Politics and economics--Sorry, they cannot be separated

Tue, Mar 14, 2017 - 10:49am

The other night, I could not sleep, and as usual I went downstairs, stoked up the fire, and began to let my mind wander, digging out my subconscious concerns so I could face them. And as usual, my 22 year old daughter, who is a night owl, wandered downstairs and said, “Hi Dad. Can’t sleep? What’s on your mind?” She plopped down on the couch next to me and we started talking.

Of course, one of the things on my mind is the future, and how we will prosper survive as this economy slides deeper into the Keynesian-socialist bog of debt-serfdom. At one point, my socialist daughter asked me a question that I couldn’t answer: “Why can’t we invent things to save labor, replace workers and make it so people don’t have to work?” Of course, she wants free college, and she wants to see her friends prosper, and she wants her dream job and country home. She can see it happening in the current system through the power of technology.

My gut knew that what the US is doing economically cannot work long-term, but at 2am, I was unable to articulate an answer to her question. Why can’t technology save us? Why won’t socialism work?

I suppose the short answer is: human nature. But at what point do things break down. And what do they break down into? Well, my old career at troubleshooting electrical systems established some neural pathways that like to start at the beginning. 1+1=2, 2+1=3, etc. And later that day, in the shower, I started at the beginning, pondering how economies function properly and the role of precious metals. There is no need for me to mention that she is not the only one wondering about it. So let’s take a look at my limited perspective.

Why can’t we have a society where people do not have to work as much?


A long, long time ago, in a river valley far, far away, (perhaps where I living now, picking up 1000 year old pottery shards when I walk the dog), a man and woman, Ralph and Lynn, wandered in one day and began living their lives…

Life was very hard. But they learned that each had a talent. Ralph was good at building shelters and Lynn figured out how to make warm clothing from animal skins.

Soon, another couple, John and Shannon, moved to the valley and set up camp nearby. John had a talent for cultivating plants, especially ones that are good to eat. And Shannon had a talent for herbs, spicing food and curing illness.

Being bored, the two couples became friends. Ralph was appalled at the crappy little lean-to their new friends lived in, but he were in awe of how much food they had stored for the winter. So they made a deal, and the first economy was born.

Ralph built a new house for John & Shannon, in return for a winter’s worth of food that they could easily spare from their bounty. That winter a 3rd couple wandered into the valley. Jim was a good hunter and Audrey knew how to find clay near streambanks and make pottery for storing food and wine. The other two families immediately saw advantages to their new friends and welcomed them into their community and economy.

Another set of newcomers had a talent for animal husbandry. A fifth family arrived who were very clever at inventing tools that made the work of everyone easier.

As the years passed, more people wandered in, each with a useful talent, each finding a helpful place in the community. They also found shiny little rocks in the streambeds by the mountain. Everyone liked them so they began to trade back and forth for the goods or services they needed. Before long, nobody had to work quite as hard, relying on the talent of each other to easily do whatever task was needed.

To pass their evenings they told stories of the old days intended to teach their children the right way to live, and invented playing cards and a game called “Poker.” The shiny rocks were especially handy for this game. The community found an equilibrium within a standard of living that all were enjoying.

Finally, a family arrived bringing problems with them. Bernie and Jane started helping in the fields, a little bit, but didn’t offer any special talent of their own, except for being really good at storytelling and poker. As the months passed, they worked less and ate more. Their kids ducked away from working, just like their parents. And this family had more children than any of the other families. As a long winter settled in, it became apparent that feeding this new family meant others had to eat less. And some people stopped playing poker.

The economic equilibrium began tilting. Keeping this new family in the community meant a lower standard of living for all. (The community decided that Darwinism was sub-human and agreed to feed & house the family and continue to encourage them to contribute.)

As the years passed, the original members grew old. They just could not work as hard as they once did. Their knowledge had already been passed on to their kids. Sure, they could do easier tasks a few hours per day, but the community felt a decline in productivity as all the aging parents entered their “golden years.”

At a group meeting, the community made a decision. After rejecting Andy's idea to mercifully strangle anyone that could not pull their weight, they chose to continue supporting their parents and accept a reduced standard of living for the entire community. After all, the new generation recognized that they owed it to their moms and dads. Another problem emerged after time. Occasionally, a community member would be seriously hurt, but never fully recover physically, and their contribution to the community welfare was greatly reduced. Again they met and decided to accept the burden of supporting their injured friends, finding tasks they could perform, yet accepting another reduction in their standard of living.

They felt good about helping to support their parents and hurt friends.

The community’s hard work and steady technological advances, found an economic balance that continued to provide an acceptable living for all.

But more things went wrong…

First, people from the valley over the ridge began sneaking into their area at night, stealing vegetables from the farms and community gardens. Ralph’s son, Andy, volunteered to keep their farms safe from thieves, but of course he needed a release from his work duties, an official title of “Reeve,” and he needed a sidekick deputy, his buddy Barney, Bernie's son, to help with the long nights and stressful work. He also settled disputes between the citizens (as he now called them). The standard of living of all declined a bit more, but the benefits of safety and justice were worth the cost. Equilibrium was re-balanced, but with a lower standard of living.

As time passed and the community grew, a group of Bernie's friends got it in their heads that they also deserved food and shelter, just like Bernie and Jane. Their reasoning was varied, but they always resorted to claiming that “You cannot let me starve.” They refused to leave the community, and clung to relatives, continuing their demands. Unfortunately, the community conceded. They supported these people, while creating schools to provide them job training. But it never quite worked out because the folks spent most of their time telling stories and playing poker.

Soon, others envious of the housing and food being received for free decided to join their group, which they cleverly called “socialists.” The drain on public welfare became untenable. The working folks began to call them “sluggards.”

Something had to change. And to the community’s great relief, a clever man, Maynard, (whom nobody trusted around their kids) stepped forward and offered a plan to manage the welfare of the entire community through wealth creation that required no work at all. Maynard proposed that they ditch their “barbarous” shiny rocks and use paper money as a medium of exchange, printing as much as needed to house & feed everyone, requiring all to accept it for their services.

Just like the invention of the plow, hybrid crops, medicinal herbs, hydrology, the wheel, the lever, and hot pockets, the people of the community accepted his plan as another technological improvement.

But everyone did NOT live happily ever after …

Even with their technological advances, there just were not enough people producing as much as what everybody wanted to have. Many of the workers came to resent the sluggards and refused to have anything to do with them ... and they kept their shiny rocks.


Well, this author hates stories with tragic endings. Unfortunately, our own economy is heading toward a tragic ending.

Somebody paid for the donut I snatched yesterday in the office break room! And if I don’t put a buck into the coffee can on the counter, I’m on the receiving end of micro-socialism.

For each person taken out of the productive work force, the rest of society foots the bill. “Free college” will be paid by someone—the government, via taxes on the workers. That free healthcare will be paid by those same workers’ tax burden. Food assistance? Rent assistance? Section 8 housing? Unemployment? Free busses?

Any hard-working economy has a fixed number of people it supports—the elderly, the young, the disabled and we are OK with that. But when too many people are on the receiving end, without contributing, the burden becomes too great …

…unless the economy can borrow money to make up the difference. And Maynard has a plan for us to do that.

Borrowing is spending your future labor today. But the day comes when you need that labor value in your own future, and it will not all be there. Your personal finances will break down and you will face the whip of the slave master.

3-1=2. Not 3. And borrowing the 3rd dollar only temporarily balances the equilibrium. It is a debt to another. The borrower becomes the servant of the lender, owing a portion of future labor.

The US government will extort collect .3 trillion in taxes but spend .9 trillion in 2017. State and local governments are borrowing fiat money to balance their budgets also.

My daughter argues that cutting the US Military (a great idea) can balance our budget. It almost does, if we eliminate it entirely. But she fails to realize how many US citizens are employed by that military and pay taxes, who would then move to the other side of the equation, becoming in need of housing & food, rather than contributing. And we shouldn’t disperse the entire military. That is no solution.

The United States is already more socialist than we realize, if we define socialism as various products and services provided to the poor from taxes upon those who work.

The share of national debt for each tax-paying citizen is 166K . Funny, I don’t recall borrowing that money, or getting any benefit from it. At least I got a house to live in with my mortgage debt of 100K.

When does the slave master’s whip arrive? Well, Venezuela and its 30 million citizens found out and are now considered a “failed state.” Their paper money (promises to pay) lost their trust in the world economy. And Goldman Sachs managed to gain possession of their shiny rocks prior to their collapse.

The most successful socialism is found in Denmark, and it maintains a balance, as long as their paper money holds its value against other paper monies, and as long as they keep borrowing. To their credit, they are trying to pay down their national debt to balance the system. The Danes are a hard-working innovative people, but their nation may break if the surplus fiat from European QE is taken away. And don’t think their citizens are happy about having the highest taxes in the world to run their socialist utopia. Their experiment has left its 5.7 million citizens about 1 billion in debt. Their system is not balanced, requiring loans to stay solvent.

Our youth today—millennials, that is—unfortunately have been bombarded with visions of a socialist utopia, failing to mention that it requires continued borrowing to maintain. Free college, shorter work weeks, free health care, cheap mortgage rates. In the next election, socialism will rise again with another Berniesque candidate and even more young voters seduced into its ambitious promises—promises that can only be kept through continually increasing the public debt.

Far too many Americans are not working. Far too many are “underemployed.” Far too many are working two jobs to make ends meet—and paying taxes in a dozen directions to provide a living for those who will not work. People are going deeper in debt personally, and collectively. And if the wealthiest Americans pay relatively little tax, due to write-offs and business losses, it leaves an eroding body of workers paying for the welfare of nearly half the nation. If these trends continue, the US will reach a breaking point, just like Venezuela. I wonder if Fort Knox and the Fed vaults still have our 8K tons of shiny safely inside? If not ... there will be no remedy, and that will be tragic.

A tragedy is not simply a story with a sad ending. That tragic story captures something deeper, capturing our imagination, revealing our own deep fears. The playwright, Arthur Miller wrote an essay in 1949 as Communism was overtaking half the world—an essay that eloquently defines the nature of tragedy:

But there are among us today, as there always have been, those who act against the scheme of things that degrades them, and in the process of action everything we have accepted … is shaken before us and examined, and from this total onslaught by an individual against the seemingly stable cosmos surrounding usfrom this total examination of the "unchangeable" environmentcomes the terror and the fear that is classically associated with tragedy … the underlying fear of being displaced, the disaster inherent in being torn away from our chosen image of what and who we are in this world. Among us today this fear is strong, and perhaps stronger, than it ever was. In fact, it is the common man who knows this fear best.

Millennials like my daughter fear for the future. They see deteriorating conditions as hope sets beyond the horizon. Any sophist promising hope appeals to them. To avoid a real tragedy that displaces what and who we are as free people, we must keep our focus on the oppressor: the banking system that has invented paper money, has stolen our shiny rocks, and to whom we owe our future labor. The banking system enslaves us, degrades us, and tears away our self-image. Without the debt it supplies, socialism could not keep a society living at an acceptable standard. And with too much debt, the standard is incrementally reduced and will eventually fail.

The only means we have to free ourselves from this oncoming slavery is to seek self-sufficiency, remain free of debt, and store our current labor surplus in the form of shiny rocks that exist outside of the control of the ones who would enslave us.

Keep working hard. Keep trading to earn some paper money if you have the skill. Even try some bitcoin. But most of all, keep stacking those “barbarous relics.”

That token of shiny metal means future freedom.

About the Author


Angry Chef
Mar 14, 2017 - 12:43pm

Hat Tip Dr. "J"

A deserving hat tip. Your story rings so true. The only thing missing is cleaning up a couple of minor typos and the addition of "usury".

I've been pondering this "usury" thing for a long time. Knowing that basic arithmatic means that debt based money+ interest = collapse. It can't be avoided. It's baked in the cake. I was thinking about how Bob Chapman used to refer to the Banksters as the Illuminati. Anytime I would bring this subject up I would be hit with the "conspiracy" theory angle. Yesterday I came across two article and I'll share them below.


" It has long been contended in the alternative research community and even among some "mainstream" researchers that the CIA was in fact established not so much as an agency of the federal government, but as an intelligence agency for Wall Street and "big finance", under the front of being a federal agency, conveniently paid for not by the obscenely rich, but by the American taxpayer. Think of it as the American version of the Most Serene Republic of Venice: a financial oligarchy disguised as a republic, complete with its own special version of the Council of Ten(the CIA), conducting its own foreign policy, espionage, and covert operations at the behest of said oligarchy, and making the citizens of Venice pay for it ".

Sound familiar ?

And then this.... Dave & Rory nailed it.

The U.S. System Needs To Reset – It Will Be Painful | Investment Research Dynamics

So my conclusion is that the Illuminati Bankster's do exist. That the CIA and probably other agencies like the FBI and IRS work for them. Whether they know it or not. That the system will collapse. Why ? It's baked in the cake ( debt based money + Usury = collapse ).



It's baked in the cake.

Mar 14, 2017 - 12:45pm

No buyers....only the manipulators

The buyers wait.....Regardless of USD/JPY or S&P.

Mar 14, 2017 - 12:45pm

enough already!

ok the paint is officially dry!

Nick Elway Doctor J
Mar 14, 2017 - 12:50pm

Quaker community consensus

Thanks Dr. J !

A quaker friend told me of their consensus approach. They keep talking until everybody is on board.

When the group grows too large to reach a consensus (around 50 people ?) it splits!

The group he goes to has an unstructured service (mostly quiet unless somebody has something to say)

Nick Elway
Mar 14, 2017 - 1:01pm

The community decided..

(The community decided that Darwinism was sub-human and agreed to feed & house the family and continue to encourage them to contribute.)

I think I found where things went wrong. What did "The community" do about old skinflint Al who said "I'm not willing to give up the fruits of my labor for some slacker." "You are going to have to use force to take my stuff."

There is no "community decides", there are just people. Some of them think it is OK to steal from Al to feed the slackers. Others say they are willing to volunteer some items from their personal stash to help the slackers survive.

If "the community" does not "decide" and things are not stolen from Al, then the slackers say "thank you" and the volunteers feel good.

If the thugs carry the day and steal from Al then the slackers feel entitled, forget to say "thank you". Al decides to produce less..why be productive if it is going to be stolen? The people who would have volunteered no longer feel good about their coerced donation.

"the community decides" and "we"(including people who had no intention of joining the "we") are red flags of statism and "legalized" theft.

Think of the sentences that start with "we"..

"we can't let people starve"

"we can't let people consume large sugary drinks"

..it is a long list.

When the topic switches to community defense from raiders from the next valley then "we have to take stuff from everybody to form an effective defense or everybody has to be armed and able to participate in defense" carries more weight. Skinflint Al not willing to participate in defense ..not much sympathy there. Thus the "government large enough to defend" argument carries the day and the would-be thugs (always ready to steal from Al) can happily steal from Al and find employment in this government-for-defense.

The problem comes when the threat from the next valley raiders goes away...and the thugs fear loss of their jobs and future inability to steal from Al..do thugs quietly go back to productive lives or do things to encourage the belief that the next valley raiders are still a threat so they could keep stealing from Al and even enlarge their sphere to steal-from-Al-to-feed-the-slackers.

This defense/freedom tug of war has been going on since at least 81 BCE.


The steal-from-Al-thugs were calling themselves progressives before Christ was born!

The don't-steal-from-Al-unless-it-is-really-needed-for-defense group was the Confucians.

The argument was whether to maintain the government monopolies on salt and iron when the threat from the mongols had abated.

edit: Salt was money

Angry Chef
Mar 14, 2017 - 1:04pm

The Banking Secret that neither Economists nor Laypeople Know |

The Banking Secret that neither Economists nor Laypeople Know | G. Washington | Covert Geopolitics

Et Voila ! Money from nothing and your chicks are free.... I can't wait to share this with my brother In-Law. He has two degrees in Economics and thinks Krugman is a super star !

Mar 14, 2017 - 1:06pm


Seems we have a line in the sand for hte USDJPY.

  • that gold is under pressure, yet steady, suggests that buyers are taking advantage of small manipulative dips.
  • that it is being held below 1211--the 38% fib level on my chart--suggests the bankers fear a rise prior to and after the announcement.
  • that AU is not rising against this falling dollar relieves my concerns about being "suckered in" only to get my clock cleaned with a post announcement smash.

I am expecting a lot of whipsaw action just prior to the announcement tomorrow, taking out stops on either side. Anyone know what tie they will announce? 2pm?

It is boring watching the paint dry. Time to walk the dog--perhaps we'll visit those ruins near my home.

TF Metals fan
Mar 14, 2017 - 1:18pm


Nice story and I also believe that as a society we need to find a way to have a balanced sort of contribution. But my questions are more focused on more willing people. Not the the ones eagerly looking for welfare or other free-loaders. And dear reader: I do not have the answers but am merely struggling with these questions like DR.J.'s daughter, albeit I am closer to DR.J.'s age :-).

I am more looking at the change in our societies over the past 200 years. 100 years ago the talented couple skilled in animal husbandry were able to keep 6 cows, maybe a few chickens and a pig. This would fit in nicely in the society as Dr. J. describes it. But this same farmer is, thanks to automation and milking machines, able to manage 300 cows today. The small society however, doesn't need that abundance of dairy products and meat. So what should our farmer do? Work only 1 hour per week again? Should our farmer not expand his capacity? And what about this slightly less talented farmer, unable to maintain 6 cows but only 4. Still enough to feed him and his family and provide enough trading material to obtain clothing and vegetables. He will be wiped out when the first farmer will decide to boost his production and blow all competition out of the water.

So what should our farmer do? Expand slightly and blow his competitor out of the water? Still have an easy life though. Because he is able to do much more. Or: Go for the 300 cows and seek new markets (which do not exist in our little world above so he would be hoping for the best)? But these two choices would mean his competitor will be on welfare and be a burden on him. What should he do? Stick with the current system then?

Second question: Today I am reading a book written by Sven Beckert 'Empire of Cotton' describing the success story of cotton since we changed the equilibrium through newly found land nobody owned (Caribbean and the south of the US) and the free labor that became available when cotton was traded for slaves in Africa. Cotton stands symbol for 'the great divide' in which the West has taken the lead in the world as we see today, accoring prof. Beckert. Yes: innovation in many fields have played a mayor role, improving output multi-folds over what it was. Together with crop cultivation, slavery and land expansion this tipped a millenium long equilibrium in the cotton fields of India, Turkey etc. Prof. Beckert describes this system as 'war capitalism' . In any case: it created far less work for people, replacing them by machines. Those people are finding jobs are in the low wages industry: in the service-industry as we see in the monthly employment data. But this means working for very low wages. And in developing countries like Malasia the working wage for a young women in the fashion industry is USD 1/day. Oh yes: she is also allowed 1 holiday. Per year. To see her child which is raised by her parents. She clearly is working hard, very hard. But then according capitalism she should be rewarded. You could argue she is not an entrepreneur because a real entrepreneur will create more welfare for her-selves even under those condition. But by no standards you can see her as a welfare person or a thieve. The people working for low wages in the West and developing world are only able to find work for those low wages. When your back is against the wall you will take anything to sustain your living. What is the way out of this for a large part of the world population?

I do not believe that the answer to these questions is socialism as you may fear. My whole working life I have been working in production improvements and I love it! But how do we spread the advantages of the mechanization of the world? Otherwise I fear we will become the next French aristocracy who didn't see it coming either....

DPMS308 Doctor J
Mar 14, 2017 - 1:19pm

Re: I wonder...

Dr. Jerome,

The answer to your question regarding Venezuela can be found here in the U.S. in NE PA and upstate NY. They may not look rich but I don't think their standard of living has changed much in over a century. We have pockets of Amish and Mennonites that have no debt, own huge farms free and clear with vast natural gas deposits under their feet, and are self-sufficient. Mother nature is their main concern and not bankers and a debt based economy. The soft modern comforts they live without is balanced with their comfort of economic stability that most of us find elusive. These people do not trade debt for future labor.

Edit: over sensitive touch pad keeps making edits that I don't see when it decides to jump else where when I am typing and not looking ...

Mar 14, 2017 - 1:24pm

Stifel Nicolas Brokerage Firm

"Stifel Access will be undergoing system maintenance on Tuesday, March 14th, 2017 from approximately 8:00 PM Central Time through Wednesday, March 15th, 2017 at 12:00 AM Central Time."

Can't remember them doing system maintenance in the middle of a trading day before. Anybody else getting similar maintenance on the 15th?

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