“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.” – Charles Mackay – Extraordinary Popular Delusions and the Madness of Crowds
The American public thinks they are rugged individualists, who come to conclusions based upon sound reason and a rational thought process. The truth is that the vast majority of Americans act like a herd of cattle or a horde of lemmings. Throughout history there have been many instances of mass delusion. They include the South Sea Company bubble, Mississippi Company bubble, Dutch Tulip bubble, and Salem witch trials. It appears that mass delusion has replaced baseball as the national past-time in America. In the space of the last 15 years the American public have fallen for the three whopper delusions:
- Buy stocks for the long run
- Homes are always a great investment
- Globalization will benefit all Americans
Bill Bonner and Lila Rajiva ponder why people have always acted in a herd like manner in their outstanding book Mobs, Messiahs and Markets:
“Of course, we doubt if many public prescriptions are really intended to solve problems. People certainly believe they are when they propose them. But, like so much of what goes on in a public spectacle, its favorite slogans, too, are delusional – more in the nature of placebos than propositions. People repeat them like Hail Marys because it makes them feel better. Most of our beliefs about the economy – and everything else – are of this nature. They are forms of self medication, superstitious lip service we pay to the powers of the dark, like touching wood….or throwing salt over your shoulder. “Stocks for the long run,” “Globalization is good.” We repeat slogans to ourselves, because everyone else does. It is not so much bad luck we want to avoid as being on our own. Why it is that losing your life savings should be less painful if you have lost it in the company of one million other losers, we don’t know. But mankind is first of all a herd animal and fears nothing more than not being part of the herd.”
Stocks for the Long Run
The book Stocks for the Long Run was written by Jeremy Siegel in the mid-1990’s. The premise is that if you just buy and hold stocks over a 20 to 30 year period, you will always make money. This was exactly what the Wall Street witch doctors ordered. They pounded this message into the brains of every American incessantly in their advertising campaigns, literature and propaganda. It became an unquestioned truth. Just one problem. It isn’t the truth. Valuations matter. The Dow Jones was at the same level in 1982 as it was in 1966. On an inflation adjusted basis, the Dow did not get back to the 1966 level until 1990. That is 24 years of no return in the stock market. The American public ignored the true facts and piled into equities during the late 1990s. The result was one of the greatest examples of mass delusion in history. The internet bubble drove the NASDAQ market to a peak of 5,048 in March 2000. Today it sits at 2,180. Ten years after the bubble burst, the NASDAQ is still down 57% from its peak.
Delusional Americans all over the country believed in the new internet paradigm. Fools thought “bricks and mortar” retailers were dead. Morons quit their jobs so they could get rich day trading. Wall Street hucksters took advantage of this hysteria by attaching .COM to every ridiculous IPO they shilled to the American public. Wall Street knew these companies were pieces of crap, but they churned out the IPOs as quickly as possible while the getting was good. The Wall Street oligarchs made billions and the delusional American public got screwed. You would think that average Americans would have learned their lesson after this experience. They did not. They continued to buy into the Wall Street lies about stocks being a sure path to riches. The fact is that the S&P 500 is currently at the same level it was in March 1998. On an inflation adjusted basis, it is 25% below the level of 1998. You don’t hear this information on CNBC because the oligarchs that control the media need the delusion to continue in order to harvest more riches from the ignorant masses.
Home Sweet Home
“The continuing shortages of housing inventory are driving the price gains. There is no evidence of bubbles popping.” – David Lereah – Chief Economist for National Association of Realtors – 2005
“We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.” – Ben Bernanke – 2005
“House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.” – Ben Bernanke – 2005
Why was it that two supposedly brilliant, highly trained economists, with countless degrees and high paying positions could be so very wrong? Were they just mistaken or were they purposefully encouraging a national delusion? With the bursting of the internet bubble in 2000 – 2002, Americans immediately proceeded to the next bubble. Alan Greenspan was an almost God like figure in the early 2000s. He had “saved” the economy countless times during his 15 year reign of terror at the Federal Reserve. When he spoke, the American people listened. After the internet bubble and 9/11, he proceeded to reduce interest rates to 1% for an extended period of time. He then gave the all clear sign to Americans to take out adjustable rate mortgages. Lastly, Mr. Free Markets decided that banks and mortgage brokers could police themselves. The result was the greatest housing bubble in US history and a near collapse of the worldwide financial system.
Sane economists like Robert Shiller saw it for what it was. He calmly pointed out that home prices had pretty much tracked inflation for over 100 years. A 100% increase in home prices over the course of 3 years was irrationally exuberant. He was scorned and ridiculed by the delusion propagators at the NAR, the cheerleaders on CNBC, the Wall Street money changers, the Federal Reserve stuffed suits, and the corrupt politicians in Washington DC. The usual drivel about positive demographics, low interest rates, strong income growth, and limited land to develop were spewed out by the corporate media complex. The beneficiaries of this mass delusion were the Wall Street banks that created mortgage products and derivatives faster than Obama spreads our wealth around.
Mass delusion is always encouraged by those who benefit most from the mass delusion. David Lereah has admitted that he lied about the housing bubble because he was employed by realtors. Realtors made millions in commissions. Appraisers made millions in fees by inflating appraisals. Mortgage brokers made millions by encouraging people to lie on mortgage applications. Wall Street whores made billions by creating toxic packages of mortgages and selling them to Irish nuns, old ladies and clueless municipal administrators. The ratings agencies made hundreds of millions in fees for slapping AAA ratings on toxic derivatives. Politicians got rich from political “contributions” from Fannie Mae, Freddie Mac, Wall Street, and the NAR. Any reasonable human being could look at the chart above and see that this would end badly, but Americans wanted to be deluded. They choose to believe. The housing market has now been falling for five years, with another five years to go. Ben Bernanke has reduced interest rates to zero. I wonder how that will work out.
Who Benefited from Globalization?
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” – Mark Twain
From the time that Bill Clinton signed the NAFTA agreement in 1994, globalization has been touted by those in power as beneficial to all Americans. How could free markets and free trade be a bad thing? Corporate America, Wall Street, and the mainstream corporate media have blared the propaganda of globalization benefits from their loudspeakers. In theory, globalization appears to be a positive concept. It describes a process by which regional economies, societies, and cultures have become integrated through a global network of communication, transportation, and trade. The truth is that globalization is not inherently good or inherently bad. The idea is that each country has its own strengths and weaknesses. Each country will take advantage of their strengths and rely on other countries to help mitigate their weaknesses. This will result in increased trade, a larger world market, and economic progress for all. One small problem. Trade is not really free. Every country on earth protects various industries. Every country on earth manipulates their currency in order to get an edge. Every country on earth invokes tariffs to protect their national interests.
Bill Bonner and Lila Rajiva address the difficulties of globalization and “free trade” in Mobs, Messiahs and Markets:
“Unfair trade is yet another of the dodgy slogans festooning the spectacle of globalization like tinsel slithering around a pole dancer. How can different regulations and practices in different countries constitute unfairness? Isn’t the essence of trade that different countries have different things to offer – whether cheap labor, or better technology, or more bountiful natural resources, or more welcoming business environments? If all countries had exactly the same things to offer each other, there would be no reason to trade at all. But what “fair” trade advocates are really advocating, of course, is unfair trade! They want to make sure their foreign competitors divest themselves of the very advantages that they bring to trading.”
“We notice, for instance, that when Americans in Detroit lose jobs to other Americans in California, they might grumble a bit. But, by and large, they accept it as part of the nature of things. They move, or retrain, or change jobs. But when they lose their jobs to Japanese in Osaka or Indians in Bangalore, then a cry goes up. Unfair trade, howl the trade unions; race to the bottom, scold the social activists; yellow – or brown – peril, shriek the xenophobes and racists.”
It seems the American middle class was sold a false bill of goods. They bought the Big Lie that globalization would benefit them. They bought into the delusion that even though their high paying manufacturing jobs sailed away to China and India, they could maintain their lifestyle through brain work, easy credit, cheap goods made in China by the people who took their jobs, and the ever increasing value of their homes. Noam Chomsky notes the fallacy of this delusion:
“The dominant propaganda systems have appropriated the term “globalization” to refer to the specific version of international economic integration that they favor, which privileges the rights of investors and lenders, those of people being incidental.”
Again, one must seek out who benefits from the delusion of globalization. The crony capitalists, Wall Street oligarchs, and corporate fascists who control the puppet strings in this country have benefited greatly from the Big Lie. Over 5 million manufacturing jobs have been off-shored since 2000. These good paying jobs are never coming back. Millions of service sector jobs continue to be shipped overseas. The global conglomerates like GE, HP, Oracle, IBM, and Boeing continue to rake in billions of profits, distributing millions to its high paid executives, while gutting middle class America. The ruling oligarchs convinced Americans to take advantage of cheap goods and easy credit, to buy electronics, cars, appliances, new kitchens, and take the vacations of their dreams. This Big Lie has left the American consumer with $2.5 trillion of non-mortgage debt and the lowest level of home equity in history. Retailers like Wal-Mart, Target, Home Depot, and Best Buy reaped billions in profits as Americans whipped out one of their 10 credit cards to buy HDTV’s, economy bags of tube socks, iPads, iPods, stainless steel refrigerators, and Dell computers. Small town America’s mom and pop economy was gutted by Big Box retailers selling the globalization delusion. The biggest beneficiaries of the globalization delusion were the Wall Street banks. They control 80% of credit card market and have reaped billions in interest at rates exceeding 20%, while sucking $20 billion per year in late fees from the clueless public. Wall Street bankers have rewarded themselves for their brilliance in destroying the middle class by reaping multi-million dollar bonus packages.
Vincible Ignorance
“Most ignorance is vincible ignorance. We don’t know because we don’t want to know.” – Aldous Huxley
Based on all available evidence, it seems the American public wants to be misled. They have chosen ignorance over knowledge and understanding. They want to believe their corrupt leaders. They want to believe that things always work out in the long run. They want to believe that the economy is about to get better. They don’t want to think about unsustainable debt, unfunded liabilities, saving for retirement, or Simon Cowell leaving American Idol. Americans desperately want to be deluded into another bubble, but there are no evident bubbles left to blow. The existing American delusion is that the current fiscal path will not lead to the utter destruction of our once great Republic.
America resembles a 40 year old aging baseball icon with two bad knees, a pot belly, receding hairline and delusions that he is still the ball player he was at 24. He doesn’t realize that his skills are shot, as he flails at curveballs in the dirt thrown by 21 year old kids. The rest of the league knows he is washed up, but he refuses to accept reality. America isn’t even running on fumes at this point. It is running on delusions. Politicians think they have saved the country from a Depression by adding $3 trillion to the National Debt and allowing Wall Street banks to pretend they are solvent. Americans have been deluded by the ruling oligarchs that a $700 billion bank bailout, an $800 billion pork filled stimulus plan, the Federal Reserve buying $1.2 trillion of toxic mortgages, and the Treasury forcing taxpayers to pick up a $400 billion tab for Fannie Mae and Freddie Mac’s bad loans has actually solved a problem created by too much debt.
The American herd has gone mad. A few people have regained their senses, but the vast majority still exhibits the behavior of sheep being led to slaughter. The ruling oligarchs have utter contempt for the average American, but they fear the masses. In order to retain their power and wealth, they gladly hand out two years of unemployment payments, food stamps, and welfare payments to keep the masses sedated. The working middle class foots the bill. Corruption abounds and is sustained by the passage of more laws and regulations. The sociopathic powers that control the levers of power in this country need to be brought to justice if this country has any chance at survival. The den of vipers and thieves have trampled on the Constitution, speculated with the country’s funds, risked blowing up the financial system, committed fraud on a massive scale, and continue to rape and pillage the American citizens. Vincible ignorance by the American people is no longer a legitimate excuse. The criminals on Wall Street and Washington DC must be routed out and Americans must awaken from their delusional state before it is too late. I weep for the liberty of my country.
And you run and you run to catch up with the sun, but it’s sinking
Racing around to come up behind you again
The sun is the same in a relative way, but you’re older
Shorter of breath and one day closer to death
Pink Floyd – Time
Interesting that you mention Jeremy Siegel because he just wrote an article endorsing further QE and more from the fed.
It seems anyone who works in wall street or has an interest in it wants the govt and fed to bail everyone out. We used to think of these people as free marketers, but they are showing their true nature. They are snake-oil salesmen.
Bloomberg, CNBC, Fox Business all feed off wall street. They need people to buy stocks to survive.
Cramers rant on TV after the crisis was specifically aimed at the fed to lower rates.
The stock market is dead until those hucksters can lure in the next generation of suckers.
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The Fed Is Not Out of “Silver Bullets”
by Jeremy J. Siegel
Friday, August 13, 2010
The Fed’s move on August 10 to “keep the balance sheet of the central bank stable” and offset the run-off of mortgage-backed securities with Treasury purchases was just a baby step. Much stronger measures can and should be taken to combat the economic slowdown.
As readers of this column know, I am a strong supporter of Ben Bernanke, Chairman of the Federal Reserve Board. I think his bold measures to insure the liquidity of the banking and financial system saved us from repeating the misguided policy that led to the Great Depression of the 1930s. This is why I was disappointed in the Fed’s move on August 10 and Bernanke’s testimony July 21 before Congress, one of the Fed’s ritual semi-annual appearances that go back to the 1970s.
During his meetings before Congress, Bernanke responded to a question by Senator Bunning of Kentucky asking whether the Federal Reserve “was out of bullets” in its fight against the faltering economy. Bernanke responded, “I don’t think so.” Later he noted other measures the Fed might use to stimulate the economy, but only said “there is some probability they will be effective.”
Bernanke should not hedge. When you are the head of the world’s most powerful central bank, expressing doubt about the Fed’s effectiveness is a mistake. It is mandatory that the policymakers and central bankers display confidence in their policy tools. And the historical evidence is that Bernanke has every right to believe the Fed can still be very effective.
Quantitative Easing
In last month’s column I recommended that the Fed consider reducing the interest rate it pays on bank reserves to zero and engage in quantitative easing to help the economy emerge from the current soft patch. Quantitative easing, or QE as it is often called, occurs when the central bank expands the quantity of Federal Reserve credit by increasing the reserves in the banking system. QE is employed when the normal policy instrument of the Fed, the Federal Funds rate, is at or near zero.
In fact, Bernanke had already engaged in significant quantitative easing during the financial crisis in 2008 by supplying the banking system with over $1 trillion of reserves in excess of the banks’ statutory requirements. These reserves were far more than are required to bring the Fed Funds rate down to its current 0% to 0.25% level, a range that the Fed adopted in December 2008.
Some argue tha,t since banks already hold more reserves than required, additional reserves would not have any further effect on lending or economic activity. But that conclusion is not warranted. Banks hold large excess reserves because they wish to show regulators and investors a high level of liquidity.
This does not mean that banks would hold unlimited excess reserves. In fact, banks are not happy earning near zero interest on these reserves, nor are investors satisfied with similar rates on their money market funds. Placing more zero-interest reserves into the banking system will tempt more banks to make loans where the profit margin is much higher.
Although the Fed’s main policy tool, the Fed Funds rate, works on short-term interest rates, QE has the potential to lower longer-term rates, especially if the asset purchases are concentrated in long-dated securities.
In a recently published article, Taeyoung Doh, a research economist at the Federal Reserve Bank of Kansas City, gives evidence that asset purchases may be a much better instrument in lowering long-term rates than giving guidance in the FOMC directives, such as the “extended period” language which Wall Street watches so attentively in the statements following Fed meetings.
Japan’s Experiment
Those who object to quantitative easing point to Japan’s alleged failed experiment with QE from March 2001 to March 2006. During that period the Bank of Japan increased reserves markedly, yet that did little to improve Japan’s economic prospects.
But a close look at the Japanese data does not support this pessimism. Between 2001 and 2006, deflationary forces were arrested in Japan, the economy-wide price level remained constant, and annual GDP growth did increase by about 0.5% from the average of the previous decade. I admit QE did not lead to robust growth, but Japan’s slow growth over the last two decades is more related to structural problems in the Japanese economy and the rapid aging of the population, not to a bubble that burst more than 20 years ago. Furthermore, the effectiveness of the Bank of Japan’s QE policy was reduced by its implementation that began well over a decade after the markets collapsed in the 1990s. This lag allowed deflationary pressures to sink much deeper into their economy than now exists in the U.S.
One of the reasons the Bank of Japan finally abandoned QE was that the Japanese public was very uneasy about unlimited expansion of the money supply. Most Japanese still remember the post World War II inflation that devalued the purchasing power of Japanese yen by more than 100 to 1, and they feared that QE could bring about another inflationary episode.
The U.S. economy is far better suited to QE than Japan’s. Serious deflationary forces have yet to take hold, while inflationary expectations have been held well in check. Adding reserves will induce banks and investors to buy longer-dated and higher-yielding assets, reduce long-term rates, and spur more lending by the banks.
Summary
The Fed is far from out of silver bullets. Fed Chief Bernanke must be confident in the potency of all the Fed’s policy tools, not just the Fed Funds rate. Quantitative easing is a viable policy and, when combined with a reduction in the interest rates on reserves and the continued support of the asset-based securities markets, the Fed can deliver a potent combination of policies to stimulate the economy.
You state that there are no bubbles left to blow. I disagree. The bubble forming now is the government bubble. It is the one from which there is no recovery.
Unlike a biological parasite, which is intelligent enough to know when to stop sucking from its host, the elite in this country will keep bleeding the country dry until there is nothing left to suckle. They’re too stupid and too full of themselves to ponder what awaits us all if we don’t change course.
Having a mansion and a fat bank account won’t mean much if the pissed off masses that have been impoverished by the largest wealth transfer in history end up breaking down the doors and dragging their well-heeled hides into the streets.
Curing stagflation gave America twenty more years. Ironically, the good times started to erode when Reagan’s other goal was accomplished and the Soviet Union dissolved in 1990. “The end of history” resulted in India and China opening their labor markets to American capitalists, who began producing offshore with foreign labor the products that they sold to Americans. The labor costs savings pushed up corporate profits, shareholders’ returns, and managerial bonuses. But it deprived Americans of middle class incomes and wrecked the balance of trade. The US income distribution and the trade deficit worsened. -=paul craig roberts=-
Ignorance is typically a chosen response. Sometimes it’s consequences can be dire. The root word of ignorance is ignore.
I still remember listening to a financial radio talk show in the Washington DC metropolitan area in the late nineties. The host was a charismatic young stockbroker in his mid thirties. I knew he was full of shit, but I also knew that the vast majority of listeners bought his story hook, line and sinker. His major theme that he harped on in every program was that this country was benefiting from an astounding three part dynamic–(1) the coming of age of the baby boomers (2) the restructuring of corporate America (you remember the mantra–sell off the assets and shrink the equity base to drive up earnings) and (3) the collapse of the iron curtain. —According to this guy, this three part equation virtually assured prosperity for those with the intelligence and discipline to buy good companies and hold for the long term.—–What a fucking crock of discredited delusion. I hope that fucker is pumping gas at a gas station, changing oil, and sucking the farts out of seatcovers.
I have to disagree with “Every country on earth protects various industries” and levies tariffs. If America does this will someone please let me know on WHAT exactly?
As for who benefits:
http://www.moneyandmarkets.com/massive-wealth-shift-in-full-swing-39836
KaD
Here is a partial list:
http://internationalecon.com/Trade/Tch10/T10-1A04.php
Excellent article … as usual!!!
My only quibble is the implication that being a “sheeple” or having a lemming-like herd mentality is an American phenomena. It is not. It is the human condition.
Looking at the world in a binary manner is often simplistic. However, I feel confident in saying that the very route of human existence shows humanity has two basic relationships; leader and follower.
In my informal study of human nature for the past 30 years, I submit the following axioms;
Axiom 1: Human beings are easily led.
Axiom 2: Human beings are easily MIS-led.
Axiom 3: The majority of humans believe they are leaders.
Axiom 4: Contrary to Axiom 3, the majority of humans are followers.
Axiom 5: This leads to a Cognitive Dissonance for followers, — that most uncomfortable feeling in the gut when one holds contradictory ideas simultaneously.
Axiom 6: A person aware of Axiom 5 can use that disconnect to his or her great advantage.
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Axiom 1 & 2 brief discussion.
We should not be surprised by this. Just look at how easily human beings can be made to respond to commercials, and how they believe what they see on TV or hear on the radio. One of the mortgage companies I worked for would run a radio ad during NY Yankee games during the 3rd and 7th innings. They were total bullshit commercials typical of a mortgage company … lowest rates, everybody gets approved, fast and easy approval, etc. ad absurdium. Let me tell you, the phones rang off the hook!! Easily 200+ calls within 15 minutes.
Man’s will is so darn easily manipulated and controlled; by commercials and other advertising lies delivered by Madison Avenue, by the media, by the “news”, by “education”, by peer pressure, by religious leaders, by pressure from family members, by pressure from friends, by evil lawmakers terrorizing the public in the name of “safety” and “security”, amongst others.
For example, just about everybody trusts the judgment of an “expert”. Why? Because we are generally afraid to trust our own judgment. That’s why people trust doctors for the treatment of their diseases. Or, ministers for their salvation. Or, newspapers and television for their “News”. Or, their President for their political and economic stability and safety from threats – even fake ones — from other nations.
From an advertising company web site;
“If a person is spoken to by a T.V. advertiser as if he were a twelve year old, then, due to suggestibility, he will, with a certain probability, respond or react to that suggestion with the uncritical response of a twelve year old and will reach into his economic reservoir (wallet) and deliver its energy (money) to buy that product on impulse when he passes it in the store.”
Bottom line: They got our number …. and most of us are screwed because, again, people are easily controlled. Why is this? Even though most people would not like to admit it, repeated sophisticated studies have revealed that there is a desire in each human being to be taken care of from the cradle to the grave.
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Axiom 3 & 4 brief discussion.
Everybody wants to be a leader. That’s why there are literally thousands of books and hundreds of thousands of books on “leadership”. I have yet to find even one seriously written book titled, “I want to be a follower”, or something similar. If you find one, please forward the link.
Does your company’s Performance Report have a category for “Follower Capabilities”? Of course, not. But, I’ll betchya an el Grande Starbucks Latte that it has categories for leadership. No one advances up the food chain because they are a good follower.
Calling someone a follower is actually an insult. Isn’t it?
But, as Jim’s article clearly points out, and as you observe life in action, what you actually see is lots and lots of followers. Even Jesus said, “Follow me.”
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Axiom 5 & 6 brief discussion.
I’m looking at it from a sales perspective. We are ALL salespeople. I learned that from Robert Ringer’s book, Looking Out For Number 1, a very long time ago. We are all salespeople whether we are selling a product for a living, or whether you are a mom trying to convince little Joey to do his homework.
So, there are a gazillion books out there on the topic of selling, influencing people, knowing how people buy, what motivates them to actually listen to you vs. someone else, and on and on it goes. Much of it is bullshit. Much of it is contradictory. Most of it is not useful.
So, I learned my own sales “technique”, and it is based on the simple axioms above.
It is so simple … just two general “rules” … that I’m almost embarrassed to mention it.
Rule #1. Stop trying to control the outcome. In fact, give up “control” all together.
So many “experts” give so much advice on how to say the right phrases, or mimic the buyers behavior, or use closing “tricks” like that horse-shit Presumptive Close — “So, Mr. Jones, do you want us to deliver your full body condom on Thursday or Friday?”. ALL of it is an attempt to manipulate or control the buyer. It was a great “Eureka!” moment for me when I realized that I don’t really control anything. Whatever I think I control, is just an illusion. People don’t like being controlled. At the end of the day, they are the ones who control the checkbook.
Rule #2. Let the buyer BE a leader. Let THEM make the decision ON THEIR OWN.
Yes, of course, I do what I can to lead them down the path of making a “yes” decision. But, whether I was selling computer software/hardware or mortgages I always told people up front that I was there simply to help them facilitate a decision — whether “yes” OR “no”. EITHER was OK by me. This alone took pressure off both of us. For me, I didn’t NEED to make a sale. For them, they didn’t HAVE to buy.
I found that by giving up the illusion of power and control that I had, in a sense, more than ever before.
Thank you! I do appreciate knowledge. Doesn’t seem like a very big list though.
Jim,
Great article as usual. Keep up the great work. You have a young following and we all seek the truth and appreciate your wisdom. (I’m 23 years old) It’s sad where are country is heading. We are accustomed to an artificial standard of living that will continue to erode and cause this nation to drop on its knees. I love this country and it hurts for me to continue to witness absolute stupidity and greed among politicians and Wall Street and practically many others. Our code of ethics and principles have been trashed. What happened to integrity and rationality. We are so caught up in the Get Rich Quick mode and Rat Race that we forget what is most important in life. It’s not about how many worthless dollars you have in your account, or how many cars or boats you own, or how big your house is. It is about spending time with the people you love and doing something you enjoy in life. Wealth is great and everyone should strive to achieve greatness but their must be a set of principles and boundaries that one must accumulate wealth and greatness according to. I believe in second chances but I fear our country will have to suffer badly before we wake up and realize that our Founding Fathers were right all along. Sorry for rant but I had to get it off my chest.
By the way, I do believe there is one more giant bubble that will soon pop. It is our debt. US treasuries are in a gigantic bubble being inflated by the one and only FED. I believe shit will hit the fan when the world no longer gives the FED credibility. When that happens we will be flooded with dollars.
Thanks again.
jmarz
You are really throwing off the demographics of the site. I’m only supposed to appeal to crotchety 60 year old men holed up in their bunkers with a computer, their guns, ammo, gold, and pictures of Ayn Rand.
“It’s not about how many worthless dollars you have in your account, …”
Every quarter we get a property tax bill for almost $2,500. Love won’t pay that bill. However, the tax office is very happy with my worthless dollars.
Ah Jim you missed the greatest delusion of humankind in your short list. This is the absolute greatest, biggest, deepest, dumbest, longest, most devastating and destructive delusion ever.
HUMAN BEINGS ACTUALLY BELIEVE THERE IS A GOD, OR GODS, IN THE BIG UNIVERSE WHO HAVE TAKEN AN INTEREST IN ALL ASPECTS OF HUMAN AFFAIRS AND REQUIRE ABSOLUTE OBEDIENCE AND FOLLOWING BY DAILY WORSHIPING
But of course such gods do exist. Because we invented them. Deluded by your own invention! There is a word for this circular delusion and it begins with the letter ‘r’…
Apollo
This could take the thread in a whole different direction. I do believe in God. I can’t possibly believe that this complex world is just a cosmic mistake.
Apollo ………….. hmmmmm …. A-P-P-O-L-O ……… ah-pah-low ………huh!
A God in Greek mythology
I trust you see the irony in your anti-God rant.
For the record, I don’t believe in deities either. We are on our own.
Now troubles are a many, they are as deep as a well, I swear there is no heaven pray there is no hell, but I will never know by living only my dying will tell, yes only my dying will tell,
Blood Sweat and Tears, And When I Die
Just dropped in from Zero Hedge were they posted this article..spot on ..the word is getting out..the big question is What the F**K do we do about it?? the end is still the same
the mass of Americans is due for a major period of hardship.
Interesting and scarry to contemplate. How long can it go on?? Nobody knows. I feel it coming like a freight train way down the tracks, the rumble is growing stronger. This week all the animals where I live began acting in a very strange way; this year has seen a massive volcano threaten the worlds airwaves, a massive oil leak that is far from over, hundreds of thousands of dead fish and more to come, a massive flood in Pakistan with one third of the country underwater and 20 million people affected, large earthquakes in many places, increasing threats of war. I take these things very seriously, I stay in tune with my creator and I feel something large is on the way. Ignore signs at your risk. For me, its time to get ready for whatever is heading down the road, get prepared because something big comes our way. Get your house in order. The powers in place now will not give up their positions easily, without a fight. They are too well imbedded and empowered by elite groups with the mighty force of GREED behind them. But the ageold forces of honesty, fairness, truth, belief, faith will prevail, they always do. If that were not the case, mankind would have self-destructed long ago.
According to a CBS poll, at least half of Americans believe in ghosts. The other half believe in politicians. We would be better off with 100% belief in ghosts. Or God, for that matter, as long as it was some sort of detached, rational God upon which everyone agreed..
The only good part about Americans, and humans in general, working so hard and so ignorantly to destroy themselves is just that, they are working to destroy themselves. Unfortunately, they will probably fuck that up as well.
There are only two ways of earning a living − by labor and by productive capital ownership (= binary economics). Humans are usually assumed to own their labor, but not necessarily the other productive factor – capital.
As capital efficiencies ramped up over the last hundred years, capital ownership has become vastly more valuable than labor. Full employment is just not possible anymore because supply of labor vastly outpaces demand for labor.
To re-balance the economy, we need to diversify capital ownership. Employee stock ownership programs (ESOP) were a step in this direction. We need to go much, much further.
Jim Quinn,
You wrote “The American herd has gone mad.” — and this is surely the cure: real asset price histories ONGOINGLY WELL-APPARENT to the people. Such as:
“Real Homes &Real Dow” at
http://homepage.mac.com/ttsmyf/RHandRD.html
“Serial Herd Behaviors” is absolutely fair, and ‘catchy’.
[img]http://homepage.mac.com/ttsmyf/RHandRD.html[/img]
God is in the DNA of the nuclei of every cell of your body.—-“In a reality that is inconceivably multidimensional, the old concepts of God are relatively meaningless. Even the term, a supreme being, is itself distortive, for you naturally project the qualities of human nature upon it. If I told you God was an idea, you would not understand what I meant, for you do not understand the dimensions in which an idea has its reality, or the energy that it can originate and propel. You do not believe in ideas in the same way that you believe in physical objects, so if I tell you that God is an idea, you will misinterpret this to mean that God is less than real–nebulous, without reality, without purpose, and without motive action.”—From Seth Speaks—-Another description of the divine is as follows—–“Value fulfillment is most difficult to describe, for it combines the nature of a loving presence–a presence with the innate knowledge of its own divine complexity–with a creative ability of infinite proportions that seeks to bring to fulfillment even the slightest, most distant portion of its own inverted complexity. Translated into simpler terms, each portion of energy is endowed with an inbuilt reach of creativity that seeks to fulfill its own potentials in all possible variations–and in such a way that such a development also furthers the creative potentials of each other portion of reality.” “…………I do not mean by such a description to minimize the importance of physical life, for All That Is endows each portion of its own transformed reality with a unique existence that is duplicated Nowhere Else, and each spark of consciousness is endowed with a divine heritage that is never extinguished, a spark that is apparent in all other corners of the universe.” And also, “The one All That Is is aware not only of its own nature and the nature of all consciousness, but it is also aware of its infinite probable selves. We go here toward subjects in which words become meaningless. The nature of All That Is can only be sensed directly through the inner senses, or in a weaker communication, through inspiration or intuition. The miraculous complexity of such reality cannot be translated verbally.” God is love expressed. Love is God expressed.
Smokey
Were you smoking some of that wacky weed?
@Jim
I made a statement but don’t wanna take this thread to a new direction, and off topic. Unfair to you.
Apollo
No problem. The thread can go in any direction people want to take it. I was hoping God might intervene in our mass delusion.
How’d you know I was tripping?
god doesn’t give a shit of our violent monkey race.
there will never be peace nor stability, and we will last shorter than the dinosaurs.
if things go south on a regular basis,It’s because of human nature.
this ensure we will let less relics than the next dominant race after us
Some good points here. But economic realities cannot be separated from social realities.
The American MALE has been dispossessed from fatherhood and responsibility by a government that supports feminism and “alternative sexualities” at every turn. There is a constant confusion of “freedom” with “sexual liberation,” of liberty with license, and a constant polarizing of society with these stupid and self-defeating issues. Where’s the community that would be able to cohere sufficiently to oppose the corruption that has become endemic in all departments of American society? I think the real issues are moral and spiritual and have to do with the love of truth and honor. A big step toward overcoming the passivity and ignorance of the American populace would be to reinvigorate the PATRIARCHAL IDEA (the Legitimacy Principle) and for good women to support men with honor and truthfulness. That is the beginning of community and solidarity. Nothing is going to happen until men and women recognize their common enemy. Because Big Government (Caesar) will continue to Divide and Conquer in this realm and render the people impotent.
Some good points here. But economic realities cannot be separated from social realities.
The American MALE has been dispossessed from fatherhood and responsibility by a government that supports feminism and “alternative sexualities” at every turn. There is a constant confusion of “freedom” with “sexual liberation,” of liberty with license, and a constant polarizing of society with these stupid and self-defeating issues. Where’s the community that would be able to cohere sufficiently to oppose the corruption that has become endemic in all departments of American society? I think the real issues are moral and spiritual and have to do with the love of truth and honor. A big step toward overcoming the passivity and ignorance of the American populace would be to reinvigorate the PATRIARCHAL IDEA (the Legitimacy Principle) and for good women to support men who have honor and truthfulness. That is the beginning of community and solidarity. Nothing is going to happen until men and women recognize their common enemy. Because Big Government (Caesar) will continue to Divide and Conquer in this realm and render the people impotent.
MASS DELUSION – AMERICAN STYLE
American-style, I don’t know what that means. The writer of the article appears to be alluding to a country called America. Since there is no such a country, I had some trouble reading the entire article.
If the writer is trying to suggest that our continent has a particular style then I think I would take umbrage with his comments. If the writer is attempting to portray that there is a country called America and then I certainly would disagree vehemently. It is only necessary to read the preamble to the Constitution of the United States of the continent called America to be immediately convinced that there is no such a country as America.
I do wish that the Yanks would finally recognize and admit that in trying to call their country America they are referring to a mythical country that does not in fact exist in reality or in law. This is typical of Yanks psychology.
I remember around 9/11, someone practically moaning on television and asking the question, “why do they hate us so much”? Articles like this outline with great clarity, at least one reason why the rest of the world absolutely hates the United States. Here is a country which has decided, without permission from the rest of America, to usurp the name of our continent as the name of their country without making changes to the constitution as would be required. No matter though, this country called the United States will cease to exist before very long. I am already 69 years of age and I would not be surprised to see this country go broke, oh just a minute, they are already broke, and then eat themselves from the inside. The Chinese practically own the country anyway and maybe one day soon they will come calling to take possession of their property. That would be very interesting indeed.
If the GOP has its way, it won’t be very long before women in the United States will be wearing burqas. A country which has so much potential and has squandered that potential because of religion and politics. The senators therefrom, remind me of nothing so much as senators from ancient Rome. What a sad ugly society.
Lorne
Your post was much ado about nothing. I nodded off during paragraph 2. I’m sure you think your beloved Canada is in much better shape. You are delusional.
Such an excellent article. I read every word & loved it. As an older person I knew something wasn’t right about ten years ago (mid to late 1990’s) . My kids couldn’t find jobs except at stores !! Corporations took advantage of the young people, degraded them by putting them in either a red polo shirt or a blue polo shirt & paid them $8/hour. The American citizen has been degraded & taken advantage of, unfortunately, it will take a long time to rebuild the country. I have just two words to leave you with: ROBERT RUBIN .
Lorne Babcock – Citizens of the US are known world over as Americans. Canadians, which you appear to be one of, are often known as pretentious asswipes. Why don’t you take your soiled tissue and fuck off.
Joshua Pritkin – People can always save up, put their asses on the line, and buy capital anytime they want to. It sounds like you are proposing legislation of some kind that will mandate capital diversification. Good ol’ socialism at its finest. Fuck that.
Smokey
DP is over on Zero Hedge posting his usual insanity. He is telling them we are one in the same.
I just talked to God and He says: “The fool says in his heart: “There is no God””. So there you have it!
Jim Quinn, despite his otherwise brilliant analysis of the American (and global) economic condition, failed to mention the most important attribute of the nasty oligarchs who are ruining America. Can you guess what that attribute is?
HINT: Visit my website for a slightly edited version of Jim’s brilliant article (and the missing link).
“Like fish taken in a cruel net, like birds caught in a snare; So the sons of men are trapped in an evil time, when it falls suddenly upon them.” Ecclesiastes 9:12
“And those who earn wages, earn wages to put into a bag with holes.” Haggai 1:6
“Those who lead you cause you to err, and those led by them are destroyed.” Isaiah 9:16
The FED is part of the supply driven side of an unbalanced equation, also known as “the stick”.
People are creatures of habit. Do you really think they’ll move over to precious metals without the incentives of the stick when keeping in mind that a move to a commodity money must be driven by the market and CANNOT be top-down ? Wake-up. The ole boys are following the script. I suggest that we all do the same. Better to accept the carrot than linger around and feel the effects of the stick.
Gold is being monetized exactly as it should, by the market and one person at a time ….. in real-time.
Admin – just had a look at DP posts at Zero Hedge. He is loony tunes. Funny to see the other posters just skip around him. He isn’t worth the time of reply, other than for a bit of target practice. Amazing anyone could be so stupid.
Lynn D
“The Word of God is living and powerful” 🙂
Mundus deceptionem invitat.
Jim – Writing about delusion now is about 20 years too late. Too late to change history. Too late to reverse course. Too late to repair. Just ask the desperate people of the Soviet Gorbachev era. They too talked a lot about delusion in 1990 as I clearly recall. People talks delusion after they have been fooled, when it is too late. For them it’s too late to fix the Soviet system. Things will continue to unfold as if on auto-pilot. And in about 5 years you and I won’t recognize the country. I look forward to this upheaval. Because it’s the only way to clear the landscape of mass delusion.
Apollo
20 years ago I was part of the ignorant masses who believed everything my Government told me.
Perhaps a portion of the population bought the idea that “free trade” was a good idea, but anyone with any sense of economics certainly never bought that idea as beneficial unless they themselves were the beneficiary of it. At least for the duration of my lifetime, I have consistently been against the system being run by the Oligarchy, and have never voted for a single one of the assholes responsible for this mess. Although I think most folks are pretty ignorant with respect to the myth of capitalism as it has been pursued since the time of the Medici, I really do not think most people are particularly enamored of the idea of the rich getting ever richer while the average J6P takes it up the ass. Howevr, there really never has been a means to stop this from happening, and the concept that we could ever get “good industrial jobs at good wages” back here in the FSofA is sheer fantasy. The REASON those jobs went offshore is because in places like China and Mexico impoverished people will do the same jobs for pennies a day. Bring said jobs BACK to the FSofA, and with global wage arbitrage they would be just as low paid here as they are over there.
Haven’t commented in a long time on your diatribes Jim, but you still present all the problems without really addressing the underlying source of the problem, which is fundamental to the monetary system, capital formation and the charging of interest. Until you address those problems , you are just pissing in the wind.
RE
RE
Holy shit. I was just thinking about you the other day. How’s Alaska treating you? Say hi to Sarah for me.
The only lemmings I see are the idiots who read this garbage and actually think any of it has any merit other than to have a good laugh!
Dale
Back to your desk in the basement of the White House!!!!!
It’s curious why Jim is such a contrarian when there’s so much to focus on that’s positive. Where Jim’s attitude belies him is he gets so wound up about all that’s wrong that he conveniently omits proposing any solution. It’s one thing to whine about everything, but entirely another to be part of the solution. Jim is perfectly within his right to be part of the problem. I continue to read him because I have nothing better to do, but when you make statements like, “The sociopathic powers .. need to be brought to justice” and “The criminals … must be routed out” without proposing by what mechanism, and what laws beyond those of common decency have been broken then this post is much ado about nothing.
Americans aren’t deluded, a con has been perpetrated with the complicity of their elected representatives. The proper response is to throw the bums out. If that doesn’t fix the problem, a proper general revolt may be in the making. And we’re not talking about malcontents burning a few city blocks of downtown LA, but more along the lines of the 60’s civil rights riots.
On another note, It’s heartening to read about God in the comments, and make no mistake, the leaders of the synagogue in time of Jesus Christ were a pit of vipers, as Jesus told them to their faces, “You are of your father the devil, and your will is to do your father’s desires.” (John 8:44, ESV). There is no doubt in my mind the top levels of government and finance are similarly corrupt today.
To Jim’s last pessimistic point, “before it’s too late”. Too late for what? And, of course, Jim offers no solution. The simple matter is that with $52T in unfunded federal entitlements, it’s already too late, yet the seeds were sown in the 1960’s with Medicare and Welfare. Medicare hid the real cost of health care in the federal deficit, Insurance companies must have paid a pretty dime for that one. Welfare effectively paid recipients to procreate, so they procreated. Fast forward 50 years to today, and when you pay people to not work, they don’t work. America is on a road where the bridge ahead is out. There are a number of scenarios that could play out, but I have faith in the indomitable spirit of man, and in the goodness of God to preserve his remnant. Call it delusion if you will, but as surely as the sun will rise, God Almighty, the God and Father of the Lord, Jesus Christ, will not forsake his own. The devil doesn’t take a day off, and neither should anyone who cares about the future of our country, and our children.
Nonananymous
Read some of my older articles you douchebag. I have proposed plenty of solutions. Do you type for the exercise? Propose your own fucking solutions.
Sometimes I feel like an alien from another planet as I watch the willfully ignorant blissfully run our once great country down the rabbit hole. It’s like watching a slow motion train wreck, not much you can but get out of the way and hope you don’t get run over. Dan.
The U.S. has been pandering to its own self-righteous hubris and appetites for far too long. What’s “bad” for America is good for the greater world, in general.
Jim, You explain that “Globalization will benefit all Americans” is a delusion. You site tariffs, currency manipulation, job loss and other gov’t interventions as the reason why free trade is damaging. Yet if we dispense with tariffs and gov’t meddling, won’t free trade grow even more rapidly? I don’t understand your logic here – if you want gov’t to get out of the way, why shouldn’t I place my factory where I choose? Why won’t that increase the liquidity and transferability of the labor markets?
At the turn of last century, the majority of Americans worked in farming. Today, that number is under 2%. Do you want to turn back the clock? My great grandparents worked in sweatshops and collected rags to sew cloths together. Do we want to be assembling trinkets?
Daniel
It seems you interpreted my words through your own prism. I clearly stated that globalization is not inherently good or bad. You are delusional if you think trade is free. You can set up your plant anywhere you like. The result is that Asian standard of living will increase and the US standard of living will decrease. That is a fact. You really have bought into the delusion that Americans will do the brainwork and let the Asians assemble the trinkets, even though our schools turn out morons. The really really smart people at my school graduate and head off to Asia where opportunity abounds.
“The American herd has gone mad.” Your rage and hatred of your fellow countrymen is disconcerting. You claim to be a patriot, but turn on your countrymen with such vitriol and anger, one might mistake you for a Penn college professor. All humans can fall victim to the ‘mob mentality’. We are social creatures and Americans are not immune. We might be simple, but we are not simpletons. One can be a rugged individualist, but nobody lives in a vacuum. You can get your retread message of tulip bulb prices (Europe’s lemmings btw – Just make sure to site Malkiel) across without spitefully bashing America over the head.
Daniel
I must be hitting one of your delusional nerves. It is good to live in a delusion of free markets and Republicans coming to the rescue in November. Keep believing.
Joshua Pritikin wrote, “There are only two ways of earning a living − by labor and by productive capital ownership (= binary economics). Humans are usually assumed to own their labor, but not necessarily the other productive factor – capital.”
Nope. There’s a third way—by collecting economic rents. Note that the classical economists understood that there are three factors of production—labor, capital, _and land_.
Land doesn’t require any investment at all—you just sit around waiting for it to appreciate.
Of course, sometimes land gets overvalued, as we’ve seen. But they ain’t making any more of it.
Weird—it ain’t “August 14th”.
Jim, Please reply to my comments without name calling. Address the fact that you are arguing against free trade, yet supply no alternative. I’m feeling a cognitive dissonance here that I’d like you to address.
Apologies if I misinterpreted your words. Perhaps I mistook the arguments for those oft repeated misconceptions on the left – that capital is finite. That the pie is fixed and every millionaire created has impoverished scores of “workers”. It is a wonderful theory, a perfect assist, if you want to spout bromide, cliché, comments like “haves and have-nots” or “mal-distribution of wealth”, etc, etc. This is the way some like to tee up policies of control.
If you are arguing against crony-capitalism, mercantilism, and government intervention, please do so. That is the target – not you fellow countrymen (“sheeple”).
I like it when everybody’s standard of living increases. Now, I’m not going to debate economics with you, although I will say that arguing against free-trade, because you fear for American standard of living is mighty un-libertarian of you. How would we have developed without the production-possibility frontier (PPF) or the opportunity cost saved in trade? Conjecture like that is outside my wheelhouse, but perhaps you can tell me how we turn back the clock?
Alaska has been very wet this summer. In the event we flood out and I have to take to the sea, I have been boning up on my celestial navigation skills so I can find my way to Tristan de Cunha after Da Goobermint encrypts the GPS signals when the Nukes start flying 🙂
In other words, same old Doom, different Day.
RE
Sheeple suck. They are part of the problem, not the solution.
Because Americans have been lulled to sleep by their stuff, they’re blind to what’s coming.
Those that are paying attention to the follies of our feckless leaders know what’s coming and are preparing accordingly.
Obama hates America and is doing his best at subverting the system until it crashes down around us so that he can implement the codex alementarius and adgenda21.
So are you getting ready for the fight of/for your life, or are you going to be hearded like sheeple onto the FEMA trains and then head off to camp?
Daniel
You have a little cognitive dissonance going big guy. Telling me that I hate my fellow countrymen? That is a total ASSHOLE statement to make. So go fuck yourself buddy.
You are so blinded by your delusional belief that you live in a free market capitalist country, you can’t even see that the American middle class is being systematically wiped out by Wall Street and Washington corporate fascists who control all the power. BOTH PARTIES.
Keep believing Mitt Romney or Newt Gingrich are going to save the country. Now that is delusion times ten.