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?