Shining A Light On Sociopaths In Politics

Submitted by Doug Casey via,

There are seven characteristics I can think of that define a sociopath, although I’m sure the list could be extended:

  1. Sociopaths completely lack a conscience or any capacity for real regret about hurting people. Although they pretend the opposite.
  1. Sociopaths put their own desires and wants on a totally different level from those of other people. Their wants are incommensurate. They truly believe their ends justify their means. Although they pretend the opposite.
  1. Sociopaths consider themselves superior to everyone else, because they aren’t burdened by the emotions and ethics others have – they’re above all that. They’re arrogant. Although they pretend the opposite.
  1. Sociopaths never accept the slightest responsibility for anything that goes wrong, even though they’re responsible for almost everything that goes wrong. You’ll never hear a sincere apology from them.
  1. Sociopaths have a lopsided notion of property rights. What’s theirs is theirs, and what’s yours is theirs too. They therefore defend currency inflation and taxation as good things.
  1. Sociopaths usually pick the wrong target to attack. If they lose their wallet, they kick the dog. If 16 Saudis fly planes into buildings, they attack Afghanistan.
  1. Sociopaths traffic in disturbing news, they love to pass on destructive rumors, and they’ll falsify information to damage others.

The fact that they’re chronic, extremely convincing, and even enthusiastic liars, who often believe their own lies, means they aren’t easy to spot, because normal people naturally assume another person is telling the truth. They rarely have handlebar mustaches or chortle like Snidely Whiplash. Instead, they cultivate a social veneer or a mask of sanity that diverts suspicion. You can rely on them to be “politically correct” in public. How could a congressman or senator who avidly supports charities possibly be a bad guy? How could someone who claims he just wants the U.S. to defend some foreign minority possibly be a warmonger? They’re expert at using facades to disguise reality, and they feel no guilt about it.

Political elites are primarily, and sometimes exclusively, composed of sociopaths. It’s not just that they aren’t normal human beings. They’re barely even human, a separate subspecies, differentiated by their psychological qualities. A normal human can mate with them spiritually and psychologically about as fruitfully as a modern human could mate physically with a Neanderthal; it can be done, but the results will be problematical.

It’s a serious problem when a society becomes highly politicized, as is now the case in the U.S. and Europe. In normal times, a sociopath stays under the radar. Perhaps he’ll commit a common crime when he thinks he can get away with it, but social mores keep him reined in. However, once the government changes its emphasis from protecting citizens from force to initiating force with laws and taxes, those social mores break down. Peer pressure, social approbation, and moral opprobrium, the forces that keep a healthy society orderly, are replaced by regulations enforced by cops and funded by taxes. Sociopaths sense this, start coming out of the woodwork, and are drawn to the State and its bureaucracies and regulatory agencies, where they can get licensed and paid to do what they’ve always wanted to do.

It’s very simple, really. There are two ways people can relate to each other: Voluntarily or coercively. The government is pure coercion, and sociopaths are drawn to its power and force.

The majority of Americans will accept the situation for two reasons: One, they have no philosophical anchor to keep them from being washed up onto the rocks. They no longer have any real core beliefs, and most of their opinions – e.g., “We need national health care,” “Our brave troops should fight evil over there so we don’t have to fight it over here,” “The rich should pay their fair share” – are just reactive and comforting catch phrases. The whole point of spin doctors is to produce comforting sound bites that elude testing against reality. And, two, they’ve become too pampered and comfortable, a nation of overfed losers, mooches, and coasters who like the status quo without wondering how long it can possibly last.

It’s nonsensical to blather about the Land of the Free and Home of the Brave when reality TV and Walmart riots are much closer to the truth. The majority of Americans are, of course, where the rot originates – the presidential candidates are spending millions taking their pulse in surveys and polls and then regurgitating to them what they seem to want to hear. Once a country buys into the idea that an above-average, privileged lifestyle is everyone’s minimum due, when the fortunate few can lobby for special deals to rake something off the table as they squeeze wealth out of others by force, that country is on the decline. Lobbying and taxation are replacing production and innovation as the national modus vivendi; parasites are unable to sustain prosperity. The wealth being squeezed took centuries to produce, but it is not inexhaustible.

I suspect most now reading this tend to vote Republican. Republicans say they believe in economic freedom (they don’t), and they definitely don’t believe in social freedom. Compared to the Democrats, they are viewed (correctly) as hypocrites. At least the Democrats are honest about disliking economic freedom. Republican candidates are at once laughable and pathological – it doesn’t matter if Trump, Cruz, or Rubio get the nod. They’re all so horrible and embarrassing that I’ve heard they’re even desperately considering recycling Mitt Romney, an empty suit, only marginally better than the previous Republican nominee, the hostile and mildly demented John McCain.

All candidates decry the upper classes, say they love what’s left of the middle class, and want to shower more goodies on the proletariat.

People generally fall into an economic class because of their psychology and their values. Each of the three classes has a characteristic psychological profile. For the lower class, it’s apathy. They have nothing, they’re ground down, and they don’t really care. They’re not in the game, and they aren’t going to do anything; they’re resigned to their fate. For the upper class, it’s greed and arrogance. They have everything, and they think they deserve it – whether they do or not. The middle class, at least in today’s world, is run by fear. Fear that they’re only a paycheck away from falling into the lower class. Fear that they can’t pay their debts or borrow more. Fear that they don’t have a realistic prospect of improving themselves.

The problem is that fear is a negative, dangerous, and potentially explosive emotion. It can easily morph into anger and violence. Exactly where it will lead is unpredictable, but it’s not a good place. One thing that exacerbates the situation is that all three classes now rely on the government, albeit in different ways. Bankruptcy of the government will affect them all drastically.

With sociopaths in charge, we could very well see the Milgram experiment reenacted on a national scale. In the experiment, you may recall, researchers asked members of the public to torture subjects (who, unbeknownst to the people being recruited, were paid actors) with electric shocks, all the way up to what they believed were lethal doses. Most of them did as asked, after being assured that it was “all right” and “necessary” by men in authority. The men in authority today are mostly sociopaths.


One practical issue worth thinking about is how you, as someone with libertarian values, will manage in a future increasingly controlled by sociopaths. My guess is poorly, unless you take action to insulate yourself. That’s because of the way almost all creatures are programmed by nature. There’s one imperative common to all of them: Survive! People obviously want to do that as individuals. And as families. In fact, they want all the groups that they’re members of to survive, simply because (everything else being equal) it should help them to survive as individuals. So individual Marines want the Marine Corps to survive. Individual Rotarians want the Rotary Club to prosper. Individual Catholics leap to the defense of the Church of Rome.

That’s why individual Germans during World War II were, as has been asserted, “willing executioners” – they were supporting the Reich for the same reasons the Marines, the Rotarians, and the Catholics support their groups. Except more so, because the Reich was under attack from all sides. So, of course, they followed orders and turned in their neighbors who seemed less than enthusiastic. Failing to support the Reich, even if they knew it had some rather unsavory aspects, seemed an invitation to invading armies to come and rape their daughters, steal their property, and probably kill them. So, of course, the Germans closed ranks around their leaders, even though everyone at the top was sociopath. You can expect Americans to do the same.

Americans have done so before, when the country was far less degraded. During the War Between the States, even saying something against the war was a criminal offense. The same was true during World War I. In World War II, the Japanese were all put in concentration camps on groundless, racially based suspicions of disloyalty. During the early years of the Cold War, McCarthyism was rampant. The examples are legion among humans, and the U.S. was never an exception. It’s even true among chickens. If a bird has a feather out of place, the others will peck at it, eventually killing it. That out-of-place feather is deemed a badge of otherness announcing that its owner isn’t part of the group. Chicken Autre must die.

Libertarians, who tend to be more intelligent, better informed, and very definitely more independent than average, are going to be in a touchy situation as the crisis deepens. Most aren’t going to buy into the groupthink that inevitably accompanies war and other major crises. As such, they’ll be seen as unreliable, even traitors. As Bush said, “If you’re not with us, you’re against us.” And, he might have added, “The Constitution be damned.” But, of course, that document is no longer even given lip service; it’s now a completely dead letter.

It’s very hard for an individualist to keep his mouth shut when he sees these things going on. But he’d better keep quiet, as even H.L. Mencken wisely did during both world wars. In today’s world, just keeping quiet won’t be enough; the national security state has an extensive, and growing, file on everybody. They believe they know exactly what your beliefs, desires, fears, and associations are, or may be. What we’re now facing is likely to be more dangerous than past crises. If you’re wise, you’ll relocate someplace where you’re something of an outsider and, by virtue of that fact, are allowed a measure of eccentric opinion. That’s why I spend an increasing amount of time in Latin America. In truth, however, security is going to be hard to find anywhere in the years to come. The most you can hope for is to tilt the odds in your favor.

The best way to do that is by diversifying your assets internationally. Allocating your wealth into real assets. Linking up with sound, like-minded people who share your values. And staying alert for the high-potential speculations that inevitably arise during chaotic times.

*  *  *

A big part of any strategy to reduce your political risk is to place some of your savings outside the immediate reach of the thieving bureaucrats in your home country. Obtaining a foreign bank account is a convenient way to do just that.

That way, your savings cannot be easily confiscated, frozen, or devalued at the drop of a hat or with a couple of taps on the keyboard. In the event capital controls are imposed, a foreign bank account will help ensure that you have access to your money when you need it the most.

In short, your savings in a foreign bank will largely be safe from any madness in your home country.

Despite what you may hear, having a foreign bank account is completely legal and is not about tax evasion or other illegal activities. It’s simply about legally diversifying your political risk by putting your liquid savings in sound, well-capitalized institutions where they’re treated best.

We recently released a comprehensive free guide where we discuss our favorite foreign banks and jurisdictions, including, crucially, those that still accept Americans as clients and allow them to open accounts remotely for small minimums.

via Zero Hedge Tyler Durden

How The Masses Deal With Risk (And Why They Remain Poor)

By Chris at

Last week I discussed how humans are wired to pay attention to scary things. In financial speak: risk. Darwinism has chastised those who ignore risk by rewarding them with an early grave, and by process of elimination rewarded those who stay out of the cross hairs.

Thing is, we no longer live in a world where saber-toothed tigers threaten our existence. In today’s world far greater risk lies in the truly enormous and disproportionate emotional attitude to (and assessment of) risk.

This has nothing to do with Darwin but rather more to do with an educational system designed and built for the industrial age. Education today is an advertising agency which leads us to believe we need the society on which it relies upon for its existence.

Beginning with the schooling system and followed by “higher education”, the middle and upper middle class in developed societies are by and large serfs. And they’re serfs because they don’t understand risk.

The overwhelming majority look at risk incorrectly. They look at it two dimensionally: “The more risk I take the more ‘volatility’ I have.” The fact is, risk is actually subjective to your own personal situation. Mismanaging your own personal situation increases risk disproportionately.

Let me give you an example of how easily an otherwise intelligent person gets royally screwed by the system by routinely miscalculating risk.

Let’s take Harry, a fictional guy from a middle class family who’s just left high school. Harry really wants to get ahead and has set himself a goal of becoming a millionaire by the time he’s 25. He figures that by 35 he’ll be worth north of $10 million.

Truthfully, these figures don’t mean much to him but he’s had a small taste of the life and he knows it costs. There was that time he was trying to impress a brunette, and they dined at one of David Chang’s NY restaurants and he still remembers the almost palpable smell of money in the air as diners around him flashed Hublots, diamond necklaces and sophistication.

He remembers how the waiter unscrewed the cap of the water as though defusing a nuclear bomb. And although the beef he ordered was so thin that he had to lick it off the plate because it kept falling off the fork, his friends were really impressed and the girl so floored that she showed her appreciation by keeping him up all night.

The first thing poor Harry is told is to get an education. And so he does just that. Years of schooling have failed to developed in him critical thought. And so, though he has access to almost every resource one can think of, and at a cost approaching zero, he automatically associates education with a four-walled institution where people who like books theorize on how the real world operates, most never having experienced it first hand.

Here he spends 3 years getting into girls’ pants, drinking too much and associating with the same type of people as himself, which does little to develop his critical thought processes. Harry is rewarded with two pieces of paper. One represents his qualification and the other represents the six figure debt he now owes. Remember that the knowledge acquired between the drinking and sex is already free.


This is Harry’s first critical step in miscalculating risk. He exits university with a piece of paper and the world skills and street-smarts of a juvenile because his free time has been spent drinking and test driving anything in a skirt. Most importantly his future income is already tied up in debt repayments.

Fresh out of university Harry now has two doors ahead of him…

The Red Door

Choosing the red door takes Harry into a job. This promises a monthly revenue stream which appears to offer security and consistency. The lure is strong. After all the need to pay off his student debt lurks high on Harry’s list. He’s excited to put himself to test in the “real world” and believes that he can really target becoming wealthy once he’s got his student debt paid off and a few years under his belt.

The Green Door

Here Harry must take his skills learned and rapidly obtain an education. A real education. He will need to do this by becoming an entrepreneur and building his own outcome. This option offers no monthly revenue stream and no security or consistency. It also offers unlimited upside and a real, not imagined, shot at becoming wealthy.

Unfortunately, Harry has a distorted view of risk for two reasons:

  1. He has debt and must make debt payments. This distorts his view of real risk.
  2. He doesn’t have an education which shows him the real cost of risk.

The red door option appears far less risky than the green door option. After all, none of  Harry’s friends are doing this and when he brought up the topic with his parents they nearly blew a gasket. “Don’t give up your future so early on,” they pleaded.  Once again, poor Harry’s lack of critical thought gets the better of him and he takes the red door believing it to be less risky.


Fast forward a few years into cubicle hell and Harry is now earning $60,000 a year. His student debts are easily manageable and in an attempt to get ahead, Harry buys a house, reasoning that he needs somewhere to live and this is the first step towards fulfilling his goal of becoming wealthy.

He reasons that buying the house is a step in the right direction, but he hates his job more every day and it’s now dawned on him that it’s a long hard slog up the corporate ladder in order to earn the sort of money that can make him wealthy.

Once again, he’s faced with a dilemma. Does Harry risk kicking in the job and starting a business of his own, doing something that he really loves, or does he stay put?

And This Is How Harry Analyses The Risk

Scratching at his now receding hairline he thinks to himself, “I can’t take the risk of starting my own business because it may fail.”

The downside now is losing not only the $60,000 salary but defaulting on the payments now tied to this revenue stream. The risk is no longer $60,000. The risk now is in losing the ability to keep up student debt payments as well as mortgage payments.

Pretty soon he’ll fill that house he bought with “stuff” which will either come on hire purchase or simply be added to his mortgage. He lies to himself saying, “Hey, at least I’ve got the income, which I wouldn’t have had without the college education. And at least I’m on my way up because I now own an asset.”

Wrong! On So Many Levels…

Here is how Harry should analyse risk for something as simple as deciding whether to quit a $60,000 a year job or not in favour of having a crack at becoming wealthy.

Let’s look at the downside: if Harry has a job paying $60,000, chances are he’ll be able to pick up another paying $60,000.

Let’s say that those chances are 60%. So he has a 60% chance of getting back to where he is now if he screws up.

Let’s further say that there is a 20% chance he can only get another job paying $50,000, and another 20% chance he will only manage to get a position paying $40,000.

The worst case scenario is therefore a 20% chance of a $20,000 loss. This is his real risk. What then is the upside?

The upside is unlimited. Literally!

Even if Harry completely screws things up, a year running his own business will provide him with 10 years worth of “higher education” leaving him far more qualified than he’ll ever be if he stays in his job.

Why wouldn’t Harry risk a 20% chance of losing $20,000 for a potentially unlimited upside?

The reason Harry doesn’t make the trade is because he’s already tied his $60,000 revenue stream to a host of liabilities. Now I hear some of you saying, “Oh no, but he owns a house and that’s an asset”. No, it’s not!

Assets make you wealthy. They provide you with more, not less freedom. Is Harry’s house doing any of those things?

Harry has already fallen into a trap where he is no longer free to make rational choices. Freedom is wealth.

The financial infrastructure surrounding Harry and the education he’s received is DESIGNED to ensure that debt is never repaid, but only serviced.

If you, dear reader, and I can create a loan for a $1 million and collect an interest payment on it for eternity, all the while getting the poor sucker who’s taken the loan to sign up for even more loans on more liabilities, then that, my friend, is an awesome deal for us. This is what banks, insurance companies and credit agencies make a living out of.

80% of people routinely make the same decisions Harry does and then continue to do so throughout their life. Is it any wonder why despite having cars, boats, a house and all the trappings of the enslaved, they reach middle age, exhausted, unfulfilled, and forever trapped in these damn payments, with some far off absurd goal to pay off the loans upon retirement?

This brings me to that Italian mathematician I mentioned last week.

The Law Of The Vital Few

Vilfredo Pareto first observed the phenomenon that 80% of the land in Italy was owned by 20% of the people. Since then this phenomenon has been mathematically proved across literally every spectrum of society and business.

The principle states that, for many phenomena, 20% of invested input is responsible for 80% of the results obtained. Put another way, 80% of consequences stem from 20% of the causes.

What I discussed last week was how we’re hard wired to take notice of pain. This neurological fact is played upon by many industries where we are led to believe things which just ain’t so. We can see the results in wealth distribution, just as Vilfredo observed in the early 20th century.

Wealth Distribution

Take early stage venture capital for example. If I had a brick for every person who’s told me that I’m taking massive risk by investing in early stage private companies, I’d have enough to rebuild the Berlin Wall.

Risk is not one dimensional. It’s a known fact that well over 50% of early stage deals go belly up. Risky? Sure, it is if viewed in isolation.

What is also a fact is that the mean return of early stage VC investments is north of 50% per annum. This is the mean and like anything else with a little bit (OK, a lot) of work, outperforming the average in anything is entirely achievable if you put effort into it.

Use proven laws to tilt the balance of probability massively in your favour. Turn off the TV. Travel. Educate yourself.

Unless you want to be part of Pareto’s 80%, then don’t invest in what 80% of the market are invested in. Look for asymmetry. Look for what lies in the 20%.

– Chris


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via Zero Hedge Capitalist Exploits

“The Fed Suspended The Laws Of The Market In Order To Save It” – What Happens Next

That the Fed has been boxed in by unleashing destructive monetary policies to “fix” decades of prior policy mistakes, is something we have been warning about since our first day. And, with every passing day that the Fed and its central bank peers pile up error upon error  to offset prior mistakes, the day approaches when this latest bubble, which some have dubbed it the “central banks all-in” bubble, will burst as well: Friday’s shocking announcement of NIRP by the BOJ just brought us one step closer to the monetary doomsday.

However, the one saving grace for the central banks was that as long as none of the market participants who benefited from these flawed policies dared to open their mouths and point out that the emperor is naked, nobody really cared: after all, why spoil the party, especially since virtually nobody outside of finance knows, let alone cares, about monetary policy or why the Fed is the most important institution in the world.

All of that has changed in recent weeks, when just one week ago in the aftermath of the Fed’s dovish quasi-relent, the billionaires in Davos were quite clear that in light of the upcoming bursting of the latest “policy error” bubble by the central banks, “The Only Winning Move Is Not To Play The Game.” As the WSJ summarized the Davos participants’ mood so well, “their mood here was irritated, bordering on affronted, with what they say has been central-bank intervention that has gone on too long.”

There is just one problem: central bank intervention simply can not go away. Exhibit A: NIRP in Japan.

To be sure, increasingly it is become a consensus view that central banks are trapped, with further intervention no longer beneficial and yet unable to relent; over this past weekend, this perspective was best summarized by Deutsche Bank’s credit derivatives strategist, Aleksandar Kocic, who writes that the Fed had to “suspend the laws of the market in order to save it.” He also adds that the market was not saved, and all the risk that piled up and was swept under the carpet courtesy of the Fed, is merely waiting for the outlet to be released in one risk explosion.

Here is the full note previewing what the Fed hath wrought.

Beyond the fourth wall

It has been our contention for some time that when it comes to interaction between the Fed and the markets, the rules of the game have changed. There are two dimensions of this problem. One is the Fed/market communication and dynamic have been both transformed to resemble the Brechtian theatre where the fourth wall has been removed. The market is observing the Fed and the Fed is observing the market — the “audience” is actively involved in shaping the play. The actors look for clues from the audience and shape the script according to audience’s reaction. They are not merely passive spectator, but involved observers able to influence the play. The most explicit recognition of this has been the September FOMC. This type of circular reaction has been a consequence of the Fed assuming the role of a market stabilizer post-2008. However, as the stimulus is unwound, this type of interactive play will continue (this time in reverse) and stability of the markets could be compromised.


The other dimension concerns the particulars of stimulus implementation. Policy response to the crisis consisted of unprecedented injection of liquidity, transfer of risk from private to public balance sheet, and reduction of volatility from its toxic levels. The net result was near-zero rate levels and collapse of volatility across the board, while different market sectors developed high degree of coordination. But, risk cannot disappear; it can only be transferred or postponed by temporarily suspending the existing transmission mechanisms and the rules of the markets.


During QE days, Fed has acted as a non-economic actor. Its presence in the market was aimed at achieving “social” and not necessarily financial goals – bond purchasing was conducted in order to lower the yields rather than to make profit over any given time horizon. Markets laws had to be suspended in order to restore normal functioning of the markets. This was the intrinsic logic of QE.


As such, policy response in its core is an extension of what in political context is known as the state of exception. The intrinsic contradiction of policy response to the crisis – suspend the laws of the market in order to save it – is resolved only by understanding that suspension is temporary. Stimulus will have to be unwound. But, and here lies the problem, accommodation has been in place for a very long time and this has had a profound impact on investors behavior, market functioning and its dynamics.


At the moment, consensus is shaping around the view that the market is driving the “play” by demanding relent, suggesting the implication that stimulus withdrawal has been premature. Lack of relent, without improvements in Asia and global economy is a policy mistake territory. The Fed is hiking, while it is importing disinflation. The curve would continue to flatten while persistence of rate hikes supports USD and pushes the short end of the curve higher. This is unlikely to be supportive for risk and should cause higher risk asset vol. Continued decoupling and EM dilemma regarding the tradeoff between weaker currency and growth is likely to keep FX vol at elevated levels as well.


Relent is supportive for risk and would mean return to carry trade in rates, while decoupling is no longer an issue and tensions in currency space and EM are no longer acute. This means lower vol across the board.


As a consequence of this landscape, three themes would dominate the near term: Policy mistake, negative rates and risk assets range.


In the background of all this looms the risk of massive, one time, devaluation by China and possibly entire region which could cause a significant repricing across the board and further destabilize global markets in the near term.

Which brings us to the supreme irony: only a Fed which admits it has lost all credibility can “save” financial markets. However, since by definition its credibility would be henceforth lost, this would also be the final intervention that the Fed could engage in without proceeding to the next and final state of play: paradropping money in hopes of unleashing (hyper)inflation, as the opportunity cost to preserving credibility will, at that point, be zero.

And since even market participants now have the courage to admit that “the Fed emperor is naked”, it is only a matter of time before the Fed has to decide: either welcome the crash, or relent and do everything in its power to unleash the BTFD animal spirits one final time.

via Zero Hedge Tyler Durden