The Joy of Central Planning

123
Fri, Nov 1, 2013 - 5:08am

When thinking of central planning, the things that often spring to mind are the 3- and 5-years plans of the Soviet Union, PRC or any number of Eastern Bloc states in Europe during the cold war. We can think of grey, soulless bureaucrats in a Kafkaesque maze of government offices, or the upstanding Party members in the grey concrete halls of the Ministry of Plenty.

But centrally planned economies are not by any means new, nor are they exclusive hallmarks of communist regimes. Some oft-forgotten examples:

  • Park junta and 3rd/4th Republic in South Korea
  • Military dictatorships in general, such as Burma (Myanmar)
  • Religious autocracies, such as Iran
  • Monarchies such as Saudi Arabia
  • Any economy during major war (esp. one threatening existence of nation – see most participants of WWII, though arguably the United States was least at risk)
  • Dictatorships in general (Gadaffi’s Libya, Hussein’s Iraq, Mubarak’s Egypt)
  • Joseph and the Pharaoh, collecting and storing 20% of the grain and foodstuffs during plenty, for redistribution / sale during the subsequent years of famine and drought

The United States is most often held up as the shining example of a ‘market economy’ or a ‘free market’ – where objective, impartial and (in the long run) infallible rules of the market shape the economy, development, resource utilization and output. It is the so-called ‘textbook example’ of a free market, indeed, the champion and guarantor of free markets worldwide – thanks to its economic influence, trade relations, investment prowess and expertise, available investment capital, rule of law, benevolent military might…

While you may notice that I am drifting into sarcasm, most of the world still hold many or most of these to be true, even if they might consider the US misguided on one policy or another, too arrogant, too interventionist, etc. But in truth ALL of these factors can be questioned and if not laid to waste, certainly taken off their perceived pedestal:

The US Central Bank dictates, in concert with (who is the marionette and who is the puppeteer?) the Government monetary policy for the global reserve currency, and thus the world. The cost of currency/capital/loans are by definition of the current system FIAT – centrally planned.

Regulatory laws (or lack thereof) in ALL industries and areas directly influence, shape and guide the course of development – from deciding the survival/regeneration/downfall of entire sectors, down to the required thickness of workboot soles.

Property regulations, at both the Federal, State and Local level dictate the terms of property and productive asset ownership, the type, number and specific characteristics of enterprises which may be established in a given locale as well as in the country as a whole.

Tax and benefit laws are central to shaping societal behavior, social stratification, wealth transfer, performance incentives, investment and saving patterns. They are also used as an alternate/unofficial regulatory mechanism, again fundamentally altering the economy’s structure.

Six words: Patient Protection and Affordable Care Act

In Communist economies and societies, there was once a widely known doctrine that ALL activities could be divided into three categories:

  1. Supported
  2. Tolerated
  3. Forbidden

This applied to EVERYTHING, from personal expression, art, economic ventures, research, trade relations with specific countries or companies – even the citizens themselves, ultimately fell into one of these buckets.

In looking at the system in the US or most other developed Western countries to some degree, I am hard-pressed to not see the exact same type of categorization taking place on a daily basis. The size of these categories may vary, the boundaries between them may be more permeable (mainly through the judicious application of ‘lubricant’ to the palms of those involved formulating policy).

The size, power, resources of the state have become so large as to seem Olympian in scale to the average individual member of society. Not just big, but SO huge that its size no longer even bears discussion, or consideration. In spite of all the rhetorical battles over whether .gov should regulate more or less, whether companies have too much power/status or if they are being stifled by regulation, the question that seems to me to be most important is very rarely asked: why should .gov have the power at ALL to be the arbiter of how and whether the economy develops? How and whether the citizenry is able to survive, work, earn a living, educate their children? And if we decide that yes, government SHOULD do these things, how can we expect it to carry out this task with so few citizens expending any effort to think through and be involved in the affairs of government? Currently in the US, there is not even a single-year budget, and can-kicks have sharply decreasing half-lives. At least the Communists had (have) 5-year plans, indicating some modicum of forward-thinking and long-term planning.

The problems with central planning remain the same, no matter how sophisticated a planning model is used, how accurate the measurement of economic activity is, or how powerful policy tools are available to shape the development and speed of the economy. In the end, the artificially created construct of the system becomes dependent on the ‘shaping’ or ‘managing’ forces for its survival. Maintaining these forces requires energy, which must be derived from the output of the system. What we are seeing today is the approach of the point where the energy required to keep the structure together, coupled with the amount of energy being leeched off by parasitic entities of many stripes, ultimately exceeds the surplus output of the economy. Like the great white shark, the system laboring under these conditions, as well as a debt-based money system, must constantly keep moving to survive. As Turd and others keep telling us, QE is ∞, and in my view this 'structural drag' is the other reason for it, besides exponentially growing 'monetary base' required by compound interest and currency based in debt. Whether you look at this as just part of the buttress supports holding up Jim Willie's Tower of Treasuries, or more broadly the Petrodollar Reserve Currency, or even more broadly the Fiat Ponzi (TM), one of its functions is to maintain central planning control.

When communist regimes switched from centrally planned economic models to ‘free market’ ones, many of them implemented a shock doctrine: a rapid, forcible transition with quick, sudden moves, quick privatization and drastic monetary policy shifts. The rise of the oligarch class, the political instability and government corruption/ineptitude, the eventual (but apparently all but inevitable) drift towards nationalistic, authoritarian-leaning political leadership in these countries was directly caused, or indirectly enabled by BOTH: the central planning AND the rapid transition to a different model. Whether this is something that could or would happen in the US is debatable, my crystal ball is very much clouded on this aspect. The structural stresses caused by ‘central planning’ are, however quite apparent -- and one might argue that the 'shock doctrine' has begun long ago, and is well underway.

Epilogue

Turning back to the topic of the ‘original’ central command & control economies, specifically the USSR – is ‘collapse’ inevitable? Was the ‘liberalization’ of economic policy and the current setup REALLY an abandonment of central planning – or could it be argued that current conditions in Russia are just as, if not more, centrally planned just like the US – minus the benefit of the global reserve currency? Just so there is no lack of conspiracy theory, there is a fascinating story to be found in the accounts of Anatoliy Golitsyn. He was a KGB defector to the US, who warned that the Soviet communist regime was playing a decades-long game of deception – faking its death to try to take over the world by exporting communism. Interesting alternate view of modern history… His books are ‘New Lies for Old’ (full book in PDF here) and ‘The Perestroika Deception’ (full book in PDF here).

For those with a couple of hours to kill – interviews with the editor of Golitsyn’s second book:

https://www.youtube.com/watch?v=zkw8nwHG2GM

https://www.youtube.com/watch?v=JhZHJhSjN8w

Some Golitsyn predictions from 1984:

“It is more than likely that these cosmetic steps will be taken as genuine by the West and will trigger a reunification and neutralization of West Germany and further the collapse of NATO. The pressure on the United States for concessions on disarmament and accommodation with the Soviets will increase. During this period there might be an extensive display of the fictional struggle for power in the Soviet leadership. One cannot exclude that at the next party congress or earlier, Andropov will be replaced by a younger leader with a more liberal image who will continue the so-called "liberalization" more intensively.”

About the Author

  123 Comments

Watcher
Nov 1, 2013 - 1:58pm

Thanks JY

That is some great stuff. Good job JY. Few are aware of Golitsyn's writings and the great deception of the Soviets. They are in a war with the banksters for dominion. There will be no vacuum. Many of us know who will end up with everlasting dominion. Won't be long now.

FYI: Here is a forum that emphasizes the final phase of the Soviet long range deception. https://thefinalphaseforum.invisionzone.com/index.php?showforum=3

SteveW ag1969
Nov 1, 2013 - 2:05pm

@ag1969: Raw milk products

"Thankfully, here in NH, they allow the very dangerous practice of buying real, raw, organic milk, as nature, not the USDA, intended it."

It's allowed here with sometimes deadly consequences.

https://www.theglobeandmail.com/news/british-columbia/deadly-e-coli-in-b...

"Health Canada told us that it does not require raw milk cheese to be labelled"

https://www.cbc.ca/thecurrent/episode/2013/09/20/raw-milk-cheese-risks-r...

Products need to be labelled including those derived from GMO so that people can make choices. Washington state is voting on a GMO labelling law next week but it looks set to fail after all the money spent against it.

https://www.biotech-now.org/food-and-agriculture/2013/10/washington-stat...

ag1969
Nov 1, 2013 - 2:15pm

Steve W

People die all the time from all sorts of things. Be it bad food, a car accident, or falling off of a cliff. The worst possible outcome of someone's unfortunate death is government regulation. I can't think of much I would want the United States Federal Government to do for me. They have proven on just about every single thing they have ever tried that they are miserable failures.

Do you think the war on milk is because the government wants to protect us? I don't. I would be more likely to look at who is lobbying for the milk industry, who they are paying off, and I would bet you find the real motivation behind the war on milk.

murphy
Nov 1, 2013 - 2:24pm

Enemy of the State

Just saw this posted on Jesse

Redefining 'Imminent Threat'

In early 2013, a Department of Justice white paper surfaced that laid out the Lawfulness of a Lethal Operation Directed Against a U.S. Citizen.

The government lawyers who wrote the 16-page document asserted that the government need not possess specific intelligence indicating that an American citizen is actively engaged in a particular or active terror plot in order to be cleared for targeted killing.

Instead, the paper argued that a determination from a 'well-informed high level administration official' that a target represents an 'imminent threat' to the United States is a sufficient basis to order the killing of an American citizen. But the Justice Department’s lawyers sought to alter the definition of 'imminent,' advocating what they called a 'broader concept of imminence.'

They wrote, 'The condition that an operational leader present an imminent threat of violent attack against the United States does not require the United States to have clear evidence that a specific attack on U.S. persons will take place in the immediate future.'

The government lawyers argued that waiting for a targeted killing of a suspect 'until preparations for an attack are concluded, would not allow the United States sufficient time to defend itself.' They asserted that such an operation constitutes 'a lawful killing in self-defense' and is 'not an assassination.'

Jameel Jaffer of the ACLU called the white paper a 'chilling document,' saying that 'it argues that the government has the right to carry out the extrajudicial killing of an American citizen.'

Jaffer added, 'This power is going to be available to the next administration and the one after that, and it’s going to be available in every future conflict, not just the conflict against al-Qaeda.

And according to the [Obama] administration, the power is available all over the world, not just on geographically cabined battlefields. So it really is a sweeping proposition...'

Today, decisions on who should live or die in the name of protecting America’s national security are made in secret, laws are interpreted by the president and his advisers behind closed doors, and no target is off-limits, including U.S. citizens. But the decisions made in Washington have implications far beyond their impact on the democratic system of checks and balances in the United States.

Jeremy Scahill, Perpetual War

https://jessescrossroadscafe.blogspot.com/2013/10/an-enemy-of-state.html...

Reminded me of this old movie.

Enemy Of The State - Trailer - (1998) - HQ

Here's the full movie for the weekend if you are so inclined

Video unavailable
sierra skier
Nov 1, 2013 - 2:30pm

The real reason for Milk controls

Is more than likely the governments desire to Control and Tax the product.

Raw milk sold privately is likely not taxed nor the income claimed so the government looses out. Raw milk sold privately avoids the FDA Controls and leaves the government out of the loop. The government is 'here to help and protect us',,,,,, god forbid we should take responsibility for our selves.

SteveW
Nov 1, 2013 - 2:35pm

ag1969

If you carefully read my comment it is an argument for labelling. I believe that people in all areas should have access to as much information as possible.

"Do you think the war on milk is because the government wants to protect us?"

No, the individual is at risk from government because of special interests. The full armour DEA style attack is just to intimidate and give the goons practice. The comment about a slim man in a bow tie calling for tea was very well put.

I consider a better organization for society is for it to be based on free enterprise limited by government rules and laws to prevent excesses. I think that was how it worked decades ago. Of course this is now turned upside down since free enterprise rapes and pillages without limitation, since it controls the government.

ancientmoney
Nov 1, 2013 - 2:39pm

Brandon Smith, meet Mr. Fix . . .

Oh, looks like you already know each other, quite well!

https://www.silverbearcafe.com/private/10.13/imf.html

Only Brandon seems to assume just financial annihilation, as opposed to inclusion of population annihilation . . .

I agree on the financial aspect, and hope and pray against the population part. so much to prepare for . . .


Nov 1, 2013 - 2:44pm
rxman
Nov 1, 2013 - 2:47pm

Obamacare=We the people are so screwed

Boots on the ground in the pharmacy. Generic drug prices trending parabolicly higher.

Example: Digoxin purchase on 8/15/13 $87.00/1000 count bottle

Digoxin purchase on 11/1/13 $978.00/1000 count bottle an 11.25x increase

Bringing 30 million uninsured who pay nothing into the system is going to be payed by whom? Well the answer is by those who have jobs, who currently pay, and are going to pay more. And this makes healthcare more affordable. F ing joke. Not to mention the provision in the bill to chip people with RFID under the guise of medical records. I could go on n on. Rant off.

rxman

ag1969
Nov 1, 2013 - 3:05pm

rxman wow! Does Digoxin...

...have silver in it or something? Oh wait....shit!

Spartacus Rex
Nov 1, 2013 - 3:10pm

@rxman - digoxin purchase trending higher

Perhaps heart patients will simply start planting Foxglove in their own gardens! Gee, Chemistry, It ain't Astrophysics! 

Dyna mo hum
Nov 1, 2013 - 3:10pm

Word is LAX shooter

is/was a TSA agent per Fox news....

Dyna mo hum
Nov 1, 2013 - 3:27pm
Bollocks
Nov 1, 2013 - 3:35pm

Pink Floyd Night...

on BBC 4 tonight. From 9pm.

3 1/2 hrs worth wink.

USA and Canadian turdites: tough shit surprise.

Dyna mo hum
Nov 1, 2013 - 3:35pm

I remember this outfit JY

Too bad no one would pay attention... now we pay our dues...
https://en.wikipedia.org/wiki/House_Un-American_Activities_Committee

ButchCassidy
Nov 1, 2013 - 3:37pm

Sweet article. On the subject

Sweet article. On the subject of the markets, did the dollar actually rally 1,5 points the last couple of days?


Nov 1, 2013 - 3:41pm
ancientmoney
Nov 1, 2013 - 3:44pm

Fresh Andy Hoffman snippet . . .

posted at silverseek site:

"No, the farcical PM attacks that commenced the second the FOMC announcement was made were solely to prevent major PHYSICAL deliveries on the COMEX. Yesterday was "first delivery day," and with so many in-the-money contracts amidst record low inventories, the Cartel was TERRIFIED as to what might occur. Oh it inevitably will, with the only question being when. Meanwhile, the RECORD global demand will only increase at these prices below the cost of production. And if you don't believe the latter point, take a look at what Barrick Gold announced today. Yes, the world's largest gold miner is desperately seeking to stave off bankruptcy.

Andrew C. Hoffman, CFA

Marketing Director

Miles Franklin Ltd.

zman
Nov 1, 2013 - 4:05pm

Bearish Signs?

Dow/Gold- Stocks are very close to taking out the recent July high on this ratio, it looked like a breakdown just 4 weeks ago, that is over in short order as stocks continue to out pace gold. The ratio is at 11.89. Gold/Bond ratio- a strong sign of deflation as bonds gain strong ground against gold the last 4 weeks. Gold/Silver- after a strong move silver (a few months ago) is now under-performing, the ratio is at 60. GDX/Gold- looks like miners are almost at all-time lows relative to gold once again, not a good sign. CRB index- once again commodities are getting killed, looking to test the April lows in short order, another deflationary trend. Dollar- this hated paper was very oversold and is now starting rally to 80.70, the rally might have just started, if so another bearish sign. Euro- After trading up to 1.38, this very over valued paper is now starting to sell off, now at 1.34 today if could really go to 1.20 or even lower, adding strong support for the US dollar. PPI- was down -0.1 at the last report, big business does NOT face inflation.

The Doc
Nov 1, 2013 - 4:06pm

Jim Willie: The Game is Over.

Jim Willie: The Game is Over. King Dollar is Dead!

willie

Many analyst writers choose the Black Swan analogy to describe deeply ominous events in progress, with little forward notice. The analogy simply does not fit anymore, as an armada of black swans is more appropriate, spotted on regular and frequent sightings. The US financial fortress died in September 2008
The Grand Paradigm Shift is in progress. My sources indicate that 5000 metric tons of Gold bullion moved from London to points East between April and July 2012. The flow eastward never stopped. The pace has continued. The Gold bullion continues to be shipped in enormous staggering volume.
The agreements have already been made on the new Gold Trade Settlement system with its newly imposed Gold Trade Standard. They have agreed on a $7000/oz gold price, with a similarly exalted silver price of at least $250/oz.

Decisions have been made final. The implementation is slow but steady.
The game is over. The King Dollar is dead.

https://www.silverdoctors.com/jim-willie-the-game-is-over-king-dollar-is...

achmachat
Nov 1, 2013 - 4:23pm

From Jim Willie:

"The agreements have already been made on the new Gold Trade Settlement system with its newly imposed Gold Trade Standard. They have agreed on a $7000/oz gold price, with a similarly exalted silver price of at least $250/oz. Decisions have been made final. "

this would mean that the decision has already been made that the Gold to Silver ratio would go to at least 28! If that decision has already been made, why would any of these players "in the know" buy any gold, while the Gold to Silver ratio hovers around 60?

They'd be at least twice as wealthy if they purchase silver. I don't know about you guys, but in my book a 100% wealth difference is kind of a big thing.

Bollocks
Nov 1, 2013 - 4:29pm

JW: "My sources indicate"

I honestly think he makes up about 50% of what he says. I've always had a gut feeling about this, even though I agree he's an entertaining listen.

Just saying...

Stock_Canines
Nov 1, 2013 - 5:01pm

JW: Wow, he is entertaining

Bat sh*t crazy, but entertaining (that is if you like being fed lies that support dreams of higher PM prices). I am absolutely sure that $7000 gold and $250 silver have been agreed to, and I am sure we will see these prices sooner rather than later. You guys can't actually take this guy seriously, can you? 


Nov 1, 2013 - 5:41pm

Interesting angle on Sino-Russian relations...

...in Golitsyn's work. I am not sure if it's mentioned by Bezmenov (lower-level, but more 'recent' defector from KGB), but one of the central tenet's of Golitsyn's thesis is that competition and hostilitites between USSR (Russia) and China are merely stage dressing. They in fact are coordinating and cooperating at a fundamental level, and act as the two blades of a scissor-tactic or pincer-movement. According to him, the two (formerly?) Communist states have carved up the world into spheres of influence, both as a staking of claims, but also as a division of labor.

"Historically relations between the Soviet and Chinese Communist parties have been the subject of much confusion. To a significant extent, this was due to a wide-ranging and successful wartime and postwar disinformation effort designed to mislead the West on the nature of Chinese Communism and to conceal the steady buildup of Soviet diplomatic, intelligence, and military help to the CPC in the final years of the civil war in China. [...]

The Sino-Soviet scissors strategy has not been recognized for what it is. In short, first the Soviet Union and then China carried out the classical strategic precept of seeking to enter the enemy's camp unopposed and, if possible, welcomed by him. As Sun Tzu said: "To subdue the enemy without fighting is the acme of skill." [...]

"To sum up, the coordinated duality of Soviet and Chinese policies offers a number of advantages for communist strategy. It enables the communist bloc to retain the initiative, to open up new possibilities for maneuver, and to induce erroneous responses from its opponents. Where there are conflicts in the outside world, it enables the two communist partners, by taking opposite sides, to strengthen communist influence simultaneously over both parties to the dispute. It enables one partner to operate effectively in areas from which the other is excluded or deliberately excludes itself for tactical reasons. It facilitates a division of labor between the two partners and enables one to take unorthodox or provocative action without compromising the other. In the longer run, through enabling the Chinese to express hostility to the Soviet Union and emphasize their concern with Chinese national interests, it may well help China to appeal more effectively to the overseas Chinese." -- New Lies for Old

I have a distinct impression that some (i.e. Western analysts and strategists) seem to think a) this is the game being played, and b) this has anything to do with China:

When the reality is much more akin to these:

Note the similarities to the 'seeming conflicts ' Russia appears to have with Saudi Arabia, Germany, UK, etc. As well as China-Japan, and how convenient it is for BOTH to have N.Korea available to generate conflicts at will. Wondering if India v. Pakistan falls into this category as well. Deceive rivals AND solidify domestic support by projecting external boogeymen.
tyberious
Nov 1, 2013 - 6:52pm

achmachat

I made a significant trade yesterday! But alas my bilge pump failed and it now swims with the fishes :(

zman
Nov 1, 2013 - 7:20pm

Looks like Andrew Maguire is

Looks like Andrew Maguire is putting himself on the line with this prediction. One can only cry wolf so many times, time will tell.

https://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/11/1_Maguire_-_Big_Banks_In_Trouble_As_Major_LBMA_Default_Nears.html

silverwhere
Nov 1, 2013 - 7:39pm

cry me a murky river CFTC!

cry me a murky river CFTC!

CFTC Delays Cases, Shelves Probes, in Funding Squeeze

Outgoing Enforcement Chief Says Agency is 'Undersized;' No Charges for Two Men in J.P. Morgan Debacle

https://online.wsj.com/news/article_email/SB10001424052702303843104579169901294571302-lMyQjAxMTAzMDMwMTEzNDEyWj

.

Dyna mo hum
Nov 1, 2013 - 7:44pm

Real life truth... I agree

Personnel Manager: “What is your greatest weakness?”
Applicant: “Honesty.”
Personnel Manager: “I don’t think honesty is a weakness.”
Applicant: “I don’t really give a shit what you think.”

sierra skier
Nov 1, 2013 - 8:06pm

Cftc and funding.

Perhaps if the CFTC was doing their job they could have plenty of funding from the fines and penalties they would generate from vigorous prosecution of some of these criminals.

What a concept.

Occasnltrvlr
Nov 1, 2013 - 8:48pm

Duane v. Santa

So...Santa comes from the Darkside. Okay. Then, Santa understands the Darkside. And, he's revealing their gold-related machinations, and working to give commoners a defense.

And this is somehow bad? Chris distrusts him because Santa's not trying to overthrow the Darkside? Perhaps Santa simply knows better.

Doesn't Mr. Duane's vision involve surviving into the "new age," and then "banding together" to become a silver oligarch?

I know that many hold him in high regard, and Mr. Duane is clearly intelligent, clear-minded, and well-spoken. But I've gotta tell ya', I just get this "Sorry, I end up with all the marbles, too bad you weren't smart enough" kind-of feeling when listening to him.

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