On the Carrier Deal

Last week, President Elect Donald Trump signaled his intent to follow through on his campaign promises when he personally intervened in a situation in which would have seen over 1000 manufacturing jobs move to Mexico from Indiana. Carrier, the business in question had planned to move those jobs and announced that the plant would be shut down in February. It became a campaign issue right after that, as Trump latched onto it, citing that specific deal as a symptom of the overall multi-decade problem of manufacturing being gutted in America.

Over the Thanksgiving festivities, Trump took to Twitter to note that a deal was being discussed:

Then a few days later, when it was completed Trump announced that he was going to visit the plant to meet the workers, as part of a ‘Thank You’ tour:

While the move clearly had a ton of political symbolism attached to it, it was a functional reminder of the Trump Doctrine, as it pertains to the economy, jobs and trade. It was a symbol that represents the Trump’s ‘America First’ outlook that he campaigned on.

The whole situation has been met with scorn from commentators on both the left and the Principled Right. From the left, the charge has been that United Technologies, the parent company of Carrier, was enticed to keep the jobs through a smattering of tax cuts and a promise of a more favorable regulatory situation. This was outlined by Bernie Sanders in a Washington Post op-ed.

The specific charge Sanders and others make is that Trump is flip flopping by giving ‘concessions’ to Carrier when he ran on being tough on corporations who send jobs overseas. In particular, Sanders says that Trump promised to levy a tax on these businesses, and here he is actually giving Carrier a tax cut.

This is yet another willful misinterpretation of something Trump does/said that has been a feature of leftist vituperations for 18 months now. During the campaign, Trump spoke of levying a ‘tax’ (tariff) on goods of companies which moved their jobs out of the country. That is a conditional statement. Carrier agreed to keep jobs in the country, and as such are not going to be subject to any additional ‘tax’ on their goods.

Furthermore, the reason for the about face isn’t cause for outrage. All reports indicate that Carrier was to receive a $7 million tax break over 10 years,or $700,000 per year. As Eric Bolling points out, the amount generated by state in taxes from the 1000 plus jobs that will remain far exceeds the amount in tax breaks for Carrier:

This is not to mention the amount of taxpayer money that won’t be spent on welfare for potentially 1000 people and their families.

During the statement Trump made at the Carrier plant, he indicated that his presidency would create a great environment for companies such that they wouldn’t want to leave:

But also, I just want to let all of the other companies know that we’re going to do great things for business. There’s no reason for them to leave anymore because your taxes are going to be at the very, very low end, and your unnecessary regulations are going to be gone.

 

We need regulations for safety and environment and things. But most of the regulations are nonsense — become a major industry, the writing of regulations. And that these companies aren’t going to be leaving anymore. They’re not going to be taking people’s hearts out. They’re not going to be announcing, like they did at Carrier, that they’re closing up and they’re moving to Mexico — over 1,100 jobs.

He cited the fact that during his travels campaigning, the one thing he kept hearing from businesses was that the poor regulatory state was their number one concern. Indeed, the average cost of regulations for a manufacturers was about $20,000 per employee. The Carrier plant specifically was under the burden of 53 new regulations in the last few years, which ultimately had made doing business in America unprofitable. This is why businesses are leaving America, and Trump has vowed to change that, by lowering taxes and massively scaling back regulations.

Many are failing to understand that this Carrier deal is a symbol of what will happen across the business community in a Trump presidency. It is not that Trump will get on the phone with every CEO in America and cut individual deals – of course that is unfeasible. It is that the basics of the deal – the government allowing a business to keep more of the money it earns while not being burdened by onerous regulations – is a generous enough ‘offer’ from the government to business in America such that they will want to keep their operations in the country on their own. That is the point.

Justin Wolfers, a leftist economist, also missed the point when he described this deal as Trump interfering with the natural churn of the economy, in that it creates and destroys jobs on a regular basis:

But the Carrier case also illustrates a larger point about how the economy works. In Mr. Trump’s telling, the economy is a fixed set of jobs getting shifted around a global chess board. Mexico’s loss is our gain and vice versa.

But you should think of the economy as being in a state of constant churn. The economist Joseph Schumpeter used the now-famous phrase “creative destruction” to describe this process by which new firms push out the old. The result can be cruel, but an extraordinarily fluid labor market, many economists argue, is the secret of American dynamism.

For a start, this deal was not about destroying jobs. These jobs were not being destroyed, but moved to another country. These jobs are not obsolete in the context of a modern economy. They were moving because they could have been done more efficiently elsewhere. The key is that the relative inefficiencies of staying in Indiana were totally self-wrought as opposed to being fundamental in nature. Removing those inefficiencies should really be no big deal, but for government it has been.

Furthermore, it is really rich to see an economist like Wolfers cite Schumpeter’s creative destruction. Economists of his ilk decry the phenomenon when it is correctly applied to our bubble economy as a whole. Many, such as myself have called for the American economy to shed its reliance on unstable bubbles and to move towards a more robust economy infused by the dynamism Schumpeter’s of creative destruction concept.

This involves the ‘destruction’ of the bubbles of yore, and thus necessary declines in asset prices, and debt levels, along with substantial increases in interest rates. That is beyond the pale for economists such as Wolfers who think that falling prices are the worst possible thing to happen to an economy.

Back to Carrier, many of the Principled Conservatives on the right are having big problems with the image of a specific company dealing with the government on a one on one basis in this manner. This group of critics (also some leftists, with a sudden reverence for Adam Smith) have slammed Trump for being anti-free market, dictating to individual businesses how to run their companies.

The first response is that in reducing taxes and regulations, Trump is actually moving towards a free market, not away from one. The ‘deal’ Trump is offering is not ‘Stay here, and be subject to high taxes and high regulations or face huge tariff,’ but ‘Stay here, we’re going to lower your taxes and regulatory burdens, but if you want to go anyway, you’ll be subject to a tariff.’

The latter option is a far superior one, despite its protectionist bent. I’m not a hardcore protectionist per se, I do recognize that tariffs are an effective tax, and they are not necessarily a free market construct. But tariffs are superior to a higher income tax, corporate tax and higher regulatory burden. Income and corporate taxes accrue to the government, while a tariff accrues to a protected class of business. The tariff influences behavior, but to a much lesser degree than do income taxes. In my view, the trade off for isolated tariffs for lower income taxes and regulation is a net positive.

Secondly, this specific deal has an element which hasn’t been discussed much – the Military Industrial complex. It has been speculated that Trump threatened the lucrative government contracts that United Technology has with the US government. These sort of contracts, and the existence of the MIC generally are a negative to anyone who of a free market mindset. Over the past 5 or 6 decades these sort of webs have been slowly built and expanded upon to the extent that corporate welfare is a very big problem.

The length of time over which this situation has developed means that untangling them isn’t going to be a quick thing. We aren’t going from a Corporatist attempt at Social Democracy to a free wheeling free market overnight. In (possibly) threatening United Technologies in this manner, Trump has done a very pro-market thing. He (possibly) used a feature of the corporatist landscape as leverage to benefit ordinary Americans.

That same dynamic applies to the arguments over the tariff question. The Principled Conservative argument of free trade listens well, but the reality is that multinational trade agreements such as NAFTA and TPP are not examples of free trade. Republicans and Principled Conservatives always argue against tariffs in that they are ‘regulated’ trade, yet thousand page bills written by politicians and special interests are apparently ‘free trade.’ Real free trade requires no agreements, no legislation, nothing. What we already have is far from free trade. So let’s mold it in our favor. Ideally this landscape would not exist, but when life gives you lemons, make lemonade.

 

The Old Media Continues to Not Get It

One of the main themes of the post election landscape is the fact that the legacy ‘old media’ refuses to understand why Trump won, and has been displaying this ignorance on a regular basis. It may come to a point that their undying cluelessness will need to be serialized here. For now, I’ll focus on a few threads from this week which the media unsuccessfully tried to spin into an anti-Trump tapestry:

Voter Fraud Tweets, the Recount Effort

Last weekend Trump tweeted the following:

This is classic Trump trolling. Since the election, the only bright spot that leftists have pointed to is the fact that Trump lost the popular vote, which has led many of them to take apparent solace from the fact that most of the country didn’t want him as president. In political pundit-speak, Trump doesn’t have a ‘mandate’ from the electorate to carry out his aims. That arguement is compeltely lnullfied by the fact that the same electorate also voted for Republican control of the House and Senate ostensibly giving Trump an ‘obedient’ congress and therefore a green light to carry out his platform. Thus the electorate did give Trump a mandate.

Regardless, the popular vote issue has been and will continue to be brought up by Trump detractors. Trump countered this by declaring that millions of people voted illegally, and once those fraudulent votes were removed, Trump would have won the popular vote as well.

Naturally, the old media couldn’t let it go, and produced a slew of fact checking articles to combat Trump’s tweet, such as this one in the Washington Post. What is curious, from the persepctive of Not Getting It, is that these vociferous defenses of the integrity of the 2016 election are coming from the same publications which would have the public believe that the 2016 election was compromised by the Russian government, in order to elect Trump, its preferred canddiate.

In that light, it explains the relative lack of scrutiny over the recount efforts of Jill Stein and others on the left. Perhaps if the election was really compromised, it might make sense to have a second look. But why are the recount efforts focused on Wisconsin, Michigan and Pennsylvania? These are states which Trump happened to have won, and coincidentally, if the results were overturned and Clinton were to be found to have won those states, she would then have the electoral votes needed to win the presidency.

Stein and co. claim that the purpose of the recount isn’t to change the result of the election. Fine. But if that is the case, the only other reason would be to make sure that the absolute totals are 100% correct. Maybe in Pennsylvania, Clinton lost by a few hundred votes less than we thought before. If that’s what they’re trying to achieve, again fine.

But if Trump is wrong to suggest that the absolute totals may not be 100% correct, Stein is equally wrong to suggest the same. The old media has gone out of its way to mentiion that Trump has no evidence backing his claim, but neither does Stein.Yet her claim is treated as though it is merely part of the process

Furthermore, had Trump lost and had been associated with a recount effort, over an alleged discrepancy involving a sum (~100,000 votes) roughly 2000 times greater than that of the 2000 recount, the old media would have been apoplectic in its admonishment of Trump. Prior to election night, when they were all convinced that Clinton would win, they declared that Trump’s correct ‘wait and see’ approach to the question of his accepting how the results turned out was unpatriotic, that it was a stance which jeopardized the fabric of the 240 year old republic.

Now that Jill Stein has gone and done exactly that, there are crickets.

Trump on Flag Burning

Another ‘controversy’ was generated by yet another Trump tweet, coming just two days after the illegal voting Tweet:

Carlos Slim’s bloggers at the New York Times tackled this tweet in a piece written by its Editorial Board, titled ‘Mr. Trump, Meet the Constitution.’

The title itself, with it’s implication that Trump is either ignorant of the very foundation of the country he is to lead, or a dictator seeking riding roughshod over that same foundation is rather rich coming from the NYT. It, like most on the left is firmly in the ‘living, breathing document’ camp with respect to how the Constitution should be intepreted, which si eally to say that the Constitution is fine when it agrees with leftist ends, but should be subverted when it doesn’t.

Later on in the piece, the Editorial Board writes:

It’s interesting that so many of the people, like Mr. Trump, who are eager to punish flag-burners are at the same time so untroubled by speech that offends minorities, women and other Americans. They rail against any concern about that kind of speech as “political correctness.” But in this country, flag-burning is about as politically incorrect as anything you can do. Where is their courageous defense of speech now? Isn’t Mr. Trump the man who stood up for the freedom to say brutally unpleasant things? Who said, at the Republican convention: “I will present the facts plainly and honestly. We cannot afford to be so politically correct anymore.”

Here, they paint Trump out to be a giant hypocrite by standing against the free speech of flag burners when he purports to be a champion of free speech. This argument falls short when looked at from a meta level. Flag burners are desecrating a symbol of that which allows them to do the desecrating. To the extent there are problems in the land over which that symbol flies, disrespecting the very symbol which allows one to voice those grievances without fear are misguided at the very best.

In this specific instance, the grievance which prompted the post election flag burning which itself prompted Trump’s tweet is Trump’s election victory, which is a proxy for the political incorrectness the NYT purports to defend, at least on the behalf of the flag burners.

The post election flag burners are, in essence, using their free speech to declare that others using their free speech to voice politically incorrect views is something that rises to such a level of injustice that the flag being burned, a denouncement of the country that would allow that, is thus a legitimate response. It is a rather anti-free speech position to take, and thus it is not surprising that the NYT would defend it.

To be sure, the opinion expressed by Trump in his tweet is wrong, constitutionally. But it is just that, an opinion, not a policy proposal or a piece of legislation. Trump is allowed to have a wrong opinion, and he is allowed to use his freedom of speech to express it.

Interestingly, the NYT piece uses the fact that Trump has now ascended to the presidency as a reason to ring the alarm bells. In the next portion of the piece the Editorial Board writes that this wrongness in opinion is possibly exponentially more dangerous now that he is the president:

Some may choose to read Mr. Trump’s social-media rants as relatively meaningless — the ramblings of a sleepless id, unmoored from thought or knowledge but tuned to Fox News, which apparently was airing a piece on college flag-burners at about the time Mr. Trump sent his tweet.

But we don’t have the luxury of merely mocking someone who is now as powerful as Mr. Trump.

In one sense, they are right. The heightened position of the president will heighten everything Trump is involved in. However, the NYT reveals its sentiments to be nothing more than feigned concern for the national good, disguising its desire to continue to yell from the rooftops the same things it merely raised its voice about during the campaign: Trump is the worst thing ever, literally Hitler, yadda yadda:

Before you tune him out, remember what the right-wing propaganda site Breitbart was celebrating on Tuesday — that Mr. Trump’s social-media presence allows him to get his message to millions, bypassing “corporate media.” He has more than 16 million Twitter followers. With Twitter, Facebook and Instagram, he can feed lies and ignorance directly to 36 million people.

He tweets, he posts, he incites. He trolls. He commands a global platform and will soon be America’s commander in chief. But it has to be said, and said again: This is not normal. It demeans the presidency.

In only a few sentences, the Editorial Board labels a differing viewpoint ‘right-wing propaganda,’ labels the political message that won worldwide in 2016 as ‘lies and propaganda,’ mocks the idea that the coterie of old media which treated Trump unfairly might need to be bypassed as a result, summing it all up by saying that the presidency is demeaned as a result. These are the words of a dying corpse lashing out with contempt at the opponent which vanquished it.

 Corey Lewandowski Blames The Media

Midweek, Harvard hosted a gathering of the top operatives in the Clinton and Trump campaigns for a tradtional discussion of the election how it went. The full event is below:

Natrually, this one was testier than it was in years past. It also included several gems from the Clinton camp (Jen Palmeiri in particular, who fought tears seemingly incessantly) which served as confirmation that the right side won owing to the fact that such small minded victors would have presaged a turbulent time for America.

One of the gems the old media took issue with was the following from Corey Lewandowski:


The strangest criticism of the media, however, was by Trump’s former campaign manager, Corey Lewandowski.

 

His complaint: Journalists accurately reported what Trump said.

 

“This is the problem with the media. You guys took everything that Donald Trump said so literally,” Lewandowski said. “The American people didn’t. They understood it. They understood that sometimes — when you have a conversation with people, whether it’s around the dinner table or at a bar — you’re going to say things, and sometimes you don’t have all the facts to back it up.”

The clearest example of what Lewandowski was talking about was the furor generated over Trump ‘instructing’ the Russian government to find the emails that Hillary Clinton deleted from her private server while she was Secretary of State. For a refresher, here is the video:

Trump was clearly being facetious, perhaps mischievously so, about emails which he old media had assured the public were of little consequence anyway. To the extent they did pose an intelligence threat, operatives from all over the world would have already looked into it, well before the campaign had even started.

Yet the old media transformed this into a matter of national controversy, with some sections of the old media claiming the above video was treasonous in nature. It was used as a springboard to further the idea that the Russian government was actively controlling the election, a narrative which persist to this day.

And when being called on such constant willfully ignorant hyperventilation in service of Hillary Clinton by Lewandowski, how does the old media respond?

By pleading innocence, dashed with a pinch of snark. ‘We were only reporting on what he literally said, what is so wrong about that? What a strange criticism.’

As far as I’m concerned, the old media can keep on keeping on.

The Social Justice Bubble

In economics, the term ‘bubble’ will mean different things to different people, but it’s safe to say that a bubble involves a dramatic mispricing of an asset or an asset class which leads to severe dislocations when those mispricings are brought back into line.

These mispricings are caused by inflation, or the increase in the money supply, credit supply or both. This increase provides the demand which is used to bid up asset prices. This rise in prices tends to be the foundation for a wider paradigm dependent on the continued trend of asset prices. For example, the recent housing bubble was fueled by the increase of cheap credit, which was a response to the post 9/11 recession. On the back of that, increases in stock and commodity prices, prospects in related businesses, and local small business activity all took shape. What culminated in the 2008 collapse started a few years before when housing prices started to slow, and by the depths of the crisis in late 2008, the damage had radiated to commodities, stocks, bonds, and local businesses, ultimately leaving the financial system as a while in a perilous situation.

Given the fact that the high asset prices seen were dependent on the increase in money supply during the early phases of bubble, the tapering of the monetary spigot brings with it the collapse as the asset price rises cannot continue upward without fresh injections of money or credit. If prices stop rising, they level off and then fall, exposing the weaknesses in debt structures and business models predicated on high asset prices.

That basic blueprint of bubbles-as-economic-growth has been at the heart of the post gold standard modern economic machine of the last 50 years or so. From the stagflation of the 1970s, to the  80s Savings and Loan crisis and 1987 crash, to the Internet bubble of the 90s, to the housing bubble of the 2000s, the economy has lurched from bubble to bubble, each one a bit larger than the last. As I write we’re in the midst of yet another bubble, constructed in the wake of the 2008 collapse to mitigate its effects.

A similar bubble has taken shape over that time in the cultural arena. We can term this the ‘social justice’ bubble, which has burst over the course of this past year in spectacular fashion, culminating in the election of Donald Trump.

Much like bubbles in economics, the social justice bubble was built on the back of an inflation, of sorts. Instead of the money supply increasing, what artificially increased was the value of certain words, to the extent that these words now have entirely new meanings or suddenly deemed to encompass things they didn’t originally. Thomas Sowell did a more comprehensive job of outlining this inflation, in addition to comparing it to the monetary variety, in his 1995 book The Vision of The Anointed. He writes:

[O]rdinary vicissitudes of life become “traumas.” Any situation which they wish to change becomes a “crisis,” regardless of whether it is any worse than usual or is already getting better on its own.

Verbal inflation, like monteary inflation, would have no effect if everyone understood what was happening and could adjust to it immediately. A ten-fold increase in the price level would mean nothing if everyone were free to add a zero to the sums in all contracts, laws, cash on hand, etc., and do so immediately. Inflation has an economic effect precisely because there is no such instantaneous and total flexibility. In the real world of lagging adjustments, borrowers pay back less than they owe, workers are paid less than they were promised, and the government cheats its way out of part of the national debt by paying it off in dollars that are worth less than the dollars that were borrowed. Verbal inflation likewise enables some people to cheat others. When “harassment,” “discrimination,” or even “rape” are redefined to include things going far beyond the original meanings of these words, there would be no real change if everyone understood what the inflated words now mean and neither social stigmas nor the penalties of the laws applied to the vast range of new things encompassed by these new meanings.

In both cases, runaway inflation us not just a zero-sum game. Monetary inflation not only redistributes benefits but can also reduce the sum total of those benefits, by undermining the credibility of the monetary unit and with it undermining the predictability of the whole system of which it is part, causing the economy to be less productive as people restrict what they do and plan, in order to avoid vastly increased risks. For similar reasons, human relations suffer when the verbal common currency of social interaction loses its meaning and predictability, so that people now protect themselves from new risks by various ways of withdrawing from one another and reducing their cooperation.

The intellectual justification for monetary inflation as a policy comes from the mostly Keynesian view that falling prices are a grave danger to an economy. Beyond this, it is viewed by many economists as a cause of recessions and depressions, and as such there is no good reason why inflationary policies should not be pursued, if the alternative is to allow prices to fall. The end result is to effectively take the position that unless prices rise higher and higher  in perpetuity, the world will come to an end. Indeed, this is where most name brand economists, like Paul Krugman are, having never seen an inflationary policy proposal that wasn’t the right thing to do at the given time.

This paradigm is reflected in the cultural Marxist ideas of ‘social justice,’ and ‘tolerance.’ Much in the same way prices can never decline lest the economy collapse, social justice acolytes hold that culture can never become more traditional. Consider this quote from a prominent 20th century cultural Marxist Herbert Marcuse, taken from his essay Repressive Tolerance:

This essay examines the idea of tolerance in our advanced industrial society. The conclusion reached is that the realization of the objective of tolerance would call for intolerance toward prevailing policies, attitudes, opinions, and the extension of tolerance to policies, attitudes, and opinions which are outlawed or suppressed. In other words, today tolerance appears again as what it was in its origins, at the beginning of the modern period–a partisan goal, a subversive liberating notion and practice. Conversely, what is proclaimed and practiced as tolerance today, is in many of its most effective manifestations serving the cause of oppression.

There are two important things to note. First is the admission that ‘tolerance’ really means ‘acceptance of all viewpoints apart from the ones we disagree with.’ The second is the logical reality of Marcuse’s view means that tolerance is an ever fluid concept. At the time he wrote this, in 1965, for example, homosexuality was very much an attitude which was suppressed. According to Marcuse, ‘tolerance’ in this instance means to be intolerant of anti-homosexuality.

Applied to 2016, you can substitute transgenderism for homosexuality. The issue is that as time goes on, any and all things which were looked down upon for any reason become subject to a Marcusian appeal to ‘tolerance.’ Taken to its logical extension, it means that human standards for decency are always negotiable in accordance to this tolerance doctrine.

The verbal inflation that Sowell describes is a tool used to prop up the social justice complex in the same manner as monetary inflation is used to prop up the price level. In both instances, the props are needed because the underlying foundations are extremely weak.

For example, in the name of ‘equality’ and ‘tolerance,’ the physical standards required to serve in the armed forces have been decreased in order to allow women to pass the threshold. This means that the armed forces are being filled with objectively less fit, less strong individuals than before. However, to speak out against it is deemed as ‘sexist,’ the word in this case referring to the truism that men and women have different capacities for physical undertaking and thus are not going to be equally suited to performing the same exact tasks.

The effect of the social justice bubble has been to elevate words such as ‘sexism,’ to great heights, to the the point they supersede reality. The violations of racism, sexism, homophobia and others have been crudely redefined in modern discourse to mean ‘disagreeing with anyone apart from straight white, Christian males for any reason.’ Thus, once charged with such a violation, at the very least the conversation is over. You have ‘lost’ the argument. It is in this manner that ‘dissidents’ are silenced, in accordance with the intolerance of their position as espoused by Marcuse.

It creates an environment in which pretty much everything becomes a social justice cause, with every slight an assault on humanity. In other words ‘ordinary vicissitudes’ suddenly become traumatic, as Sowell described. The totality of this can be described as ‘political correctness.’

The cultural Marxist influenced academics at Western universities gave the intellectual green light for the social justice bubble, and the media which megaphones it far and wide facilitates its spread to the public at large, so as to steer it in the right direction, away from traditionalism and towards a more nihilistic world.

During this expansion phase of the bubble, crazy things start becoming the new normal. During the housing bubble it started to be normal to see basically any space with a toilet and a sink going for seven figures merely because of their location in metropolitan areas. This was seen as a good thing because it was evidence of the ‘robustness’ of the market. If everyone wanted these properties such that prices were rising, it must mean that they were truly valuable. Basic supply and demand, they would say, not understanding that the ‘demand’ was artificial in nature.

Similarly, the social justice bubble has yielded similar madness. The sensitivity to ‘microagressions,’ the very existence of ‘trigger warnings,’ the need for ‘safe spaces,’ the looming threat of ‘rape culture,’ the never ending scourge that is ‘cultural appropriation,’ among other things, are the everyday symptoms of the bubble. Social justice defenders say these are good developments, because they show the robustness of the ‘tolerance’ movement in their acquiescence to anyone with a grievance, no matter how small.

Witch hunts for those who dare to disagree with the cultural Marxist line are the order of the day. Indeed, even not voicing your approval loudly enough is sufficient to get you into hot water, as Brett Favre found out last summer.

Seemingly every week there is a new celebrity being put on trial in the court of public opinions for some comment he or she made that might be deemed offensive to some group. At the very least, these trials end in ostracism for the defendant, and often times they result in boycotts, terminations and blacklistings. Look no further than Billy Bush, who got fired from the Today Show for merely laughing at Trump’s crude talk 11 years ago.

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The sort of madness that allows for such absurd housing valuations and offensive comments to be worthy of termination is par for the course in a bubble. It also means that the demise of the bubble is baked into the cake. An economic bubble requires a never ending expansion of credit and debt at ever greater amounts. This is impossible for the simple fact that production, and thus incomes do not rise in the sort of exponential manner needed to keep up with the required debt expansions.

At some point, there will be ‘too much debt,’ which will require debt loads to lessen, which in turn reduces the impetus for asset price increases, which in turn threatens the house of cards which was founded on such asset price increases. This is what happened in the Great Financial Crisis of 2008.

In terms of the social justice bubble, the requirement of a never ending expansion of grievances was always going to test otherwise well meaning people who merely wanted to be left alone. That idea, being an anathema to the social justice warrior, has resulted in the insertion of the social justice cause being inserted into all facets of life, from the regulation of Halloween costumes, to concerns over the symbolism of one’s flag, to the politics of public bathrooms. You can’t even watch a ball game without being lectured to about some social justice cause or another.

At some point, when faced with constant charges of racism or sexism, used as an attempt to bully someone out of their ‘offensive’ position, the defendant will finally respond: ‘I don’t care.’

Indeed, this ‘I don’t care’ was a significant part of Donald Trump’s campaign to Make America Great Again. This was highlighted in the first Republican Debate of the Primary season, in the now infamous exchange Trump had with Megyn Kelly.

Kelly opened the debate with a question about several ‘misogynistic’ things Trump had said over the years on social media and elsewhere and asked if that represented the temperament befitting a President. The totality of the situation is illustrative of the social justice bubble in that Kelly, in this instance a proxy for the media generally, was raking a potential President of the United States over the coals for high crimes against social justice, and doing so in front of a record national audience to maximize the level of social ostracism. That it was the first question of a debate to help determine who holds the office of the Presidency further highlights the importance ascribed to social justice by its purveyors.

Trump responded in a playfully dismissive way, and then made the more serious point that the United States no longer had time for political correctness. In doing so he signaled that he was not going to allow the media, the megaphone of the social justice bubble, to bully him as they had done to Republican candidates in the past.

More significantly, he gave the green light to others to finally say ‘I don’t care’ without fear. Trump’s campaign was the bursting of the bubble, yet it wasn’t until late on election night, when Wisconsin flipped from blue to Trump red that the social justice set realized that something had gone horribly wrong.

Up until that point they had surmised that the vast majority of the country held their views on social justice issues, and agreed with their methods of wielding power over the population through constant programming via the news and entertainment media, indoctrination of youth at colleges, and public shaming of dissidents.

This was evident in the way Hillary Clinton campaigned, using the enormous sums raised at six-figure per head dinners in the Hamptons and Hollywood to fund her attack through the use of legacy media. She relied heavily on celebrity endorsements, who used that legacy media platform to blare the message that it was ‘cool’ to vote Clinton because famous people said so.

They didn’t entertain the idea that there were huge swaths of the country, namely the parts beyond the city limits of NYC, San Fancisco and Los Angeles who not only didn’t buy into the social justice bubble, but were actively against it, in part because of the fact that bubble was built disparaging people like them. When you turn on the television and see caricatures of rednecks with funny accents and their ‘Jesus freak’ attitudes being made fun of, you tend to feel that the new social justice order might not be for you. Throw in your small town being decimated by the factory shutting down, and you’re ripe for revolution.

And it came on November 8. That night was to the social justice bubble what the failure of Lehmann Brothers was to the housing bubble. It was the moment when no one could further lie to themselves about the true state of the world. It was an incontrovertible rebuke to the idea that the housing mess was contained to subprime and that the economy was set for a new expansion forthwith. It was an incontrovertible rbuke to the idea that Trump’s rally sizes didn’t matter, that the mainstream polls were fundamentally underestimating the true nature of his support, that demographics meant that Hillary Clinton was an overwhelming favorite to win.

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Yet, it wasn’t viewed as such. One of the most curious features of modern bubble thinking is the fact that the inevitable burst of the bubble leads its cheerleaders to deny vehemently that they were fundamentally wrong about the causes of said bubble. Instead, they prefer to believe the mistake was a more tactical error. If only the Federal Reserve hadn’t raised interest rates so fast, or if only XYZ regulation had been put into place, they would say, the financial crisis wouldn’t have happened, or it would have been much less severe.

Furthermore, they go so far as to promote the reconstruction of a new bubble to replace the mess left by the bursting of the old one. This is what happened in late 2008 and early 2009, as a bevy of bailouts, interest rate cuts, money printing, and debt expansion took place in order to prop up an economy savaged by the burst housing bubble. The falling prices symptomatic of the busting of a bubble and a recession/depression had to be actively combated, according to conventional economic thinking, no matter how much money printing and new debt was needed. The fact that prices had collapsed precisely because they were too high in the first place, such that artificially forcing them back to crisis-inducing levels doesn’t make sense, is summarily ignored.

Similarly, the bursting of the social justice bubble, and with it the idea that everything is racist and sexist, has been responded to by merely repeating those charges, but a bit louder than before. This started on CNN during election night, when Van Jones declared that the election was a ‘whitelash.’ Most of the usual suspects in the mainstream echoed this language. Consider the opening few sentences from this Slate article, tiled There’s No Such Thing as a Good Trump Voter:

Donald Trump ran a campaign of racist demagoguery against Muslim Americans, Hispanic immigrants, and black protesters. He indulged the worst instincts of the American psyche and winked to the stream of white nationalists and anti-Semites who backed his bid for the White House. Millions of Americans voted for this campaign, thus elevating white nationalism and white reaction to the Oval Office.

This is nothing more than misguided conjecture, but in the eyes of social justice bubble thinking, this rises to an accurate description of reality. The narrative has gone from ‘Donald Trump is a racist, sexist, homophobic xenophobe,’ to ‘The United States is a racist, sexist, homophobic, xenophobic country for electing him.’ Instead of reexamining their worldview, the social justice left has chosen to double down.

It is in this context that the post-election protesting, rioting, and assault on the Electoral College is taking place. And more than anything else, it is highlighting the reasons Trump won, and the reasons the social justice bubble was popped.

In protesting, and in some cases inciting violence over what is a legitimate election result, the social justice left has displayed the very fascist tendencies they accused Trump of harboring. The enlisting of psychiatric professionals to assist with Trump related trauma, and the inability for college students to attend class owing to an election result suggests that these people did not have the mental fortitude required of taking charge of a nation. The fact that the legitimate election result has now seen the Electoral College, a pillar of the founding of the country, come under fire, is a microcosm of the overall social justice desire to undermine traditionalism generally.

All of that was shunned by the electorate on election night, and for good reason. Despite this, the post election outrage suggests that the social justice left will not go quietly into the night, and will try to reconstruct the burst bubble anew. At the vanguard of the reconstruction efforts has been the media, just as it was at the vanguard of the construction of the bubble.

It was the media which megaphoned the social justice agenda far and wide, and it is the media which hounds non-adherents to the social justice agenda into submission. With respect to the election, the media airwaves were essentially a nonstop Trump bashing exercise, with the exception of a handful of personalities on Fox News.

To the extent that one feels legitimately traumatized or fearful of a Trump presidency, it is most likely down to the media, which endlessly sensationalized every slightest thing about Donald Trump, and built him up to be a caricature of everything that a social justice warrior would despise. That this ‘monstrosity’ still ended up winning is understandably a shock to that system. The problem is the compromising of that system in the first place, through the false characterizations and ginning up of a false narrative by the media.

If the media hadn’t presented anyone with the temerity to have disagreements with the status quo in politics and the culture as a whole as literally Hitler 2.0, the reactions to a Trump victory would have been far less hysterical.  Furthermore, had the media presented an accurate picture of the electorate, rather than believing that the entire country thought the same way as liberals in NYC and San Francisco did, they would have better prepared its audience for the strong possibility that Trump could win. It didn’t, with most major news outlets believing, even on election day, that a Clinton victory was a 80-90% certainty.

Yet this same media, which now has had its credibility shattered, has pointed to ‘fake news’ as a substantial reason for Trump’s victory.

Looking with horror as the pieces of the burst bubble are strewn across the floor, tactics such as this, and the incessant gaslighting (Trump’s transition team is in shambles! Trump is breaking his promises! Trump might put Neocons in his cabinet!) are blatant attempts to wrestle back control. The simple fact is that ‘citizen journalists’ like Mike Cernovich, Paul Joseph Watson, Vox Day, Stefan Molyneux, Bill Mitchell and others were spot on throughout the course of the election, while the legacy media did nothing but create a false narrative based on faulty polls and faulty political analysis.

In their death rattle, these legacy institutions are using their last shred of credibility to attempt to strip those who were on the right side of the argument of their own credibility. These citizen journalists dominated the internet and social media during the campaign, using their much smaller but much freeer platforms to engage in ‘real talk,’ circumventing the legacy media and its singular, social justice approved messaging. Even President Obama admitted as much, lamenting the fact that narratives are much harder to implement on the masses thanks to the freedom that is the internet.

The key to the success of the alternate messaging was that it was grounded in truth. The social justice bubble was founded on the cultural Marxist idea that anything goes as long as it feels good. Such a principle, if you can call it that, is unsustainable, much like the attempt to expand credit indefinitely is unsustainable. The opposition to the social justice bubble was successful because it was full of truisms that people knew deep down, but were afraid to say publicly. Multiculturalism doesn’t work. Men and women are different. Illegal immigration is bad.

It is why this opposition will not falter now that it has been unleashed. In order to reconstruct the social justice bubble, its proponents will have to be ever more radical, ever more violent and ever more punitive in its efforts, and in so doing will expose even further the intellectual, moral and historical bankruptcy of their position.

To paraphrase Von Mises, there is no way to avoid the collapse of a boom brought about by expanding credit. The only determination is whether that collapse will be voluntary, via a cessation of credit expansion letting the chips fall where they may, or the final collapse of the currency itself as a result of an unending credit expansion.

In terms of the culture war, the US chose to have a voluntary collapse on November 8, by symbolically halting the verbal inflation decimating the culture. From here, it is incumbent that the country and culture moves forward to truly positive heights, such that the results of rejection the social justice bubble are sufficient enough to render those who want to restore that bubble to look unequivocally outrageous.

Election Post-Mortem: Why Trump Won And Where We Go From Here

The election is now over, and Donald Trump is the new President of the United States. I can’t say I’m surprised, I’ve been writing about Trump’s chances for about 8 months on this blog, and have been in the Trump camp since August of 2015. To me, he was always the candidate with the winning hand, and his victory was only dependent on whether he played the cards correctly.

The same can’t be said of most of the public, particularly the media and the political commentariat. Those entities have been in complete shock in the aftermath of the election. There are countless ‘How did this happen?’ style articles. I’m going to address that, and to the extent that one fails to grasp what I write here is the extent to which that individual will be lost and confused in the coming years, unable to come to terms with some of the trends which are afoot in the Western world.

The underlying theme of Trump’s victory is the breakdown of the concept that the right legislation/mandate from central authorities can cure the world’s ills. In the post World War 2 West, this concept has permeated virtually all areas of public life.

Economically, perceived ills like recessions and falling prices are believed to be ‘curable’ if central banks pursue lower interest rates and expanding the money supply. Socially, ills such as racism, sexism, homophobia and so on can be cured via flooding the culture with positive messages about diversity and tolerance. Militarily, the ills of other nations not conforming to American hegemony can be cured by imposing economic sanctions, or starting a war.

It’s highly unlikely that the average Trump voter understood that concept in the precise way I’ve described, but those voters definitely did feel the consequences. Economically, average people went from being able to afford a middle class ‘American dream’ lifestyle on one income, while saving for retirement, to needing two incomes, plus multiple credit cards to afford the same lifestyle. All of this was leading to rising prices, stagnant wages, enormous debt, and a realization that retirement may never come.

Culturally, the domination of identity politics has divided the country in innumerable ways. When individuals elevate their race, gender, religion, or sexual orientation to a level above everything else as the most important thing, you set the stage for nothing but infighting. The commonalities of culture and a singular nation-state are cast aside in favor of a fluid totem pole of victimhood which is constantly changing.

Average people were getting fed up having to determine which of a gay Hispanic male or a white ‘gender fluid’ person was in the more privileged situation and thus more deserving of ostracism. They were tired of being force fed leftist viewpoints in television, movies, music and even sports. When even voicing disagreement with the leftist narrative at work or on social media can become grounds for losing one’s job, an environment ripe for backlash is created.

On the military front,the average person may or may not have known someone who had been sent off to fight in one of America’s many post WW2 excursions, but the effects were felt in other ways. Namely the wastefulness involved in spending millions on fighter jets which drop bombs worth a few hundred thousand dollars on an opposition hanging off the beds of 1990s Toyota pickup trucks wielding machine guns most likely also paid for with American dollars. All of this, while the average person embarks on a vehicular slalom course in order to avoid potholes on the daily commute.

Beyond this, our most recent adventure in Syria, initiated by Hillary Clinton in her Secretary of State days, was leading us into an inevitable war with the Russians, given Clinton’s unequivocal declaration that a No Fly Zone over the country was her aim.

 

Trump’s victory conveyed the public’s strong disappointment with these trends, if not an outright repudiation of them entirely. Change was always coming given the unsustainable nature of those trends, and in this election, Trump was the change candidate.

The immediate reaction to the election results was one of unrest. There have been riots, calls for the Electoral College to be scrapped, stress-induced delays for exam taking at universities, and an outpouring of psychiatric advice to those beset  by depression over the result.

During the campaign, Hillary Clinton often quoted Maya Angelou, saying that ‘when someone shows you who they are, believe them.’ That sentiment applies now to the leftists, who have once again shown us who they are in the reaction to Trump’s victory.

Leftists constantly made Trump out to be an authoritarian fascist during the campaign. Yet post election, they revealed themselves to be…authoritarian fascists. The supposed authoritarian tendencies of Trump and his supporters in their support of traditionalism are actually more applicable to leftists and their support of a Cultural Marxism which requires a total acceptance to avoid social ostracism. That the mere display of resistance to leftist ideas, delivered through the ballot box, can result in riots and the threat of further violence, death and potential revolution, is indicative of where the true fascistic forces emanate from in 2016.

Furthermore, there is something especially hypocritical about a group of individuals who want to eviscerate the second amendment, and view the term ‘states rights’ to be a racist dogwhistle, to then suddenly be prepared to go full Confederate South and agitate for a Civil War 2.0.  A quick perusal of the results of the election by county suggests they wouldn’t fare well.

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As you can see, the vast majority of the US by landmass voted Trump. In addition, the Clinton areas are areas which are less gun enthusiast, hunting culture, and militiamen and more gang culture and drug related violence, if we’re being truly honest. Taking the fight from big cities full of skyscrapers to the Great American Outdoors can only be a recipe for a swift and complete defeat.

That map also brings me to the Electoral College. It looks like Clinton may have won the popular vote and lost the Electoral College vote, which has led to some viewing the result as unjust and therefore overturned. This displays a fundamental misunderstanding of one of the basic tenets of the United States. The US is not a straight democracy, but a constitutional republic. The system was intentionally set up to work the way it did, in that a handful of urban metropolises such as NYC, LA, Chicago and San Francisco don’t decide how the rest of the country should live.

The founding fathers understood perfectly the downsides of a straight democracy, and we should be thankful they set up the system the way they did. The call to scrap this basic tenet of America is a microcosm of the idea put forth by contemporary leftists that we should remove traditionalism in general.  This is exactly the sort of trend that prompted Americans to vote against Clinton.

In addition, the spike in mental breakdowns and general feeling of fear from leftists over the result not going their way is undoubtedly a sign that it was probably a good idea not to have such people in charge in the first place. On top of this, the display by these leftists are coming on the back of months and months of calling Donald Trump unhinged and thin skinned.

In threatening violence over a decision made by The People, and calling for banning a uniquely American aspect of government, leftists have shown that the charges of authoritarian fascism, anti-Americanism and questionable mental fortitude against Trump and his supporters have merely been a giant projection. If indeed Trump represents hate, why aren’t they showing the love they say will trump that hate? If Trump is evil and will cause families to break apart with his immigration plan, why do they respond with the pro-abortion (and thus anti-family formation) slogan ‘my body, my choice’ at demonstrations? Hypocrisy at its finest.

All of this has been aided and abetted by a mainstream media which has not only not seen and not understood the Trump phenomenon, right up until the very last hour, but has been the main megaphone blaring failed propaganda far and wide.

If you spend month after month after month hammering the idea that one candidate is Hitler reincarnated, and that candidate wins, the millions who have been duped by that message will unsurprisingly be upset, perhaps upset enough to riot. However, none of that actually makes that candidate Hitler.

A lot of the blame for the post election violence can be blamed on the media for its constant caricaturization of Trump, using hysteria to manipulate voters who perhaps tangentially paid attention to the election and thus for whom the mainstream media was the main source of information.

What was different about this election compared to others was the fact that social media and the internet generally gave the public access to all of the source material in ways never seen before. You can find every single Trump speech on Youtube, you can find analysis of them from the point of view of every single part of the political spectrum. This meant that one could directly compare the source material to the heavily distorted version the media put forth. To the extent I tuned into the mainstream media during this cycle, it was merely to ascertain how far they were distorting the truth from the source material everyone had access to.

This is why so many voted for Trump despite the media declaring he was Hitler non-stop. I’ve said several times on this blog that ultimately the media would protest too much and overplay its hand with respect to Trump being the ultimate evil. The media’s comparisons to evil would eventually force it into a box in which the label of Trump as evil be labeling the objective good in Trump’s doctrine as evil. The clearest example of this is Trump’s immigration plan, which is mostly already on the books as US law. Yet the media was relentless in calling Trump a racist and xenophobe for it, which meant that basic US law which mirrors laws in most other nations, is also racist and xenophobic. That put the media, and Clinton by extension in the position of being incredibly unreasonable.

In the end, Trump means fundamental change. It is needed, because the path we were on was unsustainable. An economy based on unlimited credit and printed money can’t survive. A society which doesn’t have a common culture, language, values and tradition is a society which has no culture. A country which picks fights with everyone not on board with its unchallenged hegemony will soon pick the wrong fight.

Trump’s victory is ultimately it is an acknowledgement that though there are many positives in society, things are nonetheless trending in the wrong direction and must be remedied. What surprises me is that this acknowledgement is being made before a sort of terminal crisis forces the issue. That is rare thing, because for most people, the present comfort acts as a deterrent to change, even if it was certain beforehand that the current path led to ruin. Voluntarily inflicting upon oneself the discomforts of change is not high on the agendas of most people, yet it is exactly what is required to achieve real progress.

Machiavelli captured this idea perfectly in The Prince:

It must be considered that there is nothing more difficult to carry out nor more doubtful of success nor more dangerous to handle than to initiate a new order of things; for the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order; this lukewarmness arising partly from the incredulity of mankind who does not truly believe in anything new until they actually have experience of it.

Trump will face a torrent of ‘I told you so’ from all angles, particularly the media, every time his system-disturbing moves cause a problem on the surface. Most of these problems will merely be the gears of change grinding past each other. Destroying the political old order dominated by short term thinking and political expedience means taking lumps in the short run for longer term gain. Trump had plenty of experience absorbing such blows during his campaign. Indeed, Trump’s biggest hurdle in affecting real change will be quelling the wails of those who become uneasy over the mid flight turbulence.

Putting A Trump Vote In Its Proper Context

“In a mad world, only the mad are sane.”
Akira Kurosawa

 

As the election draws near, the mere fact that Trump has more than a tangible chance of winning has several in the commentariat a little unnerved. This is shown by the bevy of op-eds and columns written in recent days and weeks which all conveyed a similar point: Please, America, don’t vote Trump – We value stability more than anything else.

Alan Dershowitz, a prominent expert on the law and Harvard Law professor crystallized this sentiment this morning, speaking with Maria Bartiromo, saying:

Let me tell you why I’m supporting Hillary Clinton: We’re living in a world of extremes, the right is getting stronger, the left is getting stronger, the center is weakening. We need a centrist president to stabilize the world, Hillary Clinton promises more in terms of being a stabilizing force than Donald Trump.

On the surface, this sounds reasonable. But Dershowitz showed exactly why it isn’t less than a minute later, when he said:

Look, the problem in American politics is that donors always get special treatment – from Republicans and Democrats. Pay to play is unfortunately a sickness within the American political system, equally applicable to republicans and democrats. Let’s end that – let’s strengthen the laws, let’s de-politicize the laws.

In admitting the politics of the status quo is broken, Dershowitz renders his support for Clinton, on the basis of her ‘stability,’ an endorsement of a broken political world. This is a world which has bestowed upon Clinton a $250 million fortune, incredible power, and a shot at being the first woman to be president of the United States, forever etching her name in history. Does Dershowitz, or anyone else for that matter, really think that Hillary Clinton, having been forged in that broken political world, is going to change it in any material way? Considering her now Wikileaks-revealed duplicity vis-a-vis her public statements and those given privately to the corporate donors which back her, the idea of her being a change agent stretches credulity, to put it mildly.

And make no mistake – change is needed. The political status quo has overseen America’s slide into over-indebtedness, declining educational standards, endless war and destruction in foreign lands, record poverty levels, multi decade lows in labor force participation, and even record lows in fertility.

Indeed, America as it stands today is merely a nominal representation of the colonial experiment which commenced just over 240 years ago. It could be said that the genesis of America as a country was the biggest tax revolt in human history, yet today the populace will at the most grumble angrily to themselves as they pay ever higher taxes on an annual basis.

In its early days, America debated the merits of a monetary system based on gold and silver versus central banking and fiat currency. After some trial and error, it settled on the former. Today’s American economy now relies on the latter, to such an extent that the mere differences in language used from one public statement to the next are said to have big implications on the fate of our economy.

The Federal Government has grown to such an extent that the population as a whole expects certain things from it. This, in comparison to a Federal Government which was once small, and stayed mostly out of the way.

It is telling that quickest way to be laughed out of a ‘serious’ political conversation in 2016 is to seriously advocate an abolition of the federal income tax, a return to the gold standard, and a vastly smaller government that balances its budget, let alone all of the above. As these things were once part of the formative fabric of America, it is fair to say that we currently live in a sort of Post-America.

This is further buttressed by the fact that the Constitution has been treated as toilet paper for a very long time now. Exactly how long that is depends on the individual, but one can cite many occurrences which marked the waning influence of the Constitution. The Civil War, 16th Amendment, Federal Reserve Act, the New Deal, Executive Order 6102, the 1971 closing of the gold window, the Patriot Act, and the Affordable Care Act, among others, are all examples of the government riding roughshod over the Constitution.

I am not going to scrutinize the merits of each individual instance. I only bring them up to highlight the fact that going by strict Constitutional originalism, the document has been violated, several times, and well before June 16, 2015, the day Trump’s campaign began. In other words, from the perspective of the principles underpinning America’s birth, and continuing on through its ascent to world power, America as it currently stands is a Mad World.

Yet it is precisely those already-departed American principles, wrapped in platitudes about our 240 year Republic and its democratic heritage, that many commentators cite when declaring Trump to be the most dangerous political force in our lifetime. Consider this from David Frum:

The lesson Trump has taught is not only that certain Republican dogmas have passed out of date, but that American democracy itself is much more vulnerable than anyone would have believed only 24 months ago. Incredibly, a country that—through wars and depression—so magnificently resisted the authoritarian temptations of the mid-20th century has half-yielded to a more farcical version of that same threat without any of the same excuse. The hungry and houseless Americans of the Great Depression sustained a constitutional republic. How shameful that the Americans of today—so vastly better off in so many ways, despite their undoubted problems—have done so much less well.

 

I have no illusions about Hillary Clinton. I expect policies that will seem to me at best counter-productive, at worst actively harmful. America needs more private-market competition in healthcare, not less; lighter regulation of enterprise, not heavier; reduced immigration, not expanded; lower taxes, not higher. On almost every domestic issue, I stand on one side; she stands on the other. I do not imagine that she will meet me, or those who think like me, anywhere within a country mile of half-way.

Not only is it true that America has eschewed its strict Constitutional Republic roots, it is not true that America successfully avoided the authoritarian temptations of the 20th century. Indeed, the America that entered the fights with the Axis dictatorships and then communism looked very different to the America that came out of them. Karl Marx’s 10 planks have been more or less instituted in America. America’s Authoritarianism, however is of a softer variety. While it doesn’t have a definitive figurehead in the shape of Mussolini or Hitler, it does have a definitive ideology spearheading it: the worship of nebulous concepts such as Equalism, Diversity and Fairness.

The most heinous crimes in today’s society are that of racism, sexism, homophobia, Islamophobia, transphobia, and so on. Transgressors are drawn out into the public square for admonishment via social ostracism. You could even lose your job over an ‘offensive’ post on Facebook or Twitter.

The rub is that the threshold for what constitutes offensive behavior is seemingly lowered by the day. The march to describe every slight as Hate Speech increasingly encroaches on that traditional American right of free speech. With respect to the election, and Trump in particular, even being neutral on his positions could get one in hot water.

That’s what happened to Scott Adams, creator of the Dilbert comic series. According to this Washington Post piece, Adams’ once lucrative speaking engagements and licensing deals have dried up, owing to his attempts to explain to the public why Trump’s campaigning has been effective, from the perspective of well known Persuasion techniques. He has become a pariah for this.

In our Mad World of Political Correctness and over-sensitivity, this is just. For there can be no justification for things we don’t agree with, no matter how rational they are. More specifically, nothing can be allowed to impede the leftward march from America to Tumblr: The Country, and anyone who dares stand in the way will be run over.

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Indeed, Donald Trump’s real sin has been his refusal to give in to the Oversensitive Mob and give it what it wants – an acknowledgement of their frivolous charges of racism and sexism – preferably via some sort of tear-laden press conference at the mercy of the same journalists who regularly excoriate him in their columns.

What is particularly interesting about Frum is that he lists several things which in his view would be good for America. All of these things line up with what Trump plans to do, even though Frum doesn’t give him credit for that. The problem for the likes of Frum is that Trump is seemingly too mean in the way he is going about his campaigning.

What this simplistic analysis misses is a lot of the outrage generated by Trump has been intentional – a ploy to draw attention to his ideas. Trump is nothing if not a shrewd marketer and astute media manipulator. He writes about it in his books, and has had 40 years of experience with the media under his belt.

Many have been in the media have been critical of the media itself for giving him so much attention, thereby legitimizing him. You’ll often see a statistic bandied about that suggests that Trump has been given $2 billion in free exposure. The reality is that Trump earned that exposure through his media exploits of well over three decades. When Trump announced his candidacy, he instantly had 100% name recognition. News agencies really couldn’t ignore him, because they’ve never ignored him. Trump is a ratings goldmine – and media corporations live on ratings.

To be sure, the media has countered by covering him negatively, to the tune of 90% of the time according to a recent study. This has both revealed the inherent bias the mainstream media has as well as confirmed the reason why Trump campaigned the way he has. His message is an anathema to a leftist media, and as such the only way to get his message across was to wrap it in a tactical outrage.

Recall the Star of David ‘controversy’ from this summer. It started with Trump re-tweeting this image:

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The media fell over themselves to use this image as evidence of Trump being an Anti-Semite, owing to the fact that the ‘Most Corrupt Candidate Ever!’ text is in an apparent Star of David.

Of course that star could easily be a sheriff star, or a normal star you would find in Clip Art. Yet the media frothed at the mouth, pushing this story for almost a week.

This meant that all over TV and the internet, this image was shown, an image which conveys a message that Hillary Clinton is a criminal.

Through enshrouding his real messages in a layer of outrage, knowing a lapdog media would spread it far and wide for him, Trump has done nothing more than display his penchant for good marketing and media manipulation.

Indeed, Trump’s initial foray into the campaign was controversial, perhaps still his most controversial episode to date. Yes, I’m referring to the moment when he ‘called all Mexicans rapists and drug dealers.’

That was the spin, and the perception that the media spread far and wide and is still used by man as a talking point to declare Trump a racist. What Trump actually did was say that a non-zero subset of those who entered the country illegally committed further crimes once in the country, and that it was a problem. His words were objectively true. However the way in which he said them cause untold outrage which reverberates to this day.

Consider the fact that Trump’s immigration ideas are now widely considered to be racist and xenophobic by most mainstream voices. However, a rational examination of his plan reveals that the vast majority of it is already codified into US law, including the wall. What Trump seemingly wants to add is a more vigorous application of the law in spots where it is currently halfheartedly applied, and in others where it is actively opposed, such as in the case of sanctuary cities.

The outrage Trump created was needed in order to call attention to an issue which has been largely neglected for many years now. If he hadn’t done it, the discussion would have been lost in the shuffle as it had been before. By raising the temperature so to speak, Trump has forced people into a box. To call Trump a racist and xenophobe for completely reasonable ideas is to explicitly advocate lawlessness. That is precisely what a Mad World does, thus to be considered a madman by that world, as Trump is, is tantamount to being the sensible one.

In a similar vein, Trump has been accused of dividing the country. However, it not Trump, but identity politics which has divided the country. In modern America, there is an increasing trend for Americans to define themselves as such, but with a prefix attached. African-American, Muslim-American, Hispanic-American, Asian-American, and so on. Race, class, religion, and sexual orientation are the lines along which the population is increasingly split.

This ground was tread long before Trump’s candidacy. LBJ may not have said that he’d ‘have those N*****s voting Democrat for the next 200 years,’ but he might as well have said it, given that politics has increasingly devolved to pandering to the varying subgroups in America. The resulting atmosphere is one in which your skin color, gender or sexual orientation becomes your uniform, and it is almost your duty to fight for your team lest you be called a traitor.

Trump’s message is simple: America First. In recent rallies, he has consistently conveyed the idea of Americans ‘working together as one people, under one God, saluting one flag.’ Trump has immediately taken some heat for this, particularly the ‘one God’ part, with critics citing this as evidence Trump doesn’t understand the separation of Church and State, or that it intimates a sort of exclusion for nonbelievers.

This interpretation is of course, nonsense. His words are no different to politicians proclaiming ‘God Bless America’ at the end of speeches. The ‘God’ in both instances is open to interpretation, with the listener free to insert the deity of choice to personalize the line. But recall, we’re living in a Mad World, and as such these minor quibbles are worth vast overreactions.

The interesting thing is that Trump’s words are objectively unifying. America First as a concept should be something that everyone can buy into, because individual identity characteristics don’t preclude participation in America as a concept, at least in theory.

But, again we live in a Mad Clown World, a world in which people can’t let go of Identity, because doing so would forfeit a chance at a slice of the bounty collected by grievances and outrage. It is thus the culture as a whole which has already divided itself, not wishing to unite as one people. It is the culture itself which sees little wrong with immigrants hoisting their home flags on American soil, but increasingly views the stars and stripes as an offensive symbol.

With that as a backdrop, Trump is indeed mad. But that means he is sensible.

And what of morality? Many believe that the Billy Bush tape disqualifies Trump from the presidency. The bottom line on this is that there have been several equally vulgar individuals to occupy the role, including Bill Clinton, who had assistance from one Hillary Clinton in concealing the vulgarity. If we’re being truly honest, neither candidate is clean here.

Furthermore, the culture as a whole is in no state to pass judgement on this score. I chuckled repeatedly watching the torrent of outrage and concern for the youth of America having been exposed to Trump’s words, when the likes of Miley Cyrus trotting around stages performing topless with inflatable male genitalia protruding from her crotch likely elicits little more than a shrug of the shoulders for those same people.

This hypocrisy is mirrored in the perception of Trump as unhinged, as it is pertains to foreign policy. And before I go on, a symptom of the Mad Clown World is evident in the fact that coverage of Trump’s Billy Bush moment dwarfed that of an analysis of foreign policy issues, in an age when nuclear capable world powers are positioning themselves for conflict. Sex sells, I get it, but to upstage potential nuclear war with Russia? I’d call that a bit Mad.

And on that subject, Trump is widely considered by your standard foreign policy expert to be dangerous. More frivolously, he is considered to be a national security risk because his flippant attitude may lead us to military conflict over his Twitter account, or something.

The reality is that these foreign policy experts, along with Hillary Clinton herself, have been responsible for nothing but failure for nigh on 50 years. From our excursions in Vietnam, to Kuwait, to Iraq, Afghanistan, Libya and now Syria, these status quo experts have done nothing but cause death and destruction across the globe, in the name of spreading Democracy.

It sounds like a great ideal to have, but ultimately, who are we as Americans to impose our way of life on the rest of the world? The interests of the average American, in America, haven’t been served by any of these adventures, for the most part. The only interest which has been served  is that of the Military Industrial complex. Eisenhower warned us about this.

With respect to the current challenge that faces us, Syria, we face a choice of war or diplomacy. We are already fighting a proxy war against the Russians, who are assisting the Assad regime, who the US wants ousted. The official reason for this is Assad’s atrocious humanitarian record, but some suspect there is more to the story.

It involves the establishment of a natural gas pipeline, running from Qatar to Turkey, passing through Syria. The reason it is sought by the US is because such a pipeline would allow Western Europe an alternative to the Russian natural gas it currently consumes. The goal is to marginalize Russia economically, as punishment for its refusal to get with the EU/NATO program on many other issues.

It is hypothesized that Assad has denied this pipeline, out of allegiance to Russia, and as a result the US wants regime change in Syria. In response to being attacked, Assad has invited Russian forces to the country for assistance. This is where we stand now.

Hillary Clinton has been consistent in her stance that a No Fly Zone be placed over Syria, despite the only way one could be enacted would be through a declaration of war with Syria, and thus Russia. Clinton was explicitly asked about this again at the third debate a few weeks ago and was unequivocal in her response.

Make no mistake, a Hillary Clinton presidency is most likely the pretense to war with Russia, an opponent with nuclear capabilities. If the true reasoning behind the war is correct, the US would be risking nuclear war to establish a natural gas pipeline overseas. Yet, here at home, the US finds the idea of a pipeline running from Alberta to Texas, with no war required, to be untenable. That’s the status quo for you.

It is in this light that the criticism Trump gets for being ‘friendly with Putin’ needs to be examined. The reality is that the Russians don’t want war, as evidenced by the fact they did nothing when Turkey took down a Russian jet last year. Putin’s greatest sin is his refusal to bow to Western, and more specifically US hegemony in geopolitics and the world order. For that refusal to play ball, the US has tried to hit Russia economically, and it is continuing to do so with its efforts in Syria. It is playing with fire, however, as previously discussed.

Trump wants nothing to do with this, not because he is reckless, but because he correctly understands that the US has little business in directing foreign affairs in the manner it has done for decades. To the extent we already have entanglements, they must be dealt with, but in the future the goal of a Trump administration is seemingly to tamp down American Imperialism. It is too expensive, too deadly, and too historically negative in terms of the prospects for nations who pursue such expansive ambitions.

Once again, the Mad Man is sane.

This election is probably the most stark choice we’ve seen in a lifetime. It is in many ways a referendum on the constructs of the Post World War II West: Keynesian Economics, supranational unions such as the EU and NATO, the sexual revolution, central banking, the Military-Industrial Complex, the Media-Academia complex, among other things.

While Trump doesn’t explicitly repudiate all of these things, Hillary Clinton certainly would be a continuation of them. Furthermore, she would be a continuation of the status quo, a continuation of the cultural preference of Pretty Lies to Ugly Truths, a continuation of the political preference of short term expedience over long term thinking.

Even if one who is on the fence agrees with every word I’ve written thus far, a sheer, base reluctance to change will still stand in the way of pulling the lever for Trump. I completely understand that point of view. For many, the fact that the power grid still works, and we have access to our daily Starbucks means things aren’t so bad, and there is no need to ‘blow up’ the political system voluntarily.

This is akin to inheriting $100 million, blowing $98 million of it on the proverbial hookers and blow, and feeling relieved upon seeing the $2 million bank balance in a sober moment, that relief stemming from the understanding that you are still better off than 99.5% of the planet.

Unfortunately, that is us, as modern day Americans. We inherited a country from a generations of individuals who built it up into a machine which produced untold riches. With us at the wheel, we’ve been in party mode, adopting an ‘anything goes as long as it feels good’ mentality socially and a ‘spend anything – we can print the money later’ attitude when it comes to economics. That is unsustainable. It is our job to recognize that, and correct course before crisis hits.

Trump is indeed a bonafide Mad Man. But we live in a Mad World. Sanity in this context is a continued slide into the abyss, a continued swim by an unaware frog as the temperature creeps to 100 degrees C.

There’s still time to jump out of the pot.

Peter Thiel On Trump

The man clearly gets it (emphasis mine):

For a long time, our elites have been in the power a long time, our elites have been in the habit of denying difficult realities. That is how bubbles form. Wherever there’s a hard problem but people want to believe in an easy solution, they will be tempted to deny reality and inflated bubble. Something about the experience of the baby boomers, whose lives have been so much easier than their parents or their children has led them to buy into bubbles again and again. The trade bubble says everyone is a winner. The war bubble says victory is just around the corner, but these overoptimistic stories simply have not been true and voters are tired of being lied to.

 

It was both insane and somehow inevitable that D.C. insiders expected this election to be a rerun between the two political dynasties who let us through the two most gigantic financial bubbles of our time. President George W. Bush presided over the inflation of the housing bubble so big that it’s collapse is still causing economic stagnation today. But what is strangely forgotten is that the last decade housing bubble was just an attempt to make up for the gains that have been lost the decade before that. In the 1990’s, President Bill Clinton presided over an enormous stock market bubble and devastating crash in 2000 just as his second term was coming to an end. That is how long the same people have been pursuing the same disastrous policies.
 

Now that someone different is in the running, someone who rejects the stories that tell us everything is fine, his larger-than-life persona attracts a lot of attention. Nobody would suggest Donald Trump is a humble man. But the big things, he is right about an amount to a much-needed dose of humility. He has questioned the core concept of American exceptionalism.
 

He doesn’t think the force of optimism alone can change reality without hard work. Just as much as is is about making America great, Trump’s agenda is about making America a normal country, a normal country does not have a half trillion dollar trade deficit. A normal country does not fight five simultaneous undeclared wars.

 
I’ve long held the opinion that Clinton is one of the luckier presidents in history, in that his favorable reputation is largely down to the Internet bubble that Alan Greenspan constructed during his presidency. This bubble happened to pop right as Clinton was leaving office in 2000. The mess fell in Bush’s lap, which was then ‘cleaned up’ by a Housing Bubble, again constructed by Greenspan.

Unfortunately for Bush, his bubble popped much earlier. Although people look to the crisis of fall 2008, that was merely a culmination of a full year of carnage that ended up making any Republican candidacy an untenable proposition. It’s great to see someone else voice this in public.

Thiel’s general point is spot on as well. This election is ultimately about whether Pretty Lies or Ugly Truths form the foundation of our thinking and policy making. For far too long we’ve been dealing in Pretty Lies, underlined by our economic policy which favors debt and monetary easing whenever we hit the slightest of recessions. Instead of allowing bankruptcies and price declines to take their course, and the economy to reset, policy makers prefer to prop up financial bubbles, allowing un-payable debts to fester in the system until the rear their ugly heads again.

Socially, the cultural Marxist idea that ‘anything goes, as long as it feels good,’ has been the basis of our views on many social issues of the day. The problem with this is that true progress doesn’t necessarily feel good. Maintaining order in a world which is naturally disposed to chaos doesn’t feel good. Everyone understands the physical concept of entropy, and fighting against it to create an ordered system requires work.

Civilization is nothing if not a massive ordered system, which requires work. It requires rules, customs, and for things to be done a certain way, and with respect to the United States, an American way. In the post World War 2 era, we’ve departed from the basic principles that took America from renegade colonies to the verge of greatness in less than 100 years, and from a country ravished by a Civil War to the most powerful nation in the world in less than 50 years.

Between the two candidates, we know that Hillary Clinton is more of the same. Trump at least understands the perils of globalism, and understands that in our own history we already have the blueprint for greatness. Hence ‘Make America Great Again.’ The full Thiel video is below:

Five for Friday

The Al Smith charity dinner was last night in New York City, featuring Hillary Clinton and Donald Trump:

Trump gets started at about 7:40. It is supposed to be a lighthearted affair, filled with self deprecating humor and good fun. Neither candidate really adhered to that, Trump much less so.

What was prevalent more than anything else was the contempt and disgust Trump has for the ‘elites.’ These were the people who have been lambasting him for the last 18 months, for having the audacity to step outside the prescribed path. Despite his wealth, these are not ‘his people.’

At the start, he played nice, and delivered several good jokes, getting far more laughs than Hillary did later on. He then veered off the road and went full shitlord, doing a political impression of The Red Wedding. The boos he engendered did him more good than bad, as they were an audible confirmation that Trump is not of that class, and that his candidacy is consistent.


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Former Joint Chiefs of Staff vice chairman General James Cartwright is in a whole heap of trouble for mishandling classified information – he faces up to five years in jail and a massive fine. Unfortunatley for Cartwright, he is not Hillary Clinton, otherwise he would have been made Democratic nominee for president.

The Washington Post handles this disgraceful situation quite well, pointing out the hypocrisy:

“There is a lack of proportion just based on the facts that one figure, Cartwright, is getting severely punished and others so far have escaped the process,” said Steven Aftergood, director of the project on government secrecy at the Federation of American Scientists. “He is being singled out for prosecution and public humiliation. It’s an implicit rebuttal to those who argued that other senior officials such as Clinton or Petraeus got off scott free or got too light of a sentence.”

 

In its statement announcing the conclusion of its three-year investigation of Cartwright, the FBI emphasized that his prosecution showed that the Justice Department is willing to go after senior officials.

 

“The FBI will continue to take all necessary and appropriate steps to thoroughly investigate individuals, no matter their position (emphasis added), who undermine the integrity of our justice system by lying to federal investigators,” said Assistant Director in Charge Paul Abbate.

 

That statement reveals that the FBI is trying address public criticism that it gives senior officials like Petraeus and Clinton special and favorable consideration, Aftergood said.

The DOJ seems to be acting politically here, saying, ‘SEE, SEE, IF YOU VIOLATE THE LAW WE WILL PROSECUTE!’ The only problem is that Cartwright doesn’t have the political connections Clinton does, and thus doesn’t have the immunity she does. This saga only confirms the public suspicion that the system is rigged against the average person.


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Obamacare costs are spiking across the country:

  • Approved Hikes Just Under 20%: Colorado, Florida and Idaho
  • Approved Hikes 20% to 29%: Connecticut, Georgia, Indiana, Kentucky, Maine, Maryland
  • Approved Hikes 30% to 49%: Alabama, Delaware, Hawaii, Kansas, Mississippi, Texas
  • Approved Hikes 50% to 92%: Arizona, Illinois, Montana, Oklahoma, Pennsylvania, Tennessee
  • Approved hikes 93%: New Mexico

Obama has defended this, trying to compare it to buying a starter home, and making improvements as you go along. The problem is, if you buy a starter home and it immediately starts falling apart, you made a mistake and didn’t do your due diligence in appraising it properly.

 

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The usually excellent John Hussman summarizes the condition of the stock market bubble and investor attitudes:

I started this comment with a 126 year-old quote to emphasize that every cycle in history warns investors against relying on speculative extremes to be permanent. I recognize that some of you are going to insist on re-learning this the hard way. We’ve certainly learned our own lessons about the ability of zero interest rate policy to postpone the kind of market collapses that reliably followed overvalued, overbought, overbullish syndromes in other cycles across history (see the “Box” in The Next Big Short for the full narrative). But that temporary suspension of consequences entirely depends on investors remaining inclined toward risk-seeking (which we measure from the behavior of market internals). Following a brief post-Brexit strengthening in a few trend-following components, market internals have deteriorated again. The danger is that investors seem to believe that easy money supports overvalued financial markets regardless of market internals or the attitude of investors toward risk. The failure of investors to grasp this critical subtlety is likely to be the source of a great deal of pain over the completion of this market cycle.

Not much to add from me there, the whole thing is a must read.

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Finally, CH discusses the gaslighting of Trump supporters being done by the media via manipulated polling in his trademark colorful manner:

The next question is, “how do rigged polls help thecunt? If she’s losing in reality, rigged polls will just make her more blissfully ignorant of her incoming defeat.”

 

The answer lies in the psychology of humans, and is related to Game and picking up women. If you create a perception of success or desirability, the voters (women) will assume you are going to win (bed them), and will paradoxically make your path to victory smoother.

 

There is a school of thought that says poll rigging can hurt more than it helps, by instilling in thecunt’s degenerate freak mafia a smug complacency about her inevitable victory, which will depress turnout as her supporters stay home to passively watch her victory unfold. I don’t buy this. It’s a misunderstanding of human nature, specifically the part of human nature which loves to “crush your enemies and see them driven before you”. If thecunt’s supporters feel emboldened by favorable polls, they will be MORE likely to swarm the voting booths to get a chance to participate in the bloodbath.

 

No, let’s dispel with this notion that the rigged system is a stroke of providence that will hurt thecunt in the end. The rigged system operatives know exactly what they’re doing, and that is why Trump is right to call them out on it.

 

Big ol’ rigged polls serve thecunt in three ways:

 

  1. Perception of desirability/success/inevitability.
  2. Demoralization of Trump supporters. (Bad polls can depress turnout for the candidate who is behind)
  3. Most importantly, rigged polls give cover to thecunt conglomerate to engage in vote fraud.

 

On that last point, the calculus works like this: If the polls are accurate and going into the election there is a small MOE difference between thecunt and Trump, then it would be harder for thecunt to pull off vote fraud without Trump contesting it and shining a light on all the DNC crookedness. If, otoh, the clown world polls are rigged and going into Election Day thecunt leads by double digits, (even if in reality she’s tied with Trump), then committing vote fraud becomes a lot more plausibly deniable, (media hack: “oh come now, trumpenpleb, why would the hillary campaign commit vote fraud when all the polls showed her coasting to victory?”)

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Takeaways From the Third Debate

Here’s how I saw it:

Trump Won On Points, Clinton Won on Feels:

Trump was able to strike a happy medium between the first debate in which he was rather incoherent and defensive, and the second debate when he was on point but extremely aggressive. In the third debate, he was more ‘presidential,’ whatever that means. One of his biggest problems to date has been the fact that the uninitiated voter thinks he’s a crazy madman, so he had to convince those viewers that he could withstand attacks without blowing up. He did that, avoiding getting too deep into the weeds on side issues and was able to get a lot of points across firmly and effectively.

He was able to put Clinton on the defensive on several issues, such as the fact that she takes donations to the Clinton Foundation from countries like Saudi Arabia, which throws gays from rooftops and treat women poorly. He also brought up the James O’Keefe video in which DNC operatives were bragging about how they paid people to incite violence at Trump rallies. Clinton’s ‘dream’ of an open border for the hemisphere, as revealed through Wikileaks was also brought up.

In each instance, Clinton had no answer. She pivoted to blaming Russia, or outright ignoring the issue brought up. Her main avenue for scoring points on the night was through emotion. She tried it with abortion, with the typical politician tactic of telling a tale of how some random person from the campaign trail just happened to personify exactly the point wished to be made. She tried it with the use of the THINK OF THE CHILDREN angle with respect to both guns and Syria, and finally with the ‘this is not who we are’ cliche with respect to Trump’s supposed misogyny.

It listens well, but in the end it’s tired. Trump was able to bring new arguments into the fray which both bolstered his case and the case against Hillary Clinton. It still remains to be seen whether the public will see through the emotional manipulation of Clinton, however effective it may be in the moment.

Trump’s ‘Refusal’ to Accept the Result of The Election

Chris Wallace asked Trump (and not Clinton) whether he would accept the result of the election. He was also asked of it by Lester Holt at the first debate. This is a bit curious for reasons I’ll get into later. But Trump’s response is getting most of the play in the mainstream media today (H/T ZeroHedge):cvlboygxyaedl3s debate-4 debate-5 debate-1 debate-3

The media has gone apoplectic over the fact that Trump said that he’d keep us in ‘suspense,’ about how he would respond to the election results. Plenty of words were written and spoken last night about the GRAVE DAMAGE TRUMP HAD DONE TO A SANCTIMONIOUS PILLAR OF OUR 240 YEAR OLD REPUBLIC.

For a start such hyperbole and spewing of platitudes is hypocritical given the allegations that George Bush had stolen the 2000 and 2004 elections, which came from the same people who are today lambasting Trump. It was enough to make Joe Scarborough, hardly Trump’s greatest fan, laugh at the latest faux outrage:

The latest response to the ‘but Gore!’ argument from the left is now something along the lines of ‘but he accepted it!’ Yes, a month later, after it was brought to the Supreme Court. Why shouldn’t Trump be afforded that same level of skepticism if something fishy happens on election night?

That brings me to my next point, which is the James O’Keefe videos. In the last two weeks, the same leftists who are today extolling the virtues of American democracy and the sanctity of our free and fair elections have been caught on camera admitting that voter fraud is rampant, explaining step by step in detail how to perpetrate voter fraud without getting caught, and describing how to subvert democracy by inciting violence at opposition political rallies.

Robert Creamer, one of those involved in organizing those efforts, visited the White House over 340 times during President Obama’s two terms, according to White House records. Both Creamer, and Scott Foval, another one of the head honchos profiled in the O’Keefe videos, stepped down from their positions after they were exposed, a move that confirms the egregious nature of what is shown on the tapes.

In a sane world, there would be a massive investigation and this would be one of the political stories of the year. But who would look into it? The same Department of Justice which is headed by an Attorney General who secretly met with Bill Clinton in an airplane, days before a ruling was to be reached on whether his wife was to face charges? The same FBI which is headed by a Director who then verbally declared she had committed a crime but also stated there was no case? I doubt it.

The mere fact that Clinton is running for an office with the highest security clearance in the land, after provably mishandling classified information in a prior position in govenment, thus disqualifying her from access to such information ever again, is mind boggling. But thanks to the media, the DOJ and the FBI, the public has been conditioned to accept Clinton as a legitimate candidate.

In a similar vein, the constant media pushback of Trump’s assertions that the system is rigged (despite scores of prominent Democrats saying the same thing for years), and the watery-eyed appeals to the history of our 240 year Republic and its pristine elections, are potentially conditioning the public to accept what might ultimately be an illegitimate election result.

It’s not a stretch for Trump to be wary of shenanigans on election night, given everything discussed here, in addition the vociferous objections to things like voter ID and the removal of the dead from voter rolls, when the only conceivable objections to either of those things would be to commit fraud. As Scaborough said, those opposing Trump on this can bathe in the hypocrisy.

A Hillary Clinton Presidency = War With Russia

This is perhaps the most chilling, and important takeaway from the night, but it might get lost in the shuffle given the media hysteria discussed above.

The proxy war in Syria between the US and Russia has escalated in recent weeks and months, and last night Hillary Clinton reiterated her desire to impose a no-fly zone over the area, to ‘hasten the end of the conflict.’

This is in opposition to President Obama, who feels that such a move would entangle us deeper into the region, and in the face of concerns from Marine Corps General Joseph Dunford, chairman of the Joint Chiefs of Staff, who said that a no fly zone would mean war with Russia:

This was how Clinton outlined her support for the no fly zone:

A few things: Clinton noted her awareness of the ‘legitimate concerns’ of the President and the General Dunford. In fact as far back as 2013, she understood the fact that imposing a no-fly zone would create all sorts of problems and cause the deaths of scores of civilians. We know this, thanks to a Wikileaks release of her transcripts to Wall Street bankers (see page 66). Back in 2013, she said this, relating to a Syrian no-fly zone:

So we’re not as good as we used to be, but we still — we can still deliver, and we should have in my view been trying to do that so we would have better insight. But the idea that we would have like a no fly zone— Syria, of course, did have when it started the fourth biggest Army in the world. It had very sophisticated air defense systems. They’re getting more sophisticated thanks to Russian imports. To have a no fly zone you have to take out all of the air defense, many of which are located in populated areas. So our missiles, even if they are standoff missiles so we’re not putting our pilots at risk—you’re going to kill a lot of Syrians. So all of a sudden this intervention that people talk about so glibly becomes an American and NATO involvement where you take a lot of civilians. [ Speech to Goldman Sachs, 2013 IBD Ceo Annual Conference, 6/4/13]
So Hillary Clinton wants to do something – which by her admission requires at the very least the killing of ‘a lot of Syrians’ – in order to save lives.  She took the nonsensical logic a step further in that clip when she spoke of the refugees which are being displaced as a result of this civil war (which she started), and how she couldn’t just stand by watching as people got slaughtered:
I am not going to slam the door on women and children. That picture of that little 4 year boy in Aleppo, with the blood coming down his face, while he sat in an ambulance, is haunting.
Clinton is, in effect, justifying war with Russia, a nuclear power because of a humanitarian crisis created by US involvement which she led, and is using dead children as an emotional impetus to do it. Truly disturbing.

Furthermore, she believes a no fly zone, the establishment of which would lead to war, would then lead to diplomacy in which a deal could be struck. Even if this were true, how could one trust the bargaining skills of Clinton given her tenure at the State Department and her consistent failures in diplomacy with respect to the Russian reset, Libya, Egypt and more?

In the end, a vote for Clinton is a vote for war, potentially of the nuclear variety. It is shaping up to be just that simple. I’ll refer you back to the video above of General Dunford’s hearing. After he declares that a no-fly zone is tantamount to war, leaving the room in a momentary stunned silence, Senator John McCain can be heard grumbling in the background. He then takes over the discussion and angrily guilt trips Dunford for honestly answering the question he was asked, saying:

No, what he asked was should we have a no fly zone so we can protect these people form being slaughtered. That’s what he’s talking about, that’s what we’re all talking about.
Dunford immediately backs down and almost apologetically says that maybe we wouldn’t have to go to war after all. But the annoyance which McCain showed at the original answer was telling. It was as though he was upset that the real consequence of establishing a no fly zone was mentioned, by such an authoritative figure on the matter so as to leave no doubt. Note how he glibly knocks away such concerns about the no fly zone by enveloping it in humanitarian concerns, just as Clinton did last night.

It is thus ironic that Clinton has such support from leftists, despite her taking the same warmongering position as a notorious neocon warmonger. These are the same leftists who were up in arms during the Bush administration owing to the endless Middle East adventures the US embarked on. Hillary Clinton has done nothing but continue them as Secretary of State, and definitively promised to continue further last night.

Despite the fact these unnecessary adventures could directly result in nuclear war, these same leftists are not only standing behind Clinton, but have the audacity to declare that it is Trump who might get us into a war frivolously.

Clinton’s actual record of promoting just that, frivolous war, is apparently meaningless, because Donald Trump says mean things sometimes. It truly is a clown world we live in.

Final Thought

Not really a huge takeaway, but I was wrong in my debate preview about Chris Wallace. He did a good job last night, particularly compared to the moderators in the other debates. He was fair to both sides, and equally tough, which made for a substantive debate.

How this will play out on election night is to be seen, but from where I sit, the dynamic of the election is as follows: Trump is seemingly wearing a clown suit and speaking with helium gas, but what his actual words amount to the fact that two plus two is equal to four. Clinton speaks with professorial calmness and assuredness, but does so in relaying the argument that two plus two is equal to twenty-two.

It is up to the electorate to note this, and act accordingly.

Third Debate Preview:

Sundance at CTH sees it like this:

Anticipate Wallace beginning the debate thusly:

 

“There has been a lot of noise amid the election coverage with reports of groping, locker room talk, emails, WikiLeaks, investigations and such lately…. but what’s more important to the electorate are the specifics of policy and your skills to lead our nation…. as such, I’m going to ask each of you to stay away from the personal nonsense, drop the controversial gotcha talking points and speak directly to the American electorate”.

Or something similar and equally table clearing.

 

He’s then going to wonkify the debate, going directly to specific and intensely granular details about policy.  This effort will be geared toward aiding the “expert government policy candidate“, Clinton.

 

Wallace will shroud and protect his (and Murdoch’s) objectives, by claiming the intellectual high-road; all-the-while the goal is to emphasize the low-minded, non intellectual, non-policy specific vulgarian, Trump.

 

Chris Wallace will use video(s), and visual aides to amplify his approach and contrast how the “intellectual professionals” within the various intellectual policy businesses (think tanks etc.), are diametrically opposed to any disruption in the order of things.

I agree with this fully. Make no mistake – Wallace is as Never Trump as they come. He’ll be different to the pro HRC moderators of the past by trying to stick it to Trump intellectually, as opposed to outright being hostile with him like Matha Raddatz and Anderson Cooper were. Expect obscure Middle East geography, and comments such as ‘483,493 Policy experts say your position on X is wrong, why do you hold it?’

It is all meant to make it look like Trump ‘doesn’t know what he’s doing.’ Trump has to emphasize two things, if he can:

  1. Appeals to the ‘experts’ well versed in the old, failing paradigm are irrelevant because their way has failed. I have new experts who validate my view that we need to go in the opposite direction
  2. The presidency is an executive, which is a position of leadership and direction more than anything else. Trump should make the case that he has been doing that his entire life, and is in many ways born for the role. The wonky stuff is best left to those chosen to be in the trenches. The key is choosing the right people, so as to be informed properly when decisions are made.

I doubt the second point will be made, but if it can be made, it will serve as a great jump off point to pivot into the scandals plaguing HRC, from her emails, to the shenanigans exposed in the Podesta emails. The fact that HRC surrounded herself with individuals of such poor quality and integrity highlights her judgement, and should count well against her with respect to the office of the presidency.

Personally, I feel that Trump will have an excellent night if he is able to draw a clear contrast between himself and Clinton. In particular, I’d like to see him highlighting the fact that he is the candidate of American sovereignty, both culturally and economically, while she ‘dreams’ of open borders and a hemispheric trade zone. He needs to highlight the fact that he is the candidate who wants diplomacy with the Russians, while HRC and the top brass of the Democrats, up to and including HRC have been agitating for war for several months now.

This, in particular, will score points and is a possible game changer. Trump to this point hasn’t done a good enough job outlining the fact that HRC is no different to a neocon in terms of warmongering, the same way he did with the rest of the Republicans in the primary. It is not enough to go over the Iraq war, and HRC’s failures in driving us into every Middle East skirmish imaginable since. A point blank assertion that this trend of HRC to preside over American combat will continue, with Russia, a nuclear power.

It doesn’t matter how it happens, with respect to tone. Trump must establish himself as the change agent, once and for all, and leave no doubt in the mind of the voter what substantive choice awaits.

 

 

The Great Unmasking

Last month, Donald Trump caused a stir in the economic world, with his analysis of the Federal Reserve and its monetary policy during an interview he did with CNBC.

In it, he was adamant that the zero interest rate policy of the Federal Reserve had created a ‘false stock market.’ This was after last week, in which he had said that the interest rate policy had created a ‘false economy.’ His reasoning for both was that the decisions were political in nature.

According to Trump, Janet Yellen, the Federal Reserve Chair, was embarking on these policies in order to help President Obama, in order to make sure he ends his term with a positive economy.

Politics aside, the administration, and most left leaning economists have quick to point to the job numbers as a sign of the recovering health of the economy. The fact that the stock market has made fresh all time highs in 2016 has been used to tout the strength of the business community and commerce. Indeed, at a campaign rally last month, President Obama vociferously patted himself on the back for an economic job well done:

Janet Yellen, during her remarks explaining the Federal Reserve’s interest rate decision on September 21, painted a rosy picture of the economy, repeatedly citing the employment figures along with household income increases as evidence.

It is my view that these data points – mainly the employment data, and the performance of the broad stock markets – are merely masks which give the perception of strength and improvement, while concealing a deteriorating reality underneath.

The Labor Market Mask

Let’s look at the employment data.

While it is true that the unemployment rate has come down to 5%, from about 10%:

Part of that is because the labor force participation rate has declined throughout President Obama’s tenure and is at multi-decade lows:

labor-force-participation-rate

With a ‘normal’ labor force participation,  the unemployment rate would be much higher, at least 10%.

The problem isn’t just with the totality of the workforce and the employment rate, but with the types of jobs which are being created in this economy, and who is filling them. Even a cursory look at the below surface trend reveals some problems.

The following is a breakdown of the labor force participation rate by age group: (Credit to the excellent Doug Short, who is a tremendous resource with his charting)

labor-force-participation-by-age

The following chart shows the breakdown in cumulative job gains for prime age workers versus those over 55, from 2007 through August 2016:

jobs-old-vs-young

The following chart shows the cumulative gains in the food and hospitality industry versus manufacturing:

water-bartender-mfg-workers

These charts show that the labor force is getting older, and the jobs that are being created are mostly of lower quality, in terms of goods producing. The bartenders vs manufacturing chart is somewhat tongue in cheek, but it does highlight the fact that most of the jobs that are being created are in the service sector, which are less paying jobs. The jobs that are being lost are the higher paying goods producing jobs.

Also concerning is he fact that the jobs data for September 2016 showed an increase in part time jobs of 430,000, compared to a loss in full time jobs of 5,000. In addition, there was a spike in the amount of individuals who hold multiple jobs of roughly 300,000, from 7.5 million to 7.8 million. The following two charts highlight these developments:

part-vs-full multiple-oct

Put it all together, and what we have is an economy which appears to be creating low paying jobs, which are being filled by people who may already have jobs, but need second and third jobs. Or, individuals who were laid off from a full time job, and are replacing it with multiple part time jobs, at lower pay.

Regardless, these are not signs of a robust economy, and those who point to headlines touting ‘X million jobs created since the recovery’ are being duped by an attractive mask that hides a horror show.

The Asset Price Mask

But what about the stock market? Isn’t it at all time highs?

It is, but masks are present here as well. Namely, the Federal Reserve. For nearly 8 years, the Federal Reserve has been engaged in unprecedented levels of monetary accommodation, with the Federal Funds rate resting at 0% until the most modest of raises in December 2015.

That raise was supposed to be the start of an easing cycle, which many experts predicted would result in four rate hikes for 2016. However, the stock market subsequently began 2016 with the worst start in the history of the stock market. This prompted an abrupt about face from the Fed, and then the ‘experts,’ with respect to the rate hiking schedule. Four rate hikes became two, and two became one, and as of this writing there is talk that there will be none at all.

That 12% stock market sell off in the first three weeks of 2016, on the back of the Fed raising rates for the first time in 7 years, from 0% to a negligible 0.25%, is indicative of the whole story: This market lives by the Fed and dies by the Fed. Some, myself among them, would call that a bubble.

The Fed’s persistence in keeping interest rates as low as possible is ultimately rooted in its flawed belief that elevated asset prices are the key to prosperity. Consider Ben Bernanke’s 2010 explanation of accommodative monetary policy and its intended result, the ignition of the ‘wealth effect.’

This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate this additional action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.

This is a description of an economic growth model that starts with the Fed lowering interest rates, pumping money into the economy, continues with various actors in the economy increasing their borrowing, and ends in them buying assets, which increase their prices, emboldening the owners of those assets to further spend or take on more debt as a result of their increased ‘collateral.’

The hope Bernanke and all Keynesian influenced central bankers had, and still have, is that this process continues and feeds on itself, a phenomenon known as the ‘virtuous cycle.’

Indeed, the Federal Reserve has accomplished this, expanding its balance sheet from roughly $800 billion in 2008 to roughly $4.5 trillion today:

fredgraph-2

Which has led to skyrocketing corporate debt:

fredgraph-3

Which has, in part, led to a substantial rise in the S&P 500, which I will use as a proxy for ‘asset prices’:

fredgraph-4

The problem with this, the Fed’s preferred model for growth, is that continued asset price increases rely on ever expanding debt, to provide the impetus to buy. It is a simple fact that debt cannot expand in perpetuity. It is limited by the ability to service that debt, which is in turn limited by the productive capacity of the borrower in question.

With respect to corporate borrowers, that productive capacity is seen in earnings. If corporates can produce increasing earnings, they can sustain larger debt loads, which justifies the higher debt-induced prices. The following chart, of the S&P 500 index compared with earnings of the companies in that index, tells an interesting tale:

spx-earnings-vs-stock-index-price-1

In short, the continued rise in stock prices are not justified based on the diminishing productive capacity of the companies themselves. A reason for this diminished capacity is general weakness in the economy itself, evidenced by the labor market situation which was discussed earlier.

An economy in which more and more people are working multiple lower paying part time service jobs instead of higher paying full time goods producing jobs is going to be an economy in which fewer and fewer people have incomes which allow them to spend freely. These household budgets are further constricted when taking into account the fact that the Fed is trying to engineer prices higher, so as to kick start the ‘virtuous cycle’ of the ‘wealth effect.’

The math just doesn’t work. Rigid incomes lead to constrained household budgets, which do not lend themselves to increased spending at higher price points, nor do they lend themselves to increasing borrowing to spend at higher price points.

Despite this roadblock, share prices continue to remain elevated, because the continued low interest rate environment established by the Fed enables corporates to take up the burden of spending. They can borrow at record low rates, and buy back stock. Or, other investors, banks, foreign central banks and others can borrow at low rates, in order to buy elevated stock prices. The rationale here is less a belief in a prospective restoration of business fundamentals, and more in a belief that buyers will buy for the sake of buying, rendering elevated prices becoming even more elevated.

Even the Fed is worried about the developments they have created:

In the minutes of the Fed’s September meeting, released this week,some officials “expressed concern that the protracted period of very low interest rates might be encouraging excessive borrowing and increased leverage in the nonfinancial corporate sector.”

 

Despite these worries, investors continue to demand corporate debt, helping fuel a years-long rip-roaring rally in corporate credit that shows few signs of stopping. Corporate bond issuance this year is set to total $1.5 trillion, nudging past last year’s tally, according to the credit strategists at HSBC, led by Edward Marrinan. Issuance of high-grade debt is expect hit [sic] another record high this year.

 

It’s all a sign that, in the words of the bank’s strategists, “Market participants seem to be downplaying—or looking past—the risks associated with the steady deterioration in the credit fundamentals of the US corporate sector,” such as rising leverage, contracting earnings, and stressed revenues.

 

After the financial crisis, many companies focused on rebuilding their balance sheets to withstand another shock. But as the prolonged period of low interest rates continued, cheap borrowing costs prompted, well, more borrowing. Much of that went to fund shareholder-friendly activities like dividend increases and share buybacks. It also funded big mergers and acqusitions.

Emphasis mine. The preponderance of ‘shareholder-friendly activities,’ not least of which being the explosion of asset prices themselves, looks very good on the surface. Indeed, many law makers, academics, and market cheerleaders (such as President Obama) have been in a celebratory mood over the last few years, boldly declaring that the Federal Reserve’s actions had worked.

However, the divergence described by the WSJ – that the Fed itself worries about – between elevated asset prices and the fundamental deterioration of those prices is real, and cannot persist in perpetuity.

Removing the Mask

Deteriorating fundamentals cannot support the further debt burdens that are required to keep asset prices rising even further beyond these levels. And the Fed knows it. This is why they abandoned the original plan for multiple rate hikes in 2016, as that would have slowed down borrowing and thus slowed down the impetus for asset price increases.

In this manner, the market going from four expected rate hikes to now one or zero rate hikes is an effective rate cut. This is what the Fed has been relegated to, sitting on its hands and hoping a miracle happens. If they are proactive in doing anything more accommodative, such as another round of QE, they will put themselves in an untenable position. They can’t on one hand tout the robustness of the economy  yet embark on further emergency policies, such as QE would be. The situation would be exposed for all but the most die-hard believers in the Fed.

Regardless of their games, or ‘forward guidance’ as they would call it, reality will assert itself at some stage. The mask will eventually come off. How exactly it will happen is uncertain. But this situation has happened several times before in financial history. There is no escaping a scenario in which too much debt has been taken on relative to the ability to service it. All the Federal Reserve (and central banking in general) can accomplish is to push the date of reckoning out into the future. But even that does damage.

The current boom/bust episode is merely the latest in a 40 plus year credit binge following the ending of the gold standard in 1971. This has eventually led to constantly rising asset prices, which fooled the majority of the public into eschewing the idea of accumulating real savings.

Most used their home or 401k as their savings account. This was fine as long as the stock and housing markets kept rising, which they did, temporary bear market corrections notwithstanding. That all changed in 2008, when the bubble burst in earnest, and asset prices crashed.

This resulted in mass layoffs, but more importantly, many who had counted on elevated real estate and stock prices for retirement were now out in the cold, just at the moment they were ready to retire. This meant they were forced to return to the labor market, because they had built up no real savings over the preceding decades. This explains the surge in labor force participation for the over 55 segment, discussed earlier.

The under 55s have struggled to regain a foothold during this latest ‘recovery,’ still being several million jobs underwater from where they began the Great Recession. Some of this is down to competition from the over 55 workers, who flooded the market. Many of them, closed off from their former occupations, went into parts of the market usually populated by younger workers. Hence the proverbial ‘Wal-Mart Greeter.’

That position really should be filled by a 16 year old kid, working his first job and acquiring the basic skills involved with employment. Instead, the position is filled by a 60 year old who is working one of his last jobs because he didn’t accumulate savings during most of his productive years.

This phenomenon doesn’t bode well for the economy as a whole going forward. When you have an economy which is severely under-employing those who are in their peak earning years, not only is the economy not going to be moving as robustly as it should, but in the future, as those workers persist with decades of under-employment, they too will have to encroach on future younger generations as they try to get their careers off the ground. Multiple generations impaired at once.

And therein lies one of the ultimate problems with central banking, played out over decades. It, like most of government, prioritizes political expedience over longer term sustainability, papering over the cracks instead of repairing them, thus consigning the ultimate costs to be dealt with in the future.

In this greater sense, reality will assert itself here as well. The exponential increase in debt and increases in money supply papering over business cycle after business cycle can only end in a currency crisis, as it has done many times in the past. One can only hope we correct course before such an event occurs.