It's Alive, It's Back and It Can't Keep It's Mouth Shut

Well the loss of an internet connection due to a hacked DSL box along with a new computer and having a life pretty well took me away from the blog-o-sphere. As you can see, that has been resolved.

Life as a stoic existentialist has presented a not for prime time existence. But life must go on. Failure is for those who lay down and refuse to get up. Example? Last fall I took a serious fall and broke a couple ribs. Painful? Until you have experienced it, you can never fully appreciate the level of shear agony. So what does a stoic do about this type of situation? I got up cussing like a soldier and strapped the breaks. Then I carried on. No doctor, no real effective pain meds, and no crying for help.

Stoicism has a few basic tenets. If you can't change the program, accept it and do something else. Never live in the past; occasional reflection is okay, but the past can't be changed. Never avoid hardships at any cost, but no sense in seeking it. Without hardship, you have no metric to compare the good times against. For the stoic, austerity is not a four letter word.

However this installment is not about my aches and pains.

As many can see, the world economic conditions continue to decline. Greece, China, Puerto Rico, Japan  and who knows how many other locales are experiencing the effects of unproductive debt. Why is this happening?

Government gets in the habit of bailing out the big boys because failure would expose the Ponzi scheme to even the most ignorant idiots. Any time debt service is based upon growing the debt is bound to end badly. Government bonds are paid off by selling replacement bonds. The need to pay interest on existing bonds requires additional bonds be sold. None of the monies acquired by selling these bonds are used for producing a good that consumers demand and are willing to pay for.

Government figuratively sells bonds to put lipstick on a pig. Why? Because the voters think the pig would be so much more attractive. Of course the pig will die, but a 3-legged goat is an easy substitute. Within a few months, the voter's normalcy bias will reset and they will proclaim it was always a goat.

In the process, banks make a nice profit on the bonds. The voters never realize they are the underwrites of the bond through their tax payments. Few people realize that once all taxes are added up, their tax burden is somewhere in the range of 30-65% of their income. Makes a 10% tithing to the church seem minor.

How will this end? I don't know. There are several possible avenues for the end of the world as we know it. Several of them require understandable definitions. The powers that be (PTB) have a set of definitions that are kept secret. Politicians think they understand, but if they did they certainly don't speak econo-speak. Then there are the commentators and analysts eager to sell you newsletters that will say a lot, but never seem to get it right.

I will offer my definitions.
Inflation: An increase in credit.
Deflation:  Forced reduction in credit.
Stagflation: Increase in credit without an increase in wages.
Investing: An expenditure in a business venture for the long term based upon market fundamentals.
Speculation: Gambling. Effectively a get rich quick scheme based upon rapidly finding a greater fool.
Greater Fool: A gambler who got in the game too late to win.

That's enough for now. So here is the general plan of operations. Government passes a law making profits possible for some industry who wrote the law. Politicians get a donation to their campaign war-chest and they get the option of buying in. Insider trading? Of course. The need for this law is presented in such a way to the public that all but the most astute believe it is a job's bill, it plugs a gaping hole in our national defense, it counters crime, it makes health treatment affordable, ... , ad nauseum.

But how could the public fall for this crap?
Homo sapiens is a social animal. As individuals, survival is a daily struggle and success is doubtful. A family unit has more than one set of hands for all the labors required for survival. Tribalism and small villages permit a division of labor with the most capable contributing according to their ability. In a perfect environ, each contributes their skills equally. There is no such thing as perfect. Next step up is where things can really begin to go wrong.

Larger city states provide a ready labor source and with it, economy of scale production can occur. This often requires additional capital investment. Effectively, those who were already successful rent out their wealth in return for periodic payments. It is here that the socialist can gain firm footing. Equality, fraternity and a conscience are their watch-words. Everyone deserves a living wage regardless of their capabilities, industriousness and economy. The so-called "deserves" morphs into "entitlements" because we must feel empathy for our less privileged members of society. Nobody brings up the notion that if you want in on the business's decision making process, buy in.

As any dissent is raised, the apologists take over. Those at the bottom of the labor pool were from poor households, had poor education, didn't get a break, lack the work habits needed, are minority groups, on and on and on. The apologists are socialists attempting to put the successful on a guilt trip. Of course they can succeed in rallying the downtrodden into a somewhat cohesive voting bloc. With that, the mice bell the cat by enlisting the dogs of war to hold the cat down.

The reality is that the socialists are thieves who use the government to do their dirty work. Oh they only skim a bit off the top for administrative costs. In the meantime the politicians are eager to scratch the socialist's back in return for the voting bloc. Incumbency is worth 10-20% of the needed votes to stay among the elected royalty.

Elected royalty?
If one were to take the time to read a bit of history, you would find that the so-called founding fathers were royalists. It is clearly evident by reading The Federalist Papers. To this day, we perpetuate the royalty aspect by introducing politicians as "The Honorable ... ". Honorable? Let's see.

As I recall, it was Calvin Coolidge that stated, "The business of America is business."
The Constitution as written stated nothing about the rights of the citizenry and little about state's rights.  Recall that mention of insider trading by politicians at the federal level? Effectively, what was good for business was good for America. The USA went from a backwater colony to a world economic power by practicing business friendly politics. It was not a gradual process, but rather fits and spurts.

The greatest change took place during the Lincoln regime. Government forced through an onerous tax and export embargo on the south. You see, southern cotton wasn't being sold at a discount to northern textile mills.  That is what started the Civil War. Slavery was a labor issue and nothing more until Northern support started declining. Enter Seward and his Emancipation Proclamation that freed nobody. Northern textile mills got their cotton at deeply discounted prices.

 What was accomplished by the Northern win was the supremacy of the federal government.

Then we have all the following ash and trash presidents with business enhancing invasions of countless other countries. To the best of my knowledge, the only country with more business-based invasions was England who was now a valued ally.

As the long arm of the US military supported the entrance of US businesses, wealth increased beyond comprehension. Enter the Women's Suffrage Movement. We had started down the path of Universal Suffrage and the saga continues.

But why would I be opposed to universal suffrage?  Universal suffrage grants those with no chips in the game to steal chips from the players that do. The renter votes for municipal upgrades that force the property owner to fund; not just for construction, but for maintenance and operation. The renter decides what businesses can operate within the renter's area. The renter decides school bond sales paid for by property tax revenues. Then when the property owner is forced to increase the rent, the renter moves to a cheaper neighborhood.

The socialists get involved the moment monies are available for redistribution. And that property owner that raised the rent gets blamed for contributing to the gentrification of the area. The cheaper neighborhood now has real social needs and another cycle begins.

So where does it end? The same place all unproductive debts go to die. Bankruptcy.

The people see inflation that drives up prices. The people incur  more and more unproductive debt because they are entitled to a reasonable standard of living above and beyond their income. Businesses move the production of their goods to cheaper sources of labor after facing a continuous assault by the socialist for failing to increase wages while maintaining low prices. The continuing fall in retail pricing forces lending institutions to re-evaluate the collateral put up for securing the loans. In doing so, it becomes evident that the collateral value is too low so credit is curtailed. Where general labor lost during the relocation of manufacturing, the reduction in the credit now forces the middle management to be cut back.

More unemployment making more demands on the Unemployment Insurance (UI) scam. UI depends on long-term employment to cover the costs. Escalating costs with reduced employment reinforce the reality of the Ponzi scheme.

Those still working put their spare change into investment scams that are nothing more than gambling dens of iniquity. Those working need more money quick and can't afford to tie up their monies for years or decades in a real investment vehicle. They know their job might be next.


So who wins? Initially it is the captains of industry including the banking establishment. Meantime, the politicians inside trade. As manufacturing moves overseas, the parent corporation gets sold to foreign conglomerates. Soon all that is left is the money changers and the politicians. Everyone else has chosen penury. For most penury is a choice. They chose to incur unproductive debt. They chose to buy cars and houses they couldn't afford. They chose long-term debt without guarantees of long-term employment.

The reality is that the world is bankrupt. There is not enough money to pay for all the bills. The entitlement programs are broke and soon enough they will be forced to shutter the doors and windows. Government will do what little it can. Angry people will do counter-productive things for which no money exists to repair it. The retired, the poor and most everyone will face hardships far surpassing what their grandparents went through during the Depression of  '29-'55.

Most of the people will curse the 5%ers. Even they are broke. It is common knowledge that expenditures and debt grows in proportion to income. For most, higher earnings means higher debt load. Asset values are a matter of opinion. Debt is etched in blood, sweat and tears.What will be left? Who will still have productive assets? About 1%. This is the old money crowd, defined as families that kept their assets through the last great depression, and the new wealth generation capable. Who are they?

Every change in the environment stresses the inhabitants. Some are too specialized and can't adapt. A few have developed the capacity to adapt to almost any operative environment. Change brings opportunity. The small shop that made car horns thrived while buggy whip socket manufacturers went into the history books. Adaptability requires broad skill sets. This is an anachronism in this day of specialization. Just as the extended family unit and small tribe insured, as much as possible, long term survival in the past. So shall it in the not so distant future. When it comes to food and fuel production, many hands make light work.

And the socialists? If you won't work, neither should you eat. Administrative skills don't put food on the table. Nobody will bail out the socialists.

Soon enough, indentured servitude will be a blessed choice over death by starvation. I desperately hope I am grossly in error. Maybe the PTB can get deux ex machina. Just because it hasn't happened yet doesn't mean it is impossible. But long-term survival requires positive action every day, all day long until it is time to take the long sleep. Hope is not an effective strategy. It is only a mindset that drives positive action.

An advertisement asks, "What's in your wallet?" I would ask, "What skill sets are in your survival backpack?" 
I recommend the acronym RAT. Recognize the change in the operative environment. Adapt to those changes. Thrive in the new environment.
Rats do it. Coyotes do it. Opossum do it. Even insects do it; cockroaches being the classic example. Are those animals superior to you? The stoic in me says,"Probably".