Category Archives: Sociology

How Breakdown Cascades Into Collapse

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By Charles Hugh Smith

Source: Of Two Minds

Maintaining the illusion of confidence, permanence and stability serves the interests of those benefiting from the bubbles and those who prefer the safety of the herd, even as the herd thunders toward the precipice.

The misconception that collapse is an all or nothing phenomenon is common: Either the system rights itself with a bit of money-printing and rah-rah or it collapses into post-industrial ruin and gangs are battling over the last stash of canned beans.

Neither scenario considers the fragility and resilience of the socio-economic system as a whole. It is both far more fragile than the believers in the permanence of the waste is growth model grasp and more resilient than the complete collapse prognosticators grasp.

The recent relatively mild logjams in global supply chains of essentials are mere glimpses of precariously fragile delivery-supply systems. These can be understood as bottlenecks that only insiders see, or as unstable nodes through which all the economy’s connections run. Put another way, the economy’s as a network appears decentralized and robust, but this illusion vanishes when we consider how the entire economy rests on a few unstable nodes.

One such node is the delivery of gasoline and fuels. It’s such an efficient and reliable system that 99.9% of us take it for granted: there will always be plenty of gasoline at every station, the tanks of jet fuel will always be topped off, and so on.

The 0.1% know that this system, once disrupted, would knock over dominoes all through the economy.

Hyper-efficiency and hyper-globalization has reduced the number of producers of essentials to the point that disruptions cannot be overcome with redundant sources. We see this everywhere in the global economy: a handful of plants and companies (sometimes a single source of essential components) process or manufacture essential components in much larger systems.

This is how you end up with thousands of newly manufactured vehicles parked in lots awaiting one critical part that is in short supply.

Another key weakness is the entire system’s reliance on debt, leverage and speculation. Few seem to understand that physical production and delivery systems can grind to a halt for financial reasons–for example, lines of credit being pulled, a counterparty to some arcane commodity swap goes under, taking the presumably solvent corporation down with it, and so on.

The more debt that’s been piled up, the greater the instability of the entire system. Risk always appears low until the system destabilizes, and then all the hedges fail and risk breaks out, flooding through the entire financial system.

Leverage is great fun on the way up, as it magnifies gains. Since the Federal Reserve implicitly guarantees that “buy the dip” will generate massive gains, why not ramp up leverage ten-fold to maximize those Fed-guaranteed gains?

Leverage is less fun on the way down. When the underlying collateral has shrunk to 20% of the leveraged bets being made, a 21% decline in the asset wipes out all the collateral holding up the palace of leveraged debt.

The Fed can print money but it can’t create collateral, nor can it make insolvent entities solvent. All the Fed can do is increase the debt and leverage, which is not the solution, it’s the problem.

Speculation is also inherently unstable, as the euphoric herd, once startled, turns in panic and stampeded in fear. Markets which appeared liquid–i.e., sellers could count on someone buying as many millions of shares as they desired to sell–become illiquid, as buyers vanish like mist in Death Valley. With buyers gone, prices plummet to levels the herd reckoned “impossible” just days before.

The Fed’s entire strategy in the 21st century has been to inflate asset bubbles that generate the illusion of wealth–the so-called wealth effect which is presumed to inspire voracious borrowing and spending.

Unfortunately for the Fed, most of the gains flowed to the top 0.1%, and an economy based on a handful of billionaires buying super-yachts and spaceships is a line of dominoes awaiting the inevitable “accident.” So there are two systemic problems with relying on asset bubbles to generate “wealth”: 1) since 90% of the assets are owned by a thin slice of the populace, bubbles increase destabilizing inequality, and 2) bubbles are intrinsically unstable. So the U.S. economy, dependent on the Fed for the “juice” of monetary stimulus, is now dependent on incredibly unstable bubbles in assets, debt and leverage, bubbles which have generated extremes of wealth/income inequality that are destabilizing the social and political orders.

As the three charts below illustrate, the fragility and instability are well hidden until it’s too late: bubbles, debt, leverage, budgets and revenues can only click higher because the system breaks down if there is any sustained decline (the rising wedge model of breakdown). Once the subsystems fail, there’s no putting the eggshell back together.

The second chart depicts how buffers thin beneath the surface, masking the systemic fragility. The loss of redundancy, the decay of maintenance, the loss of experienced workers–all of these are hidden from public view until the system breaks down.

The third chart tracks the S-curve of expansion, confidence, complacency, delusion and collapse followed by human systems, from nations to empires to corporations: as the buffers thin and the rising wedge reaches an apex of vulnerability, the leadership evinces a delusional confidence in the permanence and stability of increasingly fragile, unstable systems.

Maintaining the illusion of confidence, permanence and stability serves the interests of those benefiting from the bubbles and those who prefer the safety of the herd, even as the herd thunders toward the precipice.

This is how breakdowns in apparently stable subsystems triggers the fall of dominoes throughout the larger system, leading to a collapse that was widely viewed as “impossible.” Such is the power of complacency and delusion.

“We’ve Got To Fight Disinformation,” Says Empire Made Entirely Of Disinformation

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By Caitlin Johnstone

Source: CaitlinJohnstone.com

The weirdest thing about the Biden administration tasking itself with the censorship of “disinformation” on social media is that the United States is the hub of a globe-spanning empire that is built upon a foundation of disinformation, maintained by disinformation, and facilitated by disinformation.

If the propaganda engine of the US-centralized empire ceased actively deceiving the public about the world, it would collapse immediately. There would be mass unrest at home and abroad, status quo politics would be abandoned, alliances and coalitions would crumble, leaders official and unofficial would be ousted, and US unipolar hegemony would end.

The only thing keeping this from happening is the vast amounts of wealth and energy which are poured into continuously deceiving the people of America and its allies about what’s really going on in their nations and political systems, and in the world as a whole.

Getting people believing they live in separate, sovereign nations which function independently from one another, instead of member states within a single undeclared empire which moves as one unit on the international stage.

Getting people believing they control the fate of their nation via the democratic process, when in reality all large-scale politics are scripted puppet shows controlled by a plutocratic class who owns both the politicians and the media outlets which report on them.

Getting people believing they are part of a virtuous rules-based international order which opposes totalitarian regimes to spread freedom and democracy, instead of a tyrannical empire that works to destroy any nation which disobeys its dictates.

And above all, manufacturing the illusion that the oppressive, exploitative imperialist status quo is normal.

It’s not the big, famous lies like those which preceded the invasion of Iraq that make up the bulk of the adhesive holding the empire together, it’s the small, mundane lies we’re fed every single day by the plutocratic media. The ones which distort our worldview by half-truths, spins and omissions designed to normalize a status quo of murder, theft and ecocide.

This normalization happens in the way pundits and politicians treat any attempt to end wars or redress income inequality as freakish extremism and unrealistic fantasy, when in reality it’s the most sane and normal thing in the world and the only thing unrealistic about it is the fact that attempts to advance those agendas are always sabotaged by those same pundits and politicians.

The normalization also happens in the way endless wars, starvation deaths by US sanctions, the looming threat of total extinction via climate collapse or nuclear war, rapidly exacerbating income inequality and increasing tyranny at home and abroad are not treated as newsworthy stories, while celebrity gossip and partisan bickering between AOC and Marjorie Taylor Greene makes headline news. Every day the news media fail to report on the greatest horrors that the empire has unleashed on our world while focusing on vapid trivialities, they help normalize the horrors.

If the mass media actually existed to share important information about the world, the US-backed genocide in Yemen would be front-page news every day instead of something which gets a marginal mention once every few weeks. Every day it isn’t, this outrageous abuse is normalized.

If the mass media actually existed to share important information about the world, the fact that Americans are getting poorer and poorer while billionaires multiply their wealth during the pandemic would be brought front and center to everyone’s attention. Every day it isn’t, this outrageous abuse is normalized.

If the mass media actually existed to share important information about the world, the fact that the US military just spent trillions of dollars on a decades-long occupation of Afghanistan that accomplished nothing besides making horrible people rich would have been a national scandal. Every day it isn’t, this outrageous abuse is normalized.

But the mass media do not exist to share important information about the world. They exist to share important disinformation about the world. If they did not do this, the same US empire which is decrying the spread of disinformation today would collapse into its own footprint.

The US empire is without exception the single most corrupt and destructive force on this planet, and it’s not even close. It is the very last institution on earth that should be in charge of deciding what online content is true and what is “disinformation”. Absolute dead last, without exaggeration.

Depraved institutions which lie constantly and have killed millions and displaced tens of millions just since the turn of this century should not be the Ministry of Truth for the world’s online communication systems. This should be extremely obvious to everyone.

Freedom Rider: How the billionaires rule

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Predatory capitalism has driven down wages and created a dystopia for workers.

By Margaret Kimberley

Source: Intrepid Report

President Calvin Coolidge said, “The business of America is business.” The expression is memorable because it always rang true. But nearly 100 years later an old trite saying has taken on an ever more terrifying meaning.

The ruling class wield their power more blatantly than ever. There is little effort to conceal their determination to rule over the people and to control the politicians who are now little more than their personal minions.

When the people get a little help, as happened with additional stimulus funds for the unemployed, politicians across the country took up arms for the ruling class and turned down free money just to stay in the good graces of their bosses.

Currently 25 states out of 50 have rejected additional help for the unemployed. The money came from the federal government and didn’t impact state budgets, but politicians know who calls the shots. When called upon to help struggling people they chose to do just the opposite. They helped their exploiters and, in the process, made a mockery of what passes for democracy.

There is no labor shortage in this country. Instead, there is a shortage of jobs that pay a living wage and that is because of the power of capitalists. They have grown richer precisely because they have forced workers to live in a constant state of precarity, and now it is quite literally better to stay home than to work for a pittance.

Of course, the richest man in the world, Amazon’s Jeff Bezos, is a master at coming up with new ways to subjugate workers. Any reports of job growth should be viewed with a very jaundiced eye as predatory capitalism has driven down wages and created a dystopia for workers. Bezos has mastered squeezing the most and giving the least.

Amazon warehouse workers suffer from injuries at higher rates than other employees in similar jobs but the injuries are part of the cost of doing business. It is expected that the grueling working conditions will create high turnover which is exactly what Amazon wants. A revolving door of employees serves their needs quite nicely. Bezos made a big deal about a $15 per hour starting salary but he could certainly afford to pay a lot more, a real living wage. The tight-fisted billionaire who could potentially become a trillionaire got rich the old fashioned way. He cheats workers.

Bezos also comes up with new and ingenious ways to spread the suffering. Amazon Flex delivery drivers are hired by apps and fired by algorithms. They have no interaction with human resources or any humans at all and they must pay a $200 fee to contest terminations that are rarely decided in their favor.

Even when American workers lose their jobs they are still at the mercy of corporate giants. ID.me contracts with states to provide public access to web sites such as those used for unemployment claims. Their facial recognition software doesn’t verify everyone properly and desperate people wait days and weeks for their unemployment payments to arrive. As with Amazon there is no one to speak to for help. But state governments turn over millions of dollars to ID.me in order to cheat people out of benefits they have earned. Currently 30 states contract with ID.me to make sure that the most vulnerable are kicked while they are down.

The algorithm hirings and firings and the facial recognition technology problems are not bugs in the system. They are features. They are doing precisely what they are intended to do, keep workers poor, desperate, and at the mercy of capitalists. Cruelty is the point.

One might ask who speaks for the people. Workers in several states had their unemployment saved by court decisions but those are few and far between. Politicians are as blatant as their corporate bosses and openly side with them against their constituents.

There is no way to reform this system. Democrats and republicans are equally eager to act at the behest of corporate interests. The people either vote in hopes of change that never comes or are apathetic because they see that the odds are against them.

The workers who refuse low pay under dangerous conditions are moving in the right direction. Whether they know it or not they are potentially building a new movement. A general strike is what the country needs. Of course that is why the hammer fell in an attempt to nip any resistance in the bud and get the cogs back into the machine. But the direction we must move in is clear. There is no salvation from a Biden or a Harris or any other name being floated. The people will have to move in a different direction if they are to save themselves.

The War on Reality

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By CJ Hopkins

Source: Consent Factory, Inc.

So, the War on Reality is going splendidly. Societies all across the world have been split into opposing, irreconcilable realities. Neighbors, friends, and even family members are bitterly divided into two hostile camps, each regarding the other as paranoid psychotics, delusional fanatics, dangerous idiots, and, in any event, as mortal enemies.

In the UK, Germany, and many other countries, and in numerous states throughout the US, a “state of emergency” remains in effect. An apocalyptic virus is on the loose. Mutant variants are spreading like wildfire. Most of society is still shut down or subject to emergency health restrictions. People are still walking around in public with plastic face shields and medical-looking masks. The police are showing up at people’s homes to arrest them for “illegally gathering outdoors.” Any deviation from official reality is being censored by the Internet corporations. Constitutional rights are still suspended. Entire populations are being coerced into being injected with experimental “vaccines.” Pseudo-medical segregation systems are being brought online. And so on … you’re familiar with the details.

Meanwhile, in Sweden, and a few other countries, and in various other states throughout the US, there is no apocalyptic pandemic. People are just going about their lives as normal. OK, sure, there is a nasty virus going around, so people are taking common sense precautions, as people typically do for any nasty virus, but there is no “state of emergency” in effect, and no reason to radically transform society into a paranoid, pathologized-totalitarian dystopia.

This state of affairs, in which two contradictory, mutually-exclusive realities exist, is … well, it’s impossible, and so it cannot continue. Either there exists a devastating global pandemic that justifies a global “state of emergency,” the suspension of constitutional rights, and the other totalitarian “emergency measures” we have been subjected to since March of 2020 or there doesn’t. It really is as simple as that.

Except that it isn’t as simple as that. It is easy to forget, given the last 16 months, that people have been bitterly divided, and inhabiting mutually-exclusive realities, and regarding people who don’t conform to their realities as enemies for the last five years. I’m not talking about political disagreements, or even socio-cultural differences. I’m talking about contradictory realities. Things that actually happened, or didn’t happen. Things that exist, or do not exist.

I’m not going rehash the whole War on Populism — I covered it extensively at the time — but that’s when the current global-capitalist War on Reality was officially launched. It wasn’t just the usual lies and propaganda. It was a full-scale ideological assault. By the end of it, people actually believed that (a) Donald Trump was a Russian agent, (b) that he was literally Hitler, and so was going to stage some sort of “coup,” declare himself American Führer, and launch the “Trumpian-White-Supremacist Fourth Reich,” and (c) that he had actually attempted this by sending a few hundred unarmed protesters — violent domestic extremist grandmothers, father-and-son kill squads, and bison hat loonies — to “storm the Capitol” and overthrow the government during the so-called “January 6 Insurrection.”

So, when GloboCap rolled out the “New Normal” reality, they weren’t exactly starting from scratch. Millions of people — not just Americans, because the War on Populism was a global campaign — were already living in a new reality in which facts no longer mattered at all, where things that never happened officially happened, and other things that obviously happened never happened, not officially, or were “far-right extremist conspiracy theories,” “fake news,” or “disinformation,” or whatever, despite the fact that people knew that they weren’t.

But the goal of GloboCap’s War on Reality isn’t simply to deceive the masses and divide them into opposing camps. Rulers have been deceiving the masses and dividing them into opposing camps since the dawn of human civilization. This time, it’s a bit more complicated than that.

OK, bear with me now, because this gets kind of heady.

The War on Reality is not an attempt to replace reality with a fake reality. Or it is that, but that is only one part of it. Its real goal is to render reality arbitrary, to strip it of its epistemological authority, to turn it into a “floating signifier,” a word that has no objective referent, which, of course, technically, it already is. You cannot take a picture of reality. It is a concept. It is not a physical object that exists somewhere in time and space.

But let’s leave that last point for a later discussion. This is not the time to get lost in semiotics. For most people, for most practical purposes, reality is … well, reality. It’s objective. Material. It actually exists. It exists independent of our beliefs. It isn’t just an arbitrary, empty signifier that doesn’t actually refer to anything, but which we use, strategically, to assert authority, or to impose ideology on society. If that were the case, there would be no reality. Nothing would be true, everything would be permitted … which is a bunch of postmodern Marxist nonsense.

But just imagine, for a moment, if that were the case … if what determined reality was actually just a question of power rather than facts. Imagine that reality was just a concept that we used to mark the current limits of our knowledge and ideological beliefs. Our doctors — oncologists and virologists, for example, but they could be any kind of doctors or scientists — would be not all that different from medieval alchemists, who totally believed in their reality at the time, as did the patients they were treating, but which we know now was not reality at all, because our reality is the real reality. I mean, it’s not as if people, five hundred years from now, are going to look back at our medical practices and scientific knowledge, and laugh, like we do at those medieval alchemists, right?

Sorry, I got a little off track there. I was trying to explain the ultimate purpose of this global-capitalist War on Reality, and I wandered off into an ontological swamp, which isn’t going to get us anywhere. So, let’s get back to imagining reality, not as what we all know it is (i.e., an actual, material thing that exists), but as a construct people use to validate certain officially-sanctioned beliefs and perceptions and invalidate other beliefs and perceptions, more or less like a system of morals, except instead of dividing things into to “good” and “evil,” it divides things into “real” and “fake.”

Now imagine that you were an immensely powerful, globally hegemonic ideological system, and you wanted to impose your ideology on as much of the entire world as possible, but you didn’t have an ideology per se, or any actual values at all, because exchange value was your only real value, and so your mission was to erase all ideologies, and values, and truths, and belief systems, and so on, and transform everything and everyone in existence into de facto commodities that you could manipulate any way you wanted, because they had no inherent value whatsoever, because their only real value was assigned by the market.

How would you go about doing that, erasing all existing values, religious, cultural, and social values, and rendering everything a valueless commodity?

Well, you wouldn’t want to destroy reality completely, because people wouldn’t stand for that. They would freak right out. Things would get ugly. So, instead, you might want to go the other way, and generate a lot of contradictory realities, not just contradictory ideologies, but actual mutually-exclusive realities, which could not possibly simultaneously exist … which would still freak people out pretty badly.

Naturally, there would be one official reality that you would force everyone to rigidly conform to at any given moment in time, but you would change the official reality frequently, and force everyone to conform to the new one (and pretend that they’d never conformed to the old one), and then, once they had settled into that one, you would change the official reality again, until people’s brains just shut down completely, and they gave up trying to make sense of anything, and just tried to figure out what you wanted them to believe on any given day.

If you repeated that process long enough, eventually, nothing would mean anything anymore, because everything could potentially mean anything … at which point, you could basically tell people anything you wanted and they would go along with it, because what the hell difference would it make? A narcissistic billionaire ass-clown could be a Russian agent and literally Hitler. A half-assed riot could be an “insurrection.” Children could be born “systemically racist.” Men could menstruate. But wait … it’s gets better.

You could stage an apocalyptic global pandemic that only happened in certain countries, or in certain parts of certain countries, and that more or less mirrored natural mortality, and that didn’t drastically increase historical death rates, but was nonetheless totally apocalyptic.

Perfectly healthy people could become “medical cases.” You could count anyone who died of anything as having died of your apocalyptic virus. You could tell people in no uncertain terms that medical-looking masks will not protect them from viruses, and then turn around and tell them that they will, and then, later, publicly admit you were lying in order to manipulate them, and then deny you ever said that, and tell them to wear masks.

You could experimentally “vaccinate” millions of people whose risk of becoming seriously ill or dying from your apocalyptic virus was minuscule or non-existent, and kill tens or hundreds of thousands in the process, and the people whose brains you had methodically broken would thank you for murdering their friends and neighbors, and then rush out to their local discount drugstore to experimentally “vaccinate” their own kids and post pictures of it on the Internet.

At that point, you wouldn’t really have to worry about “populist uprisings,” or “terrorism,” or any other type of insurgent activity, because the vast majority of the global population would be scramble-headed automatons who were totally incapable of independent thought, and who had no idea what was real and what wasn’t, so just repeated whatever new script you fed them like customer-service representatives on Haldol.

It doesn’t get much better than that for globally hegemonic ideological systems!

OK, sorry, I think I got lost there again. I’m not sure what I was trying to say. I’ve been a little foggy lately. I’m not sleeping so well. It’s probably Long Covid. Or maybe it’s just that time of month. Whatever. It’s not like it matters anyway. Still, I think I’ll go down to my former local bookshop and get myself tested.

Have a nice day in … you know, reality!

Overcoming the Hypnosis of Fear

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By Julian Rose

Source: Waking Times

You are a Universal Being. Your body is just a vehicle for the manifestation of this Universal Being here on Earth. As a Universal Being your ‘essence’ lives forever. Start identifying your Self as a Universal Being, merged with the source of all existence. The more you live in this Self – the Real You – during this lifetime – the more seamless is the passage onwards at the time of passing.

Say:

“I am a spiritual entity and nothing can harm me, because ‘I’ am not this physical body which carries me through this third density existence experienced here on Earth. ‘I’ am soul, ether, spirit, plasma – and I chose to come back to planet Earth and to be reborn into a human body in order to perform valuable tasks and help realign Earthly existence with Cosmic existence – and thereby create harmony and balance.”

Repeat this – and feel the fear fall away. Feel it dissolve like the sun-burned morning mist.

Fear is a state of mind. A cramped mind. Every part of it is alien to us save that useful bit that warns us not to do some crazy act – like jump over the edge of a cliff under the illusion that one will sprout wings and fly away into the blue horizon!

Yes, the ‘real you’ can fly. The ether/spirit you. But the physical you is a gravity respecting entity here on dear mother Earth. Respect this type of fear, for it is a God given preservation instinct.

So, you are not convinced? You hold onto your fear because it seems ‘real’, doesn’t it? You quite like it, a sort of drug. After all every TV, newspaper, radio and neighbour is telling you ‘to be afraid.’ It’s easier to give in than not to. There are so many things you need to fear, they say, so many that there is almost no room left for anything else to get you going in a positive direction.

We live in a culture of fear, imposed by those we elect and allow to manage our lives. Think about it – so determined are most of us to avoid taking true responsibility for our lives and the lives of other living beings that we allow our minds to say to us “OK, that’s fine, leave it to the politicians, bankers and corporate board members to run our affairs for us.” Then we turn around and curse them for introducing a despotic top-down police-state agenda that makes a misery out of our lives!

How foolish can one get?

All the while ‘the elected ones’ (by us) learn better and better how to manipulate those who elected them, so that they can hold onto the power. They are addicted to power – and use it to make us addicted to fear. So we shrink, while they expand.

How very foolish so much of mankind is. Both parties, the purveyors of fear and the fearful, bogged-down in a rail siding leading to nowhere. Both sides bogged-down in a rail siding completely terminating our natural evolutionary instinct and putting in its place a state of perpetual self-imprisonment.

“Fear not!” say I, for anyone reading this is not heading for the end of the line or the gallows; is not busy constructing a hangman’s noose to stick his/her neck in. Nobody reading this can suffer the delusion that to profit from worldly riches is superior to profiting from the flow of Divine uplift. An ecstatic state which comes from rejecting fear and ceasing to hide in the shadows of a frightened ‘little me’.

This ‘little me’ is a hypnotised being who has convinced himself/herself that one can never step forward and take responsibility for one’s destiny, or make a valuable contribution on the stage of life.

Out you go ’little me’ – and stay out. No place for you in the unfolding age of Truth. For as has been said, You are not a cipher, You are a Divine eminence – and is that a quality to hide away under a cloak of self impoverishment? Well, is it?

After what seems like an interminable pause, an answer emerges: ‘NO’

And immediately, as if shot from a cannon, the Real You bursts upon the scene – soul-burden immeasurably lightened! Yes, I can see this Real You, right now, and I can tell you – you are an outstanding being with enough potential to single-handedly transform both yourself and your community into manifestations of an age of instant enlightenment!

Yes, my friend, I’m not talking about someone else, it’s you who is transformed. ‘Little me’, who was that? Never mind, gone forever.

Now you stand single, strong, proud, all traces of fear banished forever. Maybe for the first time, you are free, out of jail, ready to be intoxicated by the sweet scent of the wild rose, the symphonic triumph of the dawn chorus, the illustrious beauty of awakened nature calls you forth – rejoice in her and act in her defence!

Proudly step forward to defend her precious wealth of vital diversity, so cruelly sterilised by vampires wearing carefully pressed city suits and a fixed smile on their faces. They and their clan scared you once, didn’t they? But no more, you now see the fake smile for exactly what it is.

You are metamorphosed and stand shining, a ray of the living sun. Use your new gifts well, my friend, millions need the support of your awakened powers to themselves be awakened and freed from the hypnosis of fear. These are the builders of the New Society which is our imperative to create – and no one else’s.

Is Inflation “Transitory”? Here’s Your Simple Test

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By Charles Hugh Smith

Source: Of Two Minds

Is inflation “transitory” in your household budget? Really? Where?

The Federal Reserve has been bleating that inflation is “transitory”–but what about the real world that we live in, as opposed to the abstract funhouse of rigged statistics? Here’s a simple test to help you decide if inflation is “transitory” in the real world.

Let’s start with some simple stipulations: price is price, there are no tricks like hedonics or substitution. Nobody cares if the truck stereo is better than it was 40 years ago, the price of the truck is the price we pay today, and that’s all that matters.

(Funny, the funhouse statistical adjustments never consider that appliances that used to last 30 years now break down and are junked after 3 years–if we adjusted for that, the $500 washer would be tagged at $5,000 today because it has lost 90% of its durability over the past 30 years.)

Second, inflation must be weighted to “big ticket” nondiscretionary items. The funhouse statistical trickery counts a $10 drop in the price of a TV (which you buy every few years at best) as equal to a $100 rise in childcare, which you pay monthly. No, no, no: a 10% rise in rent, healthcare insurance and childcare is $400 a month or roughly $5,000 a year. A 10% decline in a TV you buy every three years is $50. Even a 50% drop in the price of a TV ($250) is $83 per year–absolutely trivial, absolutely meaningless compared to $5,000 in higher big-ticket expenses.

You can forego the new TV but not the rent, childcare or healthcare. That’s the difference between “big ticket” nondiscretionary and discretionary (meals out, 3rd TV, etc.).

Third, we jettison the painfully obvious manipulation of “owners equivalent rent” for housing costs. Housing costs are the prices we pay for rent, owning a home and paying property taxes, insurance and maintenance costs to own the home. (Have you priced having a new roof put on your house by a licensed, reputable contractor? No? Well, it’s become a lot more expensive than it was a few years ago. Where is that enormous price leap in “owners equivalent rent”? Just how stupid does the Fed reckon we are?)

OK, here’s the test: let’s say markets finally take a deflationary dive from overvalued heights. Housing, stocks and other risk assets fall 30%. Trillions of dollars in “wealth” (that didn’t exist prior to the Everything Bubble inflating) has vanished, generating a reverse wealth effect as all the owners of these assets feel poorer and less inclined to borrow and spend. This is classically considered highly deflationary: demand drops, prices drop.

The three billionaires who own more assets than the bottom 50% of Americans (165 million Americans) will be crying, but how does life change for the 165 million Americans who own a vanishingly thin slice of these assets? Does their rent drop? No, for the reasons I explained in The Fed Is Wrong: Inflation Is Sticky: the big corporate landlords have to keep rents high to placate their lenders. (And let’s not forget greed: the greedy never want to lower prices, preferring to cling to the Fed’s fantasy of “transitory” trouble.)

Now let’s ask about the higher-income 150 million Americans who own homes and pay property taxes, who pay healthcare insurance, college tuition and fees, childcare and elderly care. Even if there is a deflationary crash in stocks and housing, what are the odds the overall costs of owning and maintaining your home will drop significantly?

What are the odds that local government will let property taxes drop with valuations? Shall we be honest and say zero? If real estate valuations plummet, then property tax rates will rise to compensate. Or other “creative” fees will be imposed to make up the shortfall in tax revenues.

What about childcare? What are the odds that childcare costs will drop 30%? Shall we be honest and say zero? The costs paid by childcare providers only go up, and so those who don’t charge enough (marginal providers) will close down, generating a shortage of supply that elevates prices.

What about elderly care? Will assisted living facilities suddenly drop 30% just because asset bubbles pop? No. The costs of assisted living march higher regardless of what asset valuations and interest rates do.

What about healthcare? Will all those costs drop 30% because assets declined? No. Everyone exposed to real-world pricing of healthcare will be paying more.

But what about the roofing contractor? Won’t they charge 30% less? The biggest expenses for the contractor are workers compensation insurance, liability insurance, disability insurance, FICA (Social Security and Medicare) and healthcare insurance, and none of those will drop a single dollar even if stocks drop 30%.

Just as 85% of local government expenses are labor-related, most of the expenses of the roofing contractor are labor-related. The roofing materials dropping a few bucks might lower the cost by a few percentage points, but the material costs are based on the costs of the manufacturers, distributors, truckers, etc., and these are also based on labor-related expenses, taxes, insurance and healthcare–none of which will drop a dime, regardless of what asset prices do.

Economist Michael Spence elucidated the difference between tradable and untradable goods and services. If you want your washer repaired, that service in untradable, as shipping your broken washer to China for repair is not financially viable. As labor costs rise in China and other offshore economies, that raises costs even for tradable goods.

The majority of essential services are untradable and the costs are dependent on “big ticket” expenses which cannot go down without imploding the economy and government: taxes, insurance, healthcare, childcare, elderly care, etc. cannot drop 30% because they’re based on labor costs, highly profitable systemic friction (Big Pharma, the Higher Education Cartel, Big Ag, healthcare and other quasi-monopolies) and the need for ever-higher tax revenues to provide services which the public demands.

Let’s also ponder the consequences of the extreme concentration of wealth and income in the top 5% of U.S. households. The top 10% own roughly 85% of all wealth, and the top 1% own more than half the financial wealth.

Any significant drop in financial assets will have almost no effect on the bottom 90% because they don’t own enough of these assets to be consequential. So the deflationary effect of the reverse wealth effect will be concentrated in the discretionary spending of the top 10%: the luxury imported vehicles, the $100 per plate dinners (those $60 bottles of wine add up), the $500/day resort vacation, the $2,500/week AirBnB rental, etc.

The declines in the cost of these discretionary luxuries may well be noteworthy, but there are thresholds below which prices cannot drop. The high-end restaurant has equally high-end expenses, and so marginal providers will close, leaving only those few who can maintain profitability as demand for luxury dining craters.

The resort has high expenses as well, and once profitability has been lost, resorts will close just like other marginal providers. Supply shrinks along with demand, and the survivors keep prices high enough or they too will close.

So the essential “big ticket” costs will keep rising and the discretionary luxuries only the top 10% can afford will drop–but not by much as all those luxury providers have the same high fixed costs.

So to recap the test: what are the odds of these “big ticket” expenses dropping 30% if asset prices drop 30%?

Taxes: zero.

Healthcare: zero.

Childcare: zero.

Elderly care: zero.

Costs of doing business: zero.

As for housing: the mortgage doesn’t drop if the market value of the house drops 30%, and any declines in insurance will be modest. The costs of maintenance won’t drop much, either, and might actually increase as the supply of skilled workers declines. (Nothing is more expensive than the “cheap” repair that has to be redone correctly.)

Rents may drop in areas nobody wants to live anymore, but rents will rise in places people do want to live.

The larger point here is the long economic cycles have turned. The 40-year decline in interest rates has turned, whether we admit it or not. The 40-year decline in the prices of goods due to financialization (lower interest rates, higher speculative assets) and globalization has turned. The 40-year expansion of the workforce has turned. The 40-year decline of oil/fuel/resources prices has turned. The 40-year fantasy that we can depend on other nations for our essential resources and components is drawing to a close.

Untradable goods and services, cost thresholds, resource security, the end of financialization / globalization and declining interest rates matter. The fantasy that the top 10% can prop up the economy by borrowing and spending the phantom wealth of insanely overvalued asset bubbles is drawing to a close.

Is inflation “transitory” in your household budget? Really? Where?

George Orwell’s 1984 Has Become a Blueprint for Our Dystopian Reality

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By John W. Whitehead & Nisha Whitehead

Source: The Rutherford Institute

“If you want a picture of the future, imagine a boot stamping on a human face—for ever.”— George Orwell, 1984

Tread cautiously: the fiction of George Orwell (Jun. 25, 1903-Jan. 21, 1950) has become an operation manual for the omnipresent, modern-day surveillance state.

It’s been more than 70 years since Orwell—dying, beset by fever and bloody coughing fits, and driven to warn against the rise of a society in which rampant abuse of power and mass manipulation are the norm—depicted the ominous rise of ubiquitous technology, fascism and totalitarianism in 1984.

Who could have predicted that so many years after Orwell typed the final words to his dystopian novel, “He loved Big Brother,” we would come to love Big Brother.

“To the future or to the past, to a time when thought is free, when men are different from one another and do not live alone— to a time when truth exists and what is done cannot be undone: From the age of uniformity, from the age of solitude, from the age of Big Brother, from the age of doublethink — greetings!”—George Orwell

1984 portrays a global society of total control in which people are not allowed to have thoughts that in any way disagree with the corporate state. There is no personal freedom, and advanced technology has become the driving force behind a surveillance-driven society. Snitches and cameras are everywhere. People are subject to the Thought Police, who deal with anyone guilty of thought crimes. The government, or “Party,” is headed by Big Brother who appears on posters everywhere with the words: “Big Brother is watching you.”

We have arrived, way ahead of schedule, into the dystopian future dreamed up by not only Orwell but also such fiction writers as Aldous Huxley, Margaret Atwood and Philip K. Dick.

“If liberty means anything at all, it means the right to tell people what they do not want to hear.”―George Orwell

Much like Orwell’s Big Brother in 1984, the government and its corporate spies now watch our every move. Much like Huxley’s A Brave New World, we are churning out a society of watchers who “have their liberties taken away from them, but … rather enjoy it, because they [are] distracted from any desire to rebel by propaganda or brainwashing.” Much like Atwood’s The Handmaid’s Tale, the populace is now taught to “know their place and their duties, to understand that they have no real rights but will be protected up to a point if they conform, and to think so poorly of themselves that they will accept their assigned fate and not rebel or run away.”

And in keeping with Philip K. Dick’s darkly prophetic vision of a dystopian police state—which became the basis for Steven Spielberg’s futuristic thriller Minority Report—we are now trapped in a world in which the government is all-seeing, all-knowing and all-powerful, and if you dare to step out of line, dark-clad police SWAT teams and pre-crime units will crack a few skulls to bring the populace under control.

What once seemed futuristic no longer occupies the realm of science fiction.

Incredibly, as the various nascent technologies employed and shared by the government and corporations alike—facial recognition, iris scanners, massive databases, behavior prediction software, and so on—are incorporated into a complex, interwoven cyber network aimed at tracking our movements, predicting our thoughts and controlling our behavior, the dystopian visions of past writers is fast becoming our reality.

Our world is characterized by widespread surveillance, behavior prediction technologies, data mining, fusion centers, driverless cars, voice-controlled homes, facial recognition systems, cybugs and drones, and predictive policing (pre-crime) aimed at capturing would-be criminals before they can do any damage.

Surveillance cameras are everywhere. Government agents listen in on our telephone calls and read our emails. Political correctness—a philosophy that discourages diversity—has become a guiding principle of modern society.

“People sleep peaceably in their beds at night only because rough men stand ready to do violence on their behalf.”―George Orwell

The courts have shredded the Fourth Amendment’s protections against unreasonable searches and seizures. In fact, SWAT teams battering down doors without search warrants and FBI agents acting as a secret police that investigate dissenting citizens are common occurrences in contemporary America. And bodily privacy and integrity have been utterly eviscerated by a prevailing view that Americans have no rights over what happens to their bodies during an encounter with government officials, who are allowed to search, seize, strip, scan, spy on, probe, pat down, taser, and arrest any individual at any time and for the slightest provocation.

“The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.”―George Orwell, Animal Farm

We are increasingly ruled by multi-corporations wedded to the police state.

What many fail to realize is that the government is not operating alone. It cannot. The government requires an accomplice. Thus, the increasingly complex security needs of the massive federal government, especially in the areas of defense, surveillance and data management, have been met within the corporate sector, which has shown itself to be a powerful ally that both depends on and feeds the growth of governmental overreach.

In fact, Big Tech wedded to Big Government has become Big Brother, and we are now ruled by the Corporate Elite whose tentacles have spread worldwide. The government now has at its disposal technological arsenals so sophisticated and invasive as to render any constitutional protections null and void. Spearheaded by the NSA, which has shown itself to care little to nothing for constitutional limits or privacy, the “security/industrial complex”—a marriage of government, military and corporate interests aimed at keeping Americans under constant surveillance—has come to dominate the government and our lives.

Money, power, control. There is no shortage of motives fueling the convergence of mega-corporations and government. But who is paying the price? The American people, of course.

Orwell understood what many Americans are still struggling to come to terms with: that there is no such thing as a government organized for the good of the people. Even the best intentions among those in government inevitably give way to the desire to maintain power and control over the citizenry at all costs.

“The further a society drifts from truth the more it will hate those who speak it.” ― George Orwell

Even our ability to speak and think freely is being regulated.

In totalitarian regimes—a.k.a. police states—where conformity and compliance are enforced at the end of a loaded gun, the government dictates what words can and cannot be used. In countries where the police state hides behind a benevolent mask and disguises itself as tolerance, the citizens censor themselves, policing their words and thoughts to conform to the dictates of the mass mind.

Dystopian literature shows what happens when the populace is transformed into mindless automatons.

In Ray Bradbury’s Fahrenheit 451, reading is banned and books are burned in order to suppress dissenting ideas, while televised entertainment is used to anesthetize the populace and render them easily pacified, distracted and controlled.

In Huxley’s Brave New World, serious literature, scientific thinking and experimentation are banned as subversive, while critical thinking is discouraged through the use of conditioning, social taboos and inferior education. Likewise, expressions of individuality, independence and morality are viewed as vulgar and abnormal.

In my debut novel The Erik Blair Diaries, the dystopian future that George Orwell predicted for 1984 has finally arrived, 100 years late and ten times as brutal. In this post-apocalyptic world where everyone marches to the beat of the same drummer and words like “freedom” are taboo, Erik Blair—Orwell’s descendant and unwitting heir to his legacy—isn’t volunteering to be anyone’s hero. Unfortunately, life doesn’t always go according to plan. To save all that he loves, Orwell will have to travel between his future self and the past.

And in Orwell’s 1984, Big Brother does away with all undesirable and unnecessary words and meanings, even going so far as to routinely rewrite history and punish “thoughtcrimes.” Orwell’s Big Brother relies on Newspeak to eliminate undesirable words, strip such words as remained of unorthodox meanings and make independent, non-government-approved thought altogether unnecessary.

Where we stand now is at the juncture of OldSpeak (where words have meanings, and ideas can be dangerous) and Newspeak (where only that which is “safe” and “accepted” by the majority is permitted). The power elite has made their intentions clear: they will pursue and prosecute any and all words, thoughts and expressions that challenge their authority.

This is the final link in the police state chain.

“Until they became conscious they will never rebel, and until after they have rebelled they cannot become conscious.”—George Orwell

Having been reduced to a cowering citizenry—mute in the face of elected officials who refuse to represent us, helpless in the face of police brutality, powerless in the face of militarized tactics and technology that treat us like enemy combatants on a battlefield, and naked in the face of government surveillance that sees and hears all—we have nowhere left to go.

We have, so to speak, gone from being a nation where privacy is king to one where nothing is safe from the prying eyes of government.

“Big Brother is Watching You.”―George Orwell

Wherever you go and whatever you do, you are now being watched, especially if you leave behind an electronic footprint. When you use your cell phone, you leave a record of when the call was placed, who you called, how long it lasted and even where you were at the time. When you use your ATM card, you leave a record of where and when you used the card. There is even a video camera at most locations equipped with facial recognition software. When you use a cell phone or drive a car enabled with GPS, you can be tracked by satellite. Such information is shared with government agents, including local police. And all of this once-private information about your consumer habits, your whereabouts and your activities is now being fed to the government.

The government has nearly inexhaustible resources when it comes to tracking our movements, from electronic wiretapping devices, traffic cameras and biometrics to radio-frequency identification cards, satellites and Internet surveillance.

In such a climate, everyone is a suspect. And you’re guilty until you can prove yourself innocent. To underscore this shift in how the government now views its citizens, the FBI uses its wide-ranging authority to investigate individuals or groups, regardless of whether they are suspected of criminal activity. 

“Nothing was your own except the few cubic centimetres inside your skull.” ― George Orwell

Here’s what a lot of people fail to understand, however: it’s not just what you say or do that is being monitored, but how you think that is being tracked and targeted. We’ve already seen this play out on the state and federal level with hate crime legislation that cracks down on so-called “hateful” thoughts and expression, encourages self-censoring and reduces free debate on various subject matter. 

Say hello to the new Thought Police.

Total Internet surveillance by the Corporate State, as omnipresent as God, is used by the government to predict and, more importantly, control the populace, and it’s not as far-fetched as you might think. For example, the NSA has been working on an artificial intelligence system designed to anticipate your every move. Aquaint (the acronym stands for Advanced QUestion Answering for INTelligence) has been designed to detect patterns and predict behavior.

No information is sacred or spared.

Everything from cell phone recordings and logs, to emails, to text messages, to personal information posted on social networking sites, to credit card statements, to library circulation records, to credit card histories, etc., is collected by the NSA and shared freely with its agents in crime: the CIA, FBI and DHS.

What we are witnessing, in the so-called name of security and efficiency, is the creation of a new class system comprised of the watched (average Americans such as you and me) and the watchers (government bureaucrats, technicians and private corporations).

Clearly, the age of privacy in America is at an end.

So where does that leave us?

We now find ourselves in the unenviable position of being monitored, managed and controlled by our technology, which answers not to us but to our government and corporate rulers. This is the fact-is-stranger-than-fiction lesson that is being pounded into us on a daily basis.

It won’t be long before we find ourselves looking back on the past with longing, back to an age where we could speak to whom we wanted, buy what we wanted, think what we wanted without those thoughts, words and activities being tracked, processed and stored by corporate giants such as Google, sold to government agencies such as the NSA and CIA, and used against us by militarized police with their army of futuristic technologies.

To be an individual today, to not conform, to have even a shred of privacy, and to live beyond the reach of the government’s roaming eyes and technological spies, one must not only be a rebel but rebel.

Even when you rebel and take your stand, there is rarely a happy ending awaiting you. You are rendered an outlaw. Just look at what happened to Julian Assange.

So how do you survive in the American surveillance state?

We’re running out of options.

Whether you’re dealing with fact or fiction, as I make clear in Battlefield America: The War on the American People and in my new novel The Erik Blair Diaries, we’ll soon have to choose between self-indulgence (the bread-and-circus distractions offered up by the news media, politicians, sports conglomerates, entertainment industry, etc.) and self-preservation in the form of renewed vigilance about threats to our freedoms and active engagement in self-governance.

The Systemic Risk No One Sees

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The unraveling of social cohesion has consequences. Once social cohesion unravels, the nation unravels.

By Charles Hugh Smith

Source: Of Two Minds

My recent posts have focused on the systemic financial risks created by Federal Reserve policies that have elevated moral hazard (risks can be taken without consequence) and speculation to levels so extreme that they threaten the stability of the entire financial system.

These risks are well known, though largely ignored in the current speculative frenzy.

But there is another systemic risk which few if any see: the collapse of social cohesion.

President Carter was prescient in his understanding that a nation’s greatest strength is its social cohesion, a cohesion that America’s unprecedented wealth / income / power inequalities has undermined. Consider this excerpt from his 1981 Farewell Address:

“Our common vision of a free and just society is our greatest source of cohesion at home and strength abroad, greater even than the bounty of our material blessings.”

In other words, a nation’s strength flows not just from its material wealth but from its social cohesion–a term for something that is intangible but very real, something that doesn’t lend itself to quantification or tidy definitions.

Here is my definition: Social cohesion is the glue binding the social order; it is the willingness of the citizenry to sacrifice individual gains for the common good.

Social cohesion is the result of the citizenry sharing a common purpose and identity and working toward the common good even at personal cost. Social cohesion arises from a national identity based on shared values and sacrifices.

To maintain social cohesion, opportunities to better their circumstances must be open to all (the social contract of social mobility) and sacrifices must be shared by the entire citizenry. If the privileged elites evade their share of sacrifice, social cohesion is lost and the entire social order unravels.

The glue binding the privileged elites to shared sacrifice is civic virtue, a moral code that demands elites devote a greater share of their own resources to the public good in exchange for their political and financial power.

Though no one dares confess this publicly, America is now a moral cesspool. As a result, the moral legitimacy of the nation’s leadership has been lost. Every nook and cranny of institutionalized America is dominated by self-interest, and much of the economy is controlled by profiteering monopolies and cartels which wield far more political power than the citizenry.

Civic virtue has been lost. What remains is elite self-interest masquerading as civic virtue.

In his Farewell Address, President Carter explained that “The national interest is not always the sum of all our single or special interests. We are all Americans together, and we must not forget that the common good is our common interest and our individual responsibility.”

Social cohesion, civic virtue and moral legitimacy are the foundation of every society, but they are especially important in composite states.

America is a composite state, composed of individuals holding a wide range of regional, ethnic, religious and class-based identities. The national identity is only one ingredient in a bubbling stew of local, state and regional identities, ethnic, cultural and religious identities, educational/alumni, professional and tradecraft identities, and elusive but consequential class-based identities.

Composite states are intrinsically trickier to rule, as there is no ethnic or cultural identity that unifies the populace. Lacking a national identity that supersedes all other identities, composite states must tread carefully to avoid fracturing into competing regional, ethnic or cultural identities.

Composite states must establish a purpose-based identity that is understood to demand shared sacrifice, especially in crisis. In the U.S., the national purpose has been redefined by the needs of the era, but never straying too far from these core unifying goals: defending the civil liberties of the citizenry from state interference, defending the nation from external aggressors, and serving the common good by limiting the power of special interests and privileged elites.

We’ve failed to limit the power of privileged elites, failed to demand greater sacrifices of the wealthy in exchange for power, and so the moral legitimacy of the regime has been lost. And with the ascendance of self-interest and the elite’s abandonment of sacrifice, social cohesion has been lost.

This loss is reflected in the bitter partisanship, the increasingly Orwellian attempts to control the mainstream and social media narratives, the debauchery of “expertise” as dueling “experts” vie for control, the fraying of social discourse, the substitution of virtue-signaling for actual civic virtue, the institutionalization of white-collar crime (collusion, fraud, embezzlement, etc.), the increasing reliance on Bread and Circuses (stimulus, Universal Basic Income) as real opportunity dissipates, and the troubling rise in shootings, crime, random violence and plummeting marriage and birth rates.

The unraveling of social cohesion has consequences. Once social cohesion unravels, the nation unravels.

What’s the solution? At the national level, all that has been lost will have to be restored: civic virtue, moral legitimacy, the social contract of opportunity, shared sacrifice that falls most heavily on the wealthiest and most powerful, and a renewed national purpose centered on serving the common good.

Is such a restoration of moral legitimacy and shared purpose even possible? No one knows. If history is any guide, such a renewal is only possible after the empire of rampant self-interest implodes.

So what do we do in the meantime? Nurture our own social cohesion by living purposefully and sharing sacrifices and bounties with those we trust and admire–those in the lifeboat we chose to join.