US State Revenues Reach Pre-Crisis Peak
What Up, Orwell? Sobbing Woman Suffers Obama TSA Patdown {VIDEO}
http://www.youtube.com/watch?v=BSwKHDl9PtE&feature=b-mv
Comments »What Truly Matters in America
[youtube://http://www.youtube.com/watch?v=CWB2G9reo2I 450 300]
Comments »Lame Duck Turns Into Duck Confit
Chris Martenson: “The Trouble With Money”
“Recently I was asked by a high school teacher if I had any ideas about why students today seem so apathetic when it comes to engaging with the world around them. I waggishly responded, “Probably because they’re smart.”
In my opinion, we’re asking our young adults to step into a story that doesn’t make any sense.
Sure, we can grow the earth’s population to 9 billion (and probably will), and sure, we can extract our natural gas and oil resources as fast as possible, and sure, we can continue to pile on official debts at a staggering pace — but why are we doing all this? Even more troubling, what do we say to our youth when they ask what role they should play in this story — a story with a plot line they didn’t get to write?
So far, the narrative we’re asking them to step into sounds a lot like this: Study hard, go to college, maybe graduate school. And when you get out, not only will you be indebted to your education loans and your mortgage, but you’ll be asked to help pay back trillions and trillions of debt to cover the decisions of those who came before you. All while operating within a crumbling, substandard infrastructure. Oh, and by the way, the government and corporate sector appear to have no real interest in your long-term future; you’re on your own there.
Yeah, I happen to think apathy is a perfectly sane response to that story. Thanks, but no thanks.
To understand how our national narrative evolved (or, more accurately, devolved) to become so unappealing, we have to take an honest look at money.
Money is Not Wealth
Money is just a marker for real things. As long as you can exchange your money for real things, your money represents value. Because we tend to conduct all of our most meaningful transactions using money, our perspective can become warped to the point that we think it is the money itself that has value.
The economy is measured in these units, these markers, which we call “money.” But money is not the same thing as the economy. Far from it. And money has no value on its own, but only in relation to the things we can exchange it for.
The economy consists of real needs and wants being fulfilled. On one end of the spectrum, we have the basics like food, water, shelter, medical care, and other necessities. On the other end of the spectrum, we have 15-minute neck massages at the airport. Everything else lies in between
Money, on the other hand, is simply a facilitator of exchanges.
When we reduce the economy to its simplest form, it really consists of a growing number of people trying to meet their needs and wants. More people (~80 million more each year) simply translate into increasingly greater demand for the earth’s limited and ever-limiting resources.
Since our human desire to consume is virtually limitless, a key role of money is to provide the scarcity necessary to divvy up a limited amount of goods and services among the population. There has to be a balance between money and the things that humans can produce and distribute, or else prices get out of whack.
So now let’s imagine a world where real things are in limited (and limiting) supply, and then compare this idea to our money supply in order to get a sense of where things are headed.
This is a chart of Money of Zero Maturity (MZM), which is the largest and most comprehensive accounting of money in the Federal Reserve system and has been ever since M3 was abandoned.
If that looks like an exponential chart to you, you are correct. Sure, there are a few wiggles and jiggles along the way, but the system of money we’ve been living under and setting our expectations around is an exponential money system. For it to remain in balance with resources that come from the earth, we need those to expand exponentially, too. If they don’t — and they can’t forever — things will get out of whack. And it’s probably no surprise to hear my view that money is what is increasingly out of whack in this story, not the earth’s resources.
One feature of exponential systems is that the amount of accumulation of whatever it is that is being measured increases over time. If we draw a few arrows on the above chart, we can see that money is accumulating in our system at a faster and faster pace:
“Stage 3” in this chart shows what has been happening since 2008. Aside from the little hump there in 2008, MZM is accumulating at the fastest pace in history. Isn’t that interesting? Even as employment is historically very weak, income growth is stagnant, the economy is limping along, and inflation is (allegedly) quite low, the US is manufacturing money at the briskest nominal pace in the series.
The reason that we’ve not experienced massive inflation (yet) is that the money that is being injected into the system is basically just piling up and not really doing anything. It’s just sitting there. One measure of this is the so-called ‘velocity’ of money, which is not actually a measured value but an inferred one, derived by dividing the stock of money into GDP. The higher the resulting number, the faster each unit of money is racing around in the economy trying to do something (which usually means to spend itself before inflation steals its value).
In fact, the velocity of money is at an all-time low and seems to be headed lower. When this money all finally decides to go out and spend itself while it still has some value, it will be quite a process to observe. Just think of stored-up money like potential energy, the same as a massive snow cornice hanging precariously over a steep gully. It’s not a question of if, but when it will finally release and cause the value of money to plunge.
And the point I am trying to make is that there are two sources adding to the pressure here. One is the amount of money being piled up, and the other is the dwindling quality of oil. Adding more and more snow to the situation (as the Fed and other central banks are busily doing) is not really helping anything, and neither is a decrease in the net energy returns of new oil discoveries.
Just for kicks, here’s a chart of money in circulation (including cold, hard cash and coin) stretching back through time to around the creation of the Fed.
Is that a picture-perfect exponential chart or what?
Now the other side of the money situation is, of course, debt. Here we see something quite remarkable, which is that somehow the Fed has managed to achieve a new all-time high in total credit market debt.
I say “remarkable” because what really should be happening here is de-leveraging, not re-leveraging. We should be seeking to decrease the total amount of debt, not increase it. But of course, that is not the business of the Fed. Its business is strictly to keep the exponential money and credit systems growing exponentially.
Well, that and assuring that the big banks never have to have an unprofitable quarter. But that’s another story for another day.
Yet even with the heroic efforts of the Fed to push, badger, cajole, and horse-whip the aggregate amount of debt higher, its efforts are falling short. Note that we are still many, many trillions away from the trend line, which is what we’d need to get back to in order for things to return to ‘normal,’ as abnormal as those times really were.
Recall my other main point about debt, which is that it must double slightly faster than once every decade if we want the future to mirror the past four decades. This means that from 2008 to 2018, credit market debt will need to expand from $52 trillion to $104 trillion, or a bit more than $5 trillion per year, to keep us on the same “normal” trajectory.
Part of my skepticism about the odds of things returning to “normal” rests with the difficulty I have conceiving of what exactly it is that the US might find to suddenly go another $50 trillion into debt for.
If the US cannot find a way to go that much further into debt, then all of the many fine and subtle, overt and gross ways that we’ve come to expect the economy and financial markets to work will no longer apply. Many things will change and will simply operate very differently if no other reason than credit growth has slowed to a relative crawl.
As we are now four years past the 2008 crisis and we’ve only just managed to eke out a nominal new high in total credit market debt, this means that we are roughly $20 trillion behind the curve. You could do worse than this for an explanation as to why the national budget is such a wreck, why incomes are not keeping pace, and why the nation’s infrastructure and capital investment are in such poor shape.
The bottom line is that, as expected and predicted here many times over the years, money creation with an eye towards keeping the credit markets expanding is the name of the game.
And the problem is that money is not wealth. It’s only a marker for wealth. Simply increasing the money supply without understanding where we are in the energy story is an incredibly risky, if not foolish, thing to do.
That’s the trouble with money.
Change Is Coming”
Comments »Gutting Budgets are in Favor Over Tax Increases for Reducing the Deficit
“(Reuters) – Cutting government programs is favored as the way to reduce the budget deficit by more than twice as many Americans as those who favor raising taxes, said a Reuters/Ipsos poll.
In a result that has held fairly steady over the past five months, the poll, released on Monday, found that 22 percent of those surveyed said that spending cuts alone were the solution, while 36 percent favored a mix of more cuts than tax increases.
In contrast, only 7 percent favored raising taxes alone, with 17 percent saying a mix with more tax increases than cuts would work best to lower the government’s $1.2 trillion deficit.
Thirteen percent said they were unsure and 5 percent said they did not know or were unsure about what should be done.
These results were nearly unchanged from February, although since January, support for budget cutsas the main way to attack the deficit problem had declined slightly.
With the Congress deeply divided on fiscal issues, the November 6 presidential and congressional election campaigns are increasingly dominated by debate over taxes and spending…”
Comments »The Power of $YELP – Snobby Critics are Getting Fired
via
SF Examiner Critic Unterman Dismissed After 20 Years
Monday, April 16, 2012, by Paula Forbes
San Francisco restaurant critic Patricia Unterman has been let go from the San Francisco Examiner after twenty years with the paper. Surely this is all Yelp’s fault, as the website is believed by some critics to have “contributed to the mass murder of true critics.” No, it is the fault of the paper’s new owners, Canadian publisher Black Company.
Unterman saw the Examiner go through three owners during her tenure as critic; she will be replaced byEast Bay Express critic Jesse Hirsch.
OJ Innocent; His Son Was the Murderer?
Get an Extension of Time to File 2011 Returns Beyond the April 17 Deadline
Charles Rettig
On April 10, 2012 the Internal Revenue Service issued a reminder (IR-2012-45) that taxpayers unable to meet file their 2011 income tax return by the April 17, 2012 deadline, can obtain an automatic six-month tax-filing extension IF REQUESTED ON OR BEFORE APRIL 17, 2012.
The filing date for 2011 tax returns and extensions is April 17 because April 15 falls on a Sunday and Monday, April 16 is Emancipation Day in the District of Columbia — a local holiday unfamiliar to many Americans but, by law, District of Columbia holidays are treated like federal holidays when it comes to tax deadlines. As such, the due date for 2011 tax returns and extensions is Tuesday, April 17.
Extensions can be obtained through a paid tax preparer, by using commercially available tax-preparation software, by filing a paper IRS Form 4868 (available at irs.gov) or online thru the “Free File” link on IRS.gov (http://www.irs.gov/efile/article/0,,id=118986,00.html ). Of the 10.5 million extension forms received by the IRS last year, about 4 million were filed electronically.
Read the rest here.
Comments »
The Treasury Expects Bailout Funds to Produce a Profit for Taxpayers
It’s official. There is a Muslim exemption to the First Amendment.
Posted by Carol Rose, On Liberty April 12, 2012 05:00 PM
ACLU of Massachusetts Education Director Nancy Murray contributed the following guest post:
Tarek Mehanna is no David Stone.
David Stone and members of his Hutaree anti-government militia amassed a huge arsenal of weapons, including the ingredients for explosives, and allegedly plotted to kill a police officer and bomb his funeral. A federal judge in Michigan said they were just venting and exercising their First Amendment rights.
Mehanna, a 29-year-old pharmacist from Sudbury, Massachusetts, emailed friends, downloaded videos, translated and posted documents on the web, and traveled to and from Yemen in 2004.
No evidence was presented in court directly linking him to a terrorist group. He never hatched a plot – indeed, he objected when a friend (who went on to become a government informer and has never been charged with anything) proposed plans to stage violent attacks within the United States. He never had a weapon. He did lie to the FBI. And he has just been sentenced by US District Court Judge George O’Toole to 17.5 years in a supermax prison on various material support to terrorism charges.
Over 220 of Mehanna’s supporters in an overflow room watched on a screen as prosecutor Aloke Chakravarty in his pre-sentencing remarks stressed the “gravity” of Mehanna’s offenses. Over a decade ago, he claimed, “this defendant began to radicalize” and to radicalize others to “visit violence” on Americans. Although he failed in his efforts to find a terrorist training camp when he visited Yemen in 2004, he found his niche, the prosecutor stated, serving as the “media wing” of al Qaeda, translating documents, and sharing videos.
“The impact of the harms created through that work is huge,” Chakravarty asserted. “We don’t know how many have been radicalized…people around the world are consuming his work…The damage he has done will linger.”
The prosecutor went on at length about Mehanna’s “reticence to assist the government” – that is, become an informant. He maintained that nothing is wrong with soliciting cooperation if it is necessary to keep the country safe.
Defense attorney Jay Carney countered that Tarek Mehanna was being punished for activity protected by the First Amendment, for translating documents freely available in Arabic on the Internet and for his refusal to be an informant. The government, Carney said, does not want people to be able to read the views that other people hold. “This case goes further than any other in attacking speech protected by the First Amendment,” and involved important constitutional issues at every turn.
The attorney asked the judge to focus on “what the defendant did and did not do” – he went to Yemen for one week eight years ago. He refused to go to Iraq with the friend whom the government later enlisted as an informer. He was under close FBI scrutiny for more than eight years – if he was so dangerous, why did the FBI wait so long to arrest him?
When Tarek Mehanna personally addressed the court he described the moment when he was approached by two federal agents who said he could do things the easy way or the hard way: if he chose the easy way, he would never see the inside of a cell.
Mehanna then eloquently talked about the world view he adopted during his childhood when he avidly read Batman comics and then books like Uncle Tom’s Cabin and began to see the world in terms of the oppressor and the oppressed. He talked of learning about the struggles against slavery and for civil rights, and how impressed he was by Malcolm X and his transformation from a petty criminal to a devout Muslim. It was this, he said, that made him look more deeply into Islam and become increasingly devout.
And then he began to look to what was happening to Muslims around the world. He was horrified by the suffering caused by the sanctions on Iraq and Secretary of State Albright’s comment that the death of half a million children because of the sanctions was “worth it.” Deeply angered by the “shock and awe” US invasion, he described how affected he was by atrocities committed by American forces in Iraq and Afghanistan.
In his view, what the government had really put on trial was his belief that Muslims in other countries had the right to defend their own land from foreign invaders, including Americans. He thinks “one day America will change. One day people will look back with horror at how hundreds of thousands of Muslims were killed by American soldiers.” Meanwhile, he is the one who will go to prison as a “terrorist.”
The Mehanna case ruling and sentencing suggest that Muslims do not have the right to protected speech, and that “venting” can cost them the long years in prison spared the Hutaree militia.
Read the rest here.
Comments »Documentary: The New American Century
Yesterday was a lovely day to smell the roses with my grand-kid.
I see the markets tried to mangle my portfolio while i was unable to make any decisions. That is always the dilemma between being a trader and a investor.
At any rate, as I spend time with with my grandson, I wonder in the back of my mind what type of world will he grow up into. The most important lesson for him and all kids is to remember and study history so they can bring forth a world that is not doomed to repeat itself.
This documentary should be a reminder to all of us about the preciousness of life.
Cheers on the rest of your weekend!
[youtube:http://www.youtube.com/watch?v=OIHSUJr5jeM 450 300] Comments »Americans Begin to Trade Up After a Period of Frugality
The article is about trading up, but the firstparagraph opens with middle to higher incomes buying Este Lauder and Dunkin Doughnuts. My bad, but I never considered EL or Dunkin as a trade up….down and out perhaps.
Comments »Yale’s Shiller: Millions of Families Are Facing Eviction
Gas Prices Cut Into Convenience Store Profits
It has been touted that the recent rise in gas prices has not cut into consumer spending all that much. But if you don’t buy a coffee, candy bar, or newspaper how healthy can the consume be ?
Comments »Government to Pay Indian Tribes $1 Billion for Mishandling Funds and Natural Resources
“The federal government agreed to pay $1 billion to dozens of American Indian tribes to settle charges that it mishandled money and natural resources held or managed on their behalf.
The settlements announced Wednesday, awarded to 41 tribes, include some claims dating back 100 years and follow nearly two years of negotiations between the tribes and the Obama administration. Attorney General Eric Holder said they mark an important step in the administration’s efforts to resolve decadeslong conflicts between the federal government and the tribes.
“These settlements fairly and honorably resolve historical grievances…that, for far too long, have been a source of conflict between Indian tribes and the United States,” he said.
The settlements will be paid from the Judgment Fund, used to pay settlements or judgments against the U.S. government.
The latest settlement doesn’t resolve all lawsuits by tribes against the government….”
Comments »Fed’s Yellen: Easy Policy Appropriate Right Now
“The Federal Reserve’s ultra-easy monetary policy is appropriate given high unemployment and the headwinds facing the economy, the No. 2 official of the U.S. central bank said on Wednesday, as she left the door open to further action if needed.
Janet Yellen, the Fed’s influential vice chair, said the economic outlook is particularly uncertain, as she highlighted concerns about unemployment. Still, overall, Yellen said she expects the economic recovery to continue and to strengthen somewhat over time.
She defended the central bank’s expectation that it will keep benchmark interest rates near zero through at least late 2014, but said guidance could shift in either direction depending on the economy’s performance.
“I consider a highly accommodative policy stance to be appropriate in present circumstances. But considerable uncertainty surrounds the outlook, and I remain prepared to adjust my policy views in response to incoming information,” Yellen said a speech to the Money Marketeers of New York University.
“In particular, further easing actions could be warranted if the recovery proceeds at a slower-than-expected pace, while a significant acceleration in the pace of recovery could call for an earlier beginning to the process of policy firming” than the central bank’s policy panel currently expects.
Yellen said while the labor market has shown signs of improvement, the economy remains far from full employment and the pace of economic growth is likely to be sufficient to lower joblessness only gradually.
While she doesn’t see evidence of a significant increase in structural unemployment – jobs that have permanently disappeared – so far, Yellen said she was concerned it could rise over time if the labor market heals too slowly.
“My concern is that individuals with such long unemployment spells could become less employable as their skills deteriorate and as they lose their connections to the labor market,” Yellen said.
The struggling housing sector, fiscal policy and the sluggish pace of economic growth abroad are all factors weighing on the outlook, Yellen said.”
Comments »
Allan Hall Was a Hero
Seconds later, the children started screaming for help. Their parents rushed into the water and were each able to pull a child to safety, but a third child, a little girl, was still in harms way in the rough water. Alan Hall jumped into the tide without hesitating, Julie Hall said.
Comments »BREAKING: ZIMMERMAN IS GONE
Lawyers don’t know where the fuck he is, claiming they’ve “lost contact with Zimmerman” and no longer represents him.
