FUBAR

Weekly Irrefutable

“May you live in interesting times.”[1]


Most people don’t aspire to obtain a position of absolute power over others, but many psycho-sociopaths do, and some of them even seek political position with the belief that they know what’s best for you and me. It was Hayek who had a chapter in The Road to Serfdom named “Why the worst get on top,” and spoke about this in great length. It’s easy to wonder why the right person never seems to lead a country, or ask why Mises didn’t become Fed Chairman or Rothbard run for President. Unfortunately, the world doesn’t work like that.

Mainstream economics is a lie

If by “lie” we mean made up, or that which is untrue, then mainstream economics is exactly that. Mainstream economics is statism and the art of manipulating the public in order to serve the few who control society. Contrast this to Austrian economics, which is the economics of free market capitalism and it becomes clear why most people have never heard of the Austrian school before. For over a century the world has relied on Keynesian and off-shoot economic schools that rely on increasing the money supply to somehow manage the economy; why it has never worked and why Austrian economics is ignored remains taboo across university campuses across the world.

Even the most basic mainstream economic ideas are deeply flawed, for example, GDP does not include debt so if a government creates $1 trillion to build a bridge to nowhere, GDP will increase by $1 trillion. GDP also includes a net export calculation, whereby imports are subtracted from exports. So if a nation imports $1 trillion and exports $1 trillion of goods, the net effect to GDP will be zero, but if a nation exports $10 million and imports NIL, the GDP impact will be $10 million. But which nation would you think is more prosperous? The problem is that practically every measure used by economists has similar flaws and relies on dogmatic belief more than anything else.

In time, Econ Circus will show that mainstream economics is completely false. There is no easy way to say it, but it’s true.

The Federal Reserve is anti-capitalism

Per the FAQ on the Federal reserve website it says that: The Federal Reserve System is not “owned” by anyone.[2] This is also a lie because the Federal Reserve has over 600 million shares outstanding[3] and has been paying a dividend to its shareholders (owners) for over a century. People get confused because the President appoints the Fed Chair, but this does not negate the fact that the Fed is a privately held corporation and the United States government holds no shares.

The Fed already created $4 trillion out of thin air and gave it to the wealthiest members of society. An additional $700 billion was announced over the weekend. They will use words like liquidity injection, growth, bolster growth and consumer confidence in order to explain this, but what it really means is that the wealthiest members of society will get to invest $700 billion in assets such as stocks, bonds and real estate. This will increase the wealth gap between the rich and the poor, decrease the value of the dollar further and increase the cost of living for the masses.

Not one mainstream economist or any of the top economics schools in the world have made any statement against this.

Fake News is real

Mainstream news media is no different than mainstream economics; they are both mouthpieces for the State. Like mainstream economists, the media is meant to control people, not meant to allow people to think for themselves. The term “fake news” was likely a gaslighting technique invented by the mainstream media to call any smaller news media “fake” because they disagree with their narrative.

The Government doesn’t serve the people

The first job of any elected official is to get elected. They do this by getting donations from sponsors, however, in order to get the large donations the politician must promise the donor something in return. There is a conflict of interest whether it is a super donor for a tax break, unions for protections, or UBI for the poor. The easiest way to win an election is to buy an election. If the masses have ever heard of the name Ron Paul then they probably know little about him; Dr. Paul wants to End the Fed, but how many people would vote for him when all other voters would get “free money” from every other politician?

Public schools don’t teach critical thinking

The purpose of public school is to teach people how to be productive members for the State. It is not about thinking critically, understanding economics, liberty or freedom. It is even less about practical skills that adults should know such as building healthy relationships, discourse, money management or mental health. The purpose of public schooling is to train the citizenry well enough to get a job to contribute as a taxpayer or move on to post secondary school where they may be able get an even better job; the caveat is that the large debt load that must be taken on will make people even more reliant on the State.

People are angry but don’t know why

One of the most fascinating books I’ve ever read is the Fourth Turning, in which the author marked this current era with a lack of leadership; which I believe to be true. You can see it on peoples’ faces, on the commuter train, the subway or the bus. You can see it on Twitter, Facebook and other social media; and you most definitely can see it in the current events of today. People are struggling. Many don’t know how or why, but they do know that every year the cost of living goes up at a rate higher than 2%.

Putting it all together

The majority of people in the world live in conditions that are “third world” when compared to how life is in western societies; rights, opportunities, liberty, safety, resources and amenities are seemingly endless for most people in the West. But how long will this last?

In response to the coronavirus, world governments promise to help society by increasing fiscal stimulus, combined with increasing the money supply in the face of a decrease in production of goods and services. This is not good and the cost of living can only increase under these conditions. The failure of economics, the mainstream media, government socialism (which all are intended to increase debt levels and money supply in order to impoverish the majority of people at the expenses of the few) will have to end at some point.

The effect of the $700 billion will be seen with the increases in the prices of bonds, stocks, real estate and general prices. This might seem good to some because they may be able to “get richer” or “feel wealthy,” but this is illusionary; it fails to consider that assets are becoming more unaffordable while debt levels are becoming more unmanageable for the masses. People feel proud when their house price increases but it doesn’t mean much because everyone’s house is increasing in price.

The economists in charge will downplay the unaffordability of life, the debt and tell you that a little inflation is good. However, there is a disconnect between what most people are told and the way life really is; when you question the narrative you run the risk of being seen as the crazy one. Is it any surprise that per one estimate, 10% of people in the world have a mental health disorder.[4] Was this always the case or is this a symptom of the world we are living in?

Often, we can only speak in generalizations and use anecdotal evidence to make decisions, so it is difficult to prove that we are being lied to. I believe most people want to “do the right thing.” They would like to work, save money and live a decent life. The problem is the average person cannot do this without becoming impoverished and has little room to do much else except live paycheck to paycheck. There is no amount of government intervention or economic planning that can fix this because it is government intervention and economic planning that has caused this.

For myself, I like precious metals, hard assets and when I do buy stocks it’s penny stocks or mining stocks. If I were to buy the Dow then I’ll look to buy at around 15,000 per Fibonacci retracement between the 2009 low to the most recent high as annotated below:

Dow Chart with Fibonacci

Good luck managing your money.

EC


[1] Author unknown. It’s widely attributed to being a Chinese Curse, but I couldn’t find any proof of this.

[2] https://www.federalreserve.gov/faqs/about_14986.htm

[3] Shares outstanding from Federal Reserve Banks Combined Financial Statements as of Years Ended December 31, 2018 and 2017 and Independent Auditor’s Report. Audited by KPMG.

[4] https://ourworldindata.org/mental-health

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