Tag: finance

Authored by Alasdair Macleod via GoldMoney.com,

The interest rate fallacy

There is a widespread assumption that interest rates represent the cost of borrowing money. In the narrow sense that it is a rate paid by a borrower, this is true. Monetary policy planners enquire no further. Central bankers then posit that if you reduce the cost of borrowing, that is to say the interest rate, demand for credit increases, and the deployment of that credit in the economy naturally leads to an increase in GDP. Every central planner dreams of consistent growth in GDP and they seek to achieve it by lowering the cost of borrowing money.

The origin of this approach is mathematical. William Stanley Jevons in his The Theory of Political Economy, first published in 1871, was one of the three discoverers of the theory of marginal utility and became convinced that mathematics was the key to linking the diverse elements of political science into a unified subject. It was therefore natural for him to treat interest rates as the symptom of supply and demand for money when it passes from one hand to another with the promise of future repayment.

Another of the discoverers of the theory of marginal utility was the Austrian, Carl Menger, who explained that prices were subjective in the minds of those involved in an exchange. He argued it was fundamentally a human choice and therefore could not be predicted mathematically. This undermines the assumption that interest is simply the cost of money, suggesting that some sort of human element is involved, separate from pure cost. Eugen von Böhm-Bawerk, who followed in Menger’s footsteps saw it from a more capitalistic point of view, that a saver’s money, which was otherwise lifeless, was able to earn a saver a supply of goods through interest earned upon it.

Böhm-Bawerk confirmed interest produced an income for the capitalist and was a cost to the borrowing entrepreneur, but agreed with his mentor there was also a time preference element, the difference in the value of possessing money today compared with the promise of possessing it at a future date. The easiest way to understand it is that savers are driven mainly by time-preference, while borrowers mainly by cost. This was why borrowers had to bid up interest rates to attract savers into lending, the explanation for Gibson’s paradox.

In those days, money was gold, and currencies were gold substitutes, that is to say they circulated backed by and freely exchangeable into gold. Gold was the agency by which producers turned the fruits of their labour into the goods and services they needed and desired. Its role was purely temporary. Temporal men valued gold as a good with the special function of being money, but as a good, its actual possession was worth more than just a claim on it in the future. But do they ascribe the same time preference to fiat currency? To find out we must explore the nature of time preference as a concept.

Time-preference in classical economics

Time-preference is simply the desire to own goods at an earlier date rather than later. This is because everyone prefers immediate ownership to the promise of future ownership. Therefore, the future value of possessing a good must stand at a discount compared with actual possession, and the further into the future actual ownership materialises, the greater the discount. This is time preference. But instead of pricing time preference as if it were a zero-coupon bond, we turn it into an annualised interest equivalent.

Obviously, time-preference applies primarily to lending to finance production, which requires time between commencement and output. Borrowed money must cover partly or in whole the commodities and all the costs required to make a finished article and the time taken to deliver it to an end-user. An entrepreneur must forgo some of his current consumption if he is to invest in his own production, and the allocation he makes of his current resources to that end is governed partly by time-preference and by the profit he anticipates. If his production process requires a long time between investment and the sale of a finished product his sacrifice of current consumption will be for proportionately longer, so it has to be worthwhile.

The easiest way to isolate time-preference is to assume our entrepreneur has to borrow some or all the resources necessary. We now have to consider the position of the lender, who is asked to join in with the sacrifice of current consumption in favour of the future. The lender’s motivation is that he has a surplus of money to his immediate needs and instead of just sitting on it, is prepared to use it profitably. His reward for doing so by providing the utility of his excess to a businessman must exceed his personal time-preference.

The medium for matching investment and savings is obviously money, because it would be very difficult to coordinate them in a barter economy. It is this function above all else which money facilitates. We take this obvious function so much for granted that we forget that interest rates are actually the expression of time-preference, which has its origin in deferring ownership of consumer goods. Intermediation by banks and other financial institutions conceal from us the link between interest and time-preference, on the saver’s false assumption he is not parting with his money by depositing it in a bank.

The bank appears to be giving the depositor something for nothing in its role as financial intermediator, but it is effectively cutting the link between savers and borrowers. Both parties in a modern economy end up dealing with a bank instead of each other. However, despite a bank’s intermediation, the basic relationship between saver and entrepreneur through a bank is the possession of the former’s capital for a period of time. It may conceal it, but it cannot get rid of time-preference.

When a saver saves and an entrepreneur invests, the transaction always involves a lender’s savings being turned into the production of goods and services with the element of time. For the lender, the time preference will always equate to the loss of possession of his capital for a stated period.

Time preference and fiat money

Today’s economists do not recognise time-preference. For them, economics is about Jevon’s mathematics, state-issued currencies and the exclusion of human interest. They say we have moved on from the household economics of yester-year, and they despise classical stick-in-the-muds. But we can see from their repeated failure to tame human action in order to conform to their economic models that modern economists do not have the answers either. All they have done is cover up their failures through monetary inflation.

The ubiquity of unbacked state currencies certainly introduces new dimensions into prices and deferred settlement. Not only is the saver isolated from borrowers through bank intermediation and the belief his deposits are still his property, but his savings are debased through monetary inflation without his knowledge. The interest he expects is treated as an inconvenient cost of production, to be minimised. Interest earned is taxed as if it were the profit from a capitalist trade, and not compensation for a temporary loss of possession.

Consequently, the saver has been driven to speculate well beyond the possibility of not being repaid by a borrower by buying equities instead. He swaps credit risk for entrepreneurial risk. And because the expansion of bank credit out of thin air favours the entrepreneur over the saver, the theory goes that over time he is compensated for the loss of interest. The whole system has changed, and even consumers, who under the classical economic model would defer some of their consumption, have become unsecured borrowers themselves.

It is this evolution away from the strictures of time preference that has taken us to zero and negative interest rates. Yet, if the cost of money was simply its interest rate, the economy would be permanently mended and there would be no credit cycle. Why on earth it took the planners so long to understand the benefits of free money, and to even pay borrowers to borrow, would have been a mystery. Yet, experience and an understanding that economics is a human science tells us otherwise. Despite handing out free money, the Eurozone is in a worse economic and systemic condition than it was before the Lehman crisis ten years ago, with major bank share prices languishing at all-time lows. And all zero interest rates have achieved, together with aggressive monetary debasement, was the deferment of a banking and systemic crisis.

But credit cycles still exist. At their root is the issuance of money and credit on terms that do not reflect time preference. The value of ownership compared with the promise of future ownership has to be respected. It is not something a monetary planner can decide, because it is wholly a market phenomenon. No one but individual consumers can contribute to the collective judgments that say this any species of bird is worth more than two of them in the bush.

Ignoring time preference is the fundamental error behind monetary planning. It is why in a successful economy, monetary intervention by the state is kept to a bare minimum, or preferably banished altogether. Instead, it builds on the error of Jevon’s mathematical approach and the banishment of the people’s choice of money, which throughout history has been metallic.

Gold

The question now arises over the relationship between time-preference and gold. We should consider this in the light of historical experience; fiat currency has always died and been replaced by metallic money. Gold and likely silver as well will return to circulate as money.

When gold is used as money, time-preference obviously applies, given our rule that money is earned and saved on the one hand, and on the other savings are deployed in the production of goods and services. A saver lending his gold will expect it to be returned at the end of the loan period with an additional amount to reflect at a minimum his time-preference, usually in the form of interest.

Apart from isolated times of monetary debasement, this held true for millennia until the last century, when gold was gradually replaced as money in today’s currency system. As long as currency acted as a freely convertible gold substitute, interest earned and paid on that currency was tied to the rate on gold. However, if we can imagine a system with both gold and fiat currency in circulation as money at the same time, the time-preference for physical gold, all other things being equal, should be more than that for the fiat currency due to its relative scarcity.

Evidence of this difference is reflected in Gresham’s law. Most of the human population spends state-issued currency more readily than gold coin. The argument about today’s traders not accepting gold coin does not hold water, because gold coin is easily converted into fiat money in order to spend it. Those who own gold or gold coin see its disposal for fiat money not as a first, but as a last resort. Furthermore, if someone wanted to borrow your gold for a period of time, you would almost certainly place a greater value on the temporary loss of ownership than that reflected in the interest rate for fiat currency.

But this supposition ignores monetary inflation. Over history, the expansion in above-ground gold stocks has roughly kept pace with the growth in human population. Fiat currency expands without limitation, and the loss of purchasing power should be taken into account in any calculation of time preference. The fact that this is not reflected in interest rates is a function of central bank suppression of markets and the concealment of time-preference through bank intermediation.

The last thing central bankers would like to see is value given to time preference. Most of them are probably unaware of its existence, being immersed in the mathematical economics of Jevons and his successors. And when the general public wake up to the suppression of time-preference and therefore the mispricing of all future goods and services, the consequences will almost certainly be astonishing.

via ZeroHedge News http://bit.ly/2QUFxg2 Tyler Durden

The first representatives of Generation Z have started to trickle into the workplace – and like generations before them, they are bringing a different perspective to things.

Did you know that there are now up to five generations now working under any given roof, ranging all the way from the Silent Generation (born Pre-WWII) to the aforementioned Gen Z?

Visual Capitalist’s Jeff Desjardins shows how these generational groups differ in their approaches to communication, career priorities, and company loyalty.

Generational Differences at Work

Today’s infographic comes to us from Raconteur, and it breaks down some key differences in how generational groups are thinking about the workplace.

Let’s dive deeper into the data for each category.

Communication

How people prefer to communicate is one major and obvious difference that manifests itself between generations.

While many in older generations have dabbled in new technologies and trends around communications, it’s less likely that they will internalize those methods as habits. Meanwhile, for younger folks, these newer methods (chat, texting, etc.) are what they grew up with.

Top three communication methods by generation:

• Baby Boomers:
  40% of communication is in person, 35% by email, and 13% by phone

• Gen X:
  34% of communication is in person, 34% by email, and 13% by phone

• Millennials:
  33% of communication is by email, 31% is in person, and 12% by chat

• Gen Z:
  31% of communication is by chat, 26% is in person, and 16% by emails

Motivators

Meanwhile, the generations are divided on what motivates them in the workplace. Boomers place health insurance as an important decision factor, while younger groups view salary and pursuing a passion as being key elements to a successful career.

Three most important work motivators by generation (in order):

• Baby Boomers:
  Health insurance, a boss worthy of respect, and salary

• Gen X:
  Salary, job security, and job challenges/excitement

• Millennials:
  Salary, job challenges/excitement, and ability to pursue passion

• Gen Z:
  Salary, ability to pursue passion, and job security

Loyalty

Finally, generational groups have varying perspectives on how long they would be willing to stay in any one role.

• Baby Boomers: 8 years

• Gen X: 7 years

• Millennials: 5 years

• Gen Z: 3 years

Given the above differences, employers will have to think clearly about how to attract and retain talent across a wide scope of generations. Further, employers will have to learn what motivates each group, as well as what makes them each feel the most comfortable in the workplace.

via ZeroHedge News http://bit.ly/2WoNfjG Tyler Durden

Authored by Sarah Cowgill via LibertyNation.com,

As the homeless population in Los Angeles grows, so does the unfortunate revival of many third world diseases…

Despite hundreds of millions of dollars flowing through Los Angeles to stem the rising tide of homelessness, a resurgence of medieval diseases has the city – and neighboring states – on edge. Typhoid fever and typhus, borne by fleas, body lice, and feces, are turning the once glitzy and glamorous city into a third-world worthy environment.

Yes, Typhoid Mary is back, in a sense, living on the streets and wreaking havoc on unsuspecting people in the Golden State.

These diseases, along with an uptick in tuberculosis, hepatitis A, and staph, are easily and rapidly spread and have wide-reaching consequences. They’re highly contagious and can infect anyone through casual contact.

Typhoid fever

An LAPD officer was recently diagnosed with typhoid, and several other city employees are exhibiting the classic symptoms of high fever, muscle pain, and weakness.  Left untreated, the disease can be fatal – and let’s face it: The malady wiped out entire populations during the Dark Ages and took a heavy toll on American Civil War soldiers and early American settlers.  Some historians blame the malaise for obliterating the Jamestown settlement.

Where The Heck Did They Come From?

Los Angeles Homeless Services Authority recently released a report showing 59,000 people living on the streets in Los Angeles County – a 12% increase since 2018 – with 36,300 of them within the city limits of Los Angeles.  The U.S. Department of Housing and Urban Development (HUD), reports that “California accounted for 30% of all people experiencing homelessness as individuals” throughout the United States.

The progress of these once eradicated and near eradicated diseases is so alarming that the politicians who once spent copious amounts of time covering up the warts and putrid pustules in their liberally run cities and state are now showing disbelief and disgust.

California Governor Gavin Newsom (D) broke his silence during his state of the state speech in February: “Our homeless crisis is increasingly becoming a public-health crisis. Typhus, a medieval disease. In California. In 2019.”

Los Angeles Mayor Gil Garcetti (D), who many believed would be a 2020 presidential contender, calls the crisis, “the biggest heartbreak for me and my city.”  Garcetti campaigned extensively for the initiative known as Proposition HHH, which designated $1.2 billion over the next ten years to build homeless housing.  But now residents are howling about the pricey plan’s abject failure.  One local L.A. news outlet polled residents and found that “Forty-five percent said it’s failing, with 18 percent saying it’s a complete failure.”

Voters passed Propositions 47 (2014) and 57 (2016), downgrading theft and drug offenses to misdemeanors and redefining many felonies from violent to nonviolent to release a horde of inmates – some addicted to drugs and suffering from now untreated mental illness.

And they wonder why there are so many people on the streets living, sleeping, and breathing surrounded by urine-soaked sidewalks and piles of human feces?  And, of course, they don’t have to show symptoms to carry and transfer these diseases – simple casual contact from a carrier will do just fine.

Asymptomatic Mary Mallon was presumed to have infected over 50 people between 1907 and 1915, yet never experienced a day of sickness.  She died under quarantine – from complications of a stroke, not typhoid.  Her body was cremated and her ashes interred, but her legacy as Typhoid Mary lives on.

What’s The Plan?

Garcetti is doubling down on his homeless housing project, but his highest hurdle is his choice for building sites.  It seems no Angeleno wants drugs, typhus, and hepatitis bubbling and festering on their own block.  A short story made long, aside from Proposition HHH, there is no solid plan to curb the worsening rotting of Los Angeles.

There is a long-held belief that two American presidents succumbed to Typhoid.  The ninth Commander in Chief, William Henry Harrison, is remembered to have died of pneumonia after only 31 days in office, but recent studies suggest he likely died from typhoid.  Number 12, President Zachary Taylor, was most likely felled from the disease as well – due to the unsanitary conditions in the Swamp in the mid-19th century.

Ironically, the only thing that seems to have changed in Washington D.C. is that the deadly infections are in the heart and soul and not the body of the toadies on the Hill.

Here we are in the throes of the 21st century with running water, inoculations for just about every known malady of the last millennia, and welfare programs to heal the poorest of our citizens.  Yet Los Angeles remains a hot, malodorous, infectious mess – and it could be spreading toward a city near you.

via ZeroHedge News http://bit.ly/2I67a3e Tyler Durden

Boston Dynamics will begin selling its creepy robot dogs to the public “within months,” according to CEO Marc Raibert, who told The Verge “We’re just doing some final tweaks to the design” after “testing them relentlessly” – hopefully to obey the three laws of robotics. 

Spot is currently being tested in a number of “proof-of-concept” environments, Boston Dynamics’ CEO Marc Raibert told The Verge, including package delivery and surveying work. And although there’s no firm launch date for the commercial version of Spot, it should be available within months, said Raibert, and certainly before the end of the year. –The Verge

Raibert brought the company’s ‘Spot’ dogs to Amazon’s Re:MARS conference in Las Vegas this week, an event focused on machine learning, advanced robotics and space exploration. On the first day of the event, two Boston Dynamics employees trotted out a pair of Spots to dazzle the crowd, and freak out a police dog (until a toy offering was deemed sufficient for friendship). (photos via The Verge)

One Spot robot mounted with 3D cameras can map their environment and perform tasks such as track worker progress or identify hazards at construction sites. Models equipped with a robot arm can also open doors and manipulate objects. 

Here’s @BostonDynamics’ SpotMini robot offering a very real dog a peace offering of a cuddly toy. Peace in our time ! pic.twitter.com/DCnGgexMD5

— James Vincent (@jjvincent) June 5, 2019

Despite minor technical difficulties, the event went well for Boston Dynamics – owned by Japan’s SoftBank. One thing was clear; these dogs are really easy to control. 

Using a D-pad, you can steer the robot as you would any RC car or mechanical toy. A quick tap on the video feed streamed live from the robot’s front-facing camera lets you select a destination for it to walk to, and another tap lets you assume control of a robot arm mounted on top of the chassis. It all feels very intuitive. –The Verge

According to Raibert, Boston Dynamics will be selling “athletic intelligence” through its robots. 

Think of it like Amazon’s AWS business, but instead of offering computing power on tap, its robotic mobility.

The vast majority of bots in use in warehouses and factories today are only able to perform rote tasks, planned in advance down to the millimeter. But if robots are going to work alongside humans in more dynamic environments, they need to be able to react to hazards and changing conditions. These are eminently humans skills: tasks we complete without thinking — like catching a ball — but that stump all but the most advanced bots.

Onstage, Raibert demonstrated these skills by showing a video of Spot robot being frustrated in its attempts to open a door. The robot grapples at the door handle only to be shoved away by an engineer with a hockey stick. “We think this is one of the most important things we do,” said Raibert. “The [robots] can tolerate deviance around expected behavior.” –The Verge

At present, several construction companies in Japan are testing Spot to oversee the work progress on sites. “There’s a remarkable number of construction companies we’re talking to,” said Raibert, adding “But we have some other applications that are very promising — [including] in hostile environments where the cost of having people there is high.”

via ZeroHedge News http://bit.ly/2EZ6Ykj Tyler Durden

Via InternationalMan.com,

International Man: The US government is actively at war in about half a dozen countries. It’s eyeing new conflicts all the time.

On the topic of getting involved in another war… President Trump was reported to have said this about his National Security Advisor John Bolton: “If it was up to John, we’d be in four wars now.”

What do you make of all this?

Doug Casey: Where to start?

Well, first of all, things are out of control. The US Government has become so big, so dysfunctional, and with its fingers in so many pies that anything can happen, unpredictably. Secondly, it’s extremely dangerous. Prodding lots of hornet’s nests guarantees you’ll be stung—perhaps enough to put you in the hospital. Third, it’s extraordinarily expensive. And the US Government is already bankrupt.

As you pointed out, the US is actively at war in right now in who knows how many countries – including at least a half a dozen in Africa that nobody can find on a map. There are combat troops in probably 100 countries around the world. There are probably 800 bases around the world. These things are all just trip wires waiting for an accident or an incident to draw the country into a real war. So far—at least since the misadventure in Vietnam – the US has just engaged in trouble-making exercises and sport wars. But the big thing on the horizon right now is Iran. This is hunting big game.

One of the things that I most regret not having done in recent years was taking advantage of an all-expense paid junket, courtesy of the Iranian Ambassadors’ Polo Club, for the New Zealand Ambassadors’ Polo Club, of which I was member. It would have been wonderful to have seen three of the major Iranian cities and met some of the top people in the country while playing polo. I couldn’t do it though, because I was injured at the time.

The Iranian people have no negative animus towards the American people. The average Iranian likes the average American. He likes American cars, American music, American movies, American culture. He likes California girls. He likes everything about America.

The way to change that and turn the average Iranian into an enemy is to send uniformed American teenagers there to destroy property and kill people. That’s exactly what morons like John Bolton and Mike Pompeo are talking about. It could be a real catastrophe, because Iran is big game. It’s not like hunting small game, like Iraq, Afghanistan and Syria—which themselves were terrible catastrophes.

If this gets out of control – accidentally, or through a false flag incident, or simply because Bolton decides it’s a good idea – you could be looking at the start of World War III.

The “powers that be” think that war stimulates the economy. But the idea is complete nonsense. These fools actually believe turning lots of cities into smoking ruins would stimulate the economy.

International Man: The US government and mainstream media often justify these wars on the need to “spread democracy.” What do you make of that?

Doug Casey: The idea of spreading democracy is a snare and a delusion. Democracy has become the new societal god. In fact—and I know most readers will be appalled to hear this—democracy is a bad idea. At least for anything larger than a city-state with a small, cohesive population.

First of all, democracy is simply mob rule dressed up in a coat and tie. It’s where a bunch of people—who are marginally competent at running their own individual lives—go to a voting booth to have what H.L. Mencken termed “an advance auction on stolen goods.” Democracy usually winds up turning the State into a vehicle for theft, and making that seem like a good and moral thing…

Democracy—a gentler form of mob rule—is not a good thing. It politicizes the average person and distracts him from running his own life. It focuses his attention on trying to run other people’s lives through elected representatives. Worse, the elected representatives aren’t the best and the brightest. They’re generally sociopaths who are drawn to power. They’re the worst kind of people, the kind that want to rule other people by winning a popularity contest. This is true in the US and every other place where ballot boxes are used to determine the new ruler.

The winner of an election is typically the most skilled liar. Look at what president Wilson did by pointlessly drawing the US into WWI, while claiming to do the opposite. He said it was all about making the world safe for democracy. In fact, he initiated the long decline of Western Civilization. The French Revolution was based on democracy. It didn’t work out very well. It had a lot to do with democracy—but had nothing to do with freedom. Democracy and freedom are typically at odds with each other.

International Man: Aside from the claim of promoting democracy, the US government and mainstream media also use alleged human rights abuses as a justification for war. The term “human rights” seems to be vaguely defined and inconsistently applied. It seems like more sophistry. What’s really going on here?

Doug Casey: Let me first say, the most important “human right” is simply to be left alone by other people, to be left in peace. Whenever a government gets involved in people’s private affairs it makes things worse. The US government is actually the greatest danger to both world peace and human rights today. It’s quite Orwellian the way most Americans have been propagandized into believing the opposite, like the citizens of Oceania in 1984.

The best thing to do with foreign countries is leave them alone to work things out themselves. You cannot change a culture. When you try to change a culture, you generally wind up with chaos. That’s what the US government has created in Syria, Afghanistan, Libya, Iraq, and everywhere else it sticks its nose.

International Man: So, do these wars provide a net benefit to the average American?

Doug Casey: No. There’s no benefit at all. The correct U.S. foreign policy is to withdraw all the troops from everywhere in the world. Foreigners don’t want to see American troops on their land any more than Americans would like to see Iranian, or African, or Korean troops parading through the streets and maybe breaking down doors at 3:00 AM. That’s the first thing. If you want to “support the troops” bring all the troops home.

The next step is to cut off all foreign aid, which is really just a transfer program of about $50 billion per year from poor people in the US to rich people in poor countries. It’s almost all skimmed by cronies.

People forget that Osama bin Laden said that he only wanted three things.

First, he wanted infidel soldiers out of the homeland of the prophet, a reasonable request.

Second, he wanted the US to stop replacing Middle Eastern leaders with quislings, and interfering with local politics. Another reasonable request. The US has no more right to interfere in the politics of Middle Eastern countries than Mohammedans would interfering in US politics.

Third, he wanted the US to stop supporting Israel. Once again, a very reasonable request. We should be friendly towards all, but shouldn’t get involved in other people’s local squabbles, regardless of who we think is the good guy or the bad guy at the moment.

Of course, my saying something Osama bin Laden said was reasonable is like saying something that Hitler said was reasonable. But it doesn’t matter who says something. The facts should speak for themselves. And—just to head off hysterics—no, I neither like nor support either Osama or Adolf.

International Man: US foreign policy has serious domestic consequences. After all, “War is the health of the State” as Randolph Bourne said.

Specifically, the rapid rise of the domestic surveillance apparatus, the curtailments of civil liberties, and the turbocharging of militarized local police forces… they’re all connected to US foreign policy.

Related to all this is the inane expression “if you have nothing to hide, you have nothing to fear.” What do you make of all of this?

Doug Casey: Well, if that’s true then John Bolton, Mike Pompeo, and the rest of the apparatchiks around the DC Beltway should be happy to post their tax returns on the internet, and have microphones and cameras in every room of their houses. They ought to be perfectly happy when they’re having a private conversation in their living room to have it available to anybody that wants to listen.

The ability to maintain privacy is one thing that separates civilized men from primitives living in mud huts. In a primitive society you have zero privacy, because your neighbors can see and hear absolutely everything that goes on through the paper-thin walls of your hut. Privacy is something that grows with civilization. These people have everything exactly backwards. They’re not just anti-freedom. They’re anti-civilization. They’re the same basic personality type as Stalin, or Ceausescu, or Pol Pot.

International Man: Another arena that has been drastically affected is the airports and the creation of a new federal bureaucracy, the TSA. Thanks to the TSA, everyone knows that “if you see something say something.” That saying is actually a registered trademark of the Department of Homeland Security.

Doug Casey: It’s Orwellian. It’s the type of thing Big Brother would advise you to do… to report your neighbors to the State for any real or imagined offense.

One time I was in a line that was snaking back and forth at immigration. My briefcase weighed about 25 pounds, so I put it down and left it for about 15 feet so I could pick it up when the line snaked back.

Not once, but twice, somebody looked around like a righteous busybody citizen and said, “Unattended baggage! Unattended baggage!”

These people are really just chimpanzees. They picked up this behavior from the government… monkey see, monkey do. I said to them sarcastically “See something, say something”, but they didn’t think I was kidding. They thought I approved of what they were doing.

International Man: Do you see this degraded behavior in other places?

Doug Casey: Of all the countries in the world that I’ve traveled to—including backwards hell holes in Africa, Russia, China, it doesn’t matter—going through the US immigration, customs, and TSA, probably provides the most degrading experience. None of these other countries ask you the kinds of questions or seem so anxious to go through your laundry. Although Canada and Australia in particular are closely following the US lead.

The average American has been propagandized into thinking that he lives in the land of the free. As a matter of fact, that’s no longer true.

The US has descended from being a shining beacon—that really was exceptional and different from every other country in the world—to being just another nation state. But, perversely, one that thinks it’s still exceptional. It’s paranoid. It thinks it’s under attack, when actually it’s the attacker.

The whole thing is upside-down, and the average American has absolutely no clue.

It’s really shameful that the US has turned into both a welfare state—with about 50% of the population reliant upon the government—and a warfare state. We’re getting the worst of both worlds.

The problem is that when the economy turns down—and it will before Trump leaves office—it’s going to go from being depressing to scary. And if they start a major war, it’s going to go all the way to terrifying, because at that point you won’t have any rights. The average American will approve of it, however. Your life and property are be

*  *  *

Many people don’t realize that the US is on the precipice of a major war in the Middle East. It’s a conflict that could see oil prices skyrocket overnight… and the return of gas lines to America. It wouldn’t be the first or even second time an oil shock like this has happened. It would have profound economic consequences.

This is one reason why a financial crisis far greater than any crisis America has seen could soon strike. For some it could completely wipe out their savings… and for others it could be the fortune-building opportunity of a lifetime. Doug Casey and his team just released an urgent video on surviving and thriving during an economic collapse. Click here to watch it now.

via ZeroHedge News http://bit.ly/2WxIadV Tyler Durden

Pompeo’s words were “deceitful, untrue and merely in service of appealing to the public opinion,” blasted Abbas Mousavi, a senior Iranian diplomat, after Washington imposed sanctions against Iranian petrochemical companies despite an earlier promise of negotiations without preconditions.

On Friday, the US Treasury announced it has imposed a new wave of sanctions against Iranian energy businesses. The move is meant to stifle the revenues of the elite Islamic Revolutionary Guard Corps (IRGC), which Washington declared a terrorist organization earlier in April.

This infuriated Iran’s foreign minister, who, as RT reports, exclaimed that this proves that US Secretary of State Mike Pompeo made an empty promise to Tehran less than a week ago, when he said he was ready to start “a conversation with no preconditions.”

“Only one week was needed for the US president’s claim that he was ready to negotiate with Iran to be proven hollow.”

…

“America’s maximum pressure policy is a failed policy tried numerous times before by the country’s previous presidents. This is a wrong path and the US government can be sure that it will not achieve any of the goals set for this policy,”

He called the sanctions an act of “economic terrorism” and said Tehran will not yield to Washington’s pressure.

“All countries have a responsibility to react against the flagrant violations of the fundamental principles of international law and not to allow the international community’s achievements in multilateralism to be further ruined by the bullying and unilateral actions of the American governing body,” Mousavi said.

Of course, we wonder how many of these words were prompted by John Kerry’s guiding hand.

via ZeroHedge News http://bit.ly/2WCLftn Tyler Durden

Authored by David Bier via Cato.org,

E-Verify is the federal government’s attempt to create an electronic national identification system. It is capable of checking government databases to verify information—often including a photo—on every U.S. resident. Right now, the system monitors only employment and is only mandatory in some states, ostensibly to deter illegal immigration, but nothing would prevent lawmakers from expanding E-Verify to monitor identity or legal status in any other domain and restrict access based on other criteria they want.

Numerous federal, state, and local laws already require people to identify themselves or prove their immigration status, and lawmakers continue to propose many additional laws. The more areas that E-Verify is used to monitor, the more it will create a digital record of Americans’ lives—a record that lawmakers can draw upon to add further requirements for access to jobs, health care, banks, gun sales, housing, and much else.

Once E-Verify becomes fully mandatory for employment nationwide, proponents will seek to use it to enforce other laws. In 2015, the GOP-controlled House Judiciary Committee even voted down an amendment to a mandatory E-Verify bill that would have banned using E-Verify for purposes other than employment. This is a harbinger that the E-Verify system, if mandated federally, could be used to monitor much more than just American’s employment choices. Congress would need only make a few tweaks to the system to make it serviceable for other goals beyond jobs.

Here are a few likely targets:

1. Gun sales: The Brady Handgun Violence Prevention Act (18 U.S. Code § 922(d)(5)and (g)(5)) explicitly makes it unlawful for:

any person to sell or otherwise dispose of any firearm or ammunition to any person knowing or having reasonable cause to believe that such person … who, being an alien— (A) is illegally or unlawfully in the United States; or (B) except as provided in subsection (y)(2), has been admitted to the United States under a nonimmigrant visa.

Unlike the criminal background check system for guns which destroys the electronic record of the sale daily, E-Verify maintains records for 10 years. Once E-Verify screens gun purchases, the federal government would have a full electronic registry of all gun purchases. To do this, a future Congress would only need to enact a statute requiring the Department of Homeland Security to make the system available to verify legal status information (rather than just employment authorization) for gun sales. 

2. Transportation: Section 274 of the Immigration and Nationality Act (8 U.S.C. 1324(a)(1)(A)(ii)) criminalizes anyone who “knowing or in reckless disregard of the fact that an alien has come to, entered, or remains in the United States in violation of law, transports, or moves or attempts to transport or move such alien within the United States.” While courts have not enforced this requirement against routine transportation activities, requiring airlines, buses, trains, or other transportation businesses to use E-Verify would be a logical (while burdensome) means to enforce this provision.

3. Driver’s licenses: Section 202(c)(2) REAL ID Act of 2005 requires that states verify that the applicant has some form of legal status. State IDs not meeting this requirement will not be valid for any federal purposes, including air travel. In addition, 38 states separately ban illegal immigrants from receiving driver’s licenses and even those who do permit driver’s licenses specifically identify the license as not valid for federal identification purposes.

4. Bank accounts: Federal law doesn’t require banks to verify someone’s immigration status to open an account, but the USA Patriot Act does require them to “verify the identity of each customer, to the extent reasonable and practicable, within a reasonable time before or after account opening” and “making and maintaining a record of all information obtained relating to customer identity and verification.” Again, E-Verify already purports to verify identity before confirming someone’s employment authorization, so this use would be a fairly straightforward application of the E-Verify system.

5. Apartment rentals: Though courts prevented their implementation on the grounds that federal law “preempted” them, the state of Alabama as well as the cities of Hazleton, Pennsylvania, Fremont, Nebraska, and Farmers Branch, Texas enacted laws that would have made it explicitly illegal for landlords to rent to illegal immigrants. Tennessee is currently considering a similar state-wide statute. Congress has already enacted a statute (8 U.S.C. 1324(a)(1)(iii)) that criminalizes anyone who “attempts to conceal, harbor, or shield from detection, [an illegal] alien in any place, including any building.” However, courts have interpreted this narrowly to require more than simply renting an apartment, but a future Congress would simply need to clarify that someone who failed to use E-Verify to verify legal status would be guilty of harboring.

6. Access to certain buildings: The Legal Workforce Act, which House Republicans have repeatedly passed out of the Judiciary Committee, would authorize owners or operators of “critical infrastructure” to use E-Verify “to the extent the Secretary determines that such use will assist in the protection of the critical infrastructure.”  Federal law defines critical infrastructure to include “systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security…”

Ultimately, E-Verify doesn’t identify illegal immigrants very well at all, and its errors already harmed hundreds of thousands of legal workers attempting to obtain jobs. But the problem with E-Verify is more fundamental. It is the first-step toward a permission-slip society. Creating the infrastructure that is capable of not only monitoring but instantly restricting access to all manner of private activities will hand the government power to control the lives of Americans in ways otherwise unimaginable.

Once E-Verify use becomes ubiquitous, the federal government (and perhaps state and local governments as well) would have the power to shut down people’s lives overnight for almost any reason. A flip of switch could stop their access to jobs, housing, bank accounts, driver’s licenses, and transportation. No free society should stand for such control.

via ZeroHedge News http://bit.ly/2QWkYQt Tyler Durden

Beijing put big tech on notice last week, threatening ‘dire consequences’ if companies such as Microsoft, Dell and Samsung comply with the Trump administration’s ban on sales of key American technology to Chinese companies, according to the New York Times. Any companies which cooperate with the new policy ‘could face permanent consequences,’ according to the Times. Chinese authorities also suggested using DC lobbyists to resist the government’s moves. 

China – which is already ditching Microsoft Windows for military applications – held a flurry of meetings on Tuesday and Wednesday after tech firms for discussions amid the backdrop of Beijing’s planned blacklist of blacklisting of US firms on an “unreliable entities list.” 

Also participating in meetings were semiconductor companies Arm of Britain and SK Hynix of South Korea, according to the report, which cites a KPMG estimate that around 60% of all semiconductors sold are connected to China’s supply chain, so maybe by that new computer sooner than later. 

The breakneck unraveling of the world’s most important trade relationship has left companies and governments around the world scrambling. While the dispute had already been nettlesome for Chinese-U.S. relations, the sudden ban on Huawei last month caught many by surprise, raising the stakes by striking at the heart of China’s long-term technological ambitions.

Now, each of the two superpowers appears to be crafting new economic weapons to aim at the other. What was once a fraught, but deeply enmeshed, trade relationship is threatening to break apart almost entirely, raising the specter of a new geopolitical reality in which the world’s two superpowers would compete for economic influence and try to freeze each other out of key technologies and resources. –New York Times

“This is now extremely delicate because the Trump administration, through its brinkmanship tactics, has destabilized the entire relationship, commercial and otherwise,” according to China expert Scott Kennedy – senior adviser at the Washington-based Center for Strategic and International Studies who studies Chinese economic policy.

More broadly, the warnings also seemed to be an attempt to forestall a fast breakup of the sophisticated supply chains that connect China’s economy to the rest of the world. Production of a vast array of electronic components and chemicals, along with the assembly of electronic products, makes the country a cornerstone of the operations of many of the world’s largest multinational companies. –New York Times

“The Chinese government has regularly resorted to jawboning multinationals to try to keep them in line when there are disputes between China and others that could lead these companies to reduce their business in China.” 

For example, in 2015 Xi dropped by Seattle before heading to meet with President Obama. While there, he had a chat with Amazon executives and Chinese tech executive in order to woo them on the prospect of future business, while the Obama administration was reportedly trying to push back against China’s anticompetitive trade practices. 

That said, China is far less likely to succeed this time around, according to Kennedy, who says that “American companies aren’t going to violate American laws, especially in such a high-profile context where their actions are scrutinized.” 

“The companies are between a rock and a hard place, but that hard place will win out.”

Three Chinese government bodies are involved in the recent discussions; the National Development and Reform Commission (China’s central economic planning agency), the Ministry of Commerce and the Ministry of Industry and Information Technology. The Times posits that the fact that the three are all involved suggests the meetings came from the top-down in an attempt to rally support for Huawei – which was not specifically named. 

“There is a strong perception in Beijing that the U.S. government is intent on blunting China’s technology rise, and that if this process is not slowed or stopped, the future of China’s entire digital economy is at risk,” said Eurasia Group head of geotechnology, Paul Triolo, adding “Mr. Xi and the party will be seen as unable to defend China’s economic future” it Huawei’s 5G rollout is derailed by the Trump administration. 

As the trade relationship between the United States and China has broken down, fears have risen in China that major companies will seek to move production elsewhere to avoid longer-term risks. In the meetings this week, Chinese officials explicitly warned companies that any move to pull production from China that seemed to go beyond standard diversification for security purposes could lead to punishment, according to the two people. –New York Times

Russia, meanwhile, just announced that it would build a 5G network over the next year. The deal will see “the development of 5G technologies and the pilot launch of fifth-generation networks in 2019-2020.” MTS said in a statement on Wednesday, according to the Guardian. 

During Chinese President Xi Jinping’s recent visit to Russia, Russian President Vladimir Putin repeatedly called Xi a “close friend,” noting that the two had met nearly 30 times in six years. 

via ZeroHedge News http://bit.ly/2wFHDqU Tyler Durden

Authored by Charles Hugh Smith via OfTwoMinds blog,

Recent research supports the idea that this under-the-radar migration is already under way.

The decline of rural regions and small towns is a global phenomenon, and the causes are many but boil down to two primary dynamics:

1. Cities and megalopolises (aggregations of cities, suburbs and exurbs) attract capital, infrastructure, markets and talent, and these are the engines of job creation. People move to cities to find jobs.

The San Francisco Bay Area megalopolis of roughly 8 million people in 9 counties and 101 cities offers an example of this dynamic. The region added over 400,000 new jobs since the 2008-09 Global Financial Crisis and over 1 million additional residents since the early 2000s.

In effect, the region absorbed an entire new city with 400,000 jobs and 1 million residents. Roads and public transport did not expand capacity, and housing construction lagged. As a result, traffic is horrific, homelessness endemic and housing costs are unaffordable to all but the favored few.

Rural / small town regions cannot match these employment opportunities and so people move, reluctantly or enthusiastically, to overcrowded, horrendously costly urban zones to find jobs.

2. Globalization has lowered the cost of agricultural commodities by exposing every locality to globally set prices (supply and demand).

The relatively low cost of fuels has enabled produce from thousands of miles away to be shipped to supermarkets virtually everywhere.

These mega-trends have slashed farming incomes while costs have risen across the board. This squeeze as revenues decline and costs increase has driven even the most diligent and devoted farmers out of business.

What would it take reverse these trends?

1. The price of agricultural commodities and products would have to triple or quadruple, so that farming would become lucrative and attract capital and talent.

Imagine an economy where ambitious people wanted to get into agriculture rather than investment banking. It’s a stretch to even imagine this, but if energy suddenly became much more expensive and crop failures globally became the norm due to fungi, plant viruses and pests that can no longer be controlled and adverse weather patterns, this could very rapidly change the price of ag products to the benefit of local producers.

Another potential dynamic is the decline of global trade due to geopolitical issues and domestic politics, i.e. the desire to reshore “strategic industries” such as food production regardless of the higher costs such a trend might cause.

The repudiation of finance as the engine of economic “growth” (or pillage, if we remove the gloves) and the prioritization of real-world production are also trends that could arise as the financial bubbles pop and cannot be reinflated with the usual trickery.

2. Wealthy owners of capital tire of cities and move to small towns, bringing their capital and entrepreneurial drive with them.

There are many historical models in which the spending/investing of wealthy families drives the expansion of local economies. Colonial America and the Roman countryside are two examples of this dynamic.

When capital flows to small towns, jobs are created as the wealthy hire people to serve their needs. These new jobs create new markets for small businesses, and these new opportunities attract new capital.

Some owners of capital are passive owners, collecting rents from afar and spending this income in the local small-town economy. Others are restless entrepreneurial types who will fund new local businesses as a challenge or as an opportunity that’s been ignored in the mad rush to sprawling cities.

Both kinds of owners bring new spending and investment.

Wealth enables this class to bring its luxuries and desires with it, and so cultural activities favored by the wealthy get funding they never had before.

Wealthy types follow leaders just like everyone else, and once they hear of wealthy people extolling “the good life” in a small town, they investigate this option in a way they would never have done before.

Thus capital attracts capital, opens market opportunities, increases employment and starts attracting talent which is frustrated by the high costs and competition of the megalopolises.

Why would wealthy owners of capital move from places like Los Angeles, San Francisco, Seattle, Atlanta and New York City to small towns?

Any urban dweller in an overcrowded megalopolis can give you the answer: the traffic is unbearable, homeless is expanding, costs are skyrocketing and so on. The cultural benefits the city offers are increasingly outweighed by the friction, even for the wealthy.

What would cause the trickle of wealthy people leaving cities to swell into a mini-flood? A recession that guts tax revenues would cause cities and counties to raise taxes and fees, many aimed specifically at the rich, while limiting spending on the intractable problems of traffic, homelessness, public education, etc.

Most city dwellers cannot leave for lower cost climes because they need the higher income of city employment and they have a stake in the real estate market via a home they own and a mortgage to pay.

The wealthy, whose income is derived from capital rather than solely labor, have the financial freedom to leave the city but retain much of their income.

If both of these trends manifest, we might see those who can abandoning increasingly unlivable cities for lower cost, safer and more livable small towns.

Recent research supports the idea that this under-the-radar migration is already under way. The Rise of the Rural Creative Class (via Kevin M.) A growing body of research shows that innovative businesses are common in rural areas, and rural innovation gets a boost from the arts.

A series of studies from Tim Wojan and his colleagues at the U.S. Department of Agriculture’s Economic Research Service documents the drivers of rural innovation. Their findings draw on a variety of data sets, including a large-scale survey that compares innovation in urban and rural areas called the Rural Establishment Innovation Survey (REIS). This is based on some 11,000 business establishments with at least five paid employees in tradable industries—that is, sectors that produce goods and services that are or could be traded internationally—in rural (or non-metro) and urban (metro) areas.

The dominance of urban regions in tradable goods and services is visible in this map. We can imagine an economy in which rural / small town areas prosper within their local regions and within the domestic economy in a form of vibrant autarchy, without needing overseas trade as an engine of well-being.

*  *  *

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via ZeroHedge News http://bit.ly/2XwHhhX Tyler Durden

When it comes to simple tasks like changing tires, unclogging toilets or resetting a tripped circuit breaker, millennial dads are terrible compared to their own fathers, according to new research. 

A poll of 1,000 millennial dads and 1,000 baby boomer dads conducted by OnePoll on behalf of Alarm.com reveals that the younger generation prefers to call in the professionals when it comes to a range of DIY tasks ranging from basic plumbing to assembling furniture. 

What’s more, millennial dads are less likely to own ordinary house tools that older dads would consider essential. Just 48% of millennial dads say they don’t own a ladder, while 46% don’t own a cordless drill. 38% don’t own a set of screwdrivers, while 32% don’t own a hammer (vs 93% of baby boomer dads). 

We wonder how many of them own and know how to use guns? 

Millennials, in their defense, say that modern technology such as smart locks and doorbell cameras require more expertise than installing their old-school equivalents. 

“Hi-tech upgrades like smart home technology require professional support; especially safety and security upgrades. Even the handiest Dads see the value of partnering with a professional service provider on an important project like a smart home security system,” said Anne Ferguson, VP of marketing at Alarm.com. 

One thing both millennial and boomer dads agree on; the goal posts have been moved – and the definition of ‘handiness’ has changed. 

According to Alarm.com, “two-thirds of Boomer Dads admitted that Millennial Dads may have the edge when it comes to tech tasks around the home.” 

“While quick to master new tools like apps and mobile technology, today’s time-pressed Dads are also faster to outsource time-consuming home maintenance to professionals who have the tools and training to get the job done right. It’s a handy trade-off that enables modern Dads to spend more time with the people they love,” said Ferguson. 

Trade school kids, trade school… 

via ZeroHedge News http://bit.ly/2Wt5aWJ Tyler Durden