fat. MRE’s don’t do the trick. Canned meats aren’t the answer for most folks and grain based programs don’t fit the bill. Yes I know that the body can make saturated fat from excess carbohydrates (and such fat is 100% saturated, unlike almost anything you find in nature except for coconut fat) but it is still not very pleasant to have to depend on a diet like that when you are accustomed to something else. Fortunately you don’t have to depend on such a diet.

What follows are three foods that will serve you well in a crisis of any nature. I start with a food that will serve you no matter how long the crisis. Then I move to a food that will serve you for at least six months. The last food I recommend is one which is good for at least a week fresh and much longer if canned. My recommendations are based on the worst possible scenario, meaning no power at all. Obviously if you have access to a generator or power is available during the crisis then things will be different and you can adjust accordingly; but what follows will cover you food-wise no matter what.

 

Survival Food Number 1

Pemmican – up to 20 years

If you haven’t read my post on “The Bread of the Wilderness” you should stop and do so right now. Pemmican is lean beef, beef tallow, and sometimes berries mixed together in a one to one ratio of beef and fat (you go slightly lower on the fat or lean if you are using berries).

The value of pemmican is this: all by its lonesome, whether or not you are going through a personal financial crisis, pemmican can sustain life. In fact you can thrive on pemmican. It has a very small footprint. You don’t need much on a daily basis to be completely satisfied and well nourished, therefore it can go a long way. 3/4 of a pound of pemmican will provide approximately 2200 calories. 10 pounds of pemmican per person is enough food for two weeks.

I would suggest adding pemmican to your diet now, so that if need be you can acquire a taste for it. Some purists argue that berries should not be a part of pemmican, but I wouldn’t worry about that. Unless you are on the all meat diet feel perfectly free to eat berry pemmican. The best way is to make your own. There are several links in my “Bread of the Wilderness” article instructing you how to do that. You can also buy pemmican from US Wellness Meats (disclaimer: I have an affiliate relationship with this very fine company).

However do not buy it from any retail store that sells anything that claims to be pemmican. It is not. To the best of my knowledge, other than US Wellness Meats, there is no real pemmican available at retail in the US. If a reader knows of someone who is producing the genuine article, please let me know. Otherwise do not gamble with your health by purchasing an inferior product. Either make your own or buy the real stuff. You can also experiment using coconut oil as part of the fat ration. Coconut oil is much more saturated than beef tallow (and tastier).

 

Survival Food Number 2

Ghee¹ – up to 6 months

I have a video on this site for making ghee. Ghee is butter with the milk solids removed. I would definitely make my own ghee as it is really easy to do. All the water needs to be removed and the best way to ensure that is by doing it yourself (it is also very important that you remove all the water from beef tallow when making pemmican).

You can buy ghee at retail but the good stuff is very expensive. One brand I bought went moldy after a few weeks. Apparently all the moisture was not removed from the fat. So to be on the safe side you might want to buy a few jars now and then begin making the rest for your private storage. The same goes for pemmican. You can buy a few boxes from US Wellness Meats and then begin to make your own.

 

Survival Food Number 3

Fresh coconut milk – one week

You will need some kind of vacuum sealer to make this work. I have on this site a video on how to make coconut milk and soon I will be posting a pictorial showing you how I make my own coconut milk. For the advanced among you check out my post on Serious Juicing for Serious Juicers, which demonstrates the ideal way to make coconut milk. Coconut milk is loaded with that magic compound, saturated fat, and in many parts of the world, coconut and its derivative products are considered a miracle food.

Coconut milk makes a great dairy milk substitute in a crisis which can be used with any grains you might have on hand for cereal. If you don’t want to make your own on a regular basis I would definitely buy canned coconut milk. The only brand I am aware of at the moment that doesn’t add water is Thai Kitchen Pure Coconut Milk . This is just too good of a food not to have on hand in a crisis or any other time for that matter.

So there you have it, the complete traditional foodie storage program that gives you beef fat, butterfat, and coconut fat, which will transform any food storage program both taste wise and nutrient wise.

In closing let me add a few things regarding the concept of surviving a personal or society wide crisis. The following resources are non-negotiable in a worst case scenario:

1. The ability to handle human waste
2. The ability to purify water
3. The ability to barter for what you don’t have
4. The ability to extend the daylight
5. The ability to provide your own food.
6. The ability to provide security for your home and property

All of the above can be done cheaply and systematically if planned for in advance (in other words before everyone else is trying to do it in the midst of or in preparation for a major crisis), but it needs to be done with focus, precision, and a sense of urgency, especially if you live in the city.

MY COMMENTS:  Michael’s blog at http://nutrition-and-physical-regeneration.com/blog/ is excellent.  There are several days of reading there that is very educational and helpful. I especially liked his article on Kitavans and Pemmican.

Blog?

Why do I do a blog?

 

There are selfish reasons and there are not so selfish reasons.

 

The tagline is “Waking up before the storm.”  What storm?

 

We’ll talk about the not so selfish reasons.

 

I’ve known for sometime that we are coming into a hard time and for the purposes of this blog I call that hard time “the storm.”  I study to find the reasons I have this warning and they line up and stare me in the face.

 

Who else has been warned?  There are a few.  I just posted an audio of one of the better ones.

 

I get some readers on this blog, but not very many. The most readers I get is when I have a piece on Gold. Virtually none when I have a piece on God.

 

Says much doesn’t it?

 

My blog is the warning and why.  Yeah, you have to read and if you have loved ones you need to pass it around.

 

Yeah, you all need to WAKE UP.