You Are Feeling Sleepy, Sleepy

I freely admit that I'm a knowledge junky. I said "knowledge", not
learning. Learning is a process of assimilation or in other words, you
absorb and make it your own. Knowledge is understanding what you have
assimilated. Knowledge demands that some assimilated information must be
discarded as erroneous.

These errors might be due to lack of adequate data, personal biases in the
interpretation or (sound of approaching thunderstorm please) purposeful
manipulation to decieve. Free thought permits, NO, demands that all
information must be weighed, calibrated and compared to existing and
tested knowledge base.

Testing of learning is fairly simple. At the testers disposal is multiple
choice, fill in the blank, essays and manual manipulation. All of these
are classroom techniques. Testing of knowledge is far different.

If a person has knowledge, they know the outcome for every stage of a
process before they begin. The human element is effectively discarded. All
the variables are accounted for or an experiment is run just so the
variables can be identified and either eliminated or accounted for in the
experiment. Knowledge is tested by application.

Now that I have chased off all the oxygen thieves, I had probably better
get down to the issue at hand.

Everyone has heard of Pavlov's dogs. Ring the bell, dog salivates. It is
conditioned response. Over time, every response becomes instinctual and
the subject has no conscience idea of the action they have effected.

Insert disclaimer here!

If you are an idiot, I will smile, nod my head and walk away. I just don't
care what you think. Therefore I won't post web-links to support anything
I say unless I feel like it. Do your own research! Everything I say or
opine is subject to change as new data becomes available. Knowledge is a
pursuit that has no end point.

We now return you to our normally scheduled program.

Homo Sapiens is just another animal and conditioned response is the norm.
Punishment is the mechanism for unacceptable behavior. Respect
authorities. Stand behind your leader. Know your place. Yada, yada, gag me
with 18" pipe wrench.

There is a syndrome that affects many people in hostage situations. They
develop a love-hate relationship with their captors. The hostage resigns
themselves to dependancy of their captors and hates themselves for being
weak.

Depression becomes the inevitable result without serious intervention.
Drugs are commonly prescribed and counselling is mandatory. As counsellors
aren't cheap, the financial gain promotes long-term therapy. Any pursuit
of rapid mental reallignment of the victim is verboten. The argument for
long-term therapy hinges on the possible shock to a person who has already
suffered a shock. In medicine it has been said, "The difference between
medication and poison is the dose."

Depression is a self-reinforcing state of helplessness. The victim
immerses themselves in a state of self-pity and accepts it. What might
have been human is now a trained animal. (Cue in howls of self-righteous
anger and fade in chanting "you can't understand, you can't understand.")

Ah, but I do. Been there, done that. My self-medication of choice was
alcohol in liberal quantities. Self-analysis coupled with shock and awe
brought me out of it every time.

So just where the hell am I going with this?

Citizenry throughout the developed world is wallowing in self-pity. Even
the US government takes advantage of it. If the individual believes they
are impotent to change the direction of their life and their vote is
meaningless, everything remains the same.

We were conned into consumerism and attendant debt. Our government
supported and pursued national debt as good for business. We, the
citizens, learned through conditioning that Senator Snort brings home the
bacon. Nobody was willing to admit that government redistribution is just
theft and carries a high handling and shipping charge.

Whether it was Social Security, Welfare or Unemployment Insurance, the
object was to develop a hostage crisis for all participants unable to live
outside the system.

So how do we live outside the system? The easiest method is what the Army
termed "the problem solving format."

Step 1. Correctly identify the problem. This is the most difficult of the
steps. Symptoms are NOT the problem.

Step 2. Determine ALL the possible solutions. This MUST include even the
most unpalateable solutions.

Step 3. Select the best solution.

Step 4. Implement

Step 5. Analyze the outcome and make any changes needed. For many, this is
just as difficult as step 1. The first difficulty is accepting less than
optimum outcomes. It failed, therefore I failed so I should just accept my
sorry lot in life. Doctor, will you refill my prescription? Another
difficulty is bull-headedness. This has to work, this will work, I'll
force it to work, ... etc. Believing the experts is a fool's errand.
Nobody can grasp your anguish, ethos or dreams as effectively as you.
Physician, heal thyself.

We have become victims and exhibit all the symptoms. We accept our sorry
lot in life. We self-medicate or refill our prescriptions for
anti-depressants. We have conned ourselves into believing this is as good
as it gets. We turn to government for guidance. Recall the check-writing
scandal in Congress? They can't balance their own checkbook, the nation's
checkbook and toss good money after bad. They nationalize private debt for
the big players for your sake, but don't nationalize your's. The business
of government is tax and spend their way to re-election.

We have let ourselves become pawns in a chess game without knowing who are
the players. We have learned exactly what the players want us to think we
know. There can be no know without understanding. Remove understanding and
the know becomes exposed for what it really is; belief.

We have let the illusion become our delusion. "You are getting sleepy,
sleepy. We are from the government and we are here to help you."
Please deposit $2.5 million for the next re-election campaign. There is
still so much work to be done. Nobody dares ask, "Why would a logical
reasoning human continue to pay for non-performance by an elected
representative?" The chronicly depressed see themselves as dependants of
their captors. Now take your meds and shut up.

The Business of America Pt2

So what are the upsides and downsides of this dominant business of
royalties and licensing?

One upside is high profits to low investment ratio. Even in the field of
entertainment such as movies, if the producer practices cost containment,
three possibilities exist for profits. Lose some money, make a profit or
make an enormous profit. No, there is no such thing as break even.

All of this equates to tax revenues. Lower the cost of the material and
preserve profit increases the profit margin. Higher profit margin equals
increased tax monies. Every for-profit corporation has a fiduciary
responsibility to its shareholders to maximize profits.

The ability to maintain profits and transfer costs to a foreign company
meets this requirement. It further permits capital investment to be
provided for other projects. If we invest money in manufacturing
equipment, this money is tied up for several years. If it goes for
projects that are sourced off-shore, the investment can be recovered in a
far shorter period.

So what is the downside?

We sent our manufacturing base off-shore. Now we are faced with sending
consumer monies overseas. We lack the manufacturing capacity to take care
of ourselves. This adversely affects our balance of payments. It is good
for business, but bad for the diversity of our industrial base and
national defense.

Our nation needs a military, but national defense is far more than
military might. The military consumes and creates nothing. Every penny
spent on foreign goods just goes down the rat hole. No US jobs are created
and tax revenues leave the US economy. Our economy must be defended.

As a nation, every job sent overseas equals a transfer of US money. We
only have so much income. If we fail to save and re-invest in the US, we
will effectively spend our way into poverty.

As it is, we are rapidly moving into a service industry. This is nothing
more than taking in each other's laundry. Each monetary transfer is part
of the GDP and is taxed. If we move this money around long enough, almost
every cent is taxed away. This is the "trickle down" theory of the Reagan
era.

If we just admit that the business of America is taxes, and if we admit
that royalties/licensing is the path to greatest profits, then we have to
increase our educational expenditures. With our propensity for
entitlements, we can ill afford anything other than "No Child Left
Behind." The legacy costs of Social Security for the baby-boomers will
demand greater tax revenues.

So what is the solution?

First of all, eliminate entitlements. Cash the people out.

Remake the tax laws. Begin with a single employment deduction per employee
of $12,000 a year. No other deductions allowed. Set the tax rate at a flat
10%.

Tax all capital gains under 6 months investment at 35% as well as all
gambling tax rate. Day-trading is gambling. Eliminate deductions for
losses incurred by gambling.

We need to return to tracking of our students. Excellence must never be
compromised by dumbing down our brightest students. Tendering the argument
of equality can be addressed by tight grading standards. If the student is
failing, fail them.

Are these the answers? I don't know. We face a deficit and an enormous
national debt. We will have to make right on this debt and I fear our only
option will be hyper-inflation. Without a domestic manufacturing base, we
will face severe economic challenges. I'm not sure if American labor has
the skills a economic collapse would require. We truly live in interesting
times.

The Business of America

If you ever get the desire, look at America's largest export on the Dept
of Commerce website. Or just keep reading and I'll tell you it is
royalties and licensing. So just what is this stuff and why does it affect
me?

Software, copyrighted material and patents comprise the lion's share of
these exports. If you are reading this, you better be aware that the
software is owned by a company and you only have a usage license. You can
NOT copy and sell it. In most cases, it is only licensed for use on one
computer. You can be held liable for civil damages for buying a single-use
license and installing it on your laptop and desktop computers. These same
licenses are sold overseas and these licenses are called exports.

Copyrighted material can be books, movies and music. Just figure it as
entertainment and educational media. Much of the material can be sent to a
foreign country in digital form, converted to end-user friendly media and
then distributed. All the costs of manufacturing and distribution costs
are borne by the recieving country and the original creators get a royalty
with little costs associated with the material beyond the actual creation.
Again, these royalties are exports.

In many cases, patents are licensed to overseas manufacturers solely due
to labor costs. High-tech patents tend to be put into production
in-country until a long-term market demand demonstrates an extended and
growing lifetime is projected. Rather than make substantial capital
improvements in-country manufacturing base, the creator company licenses
it for foreign manufacture. The original manufacturing tooling is reserved
for the next generation of high-tech item. Again, the costs are the
problem of the overseas manufacturer. Another export.

So just what does this mean and how does it affect me?

As this is all about profitability and growth of our export base, if you
aren't in the game you will continue to experience smaller incomes and
elimination of manufacuring jobs. If we consider greatest income versus
job availability, high-tech is the surest path to future economic wealth
generation.

However, there is a caveat. High-tech requires education. Most will be
forced to attend college in order to gain the required knowledge base to
enter the labor market. Any and all research and development of the next
best thing done while you attend college is owned by the college. At best,
you will get your name on the patent, but it is assigned to the college by
federal law. College is a business. You are effectively buying an
internship in the business in return for training.

This leads us to the simple fact that our entire economy depends on
education. We are constantly assailed with our children's need for more
investment in education. Our schools have chosen the path of cooperative
teamwork rather than individual merit. There are somewhat valid arguments
in favor of the teamwork approach.

High-tech innovation requires massive numbers of man-hours. In most cases,
the only available mechanism to achieve this requirement. Discipline is
improved in the classroom when all members are subject to peer pressure by
members of their team. If we mix the teams up enough, we can get pretty
fair results from mediocrity. Every child gets an atta-boy.

These advantages can lead to some serious problems. Children capable of
rapid learning tend to wander off. Attention Deficit Disorder is the
problem and drugs are the solution. This causes a dumbing down. Social
equalization is maintained, discipline is maintained and even a doped-up
child can function as part of a mediocre team.

When did this trend start? I tend to think the beginnings were in the
1960's with the race for space and the moon. Space held wonder, excitement
and hunger for students with any taste for science. There remains many
people opposed to the International Space Station and the NASA agency for
being a waste of money. I contend that NASA is our nation's primary
spokes-agency for science education.

End part 1

We Have Unsettled Weather Conditions

Many who might read these blogs could get the idea that all I see is doom and gloom. Not at all. There remains a possibility that our politicians with the help of financial experts could pull a rabbit out of the hat.

I've spoken earlier about the emotive responses of homo sapiens. Even the most logical thinkers can be swayed by a well framed argument that appeals to their ethos. Just as easy as a mob can destroy a city, so can a determined mass of people can build monuments such as the Stonehenge.

Though I tend to avoid extensive planning, a sound economic plan that includes almost all of the changes needed to pay down our national debt, returns a poly-metallic monetary backing, increases bank cash reserves and eliminates derivatives would get my attention.

It could happen. Until then I will bet that our economic whiz-kids will do whatever they think might work. I can't see any evidence of malfeasance when it comes to our monetary system. I tend to think that most times, rather than malice, it is just plain ole dumb ass. I'm sure there is plenty of fodder for the conspiracy theorists. Don't get me wrong, I don't rule anything out.

Yes, there could be corporations that played the system. You might wanna read Bethany McLean's article in Vanity Fair on Goldman Sachs. (vanityfair.com)

Given enough data, a thinking person can make a pretty accurate prediction. In this case, we are mostly in the dark. There is a fight to prevent auditing the Federal Reserve. Better to error on the side of prudency. If I err, no harm. If people reading this blog buy some extra groceries or emergency supplies, it is a good idea. Severe weather could plunge anyone into several days of isolation and threaten their survival. On top of this, the economy needs consumer dollars.

If we plunge headlong into hyper-inflation, the stuff you buy today will never be cheaper. If inflation runs into triple digits, the shelves will be empty.

If you choose to lay in some supplies, keep your mouth shut about it. Desperate times make for desperate people. Far better to be the ants than the grasshopper when an ill winter wind hits. Of course you might wanna make sure you have some way to cook your grub.

Do I think it will rain out our economy? Yep. Do I think this event will result in law of the jungle? Perhaps in the cities and in some of the more isolated areas. The cities are vulnerable to any disruption of the food distribution system. In isolated areas, the probability of escaping justice will be greater. Small to midsize towns will retain a sense of community and work hard to control any criminal element.

No matter what the pros from Dover do about our economic mess, it will be several years at minimum for recovery. I suppose I had better scratch out social security. Oh well, it wasn't all that long ago that most folks worked until they died. So I reckon it might be a good idea to take our pleasures when the occaisions present themselves.

I patiently await the future with nervous anticipation. We live in interesting times which future historians will proclaim a pivotal event.

Inflation, Depression and Constipation

My step-father was a wise man. His family fled Europe during the early part of the depression and came to America. He put his way through college and gained a Masters in Silviculture by shovelling sulfur out of railroad cars. The only work he could find was with the CCC working in the woods of Oregon.

He learned the worth of money, invested carefully and abhorred debt. Money was just a tool. He taught me that the real wealth was in mental abilities. If you had a good mind, it had real value and if you had integrity to go with it, someone would always hire you.

My mother was a Rosanne. And when she married my step-father, she was white trash with money. Still she was refused entrance to the club. She started her own with herself as the mistress in charge. She truly believed money equaled respect.

I chose a different path and incurred her wrath after a phone call from her about rewriting the will. The projected value of the estate was considerable, but not majorly substantial. Stocks, bonds, cash and several pieces of real estate in a growing yuppie community. On the phone I was asked what I wanted from the estate in the will. I declined and suggested they spend some of the assets on a several month long world-wide cruise.

I can still hear her harsh retort, "We can't do that, something might happen!"

Less than a year later, both were dead. I recieved a token share of the estate that I promptly invested. The few debts remaining against the estate were medical, monthly utilities and taxes.

Here we are 10 years later. My sister and step-sisters are either broke or dead. The money brought no happiness or security.

If you recall, my teachings were that money was just a tool. Knowledge and integrity were wealth. Though I have no money, I have all the security possible without becoming a slave to the game of money accumulation or its evil step-child; public perception of wealth.

I think it was Calvin Coolidge that said, "The business of America is business." We are taught it takes money to make money. Few have the ability to accumulate money therefore they use credit. Credit by itself doesn't make money, but you can present the illusuion of being monied.

So America used its easy revolving credit plan to put on airs. Debt accumulated and each debt created the illusion of more money in the system than there actually was. It is called inflation and is made possible by fractional reserve banking insured by Uncle Sam through the FDIC.

Still, this heavy debt had its toll. Keeping up the illusion of wealth drove vast numbers of soccer-moms to anti-depressants. They were depressed and big Pharma made money. Taxes were rolling in to be dispersed according to the needs of the voting public.

When the system got over-extended, government stepped in with inflationary countermeasures called quantitative easing. In simplish, printing more money.

A consumer-based economy needs credit. We can't let the banks fail. To do so would permit an economic depression and dry up the tax base. The people would lose faith in the system. Recall all the worries about economic stimulus checks being used for debt pay-down?

So our ever benevolent politicians decided that modest inflation would eliminate national debt. The problem still remains; too much government spending and still no pay-down of the national debt. Now the talks are about national health-care, possible melt-down of commercial real estate and our continued need for a military presence in Iraq and Afghanistan. No problem, as helicopter Ben stated, we have a printing press. Inflation can't remain modest, but rather it will become hyper-inflationary. Those few that still have jobs will be able to pay off their debts, but most will fall.

No worries. Our ever wise politicians have a new CCC plan. Contain, control and convince. Contain the masses in the cities. Control them through food distribution networks and convince them that those not joining the club are the threat to prosperity. All this takes are a few facilitators helping various committees to decide to support programs that the government has already planned. Let the masses believe they have put the yoke around their own neck and they will gladly wear it. After all, we are all in this together.

The outsiders become the despised enemy. Nothing brings the masses together any faster than a common enemy. The wealthy elite will be safely cloistered far away from the masses. This includes the politicians who will have American military forces protecting them.

We will still be faced with debt. The world will isolate us from the world economy because we are a deadbeat nation. Politicians will continue to turn to the banking industry through the Fedearl Reserve system for aid.

I really doubt that the people will ever realize that this whole mess is about constipation. Our only option is a full-blown depression. We have to condition/train the public to practice financial responsibility. Everyone who thinks otherwise is just full of shit. That is called constipation.

The US citizenry and Congress needs a good old fashion enema.

The Wizard of Oz

Well once again I have left proof that I ain't no stinking wizard. Since the time when mankind first started packing up into tribes, there has been a need for prognosticators. Is it a good day to hunt? Does the north wind bode well?

I predicted that gold would hit $1200 by Monday. Little did I know that Dubai World would default on thier payment. Ripple effect on the money markets and IT IS all about money. Gold closed around $1172 on the US markets Friday and barely recovered to $1194 or so by close of business on Monday. However, by 11 PM local, the overseas markets ran it up to $1214.

Prediction is possible if enough information/data is available. Bear in mind that the human element can still toss in the monkey wrench. Humans trend towards emotional decisions more often than not. So where the hell am I going with this blog?

It is all about money. Labor creates wealth, government consumes wealth. Government wants predictable income hence the GDP nonsense. GDP is just a metric for predicting future tax revenues.

Recall my minor blurb about humans and emotional decisions? Each emotive reaction in the market place unbalances the efficacy of the prediction. If the individual pays off a debt due to fear, the revenue stream stops. The mortgage holder pays thier tax and monies that the homeowner used for debt repayment is diverted from untold layers of commerce where each layer pays taxes.

Keynesian theory depends on predictable revenue streams. When the economy is down, government infuses the system with additional revenue. When the economy improves, the government debt is paid down. In the US, we ran into a couple or more problems. Debt wasn't paid down during the good times and (drum roll please) the government lacked any effective controls to manage the economy.

Sure there have been several laws passed to get a handle on the problem such as mandatory bank reporting of large cash transfers and overseas investments, but these are just acts of desperation. These are attempts to halt the underground economy and increase the government's revenue stream.

For Keynesian theory to work, all aspects of commerce MUST be controlled by central authorities. Implementation is the problem. The easiest way to accomplish this is a noxious effort to con the people into self-regulation that is little more than a top-down con game.

Here is how it works, the government will assist local groups to set up a local planning committee along with some seed money. Locals will provide the input and policing believing that they are in control. However, the final plan is not much different than the draft prepared by central government under the guise of a model plan that other locales are using. After all, if others are using it, it must be a good plan.

Please don't get the idea that the involved locals are evil. Never attribute to malice what can be far easier explained by incompetance. It is just the old "why can't we all just get along", "we are all in this together" and the eternal quest for utopia. The locals involved believe in altruism and brotherhood of man. Every belief is subject to being highjacking. These same people have been conditioned to "respect authority." Nobody trained them to discriminate between genuine authority and pretenders.

What the public willingly rushes into is a melding of capitalism and communism termed cummunitarianism. The people trade freedom for security and in the end have neither. In any system, differences in labor create differences in capacity to achieve wealth. There is only so much wealth to go around. In order to raise the "disadvantaged" you must steal from the rich. This is termed redistribution of wealth aka welfare.

The current economic tsunami will wash away paper profits and this loss will bring more people into the fold. Poverty is always the end result of foolish money management. This poverty will induce the masses to demand more redistribution and consequently greater central authority over the economy. Hungry people vote and just who do you think they/we will vote for?

If I had any capital assets, I would secure what I could in precious metals, tools and the skills to use them, food and knowledge. Oh well, I suppose I am the grasshopper knocking on the door of the ants when the snow starts flying or maybe not. I did gain some skills, tools and knowledge over the years. Perhaps I can barter once the system goes down. Oops, I might get in trouble with the local planning committee. So scratch that idea. By the way,

Who is John Galt?