Mel Brooks: ‘We Have Become Stupidly Politically Correct’ and It’s Killing Comedy

BrooksLegendary filmmaker Mel Brooks unloaded on political correctness yesterday, blaming P.C. pressures for undermining comedians’ abilities to perform social satire.

“We have become stupidly politically correct, which is the death of comedy,” he said on BBC Radio.

Brooks, an actor, writer, and director known for making such comedies as The Producers, Young Frankenstein, Blazing Saddles, and Spaceballs, described comedy as “the lecherous little elf whispering in the king’s ear, always telling the truth about human behavior.” He complained that his 1974 film Blazing Saddles—in which a black sheriff overcomes the racism of an all-white frontier town—couldn’t be made today, given the likelihood that someone would deem it problematic.

We have seen this phenomenon play out again and again in recent years. Can We Take a Joke? a documentary film directed by former Reason TV producer Ted Balaker, highlights a number of cases of comedians being castigated for making politically incorrect jokes on college campuses. Jerry Seinfeld, Chris Rock, and Tina Fey have made similar complaints.

Audiences are under no obligation to appreciate politically incorrect humor, of course, and tastes do change with the times. Consider this part of Brooks’ comments, as reported by The Telegraph:

The director said he could find comedy in almost everything but conceded there were areas even he would not mine for material.

“I personally would never touch gas chambers or the death of children or Jews at the hands of the Nazis,” he told the BBC’s Radio 4’s Today programme.

“Everything else is ok.”

Brooks never satirized death chambers, but he did make fun of Nazis in his very first film, The Producers, in which a theater company produces a deliberately offensive pro-Nazi play called Springtime for Hitler: A Gay Romp with Adolf and Eva at Berchtesgaden. One could very easily imagine a boycott of the film today, with some activist accusing Brooks of normalizing Nazism.

But with the alt-right ascendant and white supremacists marching in Charlottesville, is not the need for un-PC Nazi-skewering greater than ever? We don’t need to punch Nazis; we can just belittle them.

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Stupidity Well Anchored: Exposing The Absurdity Of Inflation Expectations

Authored by Mike Shedlock via MishTalk.com,

The amount of sheer nonsense written about inflation expectations is staggering.

Let’s take a look at some recent articles before making a mockery of them with a single picture.

Expectations Problem

On July 17, 2017, Rich Miller writing for Bloomberg proclaimed The Fed Has an Inflation Expectations Problem.

Expectations matter because they shape how households and companies act and thus can go a long way in determining where inflation actually ends up. Consumers accustomed to meager inflation will resist paying up for goods and services.

 

“Lower inflation expectations make it all the more difficult for the central bank to achieve its inflation objective,” Charles Evans, president of the Chicago Fed, said in remarks posted on the bank’s website on July 14.

Key Element

The Business Insider says The Fed is missing a key sign of economic weakness coming from American consumers.

Andrew Levin, a career Fed economist who was a special adviser to Fed Chairman Ben Bernanke, told Business Insider he was worried by a noticeable decline in inflation expectations, both as reflected in consumer surveys and bond-market rates.

 

“The reality is that the longer-term inflation expectations of consumers and investors have shifted downward by about a half percentage point. Thus, even with the economy moving towards full employment, it’s not surprising that core PCE inflation remains about a half percentage point below the Fed’s inflation target,” he said, referring to a closely watched reading indicator that excludes food and energy costs.

 

“If the FOMC continues to ignore the downward drift in inflation expectations and simply proceeds with its intended path of policy tightening, actual inflation is likely to keep falling short of the Fed’s target and might well decline even further,” he said.

Janet Yellen On Wednesday

In a brief speech following yesterday’s FOMC announcement Janet Yellen made these statements.

Turning to inflation, the 12-month change in the price index for personal consumption expenditures was 1.4 percent in July, down noticeably from earlier in the year.

 

For quite some time, inflation has been running below the committee’s 2 percent longer-run objective.

 

One-off reductions earlier this year in certain categories of prices such as wireless telephone services are currently holding down inflation, but these effects should be transitory.

 

Such developments are not uncommon, and as long as inflation expectations remain reasonably well anchored, are not of great concern from a policy perspective because their effects fade away.

Complete Nonsense

One can find thousands of such references, all of them idiotic.

Let’s prove that with a single picture and a few comments.

CPI Percentage Weights

The idea behind inflation expectations is that if consumers think prices will go down, they will hold off purchases and the economy will collapse.

The corollary is that is consumers think inflation will rise, they will rush out and buy things causing the economy to overheat.

With that backdrop, let’s have a Q&A. I believe the answers are obvious in all cases.

Inflation Expectations Q&A

Q: If consumers think the price of food will drop, will they stop eating out?
Q: If consumers think the price of food will drop, will they stop eating at home?
Q: If consumers think the price of natural gas will drop, will they stop heating their homes and stop cooking to wait for the event.
Q: If consumers think the price of gas will drop, will they stop driving or not fill up their car if it is running on empty?
Q: If consumers think the price of gas will rise, can they do anything about it other than fill up their tank more frequently?
Q: If consumers think the price of rent will drop, will they hold off renting until that happens?
Q: If consumers think the price of rent will rise, will they rent two apartments to take advantage?
Q: If consumers think the price of plane tickets, taxis, and bus tickets will drop, will they hold off taking the plane the train or the bus?
Q: If consumers think the price of plane tickets, taxis, and bus tickets will rise, will they rush out and buy multiple tickets driving the prices even higher up?
Q: If people need an operation, will they hold off if they think prices might drop next month?
Q: If people need an operation, will they have two operations if they expect the price will go up?

All of the above questions represent inelastic items. Those constitute 80.254% of the CPI. Commodities other than food and energy constitute the remaining 19.746% of the CPI. Let’s hone in on that portion with additional Q&A.

Q. If someone needs a refrigerator, toaster, stove or a toilet because it broke, will they wait two months if for some reason they think prices will decline?
Q. If someone does not need a refrigerator, toaster, stove or a toilet will they buy one anyway if they think prices will jump?
Q. The prices of TVs and electronics drop consistently. Better deals are always around the corner. Does that stop people from buying TVs and electronics?
Q. If people thought the price of TVs was about to jump, would they buy multiple TVs to take advantage?

For sure, some people will wait for year-end clearances to buy cars, but most don’t. And if a car breaks down, consumers will fix it immediately, they will not wait for specials.

Stupidity Well Anchored

The only thing that’s “well anchored” is the stupidity of the belief that inflation expectations matter.

Asset Irony

People will rush to buy stocks in a bubble if they think prices will rise. They will hold off buying stocks if they expect prices will go down.

People will buy houses to rent or fix up if they think home prices will rise. They will hold off housing speculation if they expect prices will drop.

The very things where expectations do matter are the very things the Fed and mainstream media ignore.

No Reliable Measures

“There is no single highly reliable measure” of longer-run inflation expectations, Fed Governor Lael Brainard told The Economic Club of New York on Sept. 5.

Lovely. She’s also correct. Yet, she proposes to know what to do about it! How idiotic is that?

Economic Challenge to Keynesians

Of all the widely believed but patently false economic beliefs is the absurd notion that falling consumer prices are bad for the economy and something must be done about them.

I have commented on this many times and have been vindicated not only by sound economic theory but also by actual historical examples.

  1. My article Deflation Bonanza! (And the Fool’s Mission to Stop It) has a good synopsis.
  2. My Challenge to Keynesians “Prove Rising Prices Provide an Overall Economic Benefit” has gone unanswered.

There is no answer because history and logic both show that concerns over consumer price deflation are seriously misplaced.

BIS Deflation Study

The BIS did a historical study and found routine deflation was not any problem at all.

Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive,” stated the study.

It’s asset bubble deflation that is damaging. When asset bubbles burst, debt deflation results.

Central banks’ seriously misguided attempts to defeat routine consumer price deflation is what fuels the destructive asset bubbles that eventually collapse.

For a discussion of the BIS study, please see Historical Perspective on CPI Deflations: How Damaging are They?

Finally, and as a measure of insurance against the Fed’s clueless tactics, please consider How Much Gold Should the Common Man Own?

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WTI Hovers Above $50 As US Oil Rig Count Slides To 3-Month Lows

With crude production rebounding back to pre-Harvey levels, and refinery demand coming back on-line, WTI has trod water around $50 all week. The US oil rig count dropped for the 6th straight week (down 5 to 744), back at its lowest level since early June.

  • *U.S. OIL RIG COUNT DOWN 5 TO 744 , BAKER HUGHES SAYS :BHGE US
  • *U.S. GAS RIG COUNT UP 4 TO 190 , BAKER HUGHES SAYS :BHGE US

As Bloomberg reports, it looks like shale billionaire Harold Hamm might be right in saying U.S. producers are being more cautious than government output forecasts seem to imply.

At least that’s what the Baker Hughes weekly drilling report suggests, showing producers idled five oil rigs this week, adding to 19 parked over the previous five weeks.

The numbers released every Friday increasingly make it look like the drilling boom might have peaked, and that should impact output down the road.

Shale drillers will be disciplined in how much they produce, Hamm, chief executive officer of Continental Resources Inc. and one of the pioneers of the shale revolution, said on Bloomberg TV Thursday.

The government projection of more than 1 million new barrels a day in U.S. production this year is "flat wrong" and distorting prices, he said.

Production continues to rebound as more of Texas comes back online (despite the stagnation of oil rig counts)…

 

 

It’s going to come down to the November meeting and the market will be looking for not so much an extension of the deal, but deeper cuts, says Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors.

“We’ve been in a tight range the last couple of days, not really going anywhere and at the end of the day, winding up at the same prices”

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Emperor Joshua Norton I: The Movie

While Abraham Lincoln and Jefferson Davis were leading a war between the American north and south, a rival emperor was conducting a much more peaceful reign out west. 158 years ago this week, on September 17, 1859, Joshua Norton of San Francisco proclaimed himself emperor of the United States. Once a prosperous rice trader, now living on the edge of vagrancy, he issued his own currency, which local businesses often honored; he wrote royal proclamations, which local newspapers printed; legend has it he once managed to stop an anti-Chinese riot by standing in front of the mob and reciting the Lord’s Prayer. He allegedly inspired a character in Huckleberry Finn—the phony dauphin who travels with Huck and Jim for a spell—but he didn’t need Mark Twain to be remembered; he generated plenty of memorable stories on his own.

A few of those tales appear in The Story of Norton I: Emperor of the United States, a short film made by Columbia Pictures in 1936. Let me warn you up front: This is a clumsily made movie with stilted acting and, in one scene, one of the most cringeworthy blackface performances you’ll ever see. But there are moments when the acting is so far removed from natural behavior that it stops seeming bad and starts to feel like some strange David Lynch experiment. And surely there’s something inspirational in the film’s final line: “He was insane, but—strange as it seems—honesty and sympathy won him an empire of voluntary subjects.”

Needless to say, that’s a rather romanticized assessment. Emperor Norton I lived in poverty—more than a few businesses did not accept his scrip—and he had to withstand more than his share of mockery and cruelty. But he was loved too, and he managed to reign for two decades through sheer power of personality. I cannot think of a better American statesman, with the possible exception of President-in-Exile Dick Gregory.

Here is the film:

For some background on the motion picture, check out this post from the folks at the Emperor’s Bridge Campaign, a commendable effort to name the San Francisco Bay Bridge for Emperor Norton.

(Past editions of the Friday A/V Club can be found here.)

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The Race For The “Holy Grail” Of Renewables

Authored by Irina Slav via OilPrice.com,

In February, AES Energy’s Escondido battery storage facility in California was hailed as the largest one to date, with a capacity of 30 MW/120 MWh. Now, Tesla is building a bigger one—100 MW/129 MWh—in Australia.

On the face of it, it’s a race for the bigger battery storage system. But there’s much more to it than that.

The race is on for increasingly reliable, grid-scale, quick-to-install energy storage solutions that will make the shift to all-renewable power much more realistic. In this, factors such as renewable-friendly regulation and integration of storage systems with renewable power generation capacity can tip the energy transformation scales.

California is one of the places to be if you’re a renewables fan. Its authorities have ambitious plans in this regard, eventually hoping to replace all fossil-fuel generation capacity with renewables. Wholly reliable grid-scale storage systems are crucial for this strategy, and they are becoming increasingly popular in the state.

Unfortunately, the initiative to make the 100-percent renewable plan a law fell through. Unions, worried about possible job losses, pulled their support. Legislators themselves tweaked the bill, so its goal is now to produce 100-percent greenhouse-gas-free energy. The debate about the feasibility of the plan and how fast it could become a reality continues. California is a cautionary tale for other ambitious clean energy proponents. 

Meanwhile, the leaders of the battery pack are expanding. AES recently teamed up with Siemens on a joint venture, Fluence, focusing specifically on energy storage system development. Fluence will deal in AES’ Advancion and Siemens’ Siestorage platforms, the companies said, adding it will target the development of new energy storage capacity across 160 countries worldwide.

Tesla is looking in another direction. It already has the largest portfolio of completed energy storage projects globally, at 300 MWh. What it is looking for now is integrating future storage systems with wind and solar electricity producers.

When Tesla said it had won a deal for the construction of the world’s biggest lithium-ion battery storage facility in Australia, it noted that the deal involves partnering with local wind power producer, Neoen, which will supply the battery complex with electricity.

At the same time, AES is working mainly with traditional utilities to supply them with energy storage capacity, focusing on constantly improving the energy density and efficiency of its arrays. Tesla’s all-renewables focus is well documented, and now it could give it the lead in the energy storage race.

Earlier this month, Tesla closed another partnership, with wind power leader Vestas, to develop integrated wind power-energy storage solutions. The Danish company announced earlier this year that it has big plans for energy storage, with Chairman Bert Nordberg telling Reuters that the company had 3.2 billion euro (US$3.84 billion) in cash and no debt, so it could afford some good investments. So far this year, Vestas has invested in almost a dozen battery storage makers.

Energy storage, according to AES’ CEO Andres Gluski, is “the Holy Grail for renewables.” It is the key to the renewables kingdom of the future, eliminating the adverse effects of renewable power’s intermittency. Integrating this Holy Grail with the clean energy producers is the next step. Tesla and other battery makers have already made it. Yet staying with traditional utilities might not be a bad strategy either: it will be some time before renewables become the predominant energy source in the world.

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It’s Not Just China: No Lines For New iPhone 8 Virtually Anywhere

Earlier we showed that in a striking lack of enthusiasm for Apple’s latest offering, the iPhone 8 which went on sale today, there were just two people in “line” in front of an Apple store in China: less than the security guards at the same location.

Unfortunately for Tim Cook, it appears that it was not just China as the entire world appears to have gotten collective cold feet when it comes to Apple’s newest gizmo,  because while Apple Stores are usually faced with shockingly long lines on the morning of a new iPhone launch, that wasn’t the case today. Anywhere.

As various reports have pointed out, some Apple Stores have very short lines out front for the iPhone 8, if they have anyone at all. According to Reuters, that there were fewer than 30 people at Apple’s Sydney store, which usually has hundreds out front. And it described a “less lively mood in Asia” than for previous launches.

In California, ABC7 reporter Chelsea Edwards posted a photo from outside of an Apple Store with no one in front of it.

Other photos showed short (or no) lines in Brisbane, London, Leicester, and Ottawa

According to CBS LA, the Pasadena store was also missing a line of eager fans.

Previous releases of the iPhone attracted hundreds of Apple fans waiting in the early morning hours at several stores across Southern California. The Apple Store has a ticketing system, but that never stopped eager iPhone fans from camping out overnight.

 

But on Friday morning, all was quiet on Colorado Boulevard, except for employees inside the store handing out tickets.

To be sure, some pockets of enthusiasm remained, such as at Apple’s location at the World Trade Center and on Fifth Avenue in New York which did have a line this morning, and there appeared to be a big turnout in Singapore.

As we commented earlier, and the Verge adds, there are reasons this launch might not be getting as much turnout. For one, this is the 10th generation of the iPhone, and hype has probably just died down. People are no longer lining up to buy their first or second smartphone, and this year’s model doesn’t have any revolutionary new features that people are willing to wait overnight for.

Furthermore, in November Apple is launching the next “revolutionary” iPhone — the iPhone X — not the iterative update that’s coming out today. It’s the same reason there wasn’t a rush for the iPhone SE, either.

More concerning is that there are signs that the iPhone X is cutting into iPhone 8 online orders, too. Speaking to BuzzFeed News, Angela Ahrendts, Apple’s retail leader, said “it’s kind of our fault” that lines are going away, because Apple gives customers a choice of where to buy their phone, online or in person. That’s been true for years, though. BuzzFeed also says it saw short lines in Toronto, London, and Los Angeles.

While it is too early to conclude if the sudden disappearance of customers is troubling for Apple’s future says, it is hardly the reception Tim Cook – who carefully cultivates the image of pent up demand by parading the lines of people greeting its every product launch – wanted. Still, more important will be what happens outside Apple stores on November 3rd, when the iPhone X comes out, although with concerns mounting about the public’s receptivity to the phone’s face-scanning technology which has already received scathing criticism among even pro-Apple outlets, some investors are unwilling to wait: AAPL stock is down over 1% today and is about to have its worst week since April 2016.

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California Demands Money from Gatorade to Protect Water from Slander

GatoradeGood news, Californians! Attorney General Xavier Becerra is using your tax dollars to punish the real evildoers: those who would besmirch the good name of water.

You might not think anyone would want to destroy water, since we’d all die without it. But you just don’t understand the evils of corporate marketing strategies. Becerra does, though, and he has successfully fought off a malicious plot by a sports drink manufacturer to convince children that water is evil by giving out a mobile video game for free. And the world is just a little bit safer.

This is not the plot of a bad Saturday morning cartoon from the ’80s, people! It’s real.

In 2012, Gatorade introduced the world to Bolt!, a mobile game starring Olympic gold medalist Usain Bolt, noted for his sprinting skills. That was what the game was about: Players made Bolt run and pick up gold coins. If players hit a Gatorade logo, he would run even faster. If they hit water, though, he would slow down and lose energy.

Now, you might say to yourself, “Well, water would kind of be a threat to a sprinter if he’s trying to run.” And people with a lengthy history of playing video games might recognize that water is often represented as a threat and a slowing effect to be avoided in any kind of game that involves running or driving very quickly. And in any event, you might think it unlikely that this game would cause anyone to actually stop drinking water.

Thank God we have Becerra here to set us straight. This game was actually a marketing conspiracy to turn people—especially children—against water so they’ll drink Gatorade instead. Fortunately, we have Becerra here to protect water’s good name.

Becerra accused Gaterade of false advertising, and he has managed to extract a settlement from the company. His office notes:

Gatorade promoted “Bolt!” on social media, drawing in a youthful audience of which more than 70 percent was aged 13 to 24. The app amassed more than 2.3 million downloads and 87 million games played worldwide in 2012 and 2013. The app was also made available on iTunes for a period of time in 2017. “Bolt!” was downloaded an estimated 30,000 times in California. It is no longer available for download.

As part of the settlement, Gatorade will be required to pay $300,000, of which $120,000 will be used to fund research or education on water consumption and the nutrition of children and teenagers. In addition, the settlement requires Gatorade to disclose endorser relationships in any social media posts and prohibits the company from advertising its products in media where children under age 12 comprise more than 35 percent of the audience. The settlement also prohibits the company from negatively depicting water in any form of advertisement.

The population of California, by the way, is 39 million people. So less than .1 percent of the state’s population ever saw this game; most probably never even knew it existed.

Guess where the rest of the settlement goes? It goes to Becerra’s office. Some cynical people might argue such a mechanism creates a financial incentive for the attorney general’s office to exaggerate the nature of a deep-pocketed defendant’s misdeeds.

What inspired this absurd idea that water needs the government to protect it from defamation? It’s all about the nanny state. Gatorade has plenty of sugar in it. The original version has 21 grams of sugar per serving, though there are also low-calorie powder versions with about half that amount. And yes, they do market themselves deliberately as an alternative to water, but also specifically for those involved in athletic activities.

So this is another mechanism for the state’s health nannies to go on the attack against sugary drinks and try to get money for it. Why bother trying to convince the citizenry to raise taxes on sodas when they can just take the money directly from the corporations?

The press release from Becerra’s office makes it clear their attack is partly driven by a desire to control children’s sugar intake in order to fight obesity. Gatorade’s entire marketing shtick revolves around kids being active athletes, not just sitting around drinking Gatorade in front of the television, but never mind. Experts say you don’t actually need Gatorade. The company should just be happy that Becerra is letting them sell its drinks at all.

There are market-based solutions here. Gatorade’s market competitor, Powerade, has a no-sugar-added version with zero calories. If consumers actually care about sugar consumption, a switch to Powerade would send Gatorade a much stronger message than whatever it is Becerra is doing.

But then the state nannies wouldn’t get a cut of that money, would they?

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Look Around! Common Law Works. Government Statute Doesn’t.

Via The Daily Bell

How can something be considered a crime if there is no victim?

This is a problem. You can go through life making sure you don’t hurt anyone, and still break the law. Wouldn’t that be great if you could simply base your actions on common sense and respect for the standards of a community?

Instead, people must also make sure they don’t do anything labeled wrong by the government. Of course, it is impossible to know all the laws which the government has created. And what they call wrong is not always intuitive, nor offensive.

Government statute law goes beyond the resolution of disputes between individuals and groups. In contrast, the whole point of common law was to settle disputes in non-violent ways.

Now, there are third-party enforcers trolling around looking for a statute that has been broken. There doesn’t have to be a victim. No one has to have been wronged by the legal breach. They actually create conflict instead of resolving it. Their actions often lead to violent altercations, rather than deescalating disputes.

In an essay called “The Obviousness of Anarchy,” John Hasnas discusses the origins of common law, and how it was born out of anarchy. He says that clearly, no society can exist without governance. Part of the definition of a society is that it is somewhat organized and held together by common traditions. But that does not necessarily mean government, as the term has come to be understood.

In arguing for anarchy, I am arguing that a society without a central political authority is not only possible but desirable. That is all I am doing, however. I am not arguing for a society without coercion. I am not arguing for a society that abides by the libertarian non-aggression principle or any other principle of justice. I am not arguing for the morally ideal organisation of society. I am not arguing for utopia. What constitutes ideal justice and the perfectly just society is a fascinating philosophical question, but it is one that is irrelevant to the current pursuit. I am arguing only that human beings can live together successfully and prosper in the absence of a centralised coercive authority. To make the case for anarchy, that is all that is required.

Inevitably, there will be disputes between humans. Hasnas argues that the best society achievable is one where the entire governing structure exists exclusively to settle disputes. The rule of law was born out of trying to peacefully solve disputes that might have otherwise erupted into violence. Common law is a collection of these outcomes. Others in similar predicaments can look to precedent to see what worked to avoid violent outcomes in past similar circumstances.

…common law provides us with rules that facilitate peace and cooperative activities. Government legislation provides us with rules that facilitate the exploitation of the politically powerless by the politically dominant. The former bring order to society; the latter tend to produce strife. Hence, not only is government not necessary to create the basic rules of social order, it is precisely the rules that the government does create that tend to undermine that order.

This means there had to first be a conflict before any legal proceedings started. No Victim, no crime. Without an alleged injured party, there was nothing to resolve. People went about their business unmolested.

Courts consisted of respected members of a community who had been involved in previous conflict resolutions. They were therefore well equipt to suggest outcomes that had in the past avoided violence. Their job was to find an arrangement that satisfied both parties involved in the dispute.

English common law is, in fact, case-generated law; that is, law that spontaneously evolves from the settlement of actual disputes. Almost all of the law that provides the infrastructure of our contemporary society was created in this way. Tort law, which provides protection against personal injury; property law, which demarcates property rights; contract law, which provides the grounding for exchange; commercial law, which facilitates complex business transactions; and even criminal law, which punishes harmful behavior, all arose through this evolutionary process.

When it comes to criminal law, obviously things get a bit more complicated. But none of those complications are avoided in the current legal system. They are actually exacerbated by having the same group make the laws, enforce the laws, prosecute the cases, and judge the cases. These are no longer disinterested third parties. They have many interests wrapped up in performing their jobs to satisfy bosses and colleagues rather than victims and people in dispute.

And it is further complicated by the fact that government has mixed arbitrary statute law with laws which allow real victims recourse for wrongs done to them. But is the government really necessary to say, murder is wrong, theft is wrong, and rape is wrong?

It is true that most of our current law exists in the form of statutes. This is because much of the common law has been codified through legislation. But the fact that politicians recognised the wisdom of the common law by enacting it into statutes, hardly proves that government is necessary to create rules of law. Indeed, it proves precisely the opposite.

Rape, murder, and theft were being resolved and punished before the government codified those crimes into law. This is because victims and their families naturally have an incentive to bring suit against people who have wronged them.

In common law, the best practices naturally became widespread. The entire point is to solve a problem. The best solutions were more widely adopted.

But that doesn’t mean those solutions and methods had to be implemented in other places. Cultures are different, and communities have different values and standards. One culture may see picking an apple off a neighbor’s tree as trivial, while another may take the crime quite seriously.

But still, obeying common law does not require years of legal study.

Understanding the traditional rules of common law requires only that one be a member of the relevant community to which the rules apply, not that one be an attorney.

Government legislation, in contrast, need have no relationship to either the understanding or the moral sensibility of the ordinary person.

So it is the responsibility of an individual to understand how the rules differ from place to place. But under common law, that would only require not victimizing. If you don’t know the cultural acceptance of picking apples that don’t belong to you, don’t do it!

By contrast, governments have arbitrary statutes that are not intuitive. You may know that walking around with an open alcoholic beverage isn’t hurting anyone, yet the legality of this action differs from town to town, and state to state. The same applies to carrying a concealed weapon, possessing marijuana, and taking your shirt off. Yet none of these actions hurt anyone.

Throughout his piece, Hasnas repeatedly tells readers to look around when it comes to evidence that things can, will, and do function just fine without government law in certain areas.

Business is contracted around the world among parties from virtually all countries. Although there is neither a world government nor world court, businesses do not go to war with each other over contract disputes. News is almost always the news of violent conflict. The very lack of reporting on international business disputes is evidence that international commercial disputes are effectively resolved without the government provision of courts. How can this be?

The answer is simplicity itself. The parties to international transactions select, usually in advance, the dispute settlement mechanism they prefer from among the many options available to them. Few choose trial by combat.

What businesses avoid is American courts because of their slow speed and unpredictable rulings. And this is the main argument for why there would still be effective governance without government. Disputes, violence, and unpredictability threaten profits and wealth.

So we don’t need legislatures: all law can be created through dispute resolution. We don’t need government courts: in current situations with no government, disputes are settled just fine without violence.

And we don’t need government enforcers. They create conflict by initiating violence when a statute has been violated, even when no victim exists.

Government sponsored law enforcement is relatively recent, and society as we know it predates public police.

The proper response to the claim that government must provide police services is: look around. I work at a University that supplies its own campus police force. On my drive in, I pass a privately operated armored car that transports currency and other valuable items for banks and businesses. When I go downtown, I enter buildings that are serviced by private security companies that require me to sign in before entering. I shop at malls and department stores patrolled by their own private guards. While in the mall, I occasionally browse in the Security Zone store that sells personal and home protection equipment. I converse with attorneys and, once in a while with a disgruntled spouse or worried parent, who employ private detective agencies to perform investigations for them. I write books about how the United States Federal government coerces private corporations into performing criminal investigations for it. When I was younger, I frequented nightclubs and bars that employed “bouncers.” Although it has never happened to me personally, I know people who have been contacted by private debt collection agencies or have been visited by repo men. Once in a while, I meet people who are almost as important as rock stars and travel with their own bodyguards. At the end of the day, I return home to my community that has its own neighborhood watch.

Look around!

The most important laws that actually protect people from harm were not created by government. The most effective courts which settle disputes without violence were not created by government. And most current security which keeps us safe, investigates crime, and brings people to justice are not government forces!

No, it’s not about creating utopia. But what could exist is a society in which it becomes extremely unprofitable to be aggressive.

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China Fears “Vicious Circle” On Korean Peninsula, US Sees “Tipping Point” If Kim Tests H-Bomb Over Pacific

In a considerably more aggressive, and less diplomatic, 'story' in China's government mouthpiece Xinhua, writers warn:

"It is not hard to tell that the situation has become a vicious circle where more missile tests trigger more sanctions, while more sanctions trigger more tests…" urging the double-freeze solution once again, saying that "the parties concerned need to respect each other's security concerns."

 

At this moment, the United States and the DPRK, two key actors in the denuclearization of the Korean Peninsula, should stay calm and exercise restraint, and avoid any provocative action or rhetoric that might further escalate tensions.

 

Political courage, wisdom and a responsible attitude are required to address the current crisis, instead of provocations or threats.

However, following last night's less than veiled threat from North Korea that the next escalation will be to test a hydrogen-bomb over the Pacific:

North Korean Foreign Minister Ri Yong Ho suggested leader Kim Jong Un was considering testing “an unprecedented scale hydrogen bomb” over the Pacific in response to U.S. President Donald Trump’s threat at the United Nations to “totally destroy” the country.

Officials across the globe have frantically responded.

The International Atomic Energy Agency has chimed in…

"In the absence of a meaningful commitment by North Korea to return to serious talks aimed at denuclearisation, enhanced pressure remains essential to compel North Korea to change its course."

As Reuters reports that such an atmospheric h-bomb test would be the first globally since China detonated a device in 1980. Tests of nuclear-tipped ballistic missiles are rarer still. The United States’ only test of an operational ballistic missile with a live warhead was fired from submarine far out in the Pacific Ocean in 1962. China was widely condemned for a similar test with a missile that exploded over its Lop Nur test site in the country’s west in 1966. North Korea’s six nuclear tests to date have all been underground, the most recent earlier this month by far its largest.

Experts are gravely concerned…

“We have to assume they *could* do it, but it is exceedingly provocative,” said Vipin Narang, an associate professor of political science at  Massachusetts Institute of Technology.

 

“To put a live nuclear warhead on a missile that’s only been tested a handful of times, overflying potentially populated centers. If it…doesn’t go exactly as planned….it could be a world changing event.

 

If Kim’s threat materializes, it will be a “tipping point” for China, and may prompt many other countries to demand an “end to the regime,” said David Albright, founder of the non-profit Institute for Science and International Security in Washington.

 

“No one has tested above ground for decades and the radioactive fallout could be terrifying to many,” Albright said.

Japan’s Chief Cabinet Secretary Yoshihide Suga called Pyongyang’s remarks and behavior “completely unacceptable”.

Narang said a test high enough over the ocean would limit the radioactive fallout but risks included damage from an electro-magnetic pulse, something Pyongyang has hinted it might employ on an attack on the United States or its allies.

 

“If it doesn’t go exactly as planned and the detonation occurs at a lower altitude we could see some EMP-like effects for anything in the area. A lot of dead fish too.”

Additionally, Reuters cites a US official warning that it would be a "game-changer" if North Korea explodes an H-Bomb over the Pacific, but Washington is not giving threat "too much credence."

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The Impossible Math Of The Federal Reserve

Authored by Steven Vannelli via Knowledge Leaders Capital blog,

Earlier this week, the Federal Reserve officially signaled the beginning of its balance sheet run-off. At this point, that’s old news. But, yesterday, the Fed released the Z.1 Flow of Funds, which adds to the intrigue of the balance sheet run-off. Why?

Instead of getting wrapped up in fancy terms like quantitative easing and large-scale asset purchases, I find it easier to think about extraordinary monetary policy from a savings standpoint. Distilled to its roots, the Fed has been manufacturing “savings” from thin air for the better part of a decade. When the financial crisis hit in 2008, American savings were depleted, so the Fed had to step in to produce savings (to finance huge government deficits). Now the Fed is attempting to remove that “savings”… at a time when:

  1. The private sector is experiencing falling savings.
  2. The government is likely on the precipice of expanding its dis-saving in the form of greater deficits.

Some data and charts will help explain the concept. In the Flow of Funds, released quarterly by the Fed, the relevant section to this discussion (out the 198 page report) is F.4 – Savings and Investment by Sector. Below is a clip from that table, highlighting aggregate net savings by sector.

A couple quick notes about the above data:

  1. Net savings of domestic business is basically undistributed earnings.
  2. Net household savings is a residual of income minus consumption.
  3. Net government saving (or dis-saving as is the case) is the aggregate deficits of federal, state and local governments.

These net savings are the aggregation of what is left after businesses replace worn out capital and pay dividends, what households have after paying their bills and what the government has after paying its bills. It is the country’s seed corn. If there is no net savings, there can be no net investment.

The financial crisis of 2008 decimated the stock of savings, and it actually dipped negative for the first time ever. Current aggregate net savings in the US are $355 billion. That’s it!

Decomposing net savings into its sectoral components, we’ll start with the household sector. After the financial crisis, American households ramped up their savings, but since peaking at the end of 2012, household savings are plummeting.

Next, we can turn to the corporate sector. After the financial crisis corporate profits surged, and undistributed corporate profits peaked in the third quarter of 2010 at just over $800 billion. But since then, corporate net savings have been fading.

Last, we have the government. After the tech wreck of 2000, government dis-saving picked up pace, but after the financial crisis the rate of dis-saving exploded.

So, when we combine the net savings of all the sectors and compare it to GDP, we get the following chart highlighting the long-term structural decline in American net savings.

If the Fed starts shedding assets at $10 billion/month, ramping to $50 billion/month by 2019, can the private sector absorb these securities at the same the government budget deficit is set to widen by perhaps $100-$150 billion in the next couple years?

Not to state the obvious, but all else equal, if the fed started shedding assets at $30 billion a month (or $360 billion a year), they would exhaust the entire stock of private savings. This doesn’t allow for larger government deficits. Given the current savings level, it is mathematically impossible for the Fed to shed assets at $50 billion/month. By 2019, as we are farther out from peak net savings rates set in 2015, it is likely the stock of private savings is smaller still, and hence the ability for the Fed to shed assets at a rate of $50 billion/month is utterly impossible. Net savings have fallen in the last 2 years from a peak of just over $700 billion to the current $355 billion. Will savings halve again in the next two years? If so, there is no mathematical way in the world the Fed can shed assets at the rate it outlined yesterday.

While we are on the topic of aggregate net national savings, I thought it would be instructive to remind readers of our analysis on the relationship between net national savings and asset prices.

First, the cycle of net savings as a percent of GDP is a great way to measure movements in the US Dollar. As can be seen in the chart below, with about a two-year lead, the US Dollar follows the movement of net national savings. The drop YTD in the US Dollar, and our hypothesis that we have entered a US Dollar bear market, square with this analysis. Suffice it say, I think the opinion that Fed rate increases is US Dollar bullish is just plain wrong.

For US Treasury bonds, history suggests that a decline in the savings rate is associated with lower interest rates. Bond bear markets like 1987, 1994 or 2010 occur when the savings rate is rising. The foundation for a bond bear market does not appear in place.

For gold, history suggests that a falling savings rate is associated with higher gold prices. Here again, with about a two-year lag, gold prices are highly correlated with national savings. The foundation for a bull market in gold appears to be in place.

Lastly, I’ll look at stocks. In the charts below I use our KLSU indexes which are market-cap weighted indexes that capture to the top 85% of a region’s market cap. Unfortunately, our history is a little shorter here as our indexes only go back to 2000. But, I think the trend is still pretty clear. Below I plot the performance of KLSU North America relative to KLSU Developed Markets. This not an encouraging looking chart for US equities.

For other developed regions, the turn in the US savings cycle is positively associated with their outperformance. For visual clarity, I inverted the net savings line (right axis). The two-year old deterioration in US net savings makes Europe’s outperformance YTD more logical.

For emerging markets, the turn down in US net savings is also broadly positive. Here again, the net savings series is inverted for visual clarity.

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