The Political Vice

Posted on October 20, 2022 by thezman

The British oddsmakers are not giving new prime minister Liz Truss much of a chance to survive the year, putting the odds at 1-in-8. They are posting wagers on her probable replacement, which is a good sign they are confident they will have plenty of action in the near term. You can wager on just about anything in Britain but the point of posting odds is to attract action. If the oddsmakers are posting odds on the next prime minister it means there is a demand for it.

From an American perspective it is a bit amusing because of the over-the-top way in which the media talks about these things. It is like how British sports announcers turn a mundane sport like soccer into life and death drama. Every player heroically passes the ball to some other hero, who courageously passes it back. They are doing the same thing with the political squabbles within the Tory party. They are carrying on as if the island will flip over if they pick the wrong person.

The British are in political crisis because the people who actually run the country never forgave Boris Johnson for supporting Brexit. The fact is, the elites in Britain all wanted to be fully integrated into Europe. They loathed the very idea of Brexit and detested the people who supported it, which is the majority of the people. Just as everywhere else, British elites, and those who think they are elites, define themselves by the degree to which they hate the average subject.

The elites shoved old Boris over the side without thinking much about who would replace him because of another quirk of modern Western elites. They never think more than once move ahead when on the attack. When scheming to line their own pockets, they are masters of eight dimensional chess. When they get their feelings hurt, they tend to blindly and maliciously strike out while howling in pain. They never think about what happens after they get their revenge.

This is what is happening in Britain. They got revenge on old Boris, but then they had no suitable replacement, so they were stuck with Liz Truss. She is a simpleton, so this has quickly blown up on them. Now they have to find a way to push her over the edge and find a different empty suit to play the role of PM. The odds are the next person will be terrible and this will force new elections. The other party will be declared the winner and then the drama comes to an end.

The only reason this is interesting is that it will be a story we see all over the West in the coming months, even in America. The midterms are shaping up to be a disaster for the Democrats, so they will be forced to address their Joe Biden problem. He is not going to go quietly, because his handlers need him to stay. Joe Biden is a shuffling husk, but the people holding important jobs in the administration need him in the job so they can hold onto those important jobs. Dementia Joe is useful.

Regardless, the people who actually run Washington will conclude that they have a Joe Biden problem after the election. The trouble is the next in line makes Liz Truss sound like Cicero, so pushing Biden over the edge will just create new problems, but wounded animals do not think that far ahead. We could very well see a replay in Washington of what is happening in London. Biden is forced out for health reasons, then Harris is forced out because everyone remembers that she is an idiot.

Of course, as the political turmoil in the West heats up over the next year, the popular explanation will be that it is due to bad economics. Inflation, shortages, recession and energy prices will get the blame. You see this happening in Britain where inflation is getting blamed for the crisis. It is complete nonsense. The Bank of England is undermining the Tory government, not popular unrest. The Tories have no reason to care about public opinion. They do care about elite opinion.

That is the real source of the crisis that is slowly spreading in the West. In theory, government exists to exercise the will of the people. The “general will” is defined though the democratic process. The parties compete for support by offering up policies to address the issues the voters think are important. The Tories are in power because they supported Brexit and they implied they would do something about the problems that naturally stem from post-national cosmopolitan globalism.

There was never any chance of this happening because the people who actually run Britain never wanted those things. Those people are not subject to elections and have no concern for public opinion. That is the cause of the crisis. The political process and its results lie between public opinion and elite opinion. The two sides are natural opposites that operate like the jaws of a vice. As they close, the political process is squeezed until it eventually bursts.

The fact is the West has reached a point where we cannot have both an avaricious ruling elite and a prosperous middleclass. Either the elites are brought to heel and are subject to the political process or the middleclass collapses. The new world order is an effort to consolidate power and impoverish the population. Populism and various forms of nationalism are middleclass efforts to fight back against elites. The West is now entering the survival stage of liberal democracy.

It is tempting to think that numbers matter and the people will eventually win out and bring their elites under control. Covid should disabuse anyone of that notion, as it is clear that most people would rather die than speak out against the most humiliating abuses of the elites. If you can make people wear their underwear around their heads, you can make them do anything. Of course, an elite willing to mutilate children is never going to be susceptible to appeals to their humanity.

On the other hand, no one was really at risk during Covid. People got sick but people always get stick from something. Covid policies did not put the general wellbeing in danger, at least not right away. When people are worried about paying their rent or keeping the doors of their business open, they stop worrying so much about offending the sensibilities of rich people. Western people seem to accept no limits on their humiliation, but maybe there is a limit.

Regardless, the West is clearly entering a crisis phase. Unlike past crises in Greece, Spain or Italy, this one is occurring in the heart of the West. People expect political turmoil in Italy, but not in Britain. People expect the Spanish economy to be on the edge of the abyss, but not the German economy. Washington is supposed to be the same regardless of the party in power. This crisis is in the core of what made the post-Cold War order possible. Soon, all of it will be up for debate.

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The Energy War

Posted on October 6, 2022 by thezman

The golden rule states that the man with the gold makes the rules. In this age, gold is energy in its various forms. The world as we understand it runs on electricity, which comes from fossil fuels like oil, gas and coal. If you happen to sit upon a lot of these things, you get to be important and have a lot of money. If you do not have these things, then you are dependent upon others for your welfare. There simply is no way to have a modern society without cheap energy.

In case the West forgot this reality, OPEC+ sent a gentle reminder this week by committing to a large cut in production. Over the next two months they will reduce supplies of crude to the market by two million barrels per day. The stated reason is to bring market prices back in line with the target of $100 per barrel. The unstated reason was to remind Washington that they are not the only voice in the room. The Saudis were sending a message to Washington.

Since Biden took office, there has been a sharp decline in relations with Saudi Arabia, due, in part, to Biden’s reckless language regarding the Khashoggi affair. He was the CIA operative pretending to be a Washington Post reporter. The Saudis decided to have him chopped up at the Saudi consulate in Istanbul. This became a major scandal, as the events were leaked to the press, most likely by Washington. Biden has called Saudi Arabia’s Crown Prince Mohammed bin Salman a murderer.

There are also the recent efforts by the Biden administration to manipulate the energy markets through various means. It is clear that the administration has been faking gasoline demand numbers to suppress the futures market. Then there was the promise to buy 200 million barrels of oil from Saudi Arabia at $80 a barrel in exchange for OPEC not cutting production. The Biden admin has reneged on that deal. The Saudis have good reason to not want to play ball with Team Biden.

The larger issue for the Saudis and every other country outside the collective West is the issue of regime change, which has become a fetish for Washington. MBS looks at Biden’s reckless words regarding the Khashoggi affair and sees it as a potential first step on the regime change escalator. Whenever Washington decides they want to blow up a country, they anathematize the leader, by claiming he is in violation of the moral consensus and thus fair game.

The Saudis have become closer with the Russian over the last year and the main driver is the regime change issue. The OPEC countries, Russia, China and even India are coming to understand that Washington sees them as lackeys. As long as they do what they are told they can keep some of their stuff but get out of line and Washington will install someone new. The willingness of Washington to try regime change on a nuclear power says that no one is safe from this policy.

Of course, the Russians are a member of OPEC+ and they have their reasons for supporting a production cut. The EU is still plotting an oil price cap on Russian oil, which is mostly a face saving measure. They will set the cap at a price well above what Russia will find acceptable, so they can act tough while importing as much Russian oil as they can handle. This announcement by OPEC will make sure that the Europeans do not get creative with their math.

There is something else here. It is the first sign in the Middle East that the major players are thinking about a post-America world. The Saudi – Russia relationship has grown stronger over the last year to the point where the Saudis have been circulating a Ukraine peace plan in Europe. They have agreed to join BRIC’s, which is the political alliance formed around Brazil, Russia, India and China. Interestingly, Iran has also said they wish to join, despite their relationship with the Saudis.

Some observers suggest that Russia is playing peacemaker between Iran and the Saudis, with China and India supporting the effort. Getting these two regional rivals on the same team would be a sea change in regional politics. It is the sort of thinking that imagines a world where America is not a major force. It is also the sort of thinking that comes when all involved fear the same enemy. The sign outside their clubhouse will read, “No Regime Change Allowed.”

All of this is a reminder that while ideology plays a huge role in the current crisis, it is energy that has been the driving force. America’s presence in the Middle East has always been premised on the claim they are guarding the oil supply. The long war on Iran has been as much about keeping the Persians out of the energy markets as it has been about containing Islamic radicalism. The Iranians will not play ball with the West over energy, so they must be isolated.

This brings us back to the golden rule. Washington’s power lies solely in the power of the dollar, which is pegged to energy. The real reserve currency of the world is the BTU and the dollar is the physical manifestation of it. The war on Russia, like the war on Iran, is as much about protecting the control of energy as it is ideology. What we are seeing is that the countries with vast energy wealth are starting to figure out that they are better off as partners rather than as competitors.

Where all of this leads is hard to know. Washington is sure they can win a war of attrition against Russia, a people famous for their endurance. A lot will depend upon how much suffering Western Europe is willing to absorb. Washington is willing to fight the war in Ukraine to the last Ukrainian. Maybe they are willing to fight the energy war to the last European. As winter approaches, we will soon learn who is better equipped to survive the first energy war of the 21st century.

The Moral Hazard Society

Posted on October 4, 2022 by thezman

For the last couple of weeks, there have been whispers that some large banks may be in trouble due to the rising dollar. The strength of the dollar is due, in part, to the Federal Reserve’s effort to fight inflation. It is also due to the decline in both the Euro and the British pound. Economic conditions in Europe are deteriorating quickly because of poor management at every level. The relative strength of a currency is the relative strength of the managerial elite that issues it.

Recently, the gossip has turned to Credit Suisse and Deutsche Bank, both of which have seen their share prices collapse. The former has lost about 60% since the start of the year and the latter is down around 50% off its recent high. Credit Suisse could be at risk of imminent collapse, due to its deteriorating credit condition. Banks need credit to function and right now, no one is excited about extending credit to a bank whose CEO is telling employees that the bank is not about to fail.

Some are calling the Credit Suisse crisis the Lehman moment. This refers to the collapse of Lehman Brothers in 2008, which triggered the financial crisis. Banks are dependent upon one another, so if one fails, it can set off a chain reaction where the next weak bank fails, then the next weakest bank. Get enough banks unable to make payments to other banks and the whole system crashes. This is why everyone is worried about the banks all of a sudden.

It is also why the market boomed on Monday. The stock market is wholly dependent on central bank policy now. Loose policy means lots of money creation in the banking system, which means lots of money flowing into markets. Tight central bank policy means the money gets fussy about where it flows. It can even sit on the sidelines and wait until things appear more stable. The robots are betting that Jerome Powell blinks and ends his tightening to save the banks.

This is similar to what recently happened with the Bank of England. All of a sudden, there was no market for the long dated British bonds. This is why the British pound declined in value. This in turn created a crisis for British pension funds, as their collateral started to evaporate. The BoE had to step in and buy long dated bonds to guarantee their price and save the pension funds. As a result, the gilt and pound have stabilized over the last few days.

The weirdness of this age is right there in that action by the BoE. On the one hand, they are trying to fight inflation by reducing the money supply. They do this by raising interest rates, which reduces bank activity. This slows the creation of money, thus reducing the supply of money relative to demand. As relative demand increases, the relative value increases, which is what brings down inflation. In reality, it means a recession, which does the hard work of cratering demand.

Where we are now with the BoE, and probably the Federal Reserve, is that the bank is trying to reduce the amount of money in the system relative to demand. At the same time, they are trying to increase the money in the banking system in order to prevent the banks from running out of cash. Put another way, we may be in a situation where central banks are injecting and withdrawing money at the same time, which is one of those things that is supposed to be impossible.

The current crisis is due to the choices facing central banks. They can provide liquidity to the system or they can fight inflation. If they raise rates to fight inflation, major players who got sloppy with interest rate swaps, for example, are suddenly facing an extinction event, which threatens the whole system. On the other hand, if they protect the system by leaving rates alone, they face the political fury of governments contending with double digit inflation and energy shortages.

There is a bigger issue. The energy problems, the supply chain disruptions, inflation and the fragile credit markets are due to political incompetnace. Over the last three years, Western governments, led by Washington, have found every bad decision possible and then made it with furious enthusiasm. People cannot be blamed for thinking it is deliberate, because that is the best answer. The odds of rulers being this dumb this often strikes most people as impossible.

This is a time when Occam’s razor does not apply. They are this dumb. Liz Truss came to power promising to give rich people free money to boost the economy. This was a moronic plan that nearly blew up the economy in her first weeks. Truss is a simpleton who has no business in politics, so she thought it was a grand idea. She is in office because her predecessor was a bloated party boy who saw Churchill whenever he caught a glimpse of himself in the mirror.

Go back through British PM’s and it is one buffoon after another. This mirrors what has been happening in America. Joe Biden is in the late stages of dementia and he will be on the ticket for 2024. His predecessor was a carny act. The guy before that was a formless nobody who was willing to act the role created for him. The guy before that was a simpleton controlled by his father’s friends. You can do this in every Western country going back decades. They are as dumb as they act.

The crisis of competence in the managerial elite is not the root cause. The real first mover is the moral hazard economy. Going back to the 1970’s, the Western political system has come to rely on a handful of clever bankers to save the political class from their own idiocy. Starting with Paul Volcker, central banks have been the mother hen of political economy, always right there to kiss the boo-boo of the politicians or the pirates in the financial system when they stepped on a rake.

This safety net under the political economy of the West has warped the selection pressure on the people in the system. In a world of no real risk, feckless airheads like Liz Truss can rise to the top on promises to the powerful. After all, if she breaks something, nothing really bad can happen. The result of this risk-free political environment is that it rewards reckless behavior. The bigger the claim, the bigger the media splash, which means bigger political clout.

The same selection pressure can be seen in banking. In a world where bankers go to jail and lose all of their money if they screw up, there is a low tolerance for people who are reckless and foolish. In a world where the Fed steps in to not only save your bank but save your golden parachute and those of your colleagues, why would you not take the most dangerous risks? For over thirty years central banks have created a moral hazard, which in turn created a culture of reckless disregard.

It is this sense that no harm can ever come from error that is leading the West into a crisis from which it may not survive. It is this mentality that is leading to the game of chicken with nuclear weapons. The West is now led by a collection of mentally unfit bullies who think they own the school yard. At some point, like all bullies, they will get punched in the nose and see their own blood. In this case, it is reality that will do the punching and the bankers will not be their to kiss the boo-boo.

This raises the serious question. Bullies learn their lesson in the schoolyard because that lesson is not lethal. In the present age, how can the ruling class suddenly feel the pain of their own stupidity, without blowing up the world? How can real risk be reintroduced to change the selection pressure without risking collapse? The moral hazard society may have reached a point where there is no solution. The phrase that may be needed here is creative destruction.

Economically Pondering

Posted on September 27, 2022 by thezman

A feature of this age is words and phrases have fluid definitions, rather than the old, fixed definitions from our dark history. Vaccine used to mean a preparation to simulate the immune system in order to prevent infection. Now it means the sponsor of the regime friendly cable chat shows. Recession used to mean two consecutive quarters of negative GDP growth, but now it means a thing that never happens. After all, who can really say what words really mean anyway?

It looks like we may be getting a new definition for bear market, which used to mean a prolonged decline in equities. The rule of thumb is that a long decline that reached 20% off the previous high is a bear market. Yesterday, the Dow Jones Industrial Average reached that point when it dipped below 29,300. It is now off 20.4% from the high in January 2022 when stocks rallied after the end of Covid. The index is now below the level it was at when Biden took office.

The main reason the market is in decline is the global economy is a mess and Western finances are even worse. The wild spending during Covid was always going to come with a hefty cost, but the assumption was that the economy would just turn back on and everything would be fine. Western government could then stretch the cost of Covid policies over a long period of time. Instead, we have inflation, war and a global energy crisis that is demanding government action.

The post Cold War economic model, the New World Order, is based on the assumption that conflict between major states was a thing of the past. America was the last remaining superpower, who would police relations between the major powers of the world and prevent minor powers from getting out of line. Disputes would be sorted through the various international organizations. The business of the world was no longer ideology. It was business.

That turned out to be a grand bit of self-deception. The ideological fervor of the West, particularly the Global American Empire, was the main driver of Covid policy and is now the main source of economic chaos in the world. Western rulers saw the pandemic as a chance to launch their Build Back Better schemes. This not only led to massive shutdowns of the economy, but the scrambling of global supply chains. It turns out that the magical replacements did not just appear as assumed.

Then we have the war on Russia and to a lesser extent China. This is a two phase war, with one phase public and one phase private. The public phase is the vast array of sanctions levied against Russia and any country aiding Russia. The private phase is the currency war being waged by Washington. The booming dollar is supposed to curb domestic inflation and protect the petrodollar. There are also acts of economic sabotage like the recent attack on European gas lines.

The question that is never asked, but may turn out to be the most important, is why has it taken so long for economic data to turn sour? Shuttering wide swaths of the economy to fight the flu should have triggered a massive recession. Expanding the money supply through massive credit creation should have resulted in massive price hikes and many asset bubbles. The policies of the last three years should have brought disaster, but here we are with only the threat of disaster.

One thing the last three years has revealed is that the people who think they are indispensable to the running of society are not that important. The managerial elite made one terrible decision after another but the system carried on, because the people who actually work found a way. Businesses figured out a way to keep the lights on, despite the best efforts of government. Their people figured out how to get their work down, even with the lockdowns.

One possible source of the paranoid terror we see in the ruling class is the unspoken understanding that they are unessential. Their pompous self-regard is a mask concealing a deep fear that the Dirt People might figure out that the Cloud People are just an expensive ornament. Joe Biden is a dementia riddled vegetable, which makes clear that the job of president is ceremonial. Next in line is a former prostitute with the IQ of a goldfish. These are not serious jobs.

Another possible reason the economic data is defying economic theory is that the numbers are not what they claim. An iron rule of life is that anything with value will be faked or stolen. Economic data has value to the ruling class, as it is seen as a tool of control, so faking the numbers is possible. For example, many people think the Biden people have been giving us fake gasoline demand data. This would be an effort to jawbone down gas prices.

This is an old game that was popular in the Obama years. Every month the Feds would release rosy economic data, only to revise down the numbers at some point in the future when no one was paying attention. How much of this is going on today is hard to know, but we can use inflation as a guide. Anyone who has been to the grocery store knows that inflation is much bigger than the official government stats. We can probably assume similar manipulation everywhere.

Even so, you can only fake this stuff for so long. Providing fake data and false narratives is like check kiting. It works initially, but eventually the gap between reality and the false narratives gets too broad to maintain. This is what we see with immigration in Europe, where the it has toppled two government recently. Those romantic stories about how immigration enriches society do not hold up when the subway station is a warzone controlled by African gangs.

The other question, now that reality seems to be catching up with Western governments, is how bad will things get economically? The Europeans are just at the start of the long dark winter promised by Joe Biden. The British pound is in crisis and members of the ruling party are revolting against the new PM. The Euro is not doing much better, having fallen to ninety-six cents on the dollar. Of course, the dollar is soaring as people flee to the reserve currency for protection.

The soaring dollar creates a dilemma for the Federal Reserve. If they continue to withdraw dollars to fight inflation, they risk a currency crisis. If they back off the tightening, they risk a fresh explosion of inflation. Because of the dollar’s relationship to energy markets, it would also trigger rising energy prices. Then there is the politics, which is already turning up. Bad political environments tend to result in bad economic decisions, which make for more bad politics.

That is the final question at this stage. Can the managerial elite of the Global American Empire talk their way out of this? A central belief of the ruling class is that if they can create a plausible narrative and talk about it enough, it becomes reality. Can they convince the world that this is all just transitory and what lies ahead is the promised utopia they have been plotting for decades? They talked their way out of responsibility for the Covid vaccines, so anything is possible.

Hard Times

Posted on September 14, 2022 by thezman

Note: The comments have been getting bombed by Ukrainian bots, which is why moderation has been so immoderate. This was part of the public relations campaign around the recent offensive. It is slowly abating, but for now moderation will remain tight to prevent a flood of nutty comments.

The American stock exchanges dropped sharply yesterday when it was announced that the inflation reduction act had not reduced inflation. The consumer price index came in higher than expected. This triggered the robots to sell on the expectation that the Federal Reserve will keep tightening the money supply. The DOW dropped 3.94% bringing the decline for the year to 14.4%. Luckily, they have changed the definition of a bear market so this is still a bull market.

The inflation report was all bad news. Gasoline prices declined ten percent, but all other energy increased for the period. That probably means two things. One is the gas price decline is due to less driving. In other words, people are adjusting their spending because inflation is not starting to take a bite out of their budgets. Instead of a weekend car trip, people are staying home. According to AAA, over all sales of gasoline declined in August to levels last seen during the lockdowns.

Another piece of the gasoline puzzle is the dumping of cheap crude on the domestic refineries by the Biden administration. They panicked when gasoline hit five bucks a gallon nationally so they started releasing crude from the SPR. This drives down the price of gasoline a little. The taps run dry at the end of next month, just before the election, so prices will tick back up. In other words, some of the bad news has been pushed out to after the November elections.

The reaction to the inflation report is a good example of how the people in charge believe their own narratives. The never ending debate on this side of the great divide is whether they believe their nonsense. When it comes to the economy, they can talk themselves into anything. They had Biden out bragging about the good economy just when the report was released, on their assumption that it would be the proof they needed to go along with his speech. Whoops.

This also ties in nicely with the orchestrated media campaign in August claiming that Joe Biden was leading his party to victory in November. They rolled out a bunch of polls along with pleasing narratives about specific races. Of course, they claimed that abortion was killing the Republicans with voters. The narrative said the economy was catching fire, inflation was falling and this would result in the most popular man in history leading his party to a smashing success.

Putting that aside, inflation is the second worst thing that can happen in an economy, the worst being deflation. There is a debate about where the sweet spot is with prices, but everyone agrees that anything outside the two percent range is bad. The Fed targets two percent inflation. The sound money guys think a two percent decline in prices is the right target. Right now inflation is at eight percent using the current model and double that using the old model.

That last bit is key. We have been lying to ourselves about inflation since the 1990’s and it is obvious when you look at old bills. Pull out a cable bill from ten years ago and you see the difference. Food is probably twice what it was ten years ago. Ten years ago, people were complaining about two dollar home heating oil. In places with real winter, oil contracts are around five bucks a gallon now. This has been over a period when they say inflation was around two percent.

The subtext to this is the politics. The reckless behavior of the ruling class made people angry enough to vote for Trump when times were good. When people are worried about buying food, they tend to get a bit cranky. This hits the middle-class even more as they are riddled with angst. Poor people accept that they may have to stand in line for food, but middle-class people loath the idea of it. It is why we hide food banks from the middle-class, so they are not freaked out about it.

A suddenly panicked middle-class, still not happy about the 2020 election or the behavior of the elites, might start looking around for something a bit stronger than Trump and his one-liners. Whether that is happening or not does not matter, as the regime will assume it is happening. That is why the administration is sending goons out to rough up political opponents. Just as they were sure inflation was a social construct, they are sure the invisible Hitler army is angry over inflation.

This is probably why Russia and China are so confident about their prospects in this global economic war. They look at Europe and see an economic and political circus that is about to get very bad. In the United States, all the signs point to the last days of an empire in decline. Realistically, they are not wrong. America has been broken for a long time and now it is going broke. That is why countries like India and Saudi Arabia are not siding with the empire in the war against Russia.

Putting that aside, the news is all bad right now as far as the economy. The Federal Reserve has no choice but to keep raising rates. They should have moved faster and earlier, but Powell is doing his Arthur Burns impression. He was the Fed chief in the 1970’s who dithered while inflation raged. Powell seems to be finding his inner Volcker so that means tight money and that means recession. Just how deep is the only question that matters at this point.

The Corpse Of Democracy

Posted on September 8, 2022 by thezman

The results are in and despite what you have observed in your own life and on-line, Biden’s Gates of Hell speech was a huge success. According to a new poll close to 60% of Americans now think Donald Trump and his nefarious “MAGA movement” are a threat to our democracy. Not only that, 60% of Republicans do not think the MAGA movement represents the majority of the party. It looks like it is all over for Trump and the tens of millions who support him.

Now, most MAGA people will dismiss the poll as just another example of the craven efforts by the regime to prop up their chief stooge. This is, of course, the result of Putin’s propaganda and disinformation campaign. These conspiracy theorists questioning the veracity of polling, especially this poll, are just doing the bidding of Vladimir Putin and are probably semi-fascists. They are semi-fascists because they do not know they are being turned into fascists by the Trump movement.

Granted, the details of the poll are not available so there is no way to examine the crosstabs to see if it supports the press release. The only clue in the press releases is that the poll was weighted toward self-identified Democrats. It also subtly suggests that only 25% of the self-identified Republicans in the poll agree with the claim that Trump is a danger to the planet. There is growing evidence that the dispossessed are no longer identifying as Republican, so there is that.

In all seriousness, this is the sort of story that underscores the problem with mass democracy in the mass communication age. This poll could be a complete fraud, but there is no way to know. More important, your favorite news site is never going to check or question it. They just pick it up as a part of the automated service they use to plug into news feeds like Reuters. The left-wing news highlighter Matt Drudge is running this poll in red at the top of his site.

As de Maistre said, “False opinions are like false money, struck first of all by guilty men and thereafter circulated by honest people who perpetuate the crime without knowing what they are doing.” Drudge is a left-wing partisan, but his site is like most news sites these days in that it relies on feeds to populate itself. Even with site-created content, there is little editorial control. It is easy to inject a false opinion into the system and see it get repeated a million times in minutes.

Of course, there is the other problem. Who cares if a majority of people are falling for the latest conspiracy theory? That is, after all, what all this hysteria about Trump and the MAGA movement is, when you examine it. It relies on the assumption that there are sinister, unseen forces at work behind the scenes. The old people wearing red Trump caps at the diner are not just people who hold contrary opinions. They are part of an invisible army of fascists and evil doers.

Imagine a poll that reported a majority of people thought there are little green men visiting earth on a regular basis. You do not have to imagine it. There was a big global survey half a dozen years ago that claimed a majority of people on earth think there are little green men out there. A majority of Americans believe in ghosts. More people think psychics are real than think Ron Paul is real. Big Foot is ten times more popular than the vice president of the United States.

The point is, most people are stupid, at least when it comes to understanding things that have no direct impact on their lives. They may know accounting or chemistry, but they can also think disagreeing with the government is bad for democracy. This has always been the argument against democracy. Most people lack the desire or capacity to master the material necessary to make good political choices. Giving them a ballot is like giving a toddler a hand grenade.

Of course, opinions change. Fifty years ago, when Joe Biden entered politics, few people thought he should be elected to anything. When he ran for president in 1988, he was laughed off the stage. In 2008, he was seen as a joke candidate to give the media some entertainment. In 2020, his own party preferred an item from the museum of communism, but then everyone changed their mind all of a sudden. The same change of heart happened on election night. Opinions change.

Clearly, a polling outfit would know that their polling is a snapshot in time and may not mean anything in a week. That Reuters poll also reports that close to 60% of the respondents think the speech will make things worse. Half never bothered to watch it and two thirds think Biden is a bum. In other words, the poll is invalid on its face, but it makes for a handy false opinion, so it gets minted and passed onto gullible dupes like the rent boys running the Drudge Report.

This is the problem with mass democracy in a mass media age. Our culture, including the political process, is a giant lie machine. Imagine if people went about their day with people from the state following them around with a bullhorn, constantly shouting random slogans at them. This is what we have today. We are awash in nonsense from the mass media but are expected to have sensible opinions. It is no wonder that the political system is unresponsive to the public will.

It is the irony of mass democracy. The stated point of democracy is to make government more responsive to the public will. Instead, it reveals that the people who are in charge have no interest in the public will. They serve other interests. That means those who oppose the prevailing order should ignore the public will as well. Instead, the focus must always be on who decides. The solution to the ills of democracy is to let democracy murder itself and be ready to bury the corpse.

The End Of Grifts

Posted on September 6, 2022 by thezman

Eric Hoffer famously said that what starts out in America as a mass movement ends up as a racket, a cult, or a corporation. As we saw with Covid, it can often be all of these things at the same time. When Hoffer made this observation, mass media was still in the analog age, so things moved slower. A movement would linger for while in the corporate stage before devolving into a racket. In the digital age, these things can happen simultaneously and instantaneously.

The reason for this is America is not an actual country, like France or Sweden, but an open outdoor bazaar held together by a merchant class. As Coolidge supposedly said, the business of America is business. That means everything is treated as a business, even things that should never be a business. It is the worship of the marketplace where everyone assumes the right answer will magically arise from the transactions that occur in the marketplace. The invisible hand is our god.

The trouble is, there are things that are true that people would like to think are not true, so those market results will be at odds with reality. There are things in every society that should never be exposed to market forces. They are too important to let the fickle mobs in the marketplace decide. In theory, this is supposed to be a bedrock assumption of the American form of government. There are things like natural rights that are beyond the reach of the political process.

The corrosive effect of marketism on the political process is clear in the political industrial complex that has consumed the political system. Billions are made every election cycle in politics. What should be a straightforward process whereby the parties and candidates make their case to the voters, is instead run by a massive political industry of consultants, advisers, technicians and the media. All of these people are in the process to make money from politics.

Here is a useful example in a legacy site called the American Spectator. The post is an argument in favor of something called rank choice voting. This a system that requires voters to list their preferred candidates in order of preference. The first choices are then counted up and you get the normal total. In some systems, if no candidate gets fifty percent of the vote, then the second choices are tallied up and added to the candidates total. In other systems, this is automatic.

There are two rather obvious problems with this system. One is it adds a layer of complexity to the voting system. A central tenet of all democratic systems, even those that limit the role of voting, is that voting is clear and open. In the rank choice voting systems, you can get a minority candidate winning the election, despite most people voting for some other option. Put another way, it is not clear to the users of the system how their inputs will affect the outputs of the system.

Therein lies the other problem. This added complexity becomes a bonanza for the army of grifters in the political system. Now that the social media consultant racket has run its course, they get to jump on the ranked choice voting scam. You can be sure that all of the pinheads with “social media influencer’ in their bio are now thinking about removing the Ukraine flag so they can make room for the letters RCV. This “innovation” is quickly becoming both a racket and a business.

The proof of this assertion is the man behind that post. According to his bio, Eric Wilson is a digital-first political strategist based in Washington, DC. He was a Technology and Democracy Fellow at the Ash Center for Democratic Governance and Innovation, located at the Harvard Kennedy School. In other words, his post at The American Spectator is simply advertising for his services. Ranked choice voting, according to Eric Wilson, is good for the people, because it is profitable for him.

It cannot be emphasized enough just how terrible ranked choice voting is for a country that is quickly losing trust in its systems. With normal voting it takes some jurisdictions weeks to count the vote. The Alaska election he holds up as a great example took weeks to sort out after the election. Imagine that in a big corrupt state like California or New York. It will take years to resolve an election. There are still court cases going on over the 2020 presidential election.

Of course, this can only add to the sense that voting is rigged. Every innovation, like mail in voting, early voting, ballot harvesting and drop box voting has come with an observable increase in shenanigans. The states at the center of the 2020 election scandal were states that suddenly embraced innovated voting methods. Imagine a state like Pennsylvania suddenly switching to ranked choice voting a week before the election and you have the beginnings of armed revolt.

Of course, the promise of chaos is exactly why the consultant class want yet another way to muddy the waters on election day. Chaos is good for business. The fact that it is bad for the health of society is besides the point. Those racks of donuts are not going to buy themselves, so that means Eric Wilson needs steady work. If that work is bad for the people, well, too bad for them. They should have figured out a way to grift on the collapse of their country like Eric Wilson.

This is the problem with marketism. When everything must be exposed to the marketplace, everything quickly becomes a racket. When the governance of your country becomes a racket, you no longer have a country. That is why the people at the top of the racket so fiercely oppose anything that looks like community. It offers an alternative morality to that of marketism. If people begin to put something ahead of making a quick buck, the market could collapse.

That is where things are headed. Politics is a massive racket run by conmen, grifters and sociopaths who care only about a quick buck. The system staggers on because of the cultural inertia behind it, but eventually, it must succumb. There are also ideologues that take advantage of this to push their agenda. We see that with the neocons and their efforts to blow up the world. With no one in power interested in the wellbeing of the system, the system will eventually collapse.

The Reality Jubilee

Posted on August 24, 2022 by thezman

The Biden administration is gearing up to offer some sort of college debt jubilee as their answer to the student debt crisis. The details of the scheme are being leaked to generate interest in the forthcoming announcement. The idea is to use printed money to buy votes from the millions holding student debt. Coincidentally, this comes just as the regime begins the fall campaign. Currently there is $1.6 trillion in outstanding college debt, most held by the Federal government.

There is no economic sense behind the idea. A debt jubilee is just another way of dropping cash onto the economy. With roaring inflation and supply chain problems, this is pretty much the opposite of good policy. The net effect of the program is to put more money in the pockets of the debtors. They will spend the money, just as they did the stimulus checks, which puts upward pressure on prices. Of course, this will come after the midterms so it makes sense to the politicians.

The reason there is $1.6 trillion in college debt is that the government has been mucking around in the education markets for several generations. Financial aid, like public pensions, quickly became a good way to buy votes. Opposing it on economic grounds, while factually correct, looked like you were opposing it on moral grounds, which makes you a monster. It quickly became a political racket that grew out of control and now we have a multi-trillion dollar monster.

The madness of college financial aid is obvious when you look at the rise in tuition costs over the last thirty years. They have grown at multiples of the official inflation rate and that is excluding hidden fees. There was a time when a student could work his way through college. It was a struggle, but it was possible. Today, the cost of tuition alone dwarfs what a student can make working fulltime. In other words, in the effort to make college affordable, it was made increasingly unaffordable.

This is a well understood phenomenon. If the government starts issuing subsidies for the purchase of new BMW’s, the price of the cars will increase. The increase will track with the subsidy. The people running BMW are not stupid. Once they know the buyers can afford the premium, they will raise prices. This very same thing just happened with the subsidy for electric cars. The electric car makers raised prices to match the new subsidy from Washington.

The remarkable thing about this is everyone knows it is true. The reason the people animating Biden’s corpse have been slow to pull the trigger on this scheme is they know it will be bad for the economy. The timing is to get the applause before the election, then have the public pay the price after the election. They figure that in two years people will forget all about it. Come the 2024 election, the corpse animators will have some new scheme to sell the public.

Even more remarkable is the fact that some people in the media know it is true, but most are innumerate so they do not understand the material. Some of the former group will ask the Biden people about the math and the Biden people will make up a whopper about how the definitions of commonly used economic terms have changed so shut up bigot and clap louder. There will be no serious discussion of this scheme and the economic condition of the country will decline a bit further.

Critics will settle for blaming the voters, especially those rotten kids down at the coffee shop with their nose rings, philosophy degrees and college debt. “The people are voting themselves a raise from the public fisc!” It is a good example of the perverse effect of democracy on the public mind. The people responsible for the terrible governance get a pass, while their victims get the blame. When the people work through bad policy, the “leaders” take credit for the result.

If Joe Biden were the dictator, installed by the ruling class after the old dictator was deposed, there would be no question about who to blame. This is why they remain berserk over the 2020 election controversy. If the people think the game was rigged, then there is no way to shift the blame for the results onto the voters. It turns out that the best way to avoid the wrath of the people over the manifest corruption of their leaders is to give them a ballot and tell them they are in charge.

Putting all of this aside, the college debt crisis hides a much bigger problem going on that you can see in the college numbers. As the cost of a credential has gone up, its value has declined. One reason for that is the dilution of it by handing them out to anyone who qualifies for debt. The other reason is the changing complexion of the student body. The diversity push has changed what the credential means, which has diluted its value to the core market.

The people not going to college are the people who should be getting the additional training from the education system. That is the cohort that is dropping out of the system because the cost-benefit relationship has turned negative. The result is a swelling number of credentialed idiots carrying debt they can never pay. They are also more likely to stop paying, knowing you will not dare go after them. The moral inversion of the education system is creating new downstream problems.

Of course, all of this means the system can never be reformed. What needs to happen is a debt jubilee along with the abolition of all subsidies. Most colleges would close and half of the current students would drop out of school. The system would shrink down to its core of training bright young people and doing useful research. That can never be allowed to happen, so the system will stagger on like this until the printing presses can no longer keep pace and we reach collapse.

Our Weird New Reality

Posted on August 16, 2022 by thezman

One of the great unnoticed things about the current crisis is that the rules that everyone said were inviolable no longer seem to apply. This is most obvious in the economic realm where nothing makes any sense. Things that were said to be impossible a generation ago are now the default. Similarly, politics is now operating by a set of rules that no one can explain. Things that were considered outside of the realm of the possible are the new normal.

Way back in the before times, when Covid got going, the world literally shut itself down in response to the virus. In America, over twenty-five million people were laid off and tens of millions more were sent home to work. The official unemployment rate peaked at thirteen percent and was then restated to be just under seven percent. What the actual unemployment rate was at the peak is unknown. Regardless, it was an unprecedented attack on the economy that should have been devastating.

According to official statistics, the economy shrugged it off. The official figures say the economy contracted by 3.4% in 2020 but all of the decline was contained in the third quarter of the year. The fourth quarter began a massive rebound. The official numbers say the economy grew by 5.7% in 2021. That more than made up for the decline in the prior year due to Covid. It turns out you can literally shut down an economy and nothing serious will happen. No wonder people want to stay home.

It is not just in America where the laws of economics have been suspended. In Europe they are allegedly facing an energy shortage. Since forever we have been told that steep increases in energy prices trigger recession. Germany is literally facing the prospect of having no gas and no one seems to notice. The massive disruptions to the flow of energy into the EU has thus done little to upset the economy. According to the old rules, this should not be possible.

It is possible that the media is simply lying to us. Maybe people are seething at the suffering that has been inflicted upon them. The official media, controlled as it is by state actors, is ignoring this in favor of happy talk. It could also mean that all of those economic rules were just made up. No on really knows why the economy does what it does but like court magicians, economist pretend to know in order to provide authority to the ruling class. The whole thing is a put-on.

It is also possible that we live in a simulation. What we think of as reality is just a bit of software that the creators can tweak as they please. Those old rules had to be abandoned because the system got a computer virus. In order to keep the simulation from crashing entirely they changed the code. It is a temporary patch to the system until the next upgrade. Maybe that is why big events from the past, like the lockdowns, suddenly feel like distant memories. We rebooted.

Politics has the same weirdness. Everyone reading this is absolutely certain that we did not arrest people for speech. That was written down somewhere and everyone agreed that you could say what you like with some very narrow limits. Yet Douglas Mackey faces a decade in jail for making fun of Hillary Clinton on Twitter. Maybe like the economic rules, there was a patch done to the software, a hard reboot and we are suddenly operating under a totally new set of rules.

This confusion is obvious with the political actors. Salman Rushdie was stabbed on stage in New Jersey. All of a sudden, the people dedicating their lives to suppressing speech were bemoaning this attack on free speech. In Britain, Boris Johnson has people thrown in dungeons for using the wrong pronouns, but he was out there decrying this attack on our sacred liberty. Maybe the software engineers forgot the update these guy’s code during the last service pack.

Even taking a step back and looking at things in the most general sense, the rules no longer seem to apply. Politics used to be defined by the three big human motivations, money, power and sex. How does drag queen story hour fit in here? Who is benefitting from this lunacy? The point of this assault on the children seems to be the promotion of general mayhem, which used to be the opposite of what rulers sought. The old rules said order was the goal of the people in charge.

Of course, we know that a tenet of the new religion states that only through mass confusion can we transcend this world. They believe if they get everyone into a state of agitation that we somehow break free from our old thinking. This lets us adopt a new model of thinking which is the passage to the glorious future. The endless “subverting expectations” is a deliberate effort to make everyone crazy. It is hard to accept, but this does explain why the rulers now prefer chaos.

That does not explain why the system trundles on, despite violating all of the rules we have been told are inviolable. We have double-digit inflation, periodic food shortages and record high gas prices. The whiplash effect is now emerging, where price hikes are followed by demand destruction, which collapses prices, only to see demand return and drive prices back up again. In other words, we are seeing stagflation in the economy but no one seems to notice or care all that much.

Reality is that thing that does not go away when you stop believing it. Maybe it takes us a while to recognize reality after a long absence. Perhaps what lies ahead is a mass recognition of reality and a sudden return of the old rules. Maybe the people running the simulation get bored and shut us down. At this point, given the general weirdness we are seeing, we cannot safely assume anything. For now, at least, we are in a new world with new rules and a new sense of reality.

The Lying Game

Posted on July 27, 2022 by thezman

Note: If you are familiar with Moldbug, who now calls himself Curtis Yarvin, I did a review of and comment upon his work behind the green door. Here is the SubscribeStar link and here is the Substack link.

At first blush, logic says that deception should have been bred out of humans long before humans settled down. Deceiving the tribe would be bad for the deceiver, resulting in exile or even death. That would significantly lower the reproductive success of the deceiver. On the other hand, tribes with deceivers would be less cooperative which would lower their overall success. Given enough time, it seems like deception should have disappeared from humanity.

Clearly that is not the case. We have lots of liars. That means deception has some useful role in human society. At the minimum, deception is not so negative that it would significantly lower the reproductive success of the deceiver. In fact, deception has probably always been an asset on the mating market. Even in the narrow world of the tribe, sweettalking Pebbles into a roll in the cave has obvious benefits. Perhaps lying for sex is enough to make deception a feature of man.

On the other hand, every society has prohibitions against deception. In European cultures, reputation is tied to honesty and trustworthiness. Someone who gains a reputation for deception loses status. In more clannish societies, deceiving outsiders is not so bad, especially if it helps the in-group, but lying to people in the clan can have severe consequences. Someone who deceives his own people can be exiled from the group or possibly worse.

This apparent contradiction has been known for a long time. It is not just humans who display the willingness to deceive others in the group. In many animal societies, like bees and ants, cooperation is rewarded and deception is punished. As with humans, deception should have been selected out a long time ago, but that is clearly not the case which suggest deception has some value. The deceiver gets enough benefit over time to make deception useful in some way.

A new study suggests that cooperation is what makes deception possible, as cooperation involved complex rules. An individual can exploit those rules to gain benefit without having to contribute. The more cooperative a society, the more opportunities there are for free riders to game those rules through deception in order to prosper from the cooperation of others in the group. The less cooperative a society, the fewer opportunities to exploit the rules through deception.

Given that we live in an age of universal deceit, at least by those in positions of authority, the evolution of lying suddenly matters a great deal. Part of it is that we are better able to see the lying of the people in charge. Before the mass media age, it was hard for people to get information on official lies. Of course, it was also much harder to promote official lies. Mass media results in a sense of mass cooperation, which means the communications revolution has revolutionized mass lying.

Even adjusting for our natural recency bias, institutional lying has exploded over the last thirty years in America. Every day someone from the government stands in front of cameras and blatantly lies about things. They know they are lying. The people in the press room know they are lying. Everyone in the room knows that the people watching it know everyone involved is lying. There is the sense that the people in these positions look at lying as a game where the biggest liar wins the day.

This is not a new thing. For twenty years the drug companies have said that serotonin levels are responsible for depression. It turns out to be wrong and the studies they relied upon were obviously wrong. In other words, they should have known their claims were false, but they had a billion reasons to lie, so they lied. This sort of deception has become the norm. Here is a story about a prominent cancer research facility caught faking their research.

Of course, we are still living through one of the greatest hoaxes ever perpetrated on human society, which is the Covid pandemic. The virus is real, but the claims around it have been nonsense since the start. Mask wearing and social distancing never had any basis in science or reason. Important people not only insisted it was science but forced people to play along. Now we are learning that the vaccines are not what was claimed and may have made things worse.

Many people have noticed the scale and degree of lying from official quarters, but the assumption is always that the cause is degeneracy. That is the people slithering into positions of authority are responsible for the rise in deception. The solution is to round them up, put them on boats and send them out to sea. Put honest people back into positions of authority and we return to the normal levels of deception. That may be just as wrong as the things coming from our leaders.

It may be that we have reached a point where the people in the ruling class of society, this includes the managerial and administrative classes, no longer feel any connection to the rest of us. They lie and willingly repeat lies, because it causes no harm to them and solves immediate concerns. Like people in clannish societies, deceiving outsiders brings no penalty as outsiders simply do not count. The ruling class is now an alien clan that is indifferent to the rest of us.

Alternatively, this evolving class awareness may bring with it a sense that the people over whom they rule are a constant threat. Like the Alawites in Syria, the new class at the top of the social hierarchy now sees their position dependent on keeping the masses confused and disorganized. Israel has always done this with her Arab neighbors, preventing them from uniting against her. Perhaps the explosion of lying is due to fear and hostility by the ruling class.

Another possibility, suggested by that British study linked above, is that deception tracks with cooperation. The more cooperative a society, or at least the more it appears to cooperate, the more deception in the society. This seems counter intuitive as cooperation is about trust and deception undermines trust. On the other hand, the more people experience deception, the more they are willing to cooperate with those who display trustworthiness. Trust and deception rise and fall together.

An underappreciated aspect of the communications revolution is how unity has become the standard of politics. Fifty years ago, people understood that politics was the art of the possible, which meant compromise. You give a little to get a little, but often there was no deal to be had and you just accepted it. Today, politics is all about uniting everyone behind a narrow cause. Every day our rulers demand we put aside our interest for something. Mass cooperation is the norm.

These demands for mass cooperation track with the growth of mass media and they track with the rise in anathematizing of dissent. As communications have increased, the demand for cooperation have increased. As cooperation increases, the deception increases with it. Some of the lying is in an effort to trick people into putting their interest aside for the good of the cause. Much of the lying is just opportunism. The greater cooperation has led to an explosion in deception.

The prisoner’s dilemma game is a classic example of how even simple human interactions can become quite complex. Rational self-interest can lead someone into a trap depending upon the rules in which they are forced to operate. This may be what we are seeing with the explosion of lying. The communications revolution has altered the ancient rules of human cooperation within large scale society. The ability to enhance mass cooperation has resulted in mass deception.

Like that prisoner’s dilemma game, the people doing the lying think they are acting in their self-interest but they are actually undermining their collective interests. The more they lie in defense of “our democracy” the less valuable the system that makes it possible for them to be a ruling class. Their efforts to enhance the value of their position in society is undermining their position. Taken to its logical conclusion, the collapse in trust will bring about a collapse in the ruling class.

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