Friday, October 31, 2014

Don't Bet the Mortgage that QE Won't Be Back ...

Though I've already posted a link to David Howden's QE's Seeds are Already Sown, here's the full article that is a worthy read indeed, as it explains the Austrian business cycle theory and the outcome (bad) of bad monetary policy, namely in the form of malinvestment, and finally, that we reap what we sow.  Pass it on:  
The Federal Reserve has finally ended its quantitative easing programs. Since the financial crisis of 2008, the Fed has pursued what seemed like an endless policy of asset purchases. As recently as September 2008 the monetary base in the US was just a hair over $800 bn. Today this figure is just shy of $4.2 trillion, for a total increase of 425%.
For its part Janet Yellen and her gang of Fed economists are probably pretty pleased with themselves. Unemployment is down, headline inflation remains muted, and the word on Wall Street is that a worse crisis has been averted. The stock market is at record highs, and banks (and bankers) are back to their pre-crisis eminence.

One of the true marks of a great economist is an ability to see past the obvious outcomes and into the veiled results of policies. Friedrich Bastiat’s great essay on “that which is seen, and that which is not seen” provides a cautionary parable that disastrous analyses result when people don’t bother looking further than the immediate results of an action.

Nowhere is this lesson more instructive than with the Fed’s QE policies of the past 6 years.

Consider the Austrian business cycle theory. The nub of the theory is that changes in the money market have broader results on the greater economy. In its most succinct form, when a central bank pushes interest rates lower than they should be (by buying assets, for example), the greater economy gets distorted. Some of these distortions are immediately apparent, as consumers buy more goods and everyone takes on more debt as a result of lower interest rates. Some of the distortions are not immediately apparent. The investment decision of firms gets skewed as interest rates no longer reflect savings preferences, and the whole economy becomes fragile over time as erroneous investments add up (what Mises’ coined “malinvestments”).

When a financial crisis or economic recession hits, it’s almost never because of some event that apparently happened at the same time. The crisis of 2008 did not occur because of the collapse of Lehman Brothers. It happened because the whole financial system and greater economy were fragile following years of cheap credit at the hands of the Greenspan Fed. If anything, Lehman was a result of this and a great (if unfortunate) example of the type of bad business decisions firms are lured into by loose money. It wasn’t the cause of the troubles but a result of them. And if Lehman didn’t go under to spark the credit crunch, some other fragile financial institution would have.

The Great Depression is a similar case in point. It wasn’t the stock market crash in 1929 that “created” the Great Depression. It was a decade of loose money policies by the Fed that created a shaky economy. Again, if anything the stock market crash was the result of stock prices being too buoyant and in need of a repricing to reflect economic fundamentals. Just like today, stocks rose to such storied heights as a result of cheap credit, not because of the seemingly “great” investments funded by it.

The Fed has lowered interest rates since July 2006. We have just come off the the period with the most rapid and extreme increase in the money supply ever recorded in American history. The seeds of the next Austrian business cycle have been sown. In fact, they are probably especially fertile seeds when one considers that the monetary policy has been so loose by historical standards. Just as cheap credit of the 1920s beget the Great Depression, that of the 1990s beget the dot-com bust and that of the mid-2000s beget the crisis of 2008, this most recent period will also give birth to a financial crisis.

When the next crisis comes there will no doubt be economists and commentators who blame it on some proximal event, like the failure of a large important financial institution. Don’t be fooled. The seeds of the next crisis are already sown. Fed policy under Ben Bernanke and Janet Yellen has distorted the economy in a way that makes it precariously fragile, and susceptible to collapse.

Japanese Economy - Abenomics

Recall how Japanese recycled Prime Minister Shinzo Abe has printed stimulated the Japanese economy to the tune of $116B, all with the goal of course of ending Japan's journey through the economic doldrums (recession), which has been underway now for at least 30 years.  Of course, Abe said that "this time it would be different" as the stimulus would be "targeted" not on infrastructure, but on innovation and technology.  Well, all is not well and this time will be no different (well, at least if you're not counting being worse than before as 'different') than from the other failures in the past: Keynesianism does not work and you cannot borrow or print your way out-of-debt. 

So Abe-san, how's that stimulus working out for 'ya?

Why "This Time Won't Be Different" For Japan In Two Charts by Tyler Durden  [especially interesting is the impact of Japan's decision to shutdown all but one of its nuclear power plants after the tsunami]

Abe Says Fears Of Hyperinflation Are "Mostly" Unfounded As He Urges Companies To Hike Wages by Tyler Durden [last few sentences are all that need to be said]

Japan Food Prices Set To Soar As Government Hikes Wholesale Wheat Prices By 10% by Tyler Durden:
If the past three months have been any indication of what Japan has to look forward to from Abenomics, we have a feeling his tenure will be as short, if not shorter, than all of his recent (and numerous, among which he, himself) predecessors. Because while the stock market may have risen in lock step with the plunge in the Yen, what has also soared are costs. And while a very select few benefit from the transitory surge in the Nikkei, the rising costs, i.e., inflation, hit everyone equally.
But while the "no free lunch" reality has until now mostly been felt by those who need energy, as shown in "You Wanted Inflation, You Got It: Japanese Gasoline Price Rises To Eight Month High" the inflationary impact on Chinese imports is about to hit everyone like a sledgehammer right where it hurts the most: in the stomach, as the inevitable has finally happened, and the agriculture ministry announced that wholesale wheat prices are set to rise by a near-record 9.7% in April, which will shortly thereafter send regular food prices soaring.
And just like that Japan is about to learn that soaring stock prices always have a trade off, a lesson which even GETCO's S&P ramping algos will not be exempt from when the latest bout of soaring food inflation results in central banks scrambling to withdraw liquidity, just as they did in early 2011. The results will naturally be the same.

As for how long Abe's government will remain in power after energy and food inflation sweep through the net importing nation, that is anyone's guess.

Japan: Front-Runner Of Outright Monetization by Ryutaro Kono of BNP Paribas

Japanese Welfare Recipients Hit All-Time High by Tyler Durden

The Abenomics Farce Continues by Tyler Durden

Abenomics Tries To Make Sure Japan Is Going Down Swinging by Wolf Richter

Abenomics Utter Fail: Japan’s Crazy Exploding Trade Deficit  by Wolf Richter

Abenomics Wins: Budget And Inflation Both Jump (Over The Cliff) by Wolf Richter

“We Don’t Feel Any Impact Of Abenomics Here”  by Wolf Richter

Japan’s Frantic Redo Of An Artificial Boom Followed By A Bust  by Wolf Richter

BNP Warns Only 10% Chance That Abenomics "Ends Well" by Tyler Durden

Japanese Consumers, Hammered By Abenomics, Get Gloomier   by Wolf Richter

Cheered on by the OECD, Japan Announces Higher VAT Rate to Enable Bigger Government by Dan Mitchell

What Will It Take To Blow Up The Entire Japanese Banking System? (Not Much, According To The Bank of Japan)  by Wolf Richter

Chart Of The Day: "Japan Has No Alternative But To Print And Print And Print" by Tyler Durden

Abenomics One Year Later by Tyler Durden

Dismal Abenomics Leads To 16th Consecutive Decline In Japanese Wages by Tyler Durden

The Japanese Feel The Heat From The Big Lie Of Abenomics by Wolf Richter  [last for 2013]

*******************   2014 *******************************

Crazy Abenomics Orgy In Japan Is Ending Already – Pounding Hangover Next by Wolf Richter

The Madness Of Abenomics In One (Crazy) Chart by Wolf Richter

Total Abenomics Fail Slams Japan Where It Hurts Most by Wolf Richter

Double Data Whammy For Japan As PMI Tumbles & Industrial Production Misses By Most Since Abenomics by Tyler Durden

The Economic Catastrophe That Is Abenomics Sends Japanese Gas Prices To Five Year Highs by Tyler Durden

Abenomics At Work: Largest Ever Trade Deficit Slams Domestic Wages, Gooses Overseas Corporate Profits by Mike Mish Shedlock

Abenomics At Work: Japanese Consumer Confidence Plummets Due To Rising Prices, Stagnant Wages by Pater Tenebrarum

Abenomics Down The Memory Hole: Maniac Money Printing Has Not Stopped Japan’s Falling Wages by Jeffrey P. Snider

Abenomics At Work: Japan’s April Output And Orders Fall Sharply by Mike Mish Shedlock

Japan’s 10th Round Of QE: Still A Flat-Out Failure by Jeffrey P. Snider

Abenomics: Japan’s Live Fire Test Of Keynesian Central Banking Is A Growing Disaster by David Stockman

Abenomics' Legacy: Japan's Greatest "Misery" In 33 Years by Tyler Durden

Abenomics Nails Japan’s Workers: April Real Wages Down 3% Y/Y by Jeffrey P. Snider

Japan’s Great Keynesian Rebuke: Abenomics Has Wiped Out ItsTrade Accounts—-Exactly Opposite The Theory by Jeffrey P. Snider

The Essence Of Abenomics: Swapping Japan’s Historical Trade Mercantilism For Keynesian Financialization by Jeffrey P. Snider

The Wrath of Abenomics: Sales Collapse, Inflation Soars by Wolf Richter

Abe's Worst Nightmare: Household Spending Collapses As Inflation Spikes by Tyler Durden

Printing Press “Prosperity”: The Complete And Utter Failure Of Abenomics by Andy Sirkis

Japan’s ‘Surge’ Undone: The Abenomics Rebuke To Keynesian Money Printers by Jeffrey P. Snider

The Flame-Out Of Abenomics, in One Crucial Chart by Wolf Richter

 Pity The Japanese: They’ve Been Turned Into Keynesian Lab Rats  by Jeffrey P. Snider

 What Japan’s June Trade Disaster Really Means: Abenomics Is Flaming-Out by Wolf Richter

Abenomics Is Working: Japanese Households On Welfare Rise To Record by Tyler Durden 

The Raging “Success” of Abenomics in one Crucial Chart  by Wolf Richter

Japan’s Keynesian Money Printing Experiment Continues To Fail: Jobs, Real Incomes And Spending Plunge Again from ZeroHedge

Keynesian Central Banking Is An Economic Scourge: More Evidence From Japan from Jeffrey P. Snider

The Wrath of Abenomics Crushes Japanese Consumers, Eviscerates Economy by Wolf Richter:
So the hapless Japanese consumers are in the nightmarish situation of having to watch how the government that they themselves elected into power is executing its plan that had been part of its election platform. That plan is now destroying their earnings power and their life savings at a rate that middle-aged Japanese have only read about in history books.

Abenomics Crushes Sony: Electronics Giant Forced To Cancel Dividend For First Time Ever by Tyler Durden

Miraculous Impact of Abenomics on Trade, in One Chart by Wolf Richter

Prime Minister Abe’s Keynesian Delusions  by Jeffrey P. Snider

Japanese Stocks Tumble After BoJ Bond-Buying Operation Fails For First Time Since Abenomics from ZeroHedge

In Memoriam: Abenomics from ZeroHedge

New:  Keynesian Yen Trashers At Work: Abenomics Triggers Soaring Bankruptcies In Japan from ZeroHedge

Quote of the Day: On The Nature of Government

Today's QOTD is a repost of Professor Don Boudreaux's Quotation of the Day ... :

… is from page 197 of Michael Huemer’s impressive 2013 book, The Problem of Political Authority (emphases original):
A related form of utopianism consists of suspending general assumptions about human nature when considering agents of the state.  Defenders of government are often keen to point out the harms that might result from the widespread greed and selfishness of mankind in the absence of a government able to restrain our worst excesses.  Yet they seldom pause to consider what might result from the very same greed and selfishness in the presence of government, on the assumption that governments are equally prone to those very failings.  It is not that statists have some account of why government employees are more virtuous than average people.  Nor do they have some plan for making that be the case.  Rather, it seems simply to have never occurred to most statists to apply realistic assumptions about human nature to the government itself.  The state is treated as if it stood above the empirical human world, transcending not only the moral constraints but also the psychological forces that apply to individual human beings.
In short, the typical statist case for government intervention depends upon the occurrence of miracles. It’s very unscientific and not at all reality-based.  It’s utopian in the worst way.

Must Read: America Cannot Kill Its Way Out of the ISIS War

A must read on "Operation Inherent Resolve" from Reason's Zenon Evans entitled America Cannot Kill Its Way Out of the ISIS War:
The U.S. is a long way from resolving "Operation Inherent Resolve", our new and undeclared war in Iraq and Syria. President Barack Obama says it's "going to be a long-term campaign. There are not quick fixes involved. … As with any military effort, there will be days of progress and there are going to be periods of setback." We're only four months into what the president suggests could be a three-year fight to "degrade and destroy" the Islamic State (ISIS).

The looming question is, how does war with a totalitarian jihadist group actually end successfully, rather than morph from one military campaign into another ad infinitum? It's going to take more than just bullets and bombs. And it's not going to be a simple "we win, they lose" scenario.

ISIS does have weak points militarily. If allied forces can free cities like Mosul or Kobane, they'll strike a serious morale blow that could dissuade future recruits. America is also already bombing oil refineries, a major revenue stream, and there's a good chance ISIS doesn't use banks, so they have millions, if not billions, in cash that's vulnerable for targeting.

Whether the American-led coalition can actually pull off a military victory is yet to be seen. But our airstrikes aren't as effective as hoped, the majority of American troops want nothing to do with this war, our humanitarian aid and weapons have fallen into ISIS's hands, and our relatively small coalition is divided by rivalries and historical tensions.

"The kinetic part of this—drone strikes, airstrikes, Special Forces raids—that is just a tactical and operational tool to constrict the threat group's mobility," explains Sebastian Gorka, Major General Horner Chair at the Marine Corps University and Adjunct Professor at the Institute on World Politics.

A military success, however, does not guarantee the prevention of bigger, badder groups in the future. After all, we battled back Al Qaeda and now have ISIS, its ugliest off-shoot, on our hands. According to a 2008 Rand Corporation study, when terrorist groups do actually cease to exist, "nearly 50 percent of the time [since 1968], groups ended by negotiating a settlement with the government; 25 percent of the time, they achieved victory; and 19 percent of the time, military forces defeated them." And, "big groups of more than 10,000 members have been victorious more than 25 percent of the time."

Christopher Harmon of the Asia-Pacific Center for Security Studies has also looked at historical trends, and his "How Terrorist Groups End" lays out five potential courses: the use of force, which the U.S. has been hesitant to commit in the current case; a good grand strategy, which requires even greater commitment; decapitation of leadership, which is "exceedingly difficult to do"; the terrorist group entering the political process in the occupied nations; or the group winning state power.

So, is it possible to speak diplomatically with an organization that has a stated goal of establishing a religious totalitarian state stretching from the western coast of Spain deep into central Asia?

ISIS is not a rag-tag outfit composed solely of crazies. It's a well-organized, mafia-esque, and business-savvy enterprise. In command are some of the high-ranking Sunni members of the Saddam Hussein regime. Many were driven there by the corrupt, post-war, American-approved Maliki administration, which ousted highly-skilled Sunnis from Iraq's military and instituted "unabashedly Shiite-first policies." Barely half of Sunnis had faith in their government even a year before ISIS showed up.

"Let's get really Machiavellian," says Edward Turzanski of the Foreign Policy Research Center. "And let's say they're less interested in some sort of Islamist ideal than they are in carving out their own sphere of influence" and "protecting Sunni Arabs in Iraq." This could come in the form of Harmon's fifth option, which has previously occurred fully in the case of Bolshevik Russia and, to lesser degrees, with Hamas in Palestine and Hezbollah in Lebanon. Or it could resemble Harmon's fourth scenario, as with the Irish Republican Army (IRA), which abandoned terrorist activity and now has former militants in office.

"As a matter of historical fact, insurgencies end by negotiations," says Christopher Preble of the Cato Institute. So who would be equipped to conduct such talks?

Although the U.S. is the head of the current anti-ISIS coalition, it would be a domestic political impossibility for America to take the lead in negotiations. Our mythos is that America wins wars cleanly without concessions, and President Barack Obama is personally unlikely to backtrack on his absolutist rhetoric about defeating ISIS without talks.

ISIS is "challenging the authority of established sovereign states," and as such, "any negotiations should be between the [Iraqi, Syrian, and Kurdish regional] governments and the insurgents," says Preble. Turkey may also be in a willing position to participate in negotiations, since it has already made trade-offs with ISIS and the group is now at Turkey's border.

It's possible, however, that talks couldn't be conducted at all. Some analysts contend that the West should not overlook the seriousness of ISIS's commitment to fighting tooth and nail for a caliphate. Harmon believes that diplomacy would be very difficult.

Gorka, citing ISIS's immense brutality and conviction that this is "the final war before the judgment day," says it would be impossible to get them to compromise. But he also notes that "we cannot kill our way out of this war" or we'll be at it for centuries. Rather, America's battle with ISIS, or in "any war against a totalitarian organization … will only come when you have adequately undermined and delegitimized the ideology of the organization. You have to destroy the brand."

Gorka suggests that the U.S. needs an analog to Reagan's Berlin Wall speech, in which the president shamed the communists, "blew their credibility," and made them "uncool."

The State Department is trying something of that sort with a social media campaign called "Look Again, Turn Away." It sends the right messages: ISIS primarily targets other Muslims, its fighters are deserters, and they do not really practice Islam or have real authority over Islamic beliefs.

But, again, the U.S. may not be the best equipped to handle this front. Scott Stewart, vice president of tactical analysis at the global intelligence firmStratfor, says, "America is seen as an outsider and a crusader. It really doesn't have any entre into that battlefield. Quite frankly, the stuff the State Department is doing is almost goofy."

One of ISIS's greatest strengths is its social media propaganda campaign, which makes the organization appear fearsome and enticing, whereas the State Department's work looks poorly Photoshopped. Best suited to break ISIS's grip on ideas, suggests Stewart, will be prestigious religious authorities at Saudi Arabia's Council of Senior Scholars and Egypt's Al Azhar University. "This is a battle for the soul of Islam, it's something that has to be battled between Muslims themselves," Stewart says.

None of these are short-term or singularly effective strategies—it's much harder to end a war than to start one. But they are important strategies that the American-led coalition must consider if the threat of totalitarian Jihadism is to be eliminated and the U.S. is to actually end its long counter-terror campaigns in the Middle East.

Thursday, October 30, 2014

Life 101

20 Harsh Life Lessons Everyone Should Learn In Their 20s ... if only someone had told me 30 years ago ... oh wait a minute, my dad did try ... I didn't listen ... should've ...

5 Tools for Thriving in Uncertainty 

My Most Effective Learning Tools

Worthy Reads on Security, Technology, Privacy and Surveillance

EFF Launches Updated Know Your Rights Guide  [Note: Make sure you pass this onto your children!]

EFF Relaunches Surveillance Self-Defense:
We’re thrilled to announce the relaunch of Surveillance Self-Defense (SSD), our guide to defending yourself and your friends from digital surveillance by using encryption tools and developing appropriate privacy and security practices. The site launches today in English, Arabic, and Spanish, with more languages coming soon.

Peekaboo, I See You: Government Authority Intended for Terrorism is Used for Other Purposes

The 7 Privacy Tools Essential to Making Snowden Documentary CITIZENFOUR 

The 90s and Now: FBI and its Inability to Cope with Encryption

Hackers Are Using Gmail Drafts to Update Their Malware and Steal Data

Verizon’s ‘Perma-Cookie’ Is a Privacy-Killing Machine

Now Everyone Wants to Sell You a Magical Anonymity Router. Choose Wisely 

Cancer 101

A repository of worthy reads on cancer  ...

Is a Cancer Cure Being Suppressed? by Bill Sardi

The End of Cancer in Your Lifetime? One Picture Has the Answer by Chris Campbell

Nutrition 101

Great starting point for a new repository on nutrition.  Let's start off by debunking the myths that are killing us.  All new updates will be in RED BOLD going forward:

New: 8 Impressive Health Benefits of Turmeric

New:  My Top 5 Superfoods

New:  Our Secret Weapon: The Green Drink

Study: Eating High-Fat Dairy Lowers Type 2 Diabetes Risk

12 Signs You Need to Eat More Protein

What’s the Deal with Fiber? 

Breakfast—Not the Most Important Meal After All... 

Butter Is Back—Processed Foods Are Identified as Real Culprits in Heart Disease

10 Reasons Green Tea Is The Healthiest Drink In The World

Top 10 Destructive Nutrition Lies Ever Told

Not All Carbs Are Bad: How You Can Tell the Difference

4 Foods That Have Surprising Medicinal Benefits

Study Shows That Coconut Oil Can Help Reduce Belly Fat

10 Shocking Facts About Processed Food

Four Great Fat Rich Foods To Start Adding To Your Diet

High-Carb Diet May Increase Your Risk of Dementia

The Health Benefits of Coconut Flour • A Gluten-Free Flour Substitute

John Yudkin: The Man Who Tried to Warn us About Sugar  [1.5hr video in the article is worth the time.  Sugar is a killer, plain and simple; followed by wheat]

5 Lies About Healthy Food That Are Making You Fat  [your body needs fat; plenty of it! Same with cholesterol.  Please, read the following books: Wheat Belly; Grain Brain]

7 Foods For Teeth That Your Dentist Wants You To Eat More Often  [not so sure about #6, as any sweetener will trip insulin production to some degree. I'm still researching this!]

10 Surprising Benefits of Walnuts You May Not Know About

11 Charts That Show Everything Wrong with Our Modern Diet

18 food replacement hacks worth giving a shot

7 Unexpected Ingredients You Might Eating For Lunch Today

15 Best Anti-Aging Foods You Need To Start Eating Now [Note: I'd say '14' ... be careful about #3: stay away from wheat! And, I'm not on board with the 'anti-aging' - they're just good foods]

All Salt is Not Equal

10 Amazing Benefits of Oolong Tea You Didn’t Know

Supplement Alert: Antioxidants May Protect Cancer Cells Instead Of Protecting Us From Them  [note: key word here is "may" ... more studies need to be conducted, and, the raw data and methodology for THIS study needs to be peer reviewed as well]

The Benefits of Coconut Oil

6 Things You Need To Know About Protein

How To Win An Argument With A Nutritionist

The Top Foods That Lead To Inflammation–Avoid These At All Costs

7 Super Foods That Will Make You Live Longer

8 Foods that Speed Up Ageing While Promoting Sickness:
4. Artificial sweeteners are worse than sucrose. Ignore the aspartame and diet soda trap, too. You should actually avoid all sodas, including diet soda. Aspartame is a neuron excitoxin that can excite brain cells to death, putting you in the fast lane to dementia or even brain cancer.

Health Repository: Exercise and Medicine

A health repository for superb articles on exercise and medicine.

Newer posts will be at the top, in red.  Check back often - your health depends on it!

New:  Walking More May Be Key for a Longer, Healthier Life

Study: Exercise Protects The Brain Against Depression

Nutritional Approaches to Mental Health

To Protect Your Heart, Your Sodium to Potassium Ratio Is More Important Than Your Overall Salt Intake

7 Tips to Ignite and Maintain Your Digestive Fire [note: I'm not so keen on #7, i.e., while I support the need for fiber, I'm not convinced of "whole grains" being the best source]

How Sugar Harms Your Brain Health and Drives Alzheimer’s Epidemic (aka "Sugar Kills and You Won't Even Know It - Literally")

Why Do People Gain Weight? (aka "Never Eat in These 11 Situations" - also explains the "freshman 15" though not explicitly)

9 Signs You Need to Eat More Fat

Must Read: Ketogenic diet beats chemo for almost all cancers Note: Doctor Thomas Seyfried is no quack!

Maybe We Don't All Need Annual Physicals

Fasting diets like the 5:2 'can help prevent diabetes by reducing cholesterol after 10 to 12 hours'

Is Alzheimer’s Caused by an Infection?

Are These the Reasons Why You’re Not Losing Belly Fat?

Top Ten Ways the American Health Care System Fails

The Importance of Vitamin D for Normalizing Your Cholesterol Levels

How To Workout At Home Without Equipment Or Weights  I liked this, but the language is unnecessary IMHO.  I guess I'm just getting old.

Hero’s Workout Styles You Can’t Miss My favorite set of exercises.  These come courtesy of Neila Rey's Free Visual Workouts

80% of Strokes Are Preventable

The Best Exercise There Is, Hands Down  easy, here it is:
The single best exercise there is, hands down, is the one you’ll do.

69 Kettlebell Exercises That Quickly Help You Get in Shape

7 Simple Ways To Be Healthy And Avoid Getting Sick [watch the video on sugar!]

7 Benefits of the Bulgarian Split Squat

Can exercising for just 60 seconds a week transform your health? 

How To Lose Fat Fast

Ketogenic Diet Improves Insulin Sensitivity and Numerous Aging Markers

Free Visual Workouts

6 Illustrated Guides To Different Types Of Meditation

Set Goals by Time Instead of Distance or Quantity  [IMHO this is the critical success factor to getting back into an exercise routine.  Don't set distance or quantity goals, i.e., '2 miles' or '20 reps'. It works]

15 Reasons to Sprint More This Year

Placebo Effect Dictates Therapeutic Effect of Headache Medication

Flame Thrower: Top 10 Natural Ways to Reduce Inflammation

"Punishment" Interest

You've got to read this Wolf Richter piece a few times to believe it.  I did - I kept thinking it had to be a piece from The Onion!  But this is not the case - it's real.  Imagine being charged by a bank to save your money.  Well, you don't have to imagine it.  Welcome to the world of negative interest rates!  Didn't think there's such a thing?  Think again.  This is much akin to bank bail-ins, which I've written about before, especially during the Cyprus meltdown a few years back.  Here's The Wrath of Draghi: First German Bank Hits Savers with ‘Negative Interest Rates': [emphasis mine]
Deutsche Skatbank, a division of VR-Bank Altenburger Land, which was founded in 1859, is not the biggest bank in Germany, but it’s the first bank to confirm what German savers have been dreading for a while: the wrath of Draghi.

Retail and business customers with over €500,000 on deposit as of November 1 will earn a “negative interest rate” of 0.25%. In less euphemistic terms, they have to pay 0.25% per annum to the bank for the privilege of handing the bank their hard-earned money or their business cash.

Inflation has had a similar effect in the zero-interest-rate environment that the ECB and other central banks have inflicted on savers, but this time it’s official, it’s open, it can’t be hidden. Instead of lending your moolah to the bank so that the bank can lend it out to businesses and retail customers for all sorts of economically beneficial purposes, you’re financially better off hiding it in the basement. Grudging respect is due the ECB and other central banks: through the perverse regime of ZIRP, they have succeeded in transmogrifying “cash in bank” from an income-producing asset to a costly liability.

“Punishment Interest” is what Germans lovingly call this. It’s the latest and most blatant step of the central-bank strategy to confiscate in bits and pieces and over time the wealth that prudent people and businesses have accumulated, and that should have re-entered the economy via the intermediation of the banks.

Last summer, the ECB imposed negative deposit rates on member banks. At first, it was 0.1%, which has now doubled to 0.2%. The reason? The ECB dragged out its “mandate,” which is, as it said, “to ensure” that “price stability” is “below but close to 2% inflation,” which in turn is “a necessary condition for sustainable growth in the euro area.” Whatever. There is not a scintilla of evidence that inflation is required for economic growth; however, there is plenty of evidence that economic growth can stir up inflation. The good folks at the ECB know this. It’s just the official pretext for using inflation to eat up debt – along with savers.

“There will be no direct impact on your savings,” the ECB announced five months ago. “Only banks that deposit money in certain accounts at the ECB have to pay.” But it added ominously, “Commercial banks may of course choose to lower interest rates for savers.”

And that would be good for savers:
The ECB’s interest rate decisions will in fact benefit savers in the end because they support growth and thus create a climate in which interest rates can gradually return to higher levels.
Thank you hallelujah, ECB, for helping out the savers!

This is in line with its policy, as it says, to “punish savers and reward borrowers.” No kidding. To bring some perspective to it all, it adds, “This behavior is not specific to the ECB; it applies to all central banks.”

Now the wrath of Draghi is hitting German savers and businesses. The first bank is already trying it out. Other banks haven’t yet jumped in line. They’re taking a wait-and-see stance but refuse to exclude the possibility.

“There is no planning in that direction,” Direktbank ING Diba told the Welt.

“We believe that negative interest rates on deposit accounts – whether for private or business customers – are a dangerous signal…” said a spokesman of the German Savings Banks and Giro Association (DSGV). But he did not rule out either that some member banks might not follow the same example in the future.

“The banks will try to avoid negative deposit rates,” explained the Federal Association of German Cooperative Banks, but in this zero-interest-rate environment imposed by the ECB, negative rates on large deposits “cannot be excluded.”

“At the moment, we are not imposing negative interest rates on retail customers,” said the second largest bank in Germany, Commerzbank. At the moment….

“We cannot earnestly rule out punishment interest in the future,” said Frank Kohler, CEO at the Sparda-Bank Berlin, the largest cooperative bank in Germany in terms of membership. He pointed out that the banks that are the most susceptible to punishment interest are those whose business model relies on pure banking with individuals and businesses, and whose earnings cannot be improved by investment banking, risk-taking, gambling, market-rigging, and other big-bank activities that “have triggered the financial crisis in 2007.”

“So precisely those banks suffer the most that have never put the financial system at risk,” he said. “This is unfortunately not free of bitter irony….”

The door to punishment interest has been cracked open. It starts with large deposits and small rates. Then step by step, deposit amounts get smaller and punishment interest rates get larger until everyone gets smacked with it, and no money is save. It’s all part of the time-honored central-bank strategy to flog savers until their mood improves.

Germans don’t get to do this, but the lucky Swiss get to: they get to go to the polls and tell their central bank what to do about gold. A yes-vote will send shock waves through the gold market and other central banks. Read… What the Swiss Gold Referendum Means for Central Banks

Quote of the Day

"We are living in The Neocon Moment, a testament to the foolishness and arrogance of those who believe themselves to be engineers of peoples, societies, and nations. Yet Washington officials have yet to tire of America’s permanent state of war. Only when the American people insist that politicians make peace, not war, will The Libertarian Moment finally arrive." - Doug Bandow, Suffering through the Neocon Moment: Warmongering and Nation-Building Don’t Work

Andrew Napolitano on The Presumption of Liberty

In the years following the adoption of the Constitution, before he was Secretary of State under President Thomas Jefferson and then president himself, James Madison, who wrote the Constitution, was a member of the House of Representatives. During that period of his life, he gave illuminating speeches and wrote elegant essays and letters about human freedom.

In one of his essays, Madison noted that freedom came about in Europe when the people rose up and cast off or intimidated tyrants, who reluctantly granted the people the freedoms they sought. That was, in Madison's words, "power granting liberty." The American experience was the opposite, he argued. After we seceded from Great Britain, the free people of the 13 independent states voluntarily came together and through the states delegated discrete amounts of power to a central government. That was, in Madison's words, "liberty granting power," especially since the people reserved to themselves the liberties they did not delegate away.

Much of the political class of the founding generation, unlike our own, viewed the Constitution as restraining, not unleashing, the government. They recognized along with Madison and Jefferson that natural rights—areas of human behavior for which we do not need a government permission slip—are truly inalienable. An inalienable right, like speech, worship, travel, self-defense, and privacy for example, is one that cannot be taken away by majority vote or by legislation or by executive command. It can only be taken away after the behavior of the person whose restraint the government seeks has been found by a jury to have violated another's natural rights.

This process and these guarantees are known today as the presumption of liberty. Stated differently, because of our recognition of natural rights, and our history, values, and written constitutional guarantees, we in America are self-directed and free to make our own choices. In fact, the constitutional guarantee of due process mandates that because our individual liberty is natural to us, it is always presumed; thus, it is always the government's obligation to demonstrate our unworthiness of freedom to a judge and jury before it can curtail that freedom. It is not the other way around.

Until now.

This past week has seen disturbing events in which the government, as if in "Alice in Wonderland" mode, has punished first and insisted its victims prove they are unworthy of that punishment. The IRS, for example, revealed that it has been seizing the contents of bank accounts of folks whose taxes have been fully paid. It has done so pursuant to a federal statute that permits confiscation if the government detects a series of bank deposits that appear to be structured so that a significant number of them are below $10,000. That number triggers a bank obligation of reporting the deposit to the feds.

The original anti-structuring statute required the feds to prove that the structuring was done willfully so as to avoid reporting requirements, rather than innocently or for some other not unlawful purpose, as is often the case. After the Supreme Court reversed the first structuring conviction that made its way there because the feds had failed to prove it was "willful," Congress responded by removing the word "willful"—and hence the burden of proving willfulness—from the statute and authorizing the confiscations. This violation of the presumption of liberty happened to more than 600 Americans last year, and fewer than 120 of them were actually charged with a crime.

Also last week, a nurse who returned to the U.S. from western Africa, where she had been caring for Ebola patients, was arrested at Newark Airport on orders from the governor of New Jersey and held in a tent in a parking lot in downtown Newark until she could prove she was not symptomatic with Ebola. This, too, violated the presumption of liberty. It is not she who must prove that she is not contagious in order for her to be set free; it is the government that must prove that she is symptomatic in order to restrain her. When she quite properly threatened to sue those who arrested her, they acknowledged that they had no evidence of her contagion and released her.

What's going on here?

What's going on is the systematic governmental destruction of the presumption of liberty in the name of public safety. Politicians who want to appear bold and strong often ride a popular wave and ignore the rights of their targets. And those responsible for public safety—all of whom have taken an oath to uphold the Constitution—have forgotten that chief among their duties is the safekeeping of our freedoms.

Would it be easier for the government to keep us safe from money laundering and Ebola if it could disregard the Constitution and trample personal freedoms? Yes, it would. But who would want to live in such a society? If the government can reverse the presumption of liberty over appearances, what is the value of constitutional guarantees? Whose freedom in America is safe today?

Are You an Authoritarian?

From Are You an Authoritarian?:

The Ending of QE (... for now)

Some interesting reading on the ending of the asset-purchasing program by the Federal Reserve, known as Quantitative Easing (QE).

And The Biggest Beneficiary Of QE3 Is...:
And the winner, with over $700 billion in extra cash added thanks to QE3, is: foreign (mostly insolvent European) banks.

So yes, European banks: feel free to send your thank you cards to the Fed: without its $1.3 trillion cash injection who knows how many of you would have passed the ECB's "no deflation to model" most recent Stress Test.
 Alan Greenspan: QE Failed To Help The Economy, The Unwind Will Be Painful, "Buy Gold"

Fireworks Fly As Peter Schiff Warns "An Economy That Lives By QE, Dies By QE"

Crumbling Foundation of QE’s  

Good Riddance To QE—-It Was Just Plain Financial Fraud by David Stockman

QE’s Seeds are Already Sown

Stocks Are On Borrowed Time:
At the end of the day, the single biggest driver of stock prices has been QE. Every time QE ended, stocks have tanked. So a new QE program is not coming anytime soon.

This is a major problem for stocks. The Fed has “saved” stocks every time in the last four years with a new QE program. It won’t be this time. 

Quote of the Day: On Intellectuals

"Too many intellectuals are too impressed with the fact that they know more than other people. Even if an intellectual knows more than anybody else, that is not the same as saying that he knows more than everybody else put together -- which is what would be needed to justify substituting his judgment for that expressed by millions of others through the market or through the ballot box." - Thomas Sowell, Random Thoughts

The Random Thoughts of The Sage, Thomas Sowell

Random Thoughts: [note: I humbly disagree with The Sage, as noted in RED]
Random thoughts on the passing scene:

The great boxing champion Joe Louis once said about one of his opponents, who was known for his speed: "He can run but he can't hide." In the Congressional elections this year, many Democrats are running away from Barack Obama, but they can't hide their record of voting for Obama's agenda more than 90 percent of the time.

Now that the Western democracies have learned the hard way what the consequences are when you admit all sorts of people into your country -- including people who hate both the principles and the people of your society -- will that cause zealots for open borders and amnesty to have some second thoughts, or perhaps first thoughts?
[Semper Ratio:  Mr. Sowell, the answer to your question is "Absolutely not!".  The Statue of Liberty espouses our view (supposedly anyway) on immigrants:
"Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"
It says nothing about their thoughts, political view, etc.  Granted, with the gift of hindsight we are allowed the luxury of second-guessing, even questioning the welcoming itself, however, we are supposedly the indispensable nation - so let's live up to it.]
I hope Yankees manager Joe Girardi was watching the World Series when Madison Bumgarner was allowed to come out and pitch the 9th inning, even though he had already made 107 pitches. Time and again, Girardi has taken out a pitcher who was pitching a great game, and brought in a reliever who lost it. Baseball statistics provide good rules of thumb, but bad dogmas on a given day.

There seem to be a lot of comic-book-level movies, with human beings playing the role of cartoons.

Never take other people for granted. There is a point of no return in all relationships.
[Semper Ration: With all due respect Mr. Sowell, please refer back to your immigration statement above.]

Back in 1947, J.A. Schumpeter said, "effective political reasoning consists mainly in trying to exalt certain propositions into axioms and to put others out of court." That is still the game being played by "global warming" zealots.

Some people question Barack Obama's competence, because he appointed a man with no medical background to be the Ebola czar. But Obama is not trying to solve a medical problem. He is trying to solve a political problem, on the eve of an election -- and a political partisan is the way to do that. Expecting Obama to be concerned about a medical threat to the American people is unrealistic, in view of the man's whole history.

When I see some of the bonehead plays by professional football players, I cannot understand why guys getting paid millions of dollars cannot stay alert for two hours, once a week.

Too many intellectuals are too impressed with the fact that they know more than other people. Even if an intellectual knows more than anybody else, that is not the same as saying that he knows more than everybody else put together -- which is what would be needed to justify substituting his judgment for that expressed by millions of others through the market or through the ballot box.

Sean Hannity recently pointed out an essential parallel between Islamic extremists and Nazis. One believed that they were the "master race" and the other that they are the only true religion. Both believed that this entitled them to kill others, just for not being part of their group.

Unless the Secret Service is given unambiguous authority to shoot anyone who climbs over the White House fence, without being second-guessed by people who will say "he shot an unarmed man," any president is needlessly at risk -- and millions of American voters' choice for that office can be nullified by any crackpot. You don't know who is armed or unarmed until it is too late.
[Semper Ratio:  They have unambiguous authority to shoot.  I believe in this particular case, they were simply just incompetent.]

Attorney General Eric Holder hit a new low, even for him, when he acted indignant about the leak of evidence supporting the police officer in the Ferguson, Missouri shooting -- on grounds that this was an attempt to influence public opinion before the grand jury makes its ruling. What was Holder doing from day one, other than trying to influence public opinion in the opposite direction?

In going through my mail, I am always amazed at how many people seem to think that a series of unsubstantiated pronouncements constitutes an argument.

Except for Congressional elections, the most important election this year is the close race for governor of Wisconsin. Governor Scott Walker has shown that he has substance and guts, rather than image and rhetoric, by opposing the government employee unions that have been bleeding the taxpayers. He would make a far better Republican presidential candidate in 2016 than Congressional phrase-makers or a retreaded candidate who lost in 2012.

Oil Prices

America is a nation whose politicians, so-called economists and its MSM are bipolar at best, ignorant at worst, and no single issue reflects this reality as does the recent drop in global oil prices in general, in America specifically. At one point, these "experts" bemoan the high prices and then, when prices are dropping at such an "alarming" (again, the word of "experts") pace, it's supposedly a bad thing!  Well, you can't have it both ways!  This is what happens when experts, especially the economically ignore ones known as "politicians", witness events they simply believed could never happen, which in this case, is a dramatic fall in the price of gasoline in the United States.

Remember when oil prices, expressed in terms of U.S. gasoline per/gallon prices, would rise somewhat suddenly and dramatically?  Politicians, especially our president, would look to blame speculators.  Of course, the MSM would echo the expressed opinions of their benefactors, and the hype would continue until such time that prices stabilized or the government said it was time to move on to the next scare-mongering subject.

Also, let's keep in mind the constant call for ending America's "dependency on foreign oil", which of course was echoed in words only, as its regulations against new oil drilling and refining of crude ensure the opposite.  Recall as well, how many commentators voice the opinion that foreign oil purchases are often the source for terrorism groups, especially in the Middle East.

Lastly, keep in mind as well the constant scare-mongering about "peak oil", i.e., the time when oil itself would run out and the world would ... well, be run on windmills ... but that's another story for another day.  Remember, basic economics teaches us that scarcity is the mother of invention, and that as prices of something rise, alternatives are discovered to address the scarcity.

So, now America is producing oil again thanks to the shale oil capabilities of new technologies, particularly in North Dakota.  Fracking has resulted in unlocking vast reserves of oil and gas here in the United States that has actually resulted in a call for lifting the government regulation against exportation of these commodities.  Basic economics again teaches us that as supply increases, prices will drop. 

Below are some worthy reads on the recent issue of global and U.S. oil pricing.  Enjoy (and learn!)

Q: If oil speculators were to blame for the $12 per barrel Jan.-June increase, do they now get credit for the $25 drop? from Professor Mark J. Perry

Petropreneur Harold Hamm summarizes the profound implications of the Great American Shale Revolution by Professor Mark J. Perry

Matt Ridley on why falling oil prices are unambiguously good – they make the world richer and fairer from Professor Mark J. Perry

New:  More milestones for America’s shale revolution, which has elevated the US to the world’s No. 1 energy superpower from Professor Mark J. Perry

From the Department of WTF Comes: How To Identify a Terrorist

Zenon Evans' You Look Too Calm. What Are You, a Terrorist? Now You Look Nervous, Terrorist:

Look too calm, you're suspicious. Look too nervous, you're suspicious. These contradictory assumptions are just several transportation guidelines on "reporting suspicious activity," revealed by an American Civil Liberties Union (ACLU) Freedom of Information Act (FOIA) request.

They comes from an employee document for Amtrak, which is publicly funded. These are signs that you should be paranoid of your fellow Americans, and call the police on them:
  • Evasive path through train station
  • Carrying little or no luggage
  • Last minute reservation
  • Traveling by an unusual itinerary (multi-changes in reservations)
  • Carrying unusually large amount of currency
  • Purchase of tickets in cash
  • Purchase tickets immediately prior to boarding
  • Unusual nervousness of traveler
  • Unusual calmness or straight ahead stare
  • Looking around while making telephone call(s)
  • Position among passengers disembarking (ahead of, or lagging behind passengers)
So, Amtrak travelers, make sure you walk straight, travel straight, look straight ahead but don't look straight ahead, keep pace with the rest of us, carry just the right amount of clothes, and wipe that look of fear or curiosity or contentment off your face, or else the terrorists win.

The ACLU explains that it made this FOIA request because it "has received reports from individuals wrongfully searched and arrested on Amtrak trains," and wanted to know what policies led to these arrests.

Amtrak has a "See Something, Say Something" campaign like the Department of Homeland Security, and like the Transportation Security Agency, Amtrak's "broad categories of 'suspicious' behavior is problematic because it almost always results in racial and religious profiling, as well as the targeting of perfectly innocent activity. Most importantly, building mountains of irrelevant data is ultimately an ineffective law enforcement tactic." The ACLU points out several stupid cases that make no one safer: one woman was arrested for talking to loudly, and a photographer was arrested while participating in Amtrak's annual "Picture our Train" competition.

The Fallacy of Quantitative Easing (QE)

Well, at least I have one person that agrees with me that adding $4T to the U.S. economy was a clusterfu*k!  Well, truth be told, people such as Peter Schiff and David Stockman have long been opponents to the madness that was QE.  Here's Mark St.Cyr's Putting The Fallacy Of QE Into Perspective:  [emphasis mine]

You can’t turn on a financial news program without being bombarded by panelists as well as the hosts ready-at-the-draw to pounce on anyone with an opposing view as to the “effectiveness” of the Federal Reserve’s quantitative easing program (QE).

Once again this played out just the other day on CNBC™ where this time it was Peter Schiff who found himself in the cross hairs of today’s version of “ambush the guest.”

You can agree or disagree with anyone’s viewpoint and I even encourage people to question mine if they see fit. However, you don’t have to be a rocket scientist to watch many of these anchors to witness for yourself what now has turned into all the appearances of – an ambush.

And the recurring foil used to defend their attack? (paraphrasing but it’s the gist) “You’ve been wrong about monetary policy for if you were invested in this market, you would be making money. And those who have listened to you have missed out. So won’t you now admit you were wrong?!”

Schiff wasn’t the first nor will he be the last and can defend his own calls and does so. But no one on these shows cares. And this is clearly visible for all to see in these exchanges.

You hear calls of “Admit it!, Admit it!” over and over again as someone is trying to clarify a position. Clarify in the real sense of the word. Not obfuscate it as the hosts or other “guests” are trying to imply by shouting over them.

It’s now gone from amusing to watch, to down right pitiful. Many times I’m left watching these hosts channeling that old quote, “Do you have no shame?”

I believe this shoe now fits a few too many feet today. And many of them can’t get the boot quick enough in my opinion.

So let’s put a little perspective on this whole thing we now know as QE and shed some light on the “brilliance” and the “understanding” of monetary policy that many of these so-called financial show hosts state they know so much about.

First: What great economic reason would they give that stopped the Dow 30K narrative in its tracks to then watch it plummet wiping out all the gains of 2014 – to then reverse and edge back towards the “Never before seen in the history of mankind highs?”

There was only one: Federal Reserve Bank of St. Louis president James Bullard. Period.

All one has to do is look at a chart for proof. Chart Courtesy of ZH from the article: Chart of the day: Bullard Bull#*t

Screen Shot 2014-10-29 at 11.27.44 AM

What more about monetary policy gone wrong does one need to know than to look at that one chart and see for oneself. Proof, that the policies we once knew as “monetary” have been so adulterated that the charts are now the equivalent of pornographic pictures.

Maybe what we really need is for all these charts to be bound in some magazine with an “adult advisory label” affixed to it. At least it would be more of a true descriptor than what we are told it is: “The picture of a real economic recovery.”

But in reality it goes a lot deeper than this. It is absolutely lost on nearly everyone exactly just how much money the Fed has really injected into the system with nearly nothing to show for but a stock market so fragile: a non voting FOMC member can shake its foundation sending it tumbling wiping out a years worth of gains in days. Then, just by reversing that statement reinstate it back to its lofty highs.

And the statement? (paraphrasing) “QE should end” “QE should continue.”

Sorry things like that don’t happen in a market based on true economic principles and activity. That only happens when you have a sham of a market.

Remember, the Fed has injected into the market nearly 4 Trillion dollars. That’s $4,000,000,000,000.00

To put this into perspective I wrote back in December of 2013 an article that brings into focus exactly what we’re talking about here.

Imagine if for the same amount of money we had done the following.
(Just to be clear – this is not an endorsement. It was only an exercise as a thought experiment for you need “big things” to really appreciate just how “big” these numbers truly are.)

From the article in December 2013: Perspective Is Needed More Than Just Numbers

“In just 3 years the Federal Reserve has pushed into the financial markets via the QE programs the equivalent in dollar amounts to have purchased 510 B-2 Stealth Bombers, 72 Nimitz Class Air Craft Carriers, 120 Ohio Class Submarines. and I still have nearly 2 more years of money to appropriate where ever or for what ever I desire. i.e., Two TRILLION is still in my pocket left to spend. QE and its equivalents are now nearing 5 years.

I still have plenty left to buy the aircraft, to man them or, the missiles to outfit them. Heck, that’s just if I stop here. So far there is no indication the Fed. is going to stop and there’s also talk that the new Chairperson might be inclined to spend more!

Maybe we should add a few M1 Abrams tanks just for the fun of it. They’re about $7 Million a piece so we can get Oh let’s say TWELVE THOUSAND a month. Yes that’s 12,000 per month or One Hundred Forty Four Thousand (let that number sink in – 144,000) in a year. Sounds like a bargain when I state it that way doesn’t it? And I would still have a Trillion left if they stopped printing today.

But here’s the real crux of this argument and why I stated it as such. Sure it’s a little hyperbole and the math is not exact. We would never do now nor would anyone ever approve of such a plan. However, think of where GDP and the economic output as to where it would be today as to employ the talent needed to build those marvels. The engineers, the skilled labor, the steel, the copper, the mechanized equipment, the hotels, restaurants, and more to feed those that just supply the day labor, never mind the industrial backbone of supply that would be needed and more.”

As far as what we have to show for all this spending at the end of QE this month? Who knows, but I do know – we didn’t even get a lousy T-shirt.

Must Read: The Identity of Shame

A great post from one of my favorite thinkers, Bryan Caplan, to pass onto the young people in your life, The Identity of Shame:

Every large, unselective group includes some villains.  Say whatever you like about the average moral caliber of Christians, atheists, Democrats, Republicans, plumbers, comic book fans, or Albanians.  The fact remains that each of these groups contains some awful people.  While this isn't logically necessary, it is an iron statistical law.  If X has more than a few dozen members, and you can join group X by (a) being born into X, or (b) saying "I'm an X," then X will have some unsavory characters.

When you identify with a large, unselective group, you expose yourself to two dangers.  First, some of the villains in your group may take villainous actions that make you look bad.  Yet on reflection, that's a minor concern: Yes, the bad members of your group make you look bad, but the good members of your group make you look good. 

The second danger is more severe.  Once you identify with any large, unselective group, you will be regularly tempted to commit the villainous act of standing up for your groups' villains.  When they do wrong - as they inevitably will - your impulse will be to ignore, minimize, or justify their misdeeds.  To quote the underrated 8mm, "If you dance with the devil, the devil don't change. The devil changes you."

Look at any large, unselective group you don't identify with.  You see them clearly, do you not?  Some of its members are plainly bad people.  But getting the regular members to unequivocally condemn their bad members is almost impossible.  Evolution has honed their myside bias for millions of years, and that's not about to change.

Fortunately, there are relatively easy ways to avoid these temptations in the first place - to save yourself from all shameful identities.  Namely: Never identify with large, unselective groups!  Instead, restrict your identity to groups that are small, selective, or both.

The nuclear family is the classic small, unselective group; no other group is more deeply founded in human nature.  Fortunately, the moral risk of being part of such a family is usually small.  Even if you have five kids, there a good chance that none of them will be horrendous people.  Circles of friends are the classic small, selective group.  Pick your friends carefully, and you probably won't end up an apologist for evil.

Large, selective groups a riskier.  In principle, they can evade statistical villainy by carefully vetting and excommunicating questionable members.  Unfortunately, myside bias tends to gut the excommunication process.  Fringe movements like Jehovah's Witnesses expel members all the time, but not the Catholic Church. 

The best way to guard against this laxity is to define your large, selective groups in purely intellectual terms.  Identify with liberalism or conservatism, not liberals or conservatives.  This is the kernel of truth behind the "No True Scotsman" fallacy.  Once you insist that "No true libertarian believes in immigration restrictions," you'll feel little temptation to ignore, minimize, or justify libertarians who believe in immigration restrictions.  And this is precisely how you should feel. 

Can anyone really live up to my puritanical advice?  Yes.  Take me.  I identify with my nuclear family, with my friends, and with a bunch of ideas.  I neither need nor want any broader identity.  I was born in America to a Democratic Catholic mother and a Republican Jewish father, but none of these facts define me.  When Americans, Democrats, Republicans, Catholics, and Jews commit misdeeds - as they regularly do - I feel no shame and offer no excuses.  Why?  Because I'm not with them.

Must Read: Ed Snowden Taught Me To Smuggle Secrets Past Incredible Danger. Now I Teach You

Micah Lee's Ed Snowden Taught Me To Smuggle Secrets Past Incredible Danger. Now I Teach You is a must read for everyone.  If you're into privacy, technology, encryption and surveillance, this article's for you.  But why is it a must read for everyone?  Simple: it demonstrates just how necessary online privacy is, and, Lee educates us on how to go about accomplishing this task.  In addition, it's a fascinating read on just how Snowden got started and the critical role Lee played in making this all happen.  It's a long piece, so I won't repost it here, however, if you elect not to read it, please visit this link which Lee provides just near the end of the piece:  Encryption Works: How to Protect Your Privacy in the Age of NSA Surveillance.  Be sure to note the disclaimer in the beginning of the paper.

Just a Disconnect or Propaganda?

As expected, the Federal Reserve announced an end to its asset buying program known as Quantitative Easing (QE).  Today's Wall Street Journal (October 30th, 2014) contains two front page articles that serve as examples of either a disconnect between the Fed (and the Federal government as well) and the citizens whose financial interest it purports to serve.  First, we have this headline:
Fed Closes Chapter on Easy Money
Benefit of Bond-Buying Experiment Reamins Unclear as Central Bank's Focus Returns to Interest Rates
The article quotes the Fed's official statement on the ending of "easy money":
"There has been a substantial improvement in the outlook for the labor market since the inception of [the] current asset-purchase program." 
"Moreover, the [Fed] continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in  a context of price stability."
Sounds so positive, right?  First off, money should not be "easy".  In my opinion, easy money distorts the role of markets, especially prices.  Secondly, this blog and many others contains the data on employment not reflected in the Fed's statement, namely the number of people who have dropped out of the workforce altogether, which are not included in the official BLS statistical measure of unemployment. 

Let's move on to the second article:
Economy Stokes Voter Anger At Incumbent Governors
This article chronicles the story of two governors "battling voter skepticism" on the apparent "robust recovery" of their respective states, Florida and Colorado:
"Their re-election challenge shows the limits of upbeat economic news among many voters who either haven't seen much improvement in their own household finances or consider the recovery too week to trust."
and this:
"Unemployment is down and consumer confidence is up, but wages have fallen or flatlined for many Americans.  A record number of people work temporary jobs.  In Florida, nearly a quarter of homeowners owe more on their mortgages than their houses are worth."

Disconnect or propaganda? 

Today's Journal reminds me of the old office joke that "the beatings will continue until morale improves."  Seriously, how anyone can believe that adding $1.657T (that's trillion) more to our debt in just two years is good for the economy, for our nation, is just beyond comprehension.  Oh, that's right, I forgot, we owe it to ourselves ...