Month: December 2013

MUST BE SEEN TO BE BELIEVED

I thought the emblem below was a joke, designed to make our government look bad. But, I was wrong.

The US National Reconnaissance Office launched a top-secret surveillance satellite into space Thursday evening, and the official emblem for the spy agency’s latest mission is a malevolent octopus with furrowed brows that also happens to be wrapping its tentacles around all corners of the Earth.

The Office of the Director of National Intelligence live-tweeted Thursday’s launch from Vandenberg Air Force Base in California. It’s almost as if our Orwellian masters want to shove our faces in the fact that they know everything we do, say, or think.

Now that Snowden has revealed their worldwide spying on every U.S. citizen and foreign leader, they seem relieved to just glory in their authoritarian rule, with no fear of retribution or rebuke. We’ve passed the point of no return. This government is out of control and will have to be taken down by force. I love my country, but hate my government. Tyrants must be treated like the criminals they are.

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Outside the Box: Euthanasia of the Economy?

Outside the Box: Euthanasia of the Economy?

By John Mauldin

 

Today’s Outside the Box comes to us from my good friend and business partner Niels Jensen of Absolute Return Partners in London. Niels gives us an excellent summary of how QE has affected the global economy (and how it hasn’t). I have found myself paraphrasing Niels all week.

I also want to call to your attention an interview first posted at ZeroHedge between my friends Chris Whalen and David Kotok. This is an inside-baseball view of a not-so-minor issue involving central banks and ZIRP. The FDIC charges 7-10 basis points on deposits for the national deposit insurance scheme. At close to the zero bound, the fee means that banks can lose money on deposits. As Chris and David point out, this is just another distortion being fed into the system. David was the first to introduce me to this concept (and rather passionately). I have not written about it because it gets complicated quickly, but it highlights a very serious problem and one that is not dissimilar to the deflationary aspects of the Basel III requirements, working at odds with what central bankers are trying to do. This goes with my long-held contention that the models the Fed and all central banks are working with are simply inadequate to describe the complexity of the global economy, and we have no true idea what we are doing, just a guess and a hope.

Then there’s this quote that appeared in the Wall Street Journal this weekend, from Friedrich A. Hayek’s lecture “The Pretense of Knowledge,” delivered upon accepting the Nobel Prize in economics, Dec. 11, 1974:

To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm. In the physical sciences there may be little objection to trying to do the impossible; one might even feel that one ought not to discourage the over-confident because their experiments may after all produce some new insights. But in the social field the erroneous belief that the exercise of some power would have beneficial consequences is likely to lead to a new power to coerce other men being conferred on some authority.

Even if such power is not in itself bad, its exercise is likely to impede the functioning of those spontaneous ordering forces by which, without understanding them, man is in fact so largely assisted in the pursuit of his aims. We are only beginning to understand on how subtle a communication system the functioning of an advanced industrial society is based—a communications system which we call the market and which turns out to be a more efficient mechanism for digesting dispersed information than any that man has deliberately designed.

If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants.

There is danger in the exuberant feeling of ever growing power which the advance of the physical sciences has engendered and which tempts man to try, “dizzy with success,” to use a characteristic phrase of early communism, to subject not only our natural but also our human environment to the control of a human will. The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men’s fatal striving to control society—a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals.

Finally, and speaking of Zero Hedge, I want to offer a personal note about what I think is an egregious affront to the integrity of a close friend. Zero Hedge published and then expanded upon a rather silly article written in the Toronto Globe and Mail about the “sweet” deal that Gluskin Sheff chief economist David Rosenberg gets, noting that his $3,000,000 salary seems high for a top-five executive at a public firm, and implying that Rosie decided to turn bullish in return for the pay increase, that in essence his opinion could be bought.

Let me state that Rosie is a close personal friend and that we try to spend as much time as possible together and keep up with each other on the phone about our views on the world. Since we are more or less in the same business (writing and speaking on investments), we also share rather deep data on our personal business situations. I know Rosie’s business situation first-hand. I have offered Rosie advice on that compensation package.

First, the sweet deal is Gluskin Sheff’s. I have argued to some of their management that Rosie is underpaid. I think I might have used the word massively. Why? Because he writes a newsletter that has 3,000 subscribers who pay a $1,000 a year – roughly equal to his salary. But in addition GS gets his brand – and it is a valuable one– more or less for free and still works Rosie’s ass off traveling the country meeting with clients, all while he puts out a lengthy daily letter. The man is a machine. Now, kudos to Gluskin Sheff for getting that deal. I wish I could get him for that for Mauldin Economics. But Rosie is not overcompensated, based on his actual production numbers.

Rosie is one of the most popular speakers at my annual conference. This year, after having been bearish for years, he turned bullish while at my conference and presented the reasons why. He had been at GS for several years as a very firm, committed bear. He gets no more money contractually whether he is bearish or bullish. Like me, he just wants to get it right. We win some and lose some, but we call it the way we see it. To suggest that someone like Rosie can be bought (with what I think of as his own money from his newsletter sales) is ridiculous. Zero Hedge owes Rosenberg a major apology.

And one final point. The “author” of the ZH piece is “Tyler Durden,” which is a pseudonym. The name comes from a movie character in Fight Club. If you are going to trash someone, at least have the testosterone to do it using your real name. Man up, guys. And kudos to my readers, who when they respond to my letters almost always do with their real names and photos. None of this hiding behind the web BS. I notice that even when my thoughts get trashed, it is done civilly and with the respect of people arguing different opinions. As opposed to the situation on some other websites. But then, I always knew my readers were a cut above.

Time to hit the send button, as another meeting here in NYC is coming up in a few minutes. Tomorrow should be a very interesting day, and I will report what I learn at the CIO Investment Summit this weekend.

Your thanks for letting me vent analyst,

John Mauldin, Editor
Outside the Box[email protected]

Euthanasia of the Economy?

Niels C. Jensen
The Absolute Return Letter, November 2013

“Crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.”
– Rudi Dornbusch, economist

In his masterpiece The General Theory of Employment, Interest and Money John Maynard Keynes referred to what he called the ‘euthanasia of the rentier’. Keynes argued that interest rates should be lowered to the point where it secures full employment (through an increase in investments). At the same time he recognised that such a policy would probably destroy the livelihoods of those who lived off their investment income, hence the expression. Published in 1936, little did he know that his book referred to the implications of a policy which, three quarters of a century later, would be on everybody’s lips. Welcome to QE.

Before I go any further, please allow me to inject a brief personal comment. This month’s Absolute Return Letter is the last before my partner, Nick Rees, departs for the Canary Islands for the final preparations before he sets off to row, unaided, from La Gomera on 2 December on his conquest of the Atlantic. I don’t think any of us can quite comprehend what a mammoth task it is to row 3,000 miles across the Atlantic. Nick and his rowing partner Ed will be in the boat for 50-60 days before arriving in Antigua in late January, and they probably won’t speak to each other for 50-60 months thereafter! It is all done in support of Breakthrough Breast Cancer, one of the leading cancer research charities globally, and you can read more about the project here. Many of you have already supported Nick, and for that he is eternally grateful but, if you have somehow missed it, it is not too late to make a contribution. So many people continue to be diagnosed with breast cancer every year, 1 in 8 women over the course of their lifetime. Nick’s wife, Ellen, was one of them. Please click here if you would like to support this great cause.

Now back to QE – the topic of this month’s Absolute Return Letter. Over the past couple of years it has gradually become the consensus view that QE has failed because it hasn’t created the economic growth that everyone was hoping for. I find that view overly simplistic and naïve in equal measures. QE – or broadly similar monetary policy initiatives – has saved the world from a nasty and potentially very damaging financial meltdown not once, but twice – following the Lehman bankruptcy in the autumn of 2008 and during the depths of the Eurozone crisis in the second half of 2011. It is not clear at all (because it is impossible to quantify) how much worse off we would have been without QE, but worse off – in terms of GDP growth – we almost certainly would have been. Estimates range from 5% to 15% below actual numbers, but nobody really knows.

QE’s effect on asset prices

The second indisputable effect QE has had is on asset prices. The central banks’ unprecedented buying of bonds have had a material, and overwhelmingly positive, effect on asset prices – to the point where more and more people worry that we are in the process of forming a new bubble. Chart 1 below, borrowed with gratitude from the Financial Times, illustrates very well how effective QE has been in terms of moving asset prices higher but, at the same time, it demonstrates the dilutive effect over time. QE2 did not deliver returns of the same magnitude as QE1 and QE3 has been even less effective, at least when measured in this way.

Chart 1: The effect of QE on various asset classes

Source: The license to print money is running out, FT Money, 19-20 October 2013

I do not wish to enter into a longer discussion about whether this is bubble territory or not, as that is the subject of next month’s Absolute Return Letter, but let me make one thing clear. The current equity bull market is not a rally based on irrational behaviour. To the contrary, investors are behaving perfectly rationally. As policy makers continue to signal an intent to keep rates low for a very long time, investors merely respond to such intent. That, on the other hand, is not akin to saying that buying equities at current valuations is a virtually risk free proposition, but more about that next month.

Misguided inflation concerns

When QE was introduced in late 2008i there was plenty of concern that it would lead to higher inflation. Some even suggested it could lead to hyperinflation and the gold bugs suddenly found themselves with plenty of wind in their sails. As QE became QE2, the inflation protagonists gathered further momentum and the price of gold took another leap. Suddenly you were no longer considered an extremist by suggesting that the Fed would turn the USA into the United States of Zimbabwe.

And what happened? The reality is that almost exactly five years after the introduction of QE, the so-called ‘money printing’ii has had little or no effect on consumer price inflation. If anything, it looks as if QE has paved the road to Tokyo rather than Harare (chart 2).

Chart 2: Consumer price inflation in selected countries

Source: ECB, FRED, ONS

How could nearly everyone get it so horribly wrong? Could it be that we haven’t seen the inflation ghost yet? Are we in the lull before the storm? Is it possible that QE is in fact long term deflationary? The reality is that we have seen plenty of inflation already from QE – just not in the places nearly everyone expected it to show up. Asset price inflation is also inflation, and we have had asset price inflation galore. Many emerging economies have struggled with consumer price inflation in recent times. It looks as if we have been very good at exporting it.

I rarely brag about my predictions when, occasionally, I turn out to be on-the-money, partly because my mum taught me always to be humble, and partly because it usually comes back and bites you in the tail if you get too big-headed. Having said that, I never believed the scare mongering, and I still don’t. I am absolutely convinced that QE will generate little or no consumer price inflation in the western world, although I do recognise that some countries (for example the U.K.) have higher structural inflation rates than others. This is not the lull before the storm.

Is it Japan all over again? I believe the jury is still out on that one. Good friend and business partner John Mauldin made me aware of a very interesting study presented by the Bank of England back in 2011 which appears to suggest that at least the U.K. central bank expects QE to deflate asset prices, consumer prices and economic growth in the long run (chart 3). That is not akin to saying that we have already fallen into the same deflation trap as Japan; however, given the disinflationary trend we are currently in, we are perhaps only one or two policy mistakes away from deflation – in particular in the Eurozone. Extending QE could be one such mistake.

Chart 3: The qualitative economic impact of QE

Source: Quarterly Bulletin, Bank of England, 2011 Q3

Does QE destroy economic growth?

Let’s take a closer look at a very important question raised by chart 3. Does QE actually destroy economic growth in the long run? In order to understand the dynamics at work, let’s start with a quick snapshot of how much the world has actually de-levered since the lofty levels of 2007 when the first signs of crisis began to materialise (chart 4).

Chart 4: Gross debt as % of GDP (excl. financial sectors)

Source: Back to Black, Citi Research, October 2013.

For the sake of clarity I should mention that, in the following, I focus on QE. In reality, most countries have combined QE with various austerity measures which makes it difficult to distinguish the effect of one policy measure from another. Having said that, the U.S. hasn’t engaged in austerity to any meaningful degree which gives us good insight into the (side) effects of QE.

The first, and very important observation, when looking at chart 4 is that total debt is higher almost everywhere since the outbreak of the crisisiii. It is indeed a case of robbing Peter to pay Paul as Matt King of Citi Research so succinctly puts it. Where household debt has been reduced (for example in the U.S. and the U.K.) government debt has replaced it.

Italy’s government debt has jumped from 121% to 132% of GDP over the past two years alone. Spain’s debt-to-GDP has gone from 70% to 94% and Portugal from 108% to 124% over the same period. An interesting brand of austerity I might add! Expanding the government deficits at such speed would have been devastatingly expensive in the current environment without QE. And to those of you who want to jump at me and say that the ECB does not engage itself in QE (yes, I am aware that its charter strictly prohibits such activity), I say look at the ECB’s balance sheet. It may not be QE in the legal sense of the word, but the end result is no different.

So, in effect, QE has permitted a number of crisis countries to fund their escalating deficits at rates which would have been impossible to obtain in a free market, but that’s the least of my concerns. QE has also permitted banks in those same crisis countries to re-capitalise themselves without the use of tax payers’ money. At one level that is good news, because using tax payers’ money would only have made government deficits worse. However, there is a bothersome side effect of such an approach.

Think about it the following way. When deploying its capital, a commercial bank effectively has the choice between lending it to its customers or engaging in proprietary trading activities. With central banks underwriting the cost of capital in the banking industry by promising to keep policy rates at record low levels for some extended period, the choice is a relatively simple one. On a risk-adjusted basis, margins on lending simply cannot compete with the profits that can be made on proprietary activities. This in effect deprives the real economy of working and investment capital and thus has a detrimental effect on economic growth longer term. This, and other possible side effects of QE, was pointed out in a brilliant paper published by the Federal Reserve Bank of Dallas last year, which you can find here.

For the economy to grow, not only is it necessary for banks to be willing to lend, but borrowers must also be willing to borrow. Many consumers were over-leveraged going into the crisis and are taking advantage of the lower interest rates to de-lever faster than they could otherwise hope to do, but that is not the only reason why consumers may refrain from borrowing at present. There are signs that QE may in fact be having a direct, and negative, effect on the appetite for borrowing.

Here is how it works. Seeking to impact inflation expectations forms an integral part of monetary policy, and policy makers have been very effective at anchoring those expectations around 2% in recent years. Needless to say, if inflation expectations had moved significantly as a result of QE, I would have had to write a very different letter this month.

Behind all of this is some economic gobbledygook called the ‘rational expectations hypothesis’ which suggests that economic agents (read: consumers and businesses) make rational decisions based on their expectations. So, when the Fed – and other central banks with it – keep ramming home the same message over and over again (and I paraphrase): “Folks, we will keep interest rates low for some considerable time to come”, consumers and businesses only behave rationally when they postpone consumption and investment decisions. They have seen with their own eyes that central bankers have been able to talk interest rates down, so why borrow today if one can borrow more cheaply tomorrow?

QE’s effect on income

Charles Gave of GaveKal Research produced a very interesting paper earlier this year, linking the low income growth to QE – another nail in the coffin for economic growth. Charles found that during periods of negative real interest rates (which is a direct follow-on effect from QE), income growth in the U.S. has been low or negative (chart 5). I am sure we will hear more from GaveKal on this topic in the future. It is the first time I have seen anyone present this hypothesis which, if true, has dramatic implications for monetary policy going forward. It is well known, for example, that President Obama has been keen to find ways to get income growth back on a more positive trajectory again.

Chart 5: The link from QE to income growth

Source: The emergence of a U.S. underclass, GaveKal Research, July 2013

QE was meant to stimulate economic growth and I believe it worked well as a short term crisis management tool in 2008 and 2011. However, for policy makers to expect a longer lasting, and positive, effect on economic growth, they would have had to assume that the wealth effect (from rising asset prices) would kick in and stimulate economic growth through increased consumption. When making this calculation, they may have underestimated the power of demographics, though.

As I demonstrated in last month’s letter, middle-aged and old people, who control the majority of wealth (chart 6) do not create economic growth. Young people do, but QE may have deprived the younger – and income dependent – generations of growth capital for the reasons already discussed, whilst making the wealthy even wealthier. One could say that QE has increased inequalities in income and wealth.

Chart 6: Distribution of UK household financial assets by age group

Source: The distributional effects of asset purchases, Bank of England, July 2012.

Note: Numbers exclude pension assets.

Time to clean up the banks

When talking about the financial sector and how they have been able to take advantage of QE to re-capitalise their damaged balance sheets, it ought to be said that QE has effectively allowed banks to ignore their underlying problems. QE has become a life support machine for the financial sector at virtually no cost to them but at a significant cost to the rest of society. That cannot go on ad infinitum. At some point in the not so distant future it will be financial reckoning day for the sector which bodes particularly badly for the European banks, most of which are way behind their U.K. and U.S. peers in terms of cleaning up their balance sheets.

The IMF provided some very granular information on the state of European banks in their most recent Financial Stability Report. More than 50% of Spanish companies with loans in Spanish banks have an interest coverage ratio of less than one. In other words, the EBITDA of over half of all Spanish corporates does not even cover their interest expense (you would expect a healthy corporate borrower to have an interest coverage ratio of 3-5 times depending on the nature of the business). What’s worse, the situation in Italy and Portugal is only marginally better. All of these problems have been largely ignored since the ECB stepped in with their brand of QE about two years ago and saved the European banking sector from a complete meltdown, but few, if any, of the underlying issues have yet been addressed.

Other unintended consequences

Meanwhile, QE has left a trail of potential problems in the rest of the world. Ultra easy monetary policy in the West has resulted in a virtual credit explosion in many EM economies, many of which pursue a policy which is either directly or indirectly linked to U.S. monetary policy (chart 7). This is a key reason why I predicted in the September Absolute Return Letter (see here) that we may have to face a re-run of the EM crisis of 1997-98 before this crisis is well and truly over.

In China, the transformation currently taking place may have some unexpected consequences for inflation in our part of the world. From a peak of 10.1% of GDP in 2007, its current account surplus now stands at 2.5% of GDP and the surplus continues to trend down. In September, Chinese exports to the rest of the world dropped by 0.3% when compared to the same month last year, whereas imports grew by 7.4%.

Consequently, China is no longer building massive amounts of foreign exchange reserves, and it is quite likely that the Chinese balance of payments will turn negative in the foreseeable future. We had a foretaste of that in 2012 when they posted the first quarterly deficit since 1998. All of this is important in the context of inflation v. deflation because the renminbi may actually begin to weaken as capital outflows gather momentum – a nightmare scenario for us in the West as we would then begin to import deflation from China at a most inopportune time.

Chart 7: Change in private sector debt (gross, non-financial, % of GDP)

Source: Global Economic Outlook and Risks, Citi Research, September 2013

I could go on and on about how QE has created, and will continue to create, unintended consequences. I haven’t really touched on how QE has distorted market mechanisms in the financial markets and the implications of that. For example, as a direct result of QE, dealer inventories have been dramatically reduced since 2008 during a period where assets under management in the mutual fund and ETF industry have exploded (chart 8). When the herd wants out of credit, who is going to provide the liquidity to facilitate that?

Chart 8: U.S. credit mutual fund assets v. dealer inventories

Source: Back to Black, Citi Research, October 2013.

I have failed to mention how QE has undermined the retirement plans for millions of people across Europe and the United States as their pension savings no longer provide a sufficient income to live on. I have not entered into any discussion about how QE could quite possibly undermine the credibility of central banks longer term and how that may impact the effectiveness of monetary policy and possibly even present a threat to global financial stability.

Could the U.S. lose its reserve currency status?

All of these are important issues that deserve a mention; however, I am running out of time and space. Allow me to leave you with one thought, though. Since the end of World War I, the U.S. dollar has retained its position as the reserve currency of choice. Such a position carries with it many advantages. Approximately 60% of the world’s foreign exchange reserves are held in U.S. dollars today. In an era where the U.S. government spends considerably more than it earns, the status as the world’s preferred reserve currency comes in quite handy. Having that status is equivalent to writing cheques that nobody cashes in. What a wonderful position to be in.

The Americans seem to take their status for granted. Perhaps they need a reminder that reserve currency regimes come and go (chart 9). Given its status as a large debtor nation with insufficient domestic savings to finance its deficits internally, it could prove very painful, should the rest of the world decide that it is time for a change. The longer QE goes on for, the more likely that is to happen.

Chart 9: Reserve currency regimes since the middle ages

Source: JP Morgan via Zero Hedge

My good friend Simon Hunt reminded me the other day that, only a couple of weeks ago, an article in China’s official news agency called for a new reserve currency to be created to replace the U.S. dollar. According to Simon, the renminbi’s share of world trade has grown from zero in 2009 to around 17% in the first half of this year. Given its exponential rise, it could easily account for 40% or perhaps even 50% of world trade by 2017.

Conclusion

It is time to call it quits. QE proved to be a very effective crisis management tool, but we have probably reached a point where the use can no longer be justified on economic grounds. Just as John Maynard Keynes talked about the euthanasia of the rentier back in 1936, we are now facing the euthanasia of the economy, unless we change course. The obvious problem facing policy makers, though, is that if financial markets are the patient, QE is the drug that keeps the underlying symptoms under control. We have already seen once how dependent the patient has become of this drug (think 22 May when Bernanke mentioned the mere possibility of tapering), and the market reaction clearly scared central bankers on both sides of the Atlantic.

The western world was very critical (and rightly so) of Japan in the 1990s for not dealing decisively with its sick banking industry. Twenty years later, Japan is still paying the price for its dithering. The problem is that we are now making precisely the same mistake. QE has proven effective of suppressing the underlying symptoms, but that doesn’t mean we should stay on that medicine forever. In order to reinvigorate economic growth, and avoid falling into the Japanese deflation trap, we need a healthy banking industry. That will only happen if it is thoroughly cleaned up once and for all.

PS. To all those out there who think that the world is returning to normal, that everything will be safe and sound as long as we give it a bit more time (a strategy also known as kicking the can down the road), I suggest you read this piece in the FT.

Niels C. Jensen
7 November 2013

 

i QE was actually introduced in the United States all the way back in 1932, when Congress for the first time gave the Fed permission to buy Treasuries. Approximately $1 billion (!) was acquired by the Fed back then.

ii I deliberately use the term ‘so-called money printing’ because the techniques used by central banks today have little in common with the traditional money printing approach which caused hyper-inflation in the Weimar Republic in the 1920s and in Zimbabwe more recently, a topic I have discussed in depth before.

iii A small number of countries within the eurozone have actually managed to reduce total debt since 2007, but it is a drop in the ocean.

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How I Learned My History

How I Learned My History

history book

I’ve recently received requests for history book recommendations. I know I’m leaving out a lot, but I think I’ve compiled a good starter list.

So, without further ado:

General Histories (covering large sections of history):

The Evolution of Civilizations, by Carroll Quigley. An excellent look back – all the way to the Ice Age and even further.

The Third Wave, by Alvin Toffler. Examines human civilization from its origins to what’s coming next. Chapters 1-10 are a brilliant must read, but the rest of the book is dated and unnecessary.

The State, by Franz Oppenheimer. A serious look at the institution of the State.

The Collapse of Complex Societies, by Joseph Tainter. How centralization has destroyed culture after culture.

Art: A New History, by Paul Johnson. A superb history of art and all that pertains to it, from the beginning of human history.

Specific Periods & Subjects:

The End of the Bronze Age, by Robert Drews. The collapse of 1200 BC is one of the most important events in all of recorded history, yet very few people know anything about it.

Caesar and Christ (The Story of Civilization III), by Will Durant. A masterful history of Rome.

The Life of Greece (The Story of Civilization, Vol. 2), by Will Durant. The history of Greece.

The History of Civilization In Europe, by Francois Guizot. An excellent overview of what happened.

The Sovereign State and Its Competitors: An Analysis of Systems Change (Princeton Studies in International History and Politics), by Hendrik Spruyt. An in-depth look at feudalism and the formation of states in medieval Europe.

War Is a Force that Gives Us Meaning, by Chris Hedges. Journalism mixed with some history, but a very important look at the ugly truth about war.

Gunfighters, Highwaymen And Vigilantes: Violence on the Frontier, by Roger D. McGrath. A serious analysis of the old American West. See the “wild west” as it really was, not as portrayed on television.

The Goddess and the Bull: Catalhoyuk: An Archaeological Journey to the Dawn of Civilization, by Michael Balter. An excellent start on the great archaeological find at Catalhoyuk. (See FMP #37.)

The Leopard’s Tale: Revealing the Mysteries of Catalhoyuk, by Ian Hodder. More on Catalhoyuk. Hodder’s archaeology is excellent, but I find many of his interpretations flawed.

Barbarians To Angels: The Dark Ages Reconsidered, by Peter S. Wells. How Rome became Europe.

In the Wake of the Plague: The Black Death and the World It Made, by Norman F. Cantor. How the great pestilence of 1348 AD changed Europe.

The Medieval Underground, by Andrew McCall. Another side of the middle ages.

The Commercial Revolution in the Middle Ages, by Robert S. Lopez. How commerce created Europe.

Smuggling In The British Isles: A History, by Richard Platt. Great stories you won’t find elsewhere.

Conceived In Liberty (4 Volume Set), by Murray N. Rothbard. Four volumes of historical facts on the American Revolution, most of which are hard to find elsewhere.

Escape from Freedom, by Erich Fromm. As much psychology as history but a fascinating look at the industrial revolution and the character flaws it spawned.

A Child of the Century, by Ben Hecht. Hecht was involved in a number of historical events and tells the stories from the inside. Plus, it’s the best autobiography you’ll ever read. The world shouldn’t have forgotten about Ben Hecht.

The Reawakening, by Primo Levi. Levi survived Auschwitz, but that’s not what this book is about. It’s about the end of World War II and returning to life afterward.

The Origins of Totalitarianism, by Hannah Arendt. Antisemitism and totalitarianism in 20th century Europe.

Without Sin: The Life and Death of the Oneida Community, by Spencer Klaw. The fascinating story of the Oneida colony in 19th century New York State.

Double Lives: Stalin, Willi Munzenberg and the Seduction of the Intellectuals, by Stephen Koch. The seduction of American and European intellectuals by Soviet agents.

In God’s Name, by David Yallop. An investigation into the murder of Pope John Paul I.

Evidence of Revision: The Assassination of America. A DVD set of original footage, interviews, etc. The best material I know on the Kennedy assassination.

Courses:

I’m a fan of The Great Courses from The Teaching Company. These courses are expensive, but they are often on sale. In particular, I liked these:

  • Late Antiquity: Crisis and Transformation
  • Ancient Greek Civilizations
  • The Origin of Civilizations, Parts 1-4
  • The Early Middle Ages
  • The High Middle Ages
  • How The Crusades Changed History
  • The Birth of The Modern Mind: The Intellectual History of the 17th and 18th Centuries
  • Early Christianity: The Experience of The Divine

As I say, I’m missing a lot (half my library is not in front of me at the moment), but this should be a good list to work from.

If you’ve got one, two (or ten) that you think should be added, please feel free to comment below.

Have fun!

Paul Rosenberg

[Editor’s Note: Paul Rosenberg is the outside-the-Matrix author of FreemansPerspective.com, a site dedicated to economic freedom, personal independence and privacy. He is also the author of The Great Calendar, a report that breaks down our complex world into an easy-to-understand model. Click here to get your free copy.]

DESTROYER OF THE DOLLAR

Ron Paul Says Bitcoin Could be the “Destroyer of the Dollar”

Personally, I wouldn’t put it that way. The dollar is being destroyed by the Federal Reserve. Bitcoin is merely a preferred conduit through which fed up citizens decide to express their displeasure with the incredibly corrupt corporatist-facist state being shoved down our throats by a handful of insane and greedy oligarchs. Interesting comments nonetheless. From CNN Money:

Imagine a world in which you can buy anything in secret. No banks. No fees. No worries inflation will make today’s money worth less tomorrow.

The digital currency Bitcoin promises all these things. And while it’s far from achieving any of them — its value is unstable and it’s rarely used — some have high hopes. 

“There will be alternatives to the dollar, and this might be one of them,” said former U.S. congressman Ron Paul. If people start using bitcoins en masse, “it’ll go down in history as the destroyer of the dollar,” Paul added.

It’s unlikely that Bitcoin would replace the dollar or other government-controlled currencies. But it could serve as a kind of universal alternative currency that is accepted everywhere around the globe. Concerned about the dollar’s inflation? Just move your cash to bitcoins and use them to pay your bills instead. Tired of hefty credit card fees? Bitcoin allows transactions that bypass banks.

“That’s the holy grail for people who believe in freer markets and currency,” said Adam Gurri, a libertarian economics writer in New York.

There are no middlemen charging fees to move money between users. You can transfer bitcoins — even infinitesimally small fractions of one — directly to others’ digital wallets.

But don’t expect governments and banks to let Bitcoin take over so easily. Financial institutions will lose business if people stop using their payment systems, and central banks like the U.S. Federal Reserve would lose their ability to help slow and speed up economic activity. Paul expects banks to lobby and authorities to crack down.

“Governments absolutely demand a monopoly on money and credit. They’re not going to give it up easily,” Paul warned. “They will come down hard.”

Interesting times…

Full article here.

In Liberty,
Mike

We Should All Be Like the Hippies in this One Way

We Should All Be Like the Hippies in this One Way

hippies

The hippies are little understood these days. One particular version of them – the later, pot-smoking, political protestor – is what remains in popular culture. But the actual hippies, especially the early hippies, were a much different group. They were interesting and brave people: people very much worth remembering.

Who Were the Hippies?

The hippies were preceded by the Beat movement, a group of young people who rejected the conformity of the 1950s – a very “corporate” time. To get a feeling for their mentality, here is a quote from William S. Burroughs, one of their inspirations:

In the U.S., you have to be a deviant or die of boredom.

The Beats were, as one writer put it, “a whole bunch of people, of all different nationalities, who came to the conclusion that society sucked.”

The hippies, on the other hand, believed that they could make life better. And that was the great difference between the hippies and most other movements – the hippies acted. They changed their lives, painted their cars, and wore strange clothing. Rather than cowering at the thought of being different, they went out of their way to show their difference, and there’s something deeply transformative about that.

I’ll forgo a history of the movement and get right into the wisdom of the hippies. Let’s begin with the thoughts of two early hippies. First, some thoughts direct from the early days, care of Bob Stubbs:

We have a private revolution going on. A revolution of individuality and diversity that can only be private. Upon becoming a group movement, such a revolution ends up with imitators rather than participants.

Another, from Dr. Debra Jan Bibel:

Yes, it was sex, drugs, and rock & roll, but it was also spirituality and consciousness studies that eventually led to environmental/ecology movements, cognitive neuroscience, and psychoimmunology, as well as the increasing popularity of Buddhism in the United States and the development of world music appreciation…

Dr. Bibel is writing after the fact, of course, and you can see her disappointment with what the movement became. She continues:

The hippie wannabes spoiled the scene, did not understand the ideologies nor the proper use of entheogens. The popular image of hippies was of them, not the more thoughtful, experimental, and realized post-Beats, the pioneers who led the way.

As happens so often, the first people come for internal reasons and do the important work. Then others come along, wanting to lead the group and take credit for it as well.

From the early hippie habit of action came many of the better developments of the 1960s: new thoughts, new perspectives, the belief that they could live and thrive as individuals, not nameless insects in a giant hive.

But, more important than anything else, the early hippies discovered that they could activate their own will… that they could live their way, create the things they loved, and ignore the expectations of the state-tribe.

Once people reclaim their will, new, interesting and beneficial things tend to sprout up on every side.

The Thoughts They Sought Out

The hippies were very young, and even though they were generally intelligent kids, they knew that they lacked data and perspective, and so turned to older, experienced men.

Perhaps the best of these older teachers was Buckminster Fuller, a fascinating and good man. Here are some of his thoughts:

Politicians are always realistically maneuvering for the next election. They are obsolete as fundamental problem-solvers.

* * *

I seem to be a verb.

* * *

The end move in politics is always to pick up a gun.

* * *

You’ll see from this next one that Fuller makes up his own words. Bear in mind that he was a very serious engineer, so these odd word combinations were created carefully and are used with precision. You may have to read the passage slowly, but if you do, you’ll see that these are coherent thoughts.

The youth of humanity all around our planet are intuitively revolting from all sovereignties and political ideologies. The youth of Earth are moving intuitively toward an utterly classless, raceless, omnicooperative, omniworld humanity.

Children freed of the ignorantly founded educational traditions and exposed only to their spontaneously summoned, computer-stored and -distributed outflow of reliable-opinion-purged, experimentally verified data, shall indeed lead society to its happy egress from all misinformedly conceived, fearfully and legally imposed, and physically enforced customs of yesterday.

They can lead all humanity into omnisuccessful survival as well as entrance into an utterly new era of human experience in an as-yet and ever-will-be fundamentally mysterious Universe.

* * *

You can see that Fuller is deeply concerned with change in the world. Here are several more on that subject:

When I was born, humanity was 95 per cent illiterate. Since I’ve been born, the population has doubled and that total population is now 65 per cent literate. That’s a gain of 130-fold of the literacy. When humanity is primarily illiterate, it needs leaders to understand and get the information and deal with it. When we are at the point where the majority of humans themselves are literate, able to get the information, we’re in an entirely new relationship to Universe. We are at the point where the integrity of the individual counts and not what the political leadership or the religious leadership says to do.

* * *

We are powerfully imprisoned in these Dark Ages simply by the terms in which we have been conditioned to think.

* * *

Dear reader, traditional human power structures and their reign of darkness are about to be rendered obsolete.

* * *

Whether it is to be Utopia or Oblivion will be a touch-and-go relay race right up to the final moment… Humanity is in ‘final exam’ as to whether or not it qualifies for continuance in Universe.

* * *

I’ll close with a practical thought from Fuller. This is one that all of us should be taking seriously:

You never change anything by fighting the existing. To change something, build a new model and make the existing obsolete.

* * *

Regardless of how we wear our hair and our clothes, we should all, like the hippies, act to make life better. Now.

Peace.

Paul Rosenberg

[Editor’s Note: Paul Rosenberg is the outside-the-Matrix author of FreemansPerspective.com, a site dedicated to economic freedom, personal independence and privacy. He is also the author of The Great Calendar, a report that breaks down our complex world into an easy-to-understand model. Click here to get your free copy.]

Why Gary North Is Wrong About Bitcoin

Why Gary North Is Wrong About Bitcoin

gary north bitcoin

I like Gary North. I appreciate his work and I spent a very pleasant hour hanging out with him at FreedomFest a few years back. We have mutual friends. I saw the headline for his anti-Bitcoin article but didn’t take time to read it until we got several emails asking about it.

So, with respect that is due, here’s why Gary is wrong, point by point:

Ponzi Economics

I’ll quote Gary in italics, then respond in a plain font. The section titles are his.

… someone who no one has ever heard of before announces that he has discovered a way to make money. In the case of Bitcoins [sic], the claim is literal.

First, whether we’ve heard of him or not is meaningless, and here Gary sets a negative, suspicious tone.

Second, Satoshi didn’t say he could “make money,” he created a program that would verify crypto-currency. That’s not really the same.

He made this money out of digits. He made it out of nothing. Think “Federal Reserve wanna-be.”

Money out of digits isn’t true at all. Bitcoin is money made with cryptography – with mathematics. And as much as I like Gary’s preferred gold and silver, mathematics is eternal, built into the very nature of the universe. That’s hardly a soft foundation. Those who don’t understand mathematics may jump to the conclusion that Bitcoin is “unbacked,” but that position is simply ignorant.

Likewise, to call Bitcoin a Fed wannabe is opposite to the truth. Bitcoin is the Anti-Fed.

The individual who sells the Ponzi scheme makes money by siphoning off a large share of the money coming in… The money was siphoned off from the beginning. Somebody owned a good percentage of the original digits. Then, by telling his story, this individual created demand for all of the digits.

And Gary knows this how? (Suspicion is not a proof.) If fact, he can’t know it, and that’s one of the beauties of the currency – there are no names attached.

And how was the money “siphoned off”? Someone, we don’t know who, started mining bitcoins, a fairly difficult process. In other words, they worked to get it, just like people work to get gold out of the ground. Gold miners and early Bitcoin miners – in identical fashion – made big initial finds. Shall we despise and accuse them for it?

Lastly, Satoshi did NOT “tell his story” or “create demand.” Satoshi disappeared. Gary can guess that Satoshi is working under some other name now, but he has no way of knowing that.

The coins will never be the money of the future. This is my main argument.

“I know what will happen in the future” is very poor logic and is very far from compelling.

The Austrian Theory of Money’s Origins

Gary begins by quoting old definitions of money. There is nothing particularly wrong with those definitions, but are they supposed to negate progress for all time? To freeze the world in place? Should they make any new adaptation evil? I hardly think that was their intent.

Here is the central fact of money. Money is the product of the market process. It arises out of an unplanned, decentralized process. This takes time. It takes a lot of time. It spreads slowly, as new people discover it as a tool of production, because it increases the size of the market for all goods and services.

Bitcoin is nothing but the operation of market forces – there is zero coercion involved.

Bitcoin is utterly decentralized – there is no center at all.

Bitcoin is utterly unplanned – it involves a million people, all doing their own thing.

As for speed, the Bitcoin idea was created in the 1990s and has been implemented for almost five years. How slow is slow enough?

No one says, “I think I’ll invent a new form of money.”

Yes, they do! That’s precisely what the first person to use gold did!

Bitcoins Are Not Money

Admittedly, those who got in early on this Ponzi scheme are doing very well. They will probably continue to do well for a time.

Honestly, this reads like an appeal to envy.

As more people hear about this investment, which is justified in terms of its future potential as money, more people will buy it… [like] late investors in Charles Ponzi’s scheme thought they were buying into the arbitrage potential of foreign postage stamps.

I’m sure some people will think of Bitcoin as an investment (which it is not) or that it is an arbitrage vehicle (which it is not) and will do stupid things. Some people always do stupid things. So what?

I and many others have been saying that Bitcoin is a crypto-currency, not an investment. We’ve also warned incessantly that it is new and has enemies. In a How to Use Bitcoin report we issued just last week, we said “This is not a place for the timid,” and, “There are no guarantees.”

Bitcoins are not an alternative currency. They are something you buy in the midst of a mania, and you will sell at some point in order to get back your money.

Here we see something sad and ironic: a man who hates the Fed, trying to ruin the one tool that can actually slay the Fed.

Bitcoin is not important because its price is rising – it’s important because it takes the control of money away from the cartel.

Concern with the dollar equivalent is a fetish, a distraction. The purpose of Bitcoin – the intent of Satoshi – is not to play price games, but to dis-empower the fiat cartel.

Just Say No

In order for Bitcoins [sic] to become an alternative currency, there will have to be millions of users of the currency.

Umm… there are, or at least soon will be. Everything new starts from zero.

They will have to develop in a market on their merit as money.

Perhaps Gary is unaware, but tens of thousands of people are using Bitcoin precisely because it is better money. Consider sending money to your cousin in Manila via a bank wire or Western Union; then compare that to sending Bitcoin.

What Goes Up, Comes Down

… the market will unravel. It will unravel for the same reason that all Ponzi schemes have unraveled: not enough new buyers. When the new buyers do not show up in great numbers, the holders will start to dump them.

There have been several “crashes” already, and the majority of Bitcoin holders sat firm – because they actually USE the currency and want to continue using it.

Furthermore, “buyers” is mostly a misnomer, applying only to the most ignorant Bitcoin holders.

This mania is going to be the stuff of best-selling books. This is going to be this stuff of Ph.D. dissertations in economics and psychology. This is going to be the equivalent of Mackay’s book, Extraordinary Popular Delusions and the Madness of Crowds.

Translation: “People will make fun of you!”

Conclusion

Anytime that anybody tries to sell you an investment, you have to look at it on this basis: “What are the future benefits that this investment will give final consumers?”

Again, Bitcoin is NOT an investment. And the benefit it gives is obvious: it’s better currency.

There is no economic justification of buying Bitcoins [sic] as an alternative currency.

A million of us have learned differently. All you have to do is try: Send a hundred dollars by Western Union, then send them by Bitcoin. Compare.

it was impossible as an economic concept from the beginning. The Austrian theory of money shows why.

I know Austrians who disagree.

I do not invest in capital that has no economic justification other than the greater fool theory.

So, Bitcoin users are “fools”? Hardly a charitable position to take.

My Conclusion

It’s a tragic thing: Precious metals people have been complaining about the Fed and the fiat currency cartel for decades. Then comes a tool that empowers them to both ruin the cartel and to free their precious metals… and they do their very best to destroy it.

I find the arguments in Gary’s piece to be misleading and wholly unconvincing, and I hope my reasoning is fairly clear.

But, all that said, take a look at both and make up your own mind.

Paul Rosenberg

[Editor’s Note: Paul Rosenberg is the outside-the-Matrix author of FreemansPerspective.com, a site dedicated to economic freedom, personal independence and privacy. He is also the author of The Great Calendar, a report that breaks down our complex world into an easy-to-understand model. Click here to get your free copy.]

EASY MONEY CAUSES HARD TIMES

The Mythical Merits of Paper Money

 

by Ron Paul.

One economic myth is that paper money is wealth. The proponents of big government oppose honest money for a very specific reason. Inflation, the creation of new money, is used to finance government programs not generally endorsed by the producing members of society. It is a deceptive tool whereby a “tax” is levied without the people as a whole being aware of it. Since the recipients of the newly created money, as well as the politicians, whose only concern is the next election, benefit from this practice, it’s in their interest to perpetuate it.

For this reason, misconceptions are promulgated about the “merits” of paper money and the “demerits” of gold. Some of the myths are promoted deliberately, but many times they are a result of convenient rationalizations and ignorance.

Paper money managers and proponents of government intervention believe that money itself — especially if created out of thin air — is wealth. A close corollary of this myth — which they also believe — is that money supply growth is required for economic growth.

Paper money is not wealth. Wealth comes from production. There’s no other way to create it. Capital comes from production in excess of consumption. This excess is either reinvested, saved, or loaned to others to be used to further produce and invest. Duplicating paper money units creates no wealth whatsoever, it distorts the economy, and it steals wealth from savers. It acts as capital in the early stages of inflation only because it staels real wealth from those who hold dollars or have loaned them to someone.

Instead of economic growth being dependent on money growth as the paper money advocates claim, great economic harm comes from central banks creating new money out of thin air. This leads to the sort of economic stagnation and economic decline that we are experiencing today. Inflation — increasing the supply of paper money — is the cause of malinvestment and the business cycle, and literally destroys the capital needed for economic growth and stability. The formation of capital through savings is discouraged or eliminated by a paper money system. Instead of paper money producing economic growth, it accomplished the opposite. If money growth were necessary for economic growth, the 1970’s would have been a great decade. During this period of time the Federal Reserve nearly tripled the total money supply but the economy grew only 37 percent.

Although the supply under a gold standard would in all probability increase at the rate of two to three percent per year, this growth is not a requirement for gold to function as a sound currency. This natural or market increase in the money supply easily accommodates population growth and economic growth as long as prices are freely adjusting.

If population or economic growth presents a need for “more” purchasing media, prices merely adjust downward if the money supply is not growing. In the latter part of the nineteenth century this occurred. Wholesale prices dropped 47 percent from 1879 to 1900 and economic growth averaged nearly four percent per year. Obviously, although prices were decreasing, there was no depression. While an increase in the supply of money is never needed to produce economic growth, under a gold standard there might be honest money growth (i.e. not money created out of thin air by the politicians and bankers for the benefit of special interests) and this would serve to smooth out price adjustments.

The myth that paper money is wealth has another corollary: the myth that there’s “not enough gold” for reestablishing a gold standard. But this is merely a device used by paper money advocates to confuse the uninformed, and should carry no weight in the debate of gold versus paper. Hans Sennholz explains this clearly in his essay “No Shortage of Gold”:

On the other hand, if the supply of goods increases while that of money remains unchanged, a tendency toward enhancement of the purchasing power of money results. This fact is probably the most popular reason advanced today for policies of monetary expansion. “Our expanding national economy,” economic and monetary authorities proclaim, “requires an ever-growing supply of money and credit in order to assure economic stability.”

No one can seriously maintain that present expansionary policies have brought about economic stability. During the last forty years of almost continuous monetary expansion, whatever else it may have achieved, did not facilitate economic stability. Rather it gave our age it’s economic characteristic — unprecedented instability.

Ludwig von Mises, in his book A Critique of Interventionism (1929), clearly denounces the belief that government can create wealth by printing paper money. He explains:

By its very nature, a government decree that “it be” cannot create anything that has not been created before. Only the naive inflationists could believe that government can create anything; its orders cannot even evict anything from the world of reality, but they can evict from the world of the permissible. Government cannot make man richer, but it can make man poorer.

 

This is a powerful political and economic message, and yet it seems that so few understand it. Unfortunately, the poorer the people get, the moe economic problems we have, the more inflation we endure, and the higher the interest rates go, since more people demand government intervention. This trend has to be changed if we expect to preserve our freedoms and our standard of living.

Fact: Paper money is not wealth, it steals wealth.

A second myth is that “easy” money causes low interest rates. This myth is based on the erroneous assumption, itself a myth about government, that government officials — the Federal Reserve Board, the Congress, or the Treasury — can actually set interest rates. In reality the market determined interest rates. Governments can dictate rates, but if these rates are contrary to the market, government will not achieve the intended goal. For instance, if a usury law establishes a ten percent interest rate and the market rate if fifteen percent, no funds will be available except those allocated through government force and the creation of new money.

One reason this myth is so persistent is that in the early stages of inflation, an “easy” monetary policy temporarily lowers interest rates below market levels. Before the people are aware of the depreciation of their currency and do not yet anticipate higher prices, the law of supply and demand serves to lower “cost” of money and interest rates fall. But when the people become aware of the depreciation of the dollar’s value and anticipate future loss of purchasing power, this prompts higher interest rates due to inflationary expectations.

This expectation of future inflation and higher risk is determined subjectively by all borrowers and lenders and not by an objective calculation of money supply increases. These increases in the money supply certainly are important and contribute to the setting of the interest rates, but they are not the entire story. Interest rates vary from day to day, week to week, and year to year. There is no close correlation between money supply figures and interest rates.

Crises and panics can occur for political as well as financial reasons; and interest rates can be pushed higher than monetarist theory says they “should be.” In the early stage of inflation, rates may be lower than they “should be,” and in the latter stages frequently are higher than they “should be,” if by “should be” one means commensurate with money supply growth. Nevertheless, wrong ideas die slowly. “Easy” money, that is, inflation of the paper money supply, is still thought of as an absolute method by which the monetary authorities can achieve low interest rates.

This is not to say the Federal Reserve is helpless in manipulating interest rates. If it alters the discount rate and injects new money into the market, the immediate reaction can be that of lowering rates. But a gold-backed dollar, even if only partially backed, is a different sort, and at the time of the ’30s and the ’40s rates were at historic lows.

If the demand for lower interest rates is great enough and not accompanied by a call for sound currency — gold — the politicians will be “forced” to accommodate the demand by means of massive inflation of the money supply with strict credit controls and credit allocation. This would solve nothing, would serve to worsen economic conditions, and real interest rates in the markets would eventually soar. There is no substitute for sound money, and the sooner we realize this the better.

“Easy” money causes hard times.

Regards,

Ron Paul
for The Daily Reckoning

Excerpted with permission from Dr. Paul’s FREE Foundation work

 

Black Seeds Cure Everything But Death

I post this stuff because;

—- I am fairly well read regarding nutrition stuff, yet I’ve never heard of Black Seeds, so probably many of you haven’t either

—– it seems to address several ailments facing folks here on TBP … maybe it will help

—– it’s real food, not a pill

—– over the years I have compiled a list of Superfoods … up to about 30 right now … of which I make a serious effort to include at least once weekly …. looks like I’ll be adding Black Seeds to the list … and you might want to do the same also.

WHAT IS IT?

 

Black Seed is an herb that has been used for over 2000 years for many diseases. It is also known as Nigella Sativa, black cumin, and kalonji. (Do not confuse black caraway with black seed, as they come from two different plants.)

It was Allah’s beloved Prophet (PBUH) who said – “There is healing in Black Seed for all diseases except death.” Black seed oil was found in the tomb of King Tut proving its importance …. of all the gold and diamonds Herr Tut possessed, black seed oil was part of what he chose to take to the next life.

BLACK SEEDS NUTRITION

Black seeds contain over 100 chemical compounds and some of the ingredients are yet to be discovered and identified. The main active ingredient in black seeds is crystalline nigellone. The seeds also contain beta sitosterol, thymoquinone, myristic acid, palmitic acid, stearic acid, palmitoleic acid, oleic acid, linoleic acid, arachidonic acid, proteins and vitamins B1, B2 and B3. They also contain calcium, folic acid, iron, copper, zinc and phosphorous. It is nature’s most complete multivitamin.

BLACK SEEDS AND SPECIFIC HEALTH CONDITIONS

Black seed has been researched for very specific health conditions. Some of the most compelling applications include:

Type 2 Diabetes: Two grams of black seed a day resulted in reduced fasting glucose, decreased insulin resistance, increased beta-cell function, and reduced glycosylated hemoglobin (HbA1c) in human subjects.

Helicobacter Pylori Infection: Black seeds possess clinically useful anti-H. pylori activity, comparable to triple eradication therapy.

Epilepsy: Black seeds were traditionally known to have anticonvulsive properties. A 2007 study with epileptic children, whose condition was refractory to conventional drug treatment, found that a water extract significantly reduced seizure activity.

High Blood pressure: The daily use of 100 and 200 mg of black seed extract, twice daily, for 2 months, was found to have a blood pressure-lowering effect in patients with mild hypertension.

Asthma: Thymoquinone, one of the main active constituents within Nigella sativa (black cumin), is superior to the drug fluticasone in an animal model of asthma.  Another study, this time in human subjects, found that boiled water extracts of black seed have relatively potent antiasthmatic effect on asthmatic airways.

 Acute tonsillopharyngitis: characterized by tonsil or pharyngeal inflammation (i.e. sore throat), mostly viral in origin, black seed capsules (in combination with Phyllanthus niruri) have been found to significantly alleviate throat pain, and reduce the need for pain-killers, in human subjects.

Chemical Weapons Injury: A randomized, placebo-controlled human study of chemical weapons injured patients found that boiled water extracts of black seed reduced respiratory symptoms, chest wheezing, and pulmonary function test values, as well as reduced the need for drug treatment.

Colon Cancer: Cell studies have found that black seed extract compares favorably to the chemoagent 5-fluoruracil in the suppression of colon cancer growth, but with a far higher safety profile.[x] Animal research has found that black seed oil has significant inhibitory effects against colon cancer in rats, without observable side effects.

MRSA: Black seed has anti-bacterial activity against clinical isolates of methicillin resistant Staphylococcus aureus.

Opiate Addiction/Withdrawal: A study on 35 opiate addicts found black seed as an effective therapy in long-term treatment of opioid dependence.

Pancreatic Cancer: One of the most exciting discoverings concerning black seed oil is the positive results in the treatment of pancreatic cancer, one of the hardest cancers to cure.

Alzheimer: A new study published in the Journal of Ethnopharmacology reveals that the seeds of Nigella sativa may provide an ideal nutritional supplement for preventing or slowing the progression of Alzheimer disease.

IS THERE ANY DOCUMENTATION TO BACK THESE CLAIMS?

Yes. For starters, you can go to the link below to find 34 scientific studies.

————–  http://www.greenmedinfo.com/substance/nigella-sativa-aka-black-seed

If you’re REALLY anal, you can find 536 more studies here;

————–   http://www.ncbi.nlm.nih.gov/pubmed?term=nigella%20sativa

THE BEAUTY OF SEEDS

Seeds contain within them the very hope for continuance of the entire species that bore it. This super-saturated state of the seed, where life condenses itself down into an intensely miniaturized holographic fragment of itself, promising the formation of future worlds within itself, is the very emblem of life’s immense and immortal power. If we understand the true nature of the seed, how much life (past, present and future) is contained within it, it will not seem so far-fetched that it is capable of conquering antibiotic resistant bacteria, healing the body from chemical weapons poisoning, or stimulate the regeneration of dying insulin-producing beta cells in the diabetic, to name but only a fraction of black seed’s experimentally-confirmed powers. Moving the mountain of inertia and falsity associated with the conventional concept of disease, is a task well-suited for seeds and not chemicals. The greatest difference, of course, between a seed and a patented synthetic chemical (i.e. pharmaceutical drug), is that Nature (God) made the former, and men with profit-motives and a deranged understanding of the nature of the body made the latter.

For example, a new study shows that sesame seed paste (aka, tahini) is capable of reducing blood markers of cardiovascular disease risk in Type 2 diabetics by 39% within only six weeks.

——– http://www.greenmedinfo.com/blog/why-eating-sesame-seed-paste-tahini-could-save-your-life

HEATING BLACK SEEDS

To heat the seeds, simply put them in a shallow pan and place them in the oven at 325 degrees. Stir them frequently and watch to make sure they do not burn. Or, to simplify the process you can place them in a skillet and heat on very low heat, stirring regularly. You may hear a popping noise which is completely normal. Keep tasting the seeds and when the tartness is gone and the seeds are very bland, remove them from the stove to cool. Wait until they are completely cold before grinding.

BLACK SEEDS AND HONEY

Traditionally ground black seeds are placed in honey. The proper way to do this is to fill the jar 1/4 way with honey and add 1/4 jar of ground black seeds. Keep adding equal amounts of honey and black seeds until the jar is almost filled. The suggested dosage amount is 1 teaspoon daily. Some will add in nuts and ground ginger for more flavor and energy.

BLACK SEED DOSAGE — OIL

Black Seed oil is about three times as concentrated as ground black seeds (1 teaspoon oil = 3 teaspoons ground seeds). If using oil, it is extremely important to purchase “cold pressed” seed oil, as other methods using heat and/or chemicals destroys the health benefits. Depending on the usage or the disease that you have, most dosage requirements are about the same. More is not better. Over 25 grams can be toxic. For general well being take one teaspoon of the black seed oil mixed with one teaspoon of raw honey one half hour before breakfast. Take this once a day.

WHERE TO PURCHASE

Not a recommendation as I haven’t purchased any. But, the site below has been selling black seeds for about 30 years. Reviewers are positive.

————– http://www.amazingherbs.com

 

 

QUOTES OF THE DAY

“A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules.”

Jorge Mario Bergoglio, Francis I

“As it was in the days of Noah, so it will be at the coming of the Son of Man. In the days before the flood, they were eating and drinking, marrying and being given in marriage, up to the day that Noah entered the ark. They did not know until the flood came and swept them all away.”

Matt 24:37-39