“It goes against the American storytelling grain to have someone in a situation he can’t get out of, but I think this is very usual in life. There are people, particularly dumb people, who are in terrible trouble and never get out of it, because they’re not intelligent enough. It strikes me as gruesome and comical that in our culture we have an expectation that man can always solve his problems. This is so untrue that it makes me want to cry - or laugh.”
"The small group of devoted followers gathered around Chicago housewife Dorothy Martin sat in stunned silence as the clock on her suburban living room wall struck midnight on the twentieth of December, 1954…and nothing happened. Many had left jobs and spouses and given away all their money and possessions in order to await the arrival of alien beings from the planet Clarion, who Martin had assured them would descend at that appointed hour, carrying the faithful few off in their flying saucers just before huge floods engulfed the planet Earth. Finally, four hours after their scheduled departure time, Martin broke her silence.
As the group readjusted their bras, belts, and zippers - having been instructed to discard any metal objects which might interfere with the aliens’ telepathic radio transmissions - their tearful host revealed the reason why their intergalactic rescuers had failed to appear: Apparently it had all been only an elaborate test of faith, and the group’s advanced state of enlightenment had saved the entire planet from a watery destruction!
Surprisingly, only one or two of Martin’s followers were unconvinced by this perfectly rational explanation. Among them, however, was social psychologist Leon Festinger, who had secretly infiltrated the group. Festinger would later write about Martin - using the pseudonym of Marian Keech - in his groundbreaking 1958 book, "When Prophecy Fails." (Not surprisingly, Festinger is credited with coining the psychological term ‘cognitive dissonance.’)
Following publication of Festinger’s book, the group predictably collapsed under the weight of public ridicule. Martin fled to Peru to warn the clueless natives about the imminent re-emergence of Atlantis, before later resurfacing in Arizona, where she joined crackpot L. Ron Hubbard’s nascent pseudoscientific movement, Scientology.
It seems that for as long as people have inhabited the world, they have anticipated its imminent demise. (In fact, the oldest known apocalyptic prediction is depicted on Assyrian tablets from 2800 BC.) In what may be the earliest example in European folklore, a Frankish villager wandered off into the forest in 591, only to be accosted by a swarm of ravenous flies. Overwhelmed, the poor fellow completely lost his mind and returned to his village clothed in animal pelts, claiming he was Jesus Christ, sent to gather his flock before the coming Rapture. (Perhaps resenting the competition, a local bishop hired a gang of thugs to capture the Lord of the Flies, who they rapturously hacked into little bits.)
The failure of one apocalyptic prophecy not only failed to deter its devoted followers but in fact spawned several entirely new religions. When the world failed to end as predicted in the ‘Great Disappointment’ of 1843-44, Massachusetts preacher William Miller’s tens of thousands of followers splintered off to found the Seventh Day Adventists, as well as the obnoxious doorknockers known as Jehovah’s Witnesses. When the next fateful year of 1874 passed without the desired fireworks, the latter’s charismatic founder, Charles Taze Russell, explained that Jesus had indeed returned, but was invisible to all except the truly devout. (Predictably, few dared admit to being lacking in the requisite level of faith.)
The founder of Mormonism, Joseph Smith, had declared way back in 1832 that 1890 would be the year of Jesus’s long awaited return engagement. (Later jailed for fraud, Smith somehow failed to predict his own deliverance by an angry mob at age 39.) Russell revised the fateful year to 1881…then 1914…and finally, 1918. (The latter dates spanned World War I and the Spanish Flu epidemic, events that while apocalyptic for many, fell short of being world ending.)
Our own time has seen the horrors of the Peoples Temple - in which 914 adults and children committed suicide in the jungles of Guyana in 1978; the Branch Davidians, an offshoot of the Seventh Day Adventists - 75 of whom died in the FBI standoff at Waco in 1993; Aum Shinri Kyo -whose poison gas attacks on the Tokyo subway in 1994-95 left 19 innocent people dead; and -neither least nor unfortunately, last - Heaven’s Gate, 39 of whose members committed suicide in 1996, fully expecting (like Dorothy Martin) their spirits to be carried away by aliens hiding in the wake of an approaching comet.
It was probably no coincidence that all of these cults were acting in anticipation of an impending Bible-inspired Day ofJudgement. One is tempted to blame these kinds of incidents on the delusions of a small minority of misguided religious fanatics, except that millions of people alive today are expecting an imminent Biblical apocalypse. In a 2012 global poll, fully one out of 7 people said they thought the world would end during their lifetime - and rather ominously, Americans topped the list of doomsayers at 22%. Since their government has the means to fulfil their death wish many times over, one can only hope their gloomy prediction won’t one day become a self-fulfilling prophecy. Just call it a bedtime story for humanity."
“When the pain of leaving behind what we know outweighs the pain of embracing it, or when the power we face is overwhelming and neither flight nor fight will save us, there may be salvation in sitting still. And if salvation is impossible, then at least before perishing we may gain a clearer vision of where we are. By sitting still I do not mean the paralysis of dread, like that of a rabbit frozen beneath the dive of a hawk. I mean something like reverence, a respectful waiting, a deep attentiveness to forces much greater than our own.”
"We Have Never Been More Vulnerable, And The Stage
Has Now Been Set For A Complete And Total Economic Collapse"
by Michael Snyder
"Teetering on a precipice can seem exciting until something comes along that knocks you over the edge. Unfortunately, the events of the past couple of years have perfectly set the stage for a global economic collapse of unprecedented size and scope. Inflation is out of control all over the planet, the worst global supply chain crisis since World War II continues to get worse with each passing day, and the vast majority of the global population is just barely scraping by from month to month. In other words, we have never been more vulnerable than we are right now.
Even in the United States, a shockingly high percentage of the population literally lives on the brink of financial disaster. According to a brand new survey that was just released, seven out of every ten Americans are currently living paycheck to paycheck… "In these tough financial times, a new study finds it’s getting harder and harder for people to save any of their money. In fact, seven in 10 Americans say they’re living paycheck to paycheck. A recent survey of 2,007 adults found that 63 percent don’t see themselves reaching a level of financial security that will allow them to live the lifestyle they want."
Most people do not have a sizable financial cushion to fall back on. And even though our leaders in Washington have absolutely flooded the system with new money over the past two years, more than two-thirds of the country is living paycheck to paycheck. As bad as things have been, it is only a matter of time before another major crisis of some sort comes along. So what is going to happen when the other shoe finally drops?
During this pandemic we have also seen global supplies of just about everything get tighter and tighter and tighter. In fact, the head commodity strategist for Goldman Sachs just publicly admitted that the world is now facing shortages of virtually all major commodities…
In a time when social networks have been swamped with photos of empty shelves from across the nation, Goldman’s head commodity strategist and one of the closest-followed analysts on Wall Street, said he’s never seen commodity markets pricing in the shortages they are right now. “I’ve been doing this 30 years and I’ve never seen markets like this,” Currie told Bloomberg TV in an interview on Monday. “This is a molecule crisis. We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it we’re out of it.”
Read that last paragraph again.
This is a really big deal.
You may not realize it yet, but this isn’t just a temporary global supply chain crisis. This is the beginning of a global supply chain collapse. So what is going to happen when the other shoe finally drops?
All over the planet, way too much money is chasing way too few goods and services. This is driving up prices at a staggering pace, and we continue to get more troubling news with each passing day. For example, even though meat prices have already gone up very aggressively, Tyson Foods just announced that it will be raising prices yet again… "Stock of Tyson Foods, the world’s second largest processor and marketer of chicken, beef, and pork after Brazil’s JBS S.A., is soaring 9%, hitting an all time high and is one of the S&P’s best companies this morning after the company reported blowout earnings (thanks to passing on surging food prices) and announced that it is raising prices even more as it grapples with a tight labor market and smaller livestock herds. According to the report, beef prices jumped by 32% in the quarter, with chicken up ~20% and pork 13%."
Of course similar things are happening in other industrialized nations all over the globe. One British news sources is telling us that the economy in Germany “is in freefall” and that “devastating” price hikes are causing a tremendous amount of pain for consumers over there.
So what is going to happen when the other shoe finally drops? Needless to say, a lot of people can see what is coming and they are taking steps to get prepared. Earlier today, I came across a Wall Street Journal article that lamented the fact that so many Americans are engaged in “hoarding”… "Alexis Abell recently walked out of a BJ’s Wholesale Club outside Buffalo, N.Y., with 24 boxes of Kraft Macaroni & Cheese, a box of 50 frozen mozzarella sticks, a 40-pound bag of basmati rice and a 12-can pack of garbanzo beans. “I don’t want to be in a position again where I can’t get something,” says Ms. Abell, a 41-year-old mother of five, who was laid off from her retail job at a quilt shop in 2020 and decided not to return to work."
I don’t call this “hoarding” at all. I call it being smart. The stupid people are those that expect the government to bail them out when everything starts hitting the fan. As I have discussed previously, the federal government has a very limited amount of food, water and generators at eight widely scattered FEMA distribution centers around the country. Other than that, the federal government purchases a very small amount of food that it distributes through foreign aid programs. In the event of a major national emergency, the government’s meager supplies will be totally gone almost immediately. Then you will be on your own.
We are rapidly moving into a time when normal people won’t be able to afford to eat meat on a regular basis. Once that day arrives, where will you get your protein?
Our world is changing at a pace that is absolutely breathtaking, but most people still want to believe that everything will go back to “normal” eventually."
"In a recent press conference held on the occasion of a visit to Moscow by Hungarian Prime Minister Viktor Orban, Russian President Vladimir Putin spoke about continued NATO expansion, and the potential consequences if Ukraine was to join the trans-Atlantic alliance.
“Their [NATO’s] main task is to contain the development of Russia,” Putin said. “Ukraine is simply a tool to achieve this goal. They could draw us into some kind of armed conflict and force their allies in Europe to impose the very tough sanctions that are being talked about in the United States today,” he noted. “Or they could draw Ukraine into NATO, set up strike weapons systems there and encourage some people to resolve the issue of Donbass or Crimea by force, and still draw us into an armed conflict.”
Putin continued, “Let us imagine that Ukraine is a NATO member and is stuffed with weapons and there are state-of-the-art missile systems just like in Poland and Romania. Who will stop it from unleashing operations in Crimea, let alone Donbass? Let us imagine that Ukraine is a NATO member and ventures such a combat operation. Do we have to fight with the NATO bloc? Has anyone thought anything about it? It seems not.”
But these words were dismissed by White House spokesperson Jen Psaki, who likened them to a fox “screaming from the top of the hen house that he's scared of the chickens,” adding that any Russian expression of fear over Ukraine “should not be reported as a statement of fact.”
Psaki’s comments, however, are divorced from the reality of the situation. The principal goal of the government of Ukrainian President Volodymyr Zelensky is what he terms the “de-occupation” of Crimea. While this goal has, in the past, been couched in terms of diplomacy – “[t]he synergy of our efforts must force Russia to negotiate the return of our peninsula,” Zelensky told the Crimea Platform, a Ukrainian forum focused on regaining control over Crimea – the reality is his strategy for return is a purely military one, in which Russia has been identified as a “military adversary”, and the accomplishment of which can only be achieved through NATO membership.
How Zelensky plans on accomplishing this goal using military means has not been spelled out. As an ostensibly defensive alliance, the odds are that NATO would not initiate any offensive military action to forcibly seize the Crimean Peninsula from Russia. Indeed, the terms of Ukraine’s membership, if granted, would need to include some language regarding the limits of NATO’s Article 5 – which relates to collective defense – when addressing the Crimea situation, or else a state of war would de facto exist upon Ukrainian accession.
The most likely scenario would involve Ukraine being rapidly brought under the ‘umbrella’ of NATO protection, with ‘battlegroups’ like those deployed into eastern Europe being formed on Ukrainian soil as a ‘trip-wire’ force, and modern air defenses combined with forward-deployed NATO aircraft put in place to secure Ukrainian airspace.
Once this umbrella has been established, Ukraine would feel emboldened to begin a hybrid conflict against what it terms the Russian occupation of Crimea, employing unconventional warfare capability it has acquired since 2015 at the hands of the CIA to initiate an insurgency designed specifically to “kill Russians.”
The idea that Russia would sit idly by while a guerilla war in Crimea was being implemented from Ukraine is ludicrous; if confronted with such a scenario, Russia would more than likely use its own unconventional capabilities in retaliation. Ukraine, of course, would cry foul, and NATO would be confronted with its mandatory obligation for collective defense under Article 5. In short, NATO would be at war with Russia.
This is not idle speculation. When explaining his recent decision to deploy some 3,000 US troops to Europe in response to the ongoing Ukrainian crisis, US President Joe Biden declared, “As long as he’s [Putin] acting aggressively, we are going to make sure we reassure our NATO allies in Eastern Europe that we’re there and Article 5 is a sacred obligation.”
Biden’s comments echo those made during his initial visit to NATO Headquarters, on June 15 last year. At that time, Biden sat down with NATO Secretary-General Jens Stoltenberg and emphasized America’s commitment to Article 5 of the NATO charter. “Article 5 we take as a sacred obligation,” Biden said. “I want NATO to know America is there.”
Biden’s view of NATO and Ukraine is drawn from his experience as vice president under Barack Obama. In 2015, then-Deputy Secretary of Defense Bob Work told reporters, “As President Obama has said, Ukraine should be able to choose its own future. And we reject any talk of a sphere of influence. And speaking in Estonia this past September, the president made it clear that our commitment to our NATO allies in the face of Russian aggression is unwavering. As he said it, in this alliance there are no old members and there are no new members. There are no junior partners and there are no senior partners. There are just allies, pure and simple. And we will defend the territorial integrity of every single ally.”
Just what would this defense entail? As someone who once trained to fight the Soviet Army, I can attest that a war with Russia would be unlike anything the US military has experienced – ever. The US military is neither organized, trained, nor equipped to fight its Russian counterparts. Nor does it possess doctrine capable of supporting large-scale combined arms conflict. If the US was to be drawn into a conventional ground war with Russia, it would find itself facing defeat on a scale unprecedented in American military history. In short, it would be a rout.
Don’t take my word for it. In 2016, then-Lieutenant General H.R. McMaster, when speaking about the results of a study – the Russia New Generation Warfare – he had initiated in 2015 to examine lessons learned from the fighting in eastern Ukraine, told an audience at the Center for Strategic and International Studies in Washington that the Russians have superior artillery firepower, better combat vehicles, and have learned sophisticated use of unmanned aerial vehicles (UAVs) for tactical effect. “Should US forces find themselves in a land war with Russia,” McMaster said, “they would be in for a rude, cold awakening.”
In short, they would get their asses kicked.
America’s 20-year Middle Eastern misadventure in Afghanistan, Iraq, and Syria produced a military that was no longer capable of defeating a peer-level opponent on the battlefield. This reality was highlighted in a study conducted by the US Army’s 173rd Airborne Brigade, the central American component of NATO’s Rapid Deployment Force, in 2017. The study found that US military forces in Europe were underequipped, undermanned, and inadequately organized to confront military aggression from Russia. The lack of viable air defense and electronic warfare capability, when combined with an over-reliance on satellite communications and GPS navigation systems, would result in the piecemeal destruction of the US Army in rapid order should they face off against a Russian military that was organized, trained, and equipped to specifically defeat a US/NATO threat.
The issue isn’t just qualitative, but also quantitative – even if the US military could stand toe-to-toe with a Russian adversary (which it can’t), it simply lacks the size to survive in any sustained battle or campaign. The low-intensity conflict that the US military waged in Iraq and Afghanistan has created an organizational ethos built around the idea that every American life is precious, and that all efforts will be made to evacuate the wounded so that they can receive life-saving medical attention in as short a timeframe as possible. This concept may have been viable where the US was in control of the environment in which fights were conducted. It is, however, pure fiction in large-scale combined arms warfare. There won’t be medical evacuation helicopters flying to the rescue – even if they launched, they would be shot down. There won’t be field ambulances – even if they arrived on the scene, they would be destroyed in short order. There won’t be field hospitals – even if they were established, they would be captured by Russian mobile forces.
What there will be is death and destruction, and lots of it. One of the events which triggered McMaster’s study of Russian warfare was the destruction of a Ukrainian combined arms brigade by Russian artillery in early 2015. This, of course, would be the fate of any similar US combat formation. The superiority Russia enjoys in artillery fires is overwhelming, both in terms of the numbers of artillery systems fielded and the lethality of the munitions employed.
While the US Air Force may be able to mount a fight in the airspace above any battlefield, there will be nothing like the total air supremacy enjoyed by the American military in its operations in Iraq and Afghanistan. The airspace will be contested by a very capable Russian air force, and Russian ground troops will be operating under an air defense umbrella the likes of which neither the US nor NATO has ever faced. There will be no close air support cavalry coming to the rescue of beleaguered American troops. The forces on the ground will be on their own.
This feeling of isolation will be furthered by the reality that, because of Russia’s overwhelming superiority in electronic warfare capability, the US forces on the ground will be deaf, dumb, and blind to what is happening around them, unable to communicate, receive intelligence, and even operate as radios, electronic systems, and weapons cease to function.
Any war with Russia would find American forces slaughtered in large numbers. Back in the 1980s, we routinely trained to accept losses of 30-40 percent and continue the fight, because that was the reality of modern combat against a Soviet threat. Back then, we were able to effectively match the Soviets in terms of force size, structure, and capability – in short, we could give as good, or better, than we got.
That wouldn’t be the case in any European war against Russia. The US will lose most of its forces before they are able to close with any Russian adversary, due to deep artillery fires. Even when they close with the enemy, the advantage the US enjoyed against Iraqi and Taliban insurgents and ISIS terrorists is a thing of the past. Our tactics are no longer up to par – when there is close combat, it will be extraordinarily violent, and the US will, more times than not, come out on the losing side.
But even if the US manages to win the odd tactical engagement against peer-level infantry, it simply has no counter to the overwhelming number of tanks and armored fighting vehicles Russia will bring to bear. Even if the anti-tank weapons in the possession of US ground troops were effective against modern Russian tanks (and experience suggests they are probably not), American troops will simply be overwhelmed by the mass of combat strength the Russians will confront them with.
In the 1980s, I had the opportunity to participate in a Soviet-style attack carried out by specially trained US Army troops – the ‘OPFOR’ – at the National Training Center in Fort Irwin, California, where two Soviet-style Mechanized Infantry Regiments squared off against a US Army Mechanized Brigade. The fight began at around two in the morning. By 5:30am it was over, with the US Brigade destroyed, and the Soviets having seized their objectives. There’s something about 170 armored vehicles bearing down on your position that makes defeat all but inevitable.
This is what a war with Russia would look like. It would not be limited to Ukraine, but extend to battlefields in the Baltic states, Poland, Romania, and elsewhere. It would involve Russian strikes against NATO airfields, depots, and ports throughout the depth of Europe.
This is what will happen if the US and NATO seek to attach the “sacred obligation” of Article 5 of the NATO Charter to Ukraine. It is, in short, a suicide pact."
"For what seems like a long time now, we have been reporting the apparently endless shortages that U.S. producers, retailers, developers, and many other businesses have been facing over the past couple of years. Today, we decided to share the view of those who are actually inside the industry and see problems compounding on a daily basis. The supply chain crisis is a very complex issue that affects each and every one of us, and the longer it persists the more harm it brings to our lives, our society, and our economy.
Miller describes that over the past decade, he has seen several situations where raw material supplies, especially metal, were very tight and led to disruptions in the company’s operations. “However, we’ve never seen anything like we’re experiencing now as it goes beyond just metal supply,” he said. Today, the industry’s bottlenecks are affecting the supplies of pretty much everything. “The days of being able to place orders and know that we will receive the supplies we need when we need it are long gone. Manufactures now tell us how much they can sell us. And even at that, they are often delayed on shipments. It really isn’t supposed to work this way! The system is broken,” he said.
The problems faced by his company are similar to what many other businesses have been experiencing in recent months. The biggest worry, however, is how these disruptions are affecting one industry all of us rely on: the food industry. All over the nation, food retailers are struggling with worsening labor and product shortages that can potentially threaten America’s food security. The latest wave of confirmed virus cases has left a dent in the labor market, as millions of workers have been calling in sick and new protocols are reinstituted on food manufacturing plants. In January, the economists estimated that employee absenteeism had hit about 30 percent of staffers at some stores. Now that number is over 50 percent and is continuing to rise by the day.
As the situation worsens, small and medium-sized grocery stores won’t be able to stay open, which will compromise food security in rural and remote areas that depend on independent grocers, they warned. One grocery store owner said that the shortage of workers is putting his business on the edge of closure. “If we have to keep sending people home, at a certain point stores are not going to be able to operate,” he said.
The truth is that the truck driver shortage is an issue that has never been properly addressed. We can get millions of containers filled to the brim with goods coming from China and around the world, but if there are not enough truck drivers to distribute and deliver them to stores all across the country, then we will have to get used to seeing empty shelves for a long, long time.
If nothing is done to stimulate job growth in the sector, no matter how many supplies we can import, they won’t be delivered and prices and inflation will continue to skyrocket. If there was still any doubt remaining before, now it’s clear that the U.S. labor and supply chain nightmare is here to stay, and this crisis is far from over. In fact, a Resilinc survey found that supply shortages rocketed 88% last month, and rose 452% year-over-year. Resilinc said the top six disruptions were factory shutdowns, workforce disruptions, leadership transitions, and raw material shortages. “The conditions are spurring nations worldwide to look after themselves, hoarding locally-sourced raw materials. This will further negatively affect the supply chain as exports decline and countries that rely on those exports face shortages,” the firm noted.
Resilinc, monitors, and maps risk events for the supply chain, and just last year, it sent out 491 shortage alerts covering semiconductors, plastics, paper, and raw materials. All of these chokepoints on our supply chains will definitely make conditions a lot more complicated this year. It appears that the prophecy that few heard and no one believed had finally come true: Shortages will become commonplace in the world's wealthiest country, and the supply and demand imbalances we are witnessing are sowing the seeds for economic chaos in the coming months."
"US Debt of $30 Trillion Visualized in Stacks of Physical Cash"
"U.S. Attains Frightening Milestone"
by Jim Rickards
"Well, we did it! It took some hard work, but the United States finally managed to find itself with $30 trillion of government debt. But if anyone is actually thinking of celebrating this dubious accomplishment, I have some advice for you - get ready for the hangover. Let’s see how we got here…
The U.S. government bond market was invented by Alexander Hamilton early in the first administration of George Washington around 1790. The newly formed United States of America was facing claims from creditors who had financed the Revolutionary War. The Congress had a simple solution: Default! That’s the American Way. But Hamilton had a better idea. He said the new government should borrow more money and use that to pay off the old creditors. Once we did that, we would be deemed creditworthy and we could borrow even more money to pay off the money borrowed in the first round.
This plan was so successful that the U.S. Treasury market is now celebrating its 230th anniversary! That’s how long the U.S. has been borrowing new money to pay off old debt. In 1835, Andrew Jackson became the first and only president who cut the national debt to zero.
Inflation Is the Only Way Out: The story of U.S. debt is not one in which the debt went up steadily for 230 years. The actual history is that the debt went up in times of war and it was paid back in times of peace. Debt went up in the War of 1812, the Mexican-American War of 1846–1848, the Civil War, World War I, World War II, Korea, Vietnam and under Reagan to win the Cold War. (The only major debt increase without war prior to 2000 was during the Great Depression). But the war debt was paid off during times of peace including the 1820s, 1870s, 1920s and 1990s. It was only after 2000 that things went off the rails and government debt went straight up under George W. Bush, Barack Obama, Donald Trump and Joe Biden.
Now the debt is unmanageable without inflation. Inflation favors debtors because they get to pay back the debt with depreciating dollars. It’s easier to pay down debt because you’re paying back debt with dollars that are less valuable than when you originally borrowed them. So inflation eases the real value of debt. On the other hand, deflation increases the real value of debt. With deflation, the value of money increases, making it more burdensome to pay off debt. This is why debtors hate deflation.
The Debt Death Trap: People who say, “We can’t pay off the national debt!” don’t understand this market. There’s no need to pay off the national debt. We just have to keep rolling it over. But to do that we need to maintain our credit standing, as Hamilton understood. Once our credit is called into question, the entire house of cards collapses.
This shows up first in higher interest rates, then in a devaluation of the dollar and finally in illiquid markets where the debt just can’t be sold except to the Fed. The final stage is hyperinflation and complete collapse of the currency and the bonds. It’s not going to happen tomorrow, but we’re getting closer to that endgame.
I’ve said before that the U.S. is caught in a debt death trap. Monetary policy won’t get us out because the velocity of money, the rate at which money changes hands, is dropping. Printing more money alone will not change that.
Fiscal policy won’t work either because of high debt ratios. At current debt-to-GDP ratios, each additional dollar spent yields less than a dollar of growth. But because it must be borrowed, it does add a dollar to the debt. Debt becomes an actual drag on growth. The ratio gets higher and the situation grows more desperate. The economy barely grows at all while the debt mounts. You basically become Japan.
The national debt is $30 trillion. A $30 trillion debt would not be a serious issue if we had a $50 trillion economy. But we don’t have a $50 trillion economy. We have about a $21 trillion economy, which means our debt is bigger than our economy. And it’s stalling.
A Small Rounding Error Away From Recession: Although we’re only about one-third of the way through the first quarter of 2022, the Federal Reserve Bank of Atlanta has published its estimate for first-quarter growth using the data we have so far. The result is a forecast of 0.1% GDP growth on an annualized basis. That’s a small rounding error away from a recession. That’s significant because the Atlanta Fed is known for its highly optimistic forecasts.
There are several reasons for this weak start to the quarter. The first is that strong fourth-quarter growth in 2021 was mostly a mirage. Almost the entire growth came from inventory accumulation. That does not represent final sales; it represents goods piling up in warehouses. If those goods get sold in the first quarter, they don’t add much to GDP because they were already counted in GDP when the inventories were purchased.
If the goods don’t get sold, it’s even worse because supply chain managers will cancel new orders while waiting for the inventories to run off (probably at steep discounts). Also, the economic impact of Omicron is just being felt now. It hit hard in December but did not have much impact coming that late in the year.
After Jan. 1, the quarantines, hospitalizations and lockdowns started to pile up, so the first quarter will bear the brunt of it. When you combine this intrinsic weakness with Fed tightening today and rate hikes in March, you have a recipe for recession in the first quarter.
Heading for a Sovereign Debt Crisis: In basic terms, in the bigger picture, the United States is going broke. We’re heading for a sovereign debt crisis. I don’t say that for effect. I’m not looking to scare people or to make a splash. That’s just an honest assessment based on the numbers. Tax cuts won’t bring us out of it; neither can structural changes to the economy. Both would help if done properly, but the problem is simply far too large. You can’t grow yourself out of this kind of debt.
So an economic time bomb is ticking. Velocity is dropping. Debt is growing while growth is slowing. The explosion will come in the form of asset bubbles bursting and stocks crashing. There’s no way out of the debt death trap except through inflation. Say goodbye to Hamilton’s master plan. Time to buy some gold before the rush into hard assets really begins."
“The constellation of Orion holds much more than three stars in a row. A deep exposure shows everything from dark nebula to star clusters, all embedded in an extended patch of gaseous wisps in the greater Orion Molecular Cloud Complex. The brightest three stars on the far left are indeed the famous three stars that make up the belt of Orion. Just below Alnitak, the lowest of the three belt stars, is the Flame Nebula, glowing with excited hydrogen gas and immersed in filaments of dark brown dust.
Below the frame center and just to the right of Alnitak lies the Horsehead Nebula, a dark indentation of dense dust that has perhaps the most recognized nebular shapes on the sky. On the upper right lies M42, the Orion Nebula, an energetic caldron of tumultuous gas, visible to the unaided eye, that is giving birth to a new open cluster of stars. Immediately to the left of M42 is a prominent bluish reflection nebula sometimes called the Running Man that houses many bright blue stars. The above image, a digitally stitched composite taken over several nights, covers an area with objects that are roughly 1,500 light years away and spans about 75 light years.”
“Johannes Kepler is best known for figuring out the laws of planetary motion. In 1610, he published a little book called “The Six-Cornered Snowflake” that asked an even more fundamental question: How do visible forms arise? He wrote: "There must be some definite reason why, whenever snow begins to fall, its initial formation is invariably in the shape of a six-pointed starlet. For if it happens by chance, why do they not fall just as well with five corners or with seven?"
All around him Kepler saw beautiful shapes in nature: six-pointed snowflakes, the elliptical orbits of the planets, the hexagonal honeycombs of bees, the twelve-sided shape of pomegranate seeds. Why? he asks. Why does the stuff of the universe arrange itself into five-petaled flowers, spiral galaxies, double-helix DNA, rhomboid crystals, the rainbow's arc? Why the five-fingered, five-toed, bilaterally symmetric beauty of the newborn child? Why?
Kepler struggles with the problem, and along the way he stumbles onto sphere-packing. Why do pomegranate seeds have twelve flat sides? Because in the growing pomegranate fruit the seeds are squeezed into the smallest possible space. Start with spherical seeds, pack them as efficiently as possible with each sphere touching twelve neighbors. Then squeeze. Voila! And so he goes, convincing us, for example, that the bee's honeycomb has six sides because that's the way to make honey cells with the least amount of wax. His book is a tour-de-force of playful mathematics.
In the end, Kepler admits defeat in understanding the snowflake's six points, but he thinks he knows what's behind all of the beautiful forms of nature: A universal spirit pervading and shaping everything that exists. He calls it nature's "formative capacity." We would be inclined to say that Kepler was just giving a fancy name to something he couldn't explain. To the modern mind, "formative capacity" sounds like empty words.
We can do somewhat better. For example, we explain the shape of snowflakes by the shape of water molecules, and we explain the shape of water molecules with the mathematical laws of quantum physics. Since Kepler's time, we have made impressive progress towards understanding the visible forms of snowflakes, crystals, rainbows, and newborn babes by probing ever deeper into the heart of matter. But we are probably no closer than Kepler to answering the ultimate questions: What is the reason for the curious connection between nature and mathematics? Why are the mathematical laws of nature one thing rather than another? Why does the universe exist at all? Like Kepler, we can give it a name, but the most forthright answer is simply: I don't know.”
"When we're headed toward an outcome that's too horrible to face, that's when we go looking for a second opinion. And sometimes, the answer we get just confirms our worst fears. But sometimes, it can shed new light on the problem, make you see it in a whole new way. After all the opinions have been heard and every point of view has been considered, you finally find what you're after - the truth. But the truth isn't where it ends, that's just where you begin again with a whole new set of questions."
“Life has no victims. There are no victims in this life. No one has the right to point fingers at his/her past and blame it for what he/she is today. We do not have the right to point our finger at someone else and blame that person for how we treat others, today. Don’t hide in the corner, pointing fingers at your past. Don’t sit under the table, talking about someone who has hurt you. Instead, stand up and face your past! Face your fears! Face your pain! And stomach it all! You may have to do so kicking and screaming and throwing fits and crying – but by all means – face it! This life makes no room for cowards.”
"In 1987, Levon Helm, a former cotton farmer from Arkansas, sat brooding in his yard, trying to describe why his apparent success had turned to near-bankruptcy: "Well, it’s hard to put your finger on. You get behind financially and once you get behind financially, you seem to get behind spiritually. And your luck turns against you."
Levon’s perception of his situation is a common one. He had become quite successful, but had never learned to understand more about economics than, "If you got it, spend it." As a result, throughout his life, he repeatedly found himself in monetary difficulties. He habitually lived in the moment and didn’t invest much time analysing what his actions would need to be to assure a sound economic future. Unfortunately, his approach to his future is, to a great extent, the approach of the vast majority of people.
Let’s take his comments one sentence at a time: "Well, it’s hard to put your finger on." In this comment, Levon begins by stating that he doesn’t really understand what’s happened to him. As someone who hasn’t given much thought into the subject of economic study, his personal outcome is a mystery to him - impossible to fathom.
"You get behind financially and once you get behind financially, you seem to get behind spiritually." He then relates a basic truth - that a by-product of financial decline is a spiritual decline. Morals are often compromised in order to survive the financial debacle and, frequently, a sense of emptiness and failure takes over.
"Your luck turns against you." In this last statement, he disavows any personal responsibility for either his monetary problems or any human action that he might have taken that could have corrected the situation, since the elusive and incomprehensible "bad luck" has taken control - a force that he believed he could not have overcome.
And so, Levon led a life of repeated success and loss, never learning that, from the outset, the course of his economic life was of his own making. Had he chosen to understand and anticipate economic events and adjust for them, he could have taken charge of his financial life. Instead, he became a casualty of those events. Unfortunately, his entire problem could be defined as a lack of human action.
Recently, I was asked the question, "Once we know history, do we have any power to change it?" My answer is that, in a vast economic world, with hundreds of millions of players, some of whom hold exceedingly high levels of power, the odds of changing that history in any meaningful way is very slight. It can be likened to a man standing in the ocean, watching the waves grow in height, then come crashing over him. He might wish that he could control the wave action, but the odds of him achieving this are so slight that it’s a non-starter.
What he can do, however, is learn to surf. When we observe waves, we’re most fascinated by the ones that grow to great heights, then come crashing down. And, in economics, we demonstrate the same excitement. We’re drawn to the prospect of a great economic build-up. However, just as in nature, economic waves always end and, the bigger the wave, the bigger the crash. Many people choose to stand back from the economic shore, where they’ll be safe, but will be unlikely to prosper. Others hope that they can somehow control the economic waves and cash in on them. In most cases, this leads to a repeating boom and bust pattern.
However, those who learn to surf have figured out that they, as individuals, cannot control the economic waves, but they can learn to ride a wave, watch it carefully to anticipate when it will crest, then back out before it breaks. They’re usually laughed at by their peers, as they’re the ones who sell just as the market is reaching its final, dizzying vertical ascent. However, by getting out early, they secure their wealth and will be ready and able to catch the next wave.
But this form of success can be taken further. The world is made up of some 200 jurisdictions. At any given time, some are advancing economically, whilst others have already crested and will soon come crashing down. The average investor will look around his immediate vicinity for a wave that’s on the rise and hope that he can benefit from it. However, those who think internationally have a tendency to examine many jurisdictions at the same time, seeking opportunities. Each jurisdiction will be different, with its own parameters. There will be multiple concerns: geographical location and accessibility, the level of stability of governmental leadership (even a very poor leadership, if it’s predictable enough, can offer opportunity), its laws (some countries being more restrictive than others), and the local economic climate. Each country has a unique combination of conditions and may therefore be advantageous to some types of investment, but no one jurisdiction will be the best for all types of investment. Some jurisdictions will be easier to profit in than others and each will have a different set of opportunities.
Those who internationalize are therefore the equivalent of a surfer who is surfing several beaches at the same time, picking the best waves to try to ride, then backing out of each prior to its inevitable crash. This diversification offers considerably greater opportunity for the investor than he could ever achieve in any one jurisdiction.
Of particular interest is the fact that each jurisdiction undergoes periodic change. For example, the rise of the Nazis in Germany would have suggested the removal of all investments there, to be transferred to, say, Uruguay, where greater economic and political stability existed at that time. Similarly, there might be some investments in the US today that could have a promising future, but increased socialism, increased warfare, unpayable debt, and the rise of a police state assure us that, in the near future, virtually all investment in the US stands to take a major hit. Therefore, the likelihood of success is limited. An investment in one of the countries that stand to become a net recipient when the US crashes take place would therefore be a more promising bet.
Those with foresight will generate speculation as to the prospects of Venezuela - currently nearing meltdown, but still retaining great natural resources that could provide great opportunity for those who plan in advance, and time their investments to take place after the dust has settled on the meltdown.
Any forward-thinking investor who has spent time in Cuba will say that there is immense opportunity there, but that any investment today would be very risky. The task at present is to continue watching Cuba so that when conditions become favorable for investment, we’re poised to act.
This is the opposite extreme of our friend Levon. He firmly believes that he doesn’t really direct his life. Life happens to him. He, in essence, is just along for the ride. The choice for each of us is whether we wish to climb on the bus with him, avoiding taking responsibility for our lives, but also being collateral damage if that bus goes off the road, or whether we choose to employ human action. If we have the courage to choose the latter, we might also have the wisdom to learn to surf, and, beyond that, have the imagination to surf internationally."
"The Fed Says $40 Trillion National Debt is No Big Deal"
"The St. Louis Fed wants us to believe that owing $40 Trillion in no big deal. We owe money to other countries, our military pensions, social security and we just keep printing dollar bills. There has to be a better way."
“Most do not fully see this truth that life is difficult. Instead they moan more or less incessantly, noisily or subtly, about the enormity of their problems, their burdens, and their difficulties as if life were generally easy, as if life should be easy. They voice their belief, noisily or subtly, that their difficulties represent a unique kind of affliction that should not be and that has somehow been especially visited upon them, or else upon their families, their tribe, their class, their nation, their race or even their species, and not upon others. Problems do not go away. They must be worked through or else they remain, forever a barrier to the growth and development of the spirit.”
Dublin, Ireland - “Nobody wants to do this kind of work anymore.” Mick, our old-school stone mason, turns 65 this year. He will retire soon. “It’s great work. You’re outside all day. And it’s healthy. You get a lot of exercise. But it’s hard, physical work. I’ve been doing it for 50 years. I’ve always enjoyed it. But it takes a toll. And when I retire [my employer] won’t have a mason on the payroll anymore. The kids want to go to Dublin. They all want to work in finance. Or those computer things. They’ve got that area [in Dublin] they call the Silicon Docklands. That’s where all those high-tech firms are. That’s where the kids want to go.”
Herewith a few thoughts on where the kids want to go… Mick was right. The two big money makers of the last quarter century have been Wall Street and Silicon Valley. It’s been a puzzle to us. A real economy is based on give and take. And, generally, the more you give… the more you get.
We get bread from bakers… wheels from the car makers... nice people in Indonesia prick their fingers so we will have clothes to wear… John Deere made our tractor…the Ford company made our truck… lumberjacks in Canada send us lumber… carpenters build our houses… roughnecks drill for oil… truckers deliver it… clerks sell it.
When we go to a good restaurant we compliment the chef and tip the waiter. A man came to the house yesterday to check if our in-ground gas tank was leaking; we thanked him. And last night, we opened a bottle of wine that came all the way from Chile. The harvesters had picked the grapes. The winemaker had bottled it. The captain had brought his ship into Dublin harbor, with the wine aboard. And the local SuperValue had stocked it on its shelves for us. All for only $12.
All of these people work hard to make our lives more agreeable. But what do Wall Street and Silicon Valley do?
Face Down: Whatever FaceBook does, last week, investors figured it was worth less than they had previously thought. In the space of a few hours, $250 billion of market cap dissolved. The proximate cause of this big drop was Facebook’s quarterly report to investors, in which it revealed that revenues went down. And so did its customers (users). This looked like a top; now it’s clear that even the most successful of the ‘tech’ firms don’t go up forever.
Meanwhile, it is up, up and up for Wall Street. Here’s an update from last week. Bloomberg: "Ten million dollars, $15 million, $25 million, more: Big money is back on Wall Street. Not since the late 2000s, when lavish bonuses rained down before and after federal bailouts, have pay packages at U.S. investment banks swelled as much as they have right now.
Goldman Sachs Group Inc. just finished spending an average of 23% more per employee for the past year – the biggest jump in more than a decade. And that figure is muted compared with how dramatically bonuses have gone up for dealmakers, with Morgan Stanley, JPMorgan Chase & Co. and Goldman raising them to the tune of 30%, 40% and 50%."
After years of restraint, bank leaders are once again projecting a “whatever it takes” approach to compensation, vowing they won’t be outbid for top performers, lest they lose an edge in a hot market for trading and deals. That has their employees in Manhattan uncorking $2,000 bottles of wine at the fastest pace in years, buying bigger homes in fashionable TriBeCa, and snapping up yachts.
There is a minor discipline of economists and historians who try to figure out why societies go into decline – often catastrophically. Many are the hypotheses – climate change, war, disease, overpopulation, and so forth. Here is one of them: in every society, some people rule… others are ruled. As time goes by, more and more people want to join the governing class. In our own time, mothers encourage their children to go to college… to wear suits, rather than overalls… and to join the elite.
The Sultan’s Sedan: The trouble is, the ruling classes don’t add much of value. They regulate… they control… they administer… they supervise… they advise. In an honest society, you need some people – an elite – to provide these services. But extra weight in the upper classes is a burden. An unproductive elite is parasitic. It toils not. Neither does it spin. It is toted on the shoulders of the common man, like a Turkish sultan in a sedan chair.
Wall Street is a regulator… a facilitator. Its role is to match businesses and investors up with each other… allocating precious capital to the enterprises that are most likely to fructify it. It is a useful service. But in an honest world, capital is limited. So are the opportunities to use it wisely. And the appetite for risking them in bizarre speculations – on NFTs, cryptos, money losing, zombie companies, meme stocks, options, SPACs, and hugely overpriced ‘tech’ companies – is restrained.
Investors usually make money by buying money-making businesses… not by gambling on wacky, weird innovations. So, the opportunity for the middlemen – Wall Street – to make money is also limited. That’s why, back in the Land Before Financialization, in 1982, the finance industry represented about only 10% of corporate profits. It only hit after the US began its decline in 2000. And now that the big bonuses are back, no wonder the young stonemasons want to put down their trowels.
More dots to be connected – why Facebook has topped out… why people on Wall Street are overpaid… and why the US empire is in retreat. Stay tuned."
