A Dangerous Combo: Over-Confident & Stupid

From 2010 to 2012, the US’s world ranking in education fell from #14 to #17. At the same time the US has regained the #1 spot in confidence. Is there a better way to fulfill George Santayana’s warning than to breed a bunch of over-confident stupid people?

“Those who cannot remember the past are condemned to repeat it.” — George Santayana

If we do have an excuse for ignoring history, it is that our country is old enough to have forgotten our revolutionary history, but not old enough to have experienced the grip of tyranny. However, with all the information that now exist at our fingertips, is the loss of life really necessary in order to understand what happens when government obtains absolute power?

The Wall Street Journal recently reported that the NSA’s surveillance network has the capacity to spy on 75 percent of all U.S. Internet traffic. You should also know that your govt can seize your laptop or any other digital device within 100 miles of the border without probable cause. If you live in Florida, this no-Constitution zone applies to your entire state. If you don’t already know it, the reason the govt is ignoring your 4th Amendment rights is not to check and see if you have contacts with terrorist, but to see if you have any hidden bank accounts.

This money grab is always the response of govt’s that run out of money, and are afraid of losing their grip on power and perks when civil unrest ultimately erupts. It is also how nations collapse, as capital is chased further underground and to friendly jurisdictions. One might ask, why don’t they reform the system before it’s too late? The answer is easy – they would have to admit they were wrong and downsize themselves. When you have the power, it’s easier and more financially rewarding to just dig in your heels.

All over the world, bankrupt cities and countries are coming to grips with the fact that political promises cannot pay for unfunded liabilities. Whether its socialist cities like Detroit, or industrial powerhouses like Germany and Japan; if you spend more than you are ABLE to collect in taxes, the math eventually catches up to you. Instead of fixing the problem, govt stupidly thinks they can continually take more money out of your pockets and expect you to spend the same and work harder. Now do you understand why politicians cannot get a job in the real world?

Relative to their GDP, Japan has injected over 50% more money into their economy than our three QE programs did, and they’ve gotten squat from it (and they did it all at once, instead of over four years like we did). In fact, Japanese bond yields have spiked since the announcement, increasing interest expense and making it more costly to roll their debt. Bernanke knows we’re headed in the exact same direction, which is why he’s jumping ship.

Govt stupidity is redundant, which is why it’s not unique to Japan or the US.  Europe could be the poster child for the political circle jerks happening around the world, as it will continue to throw good money after bad in Greece. This realization comes on the heels of bail-ins in Cyprus. Maybe it will dawn on the citizens that their politicians are corrupt after their bank deposits are stolen to save the bribing banks (after the German elections, of course).

In India, they don’t understand that implementing capital controls only accelerates the actions that drove them to conclude capital controls were the solution. If the govt says you can’t save money, what do you think people will do? The attitude of Govt is to always crank up the capital controls until morale improves. Only people who think they are God believe they can manipulate human nature and eruptions on the sun.

The Feds may be able to con the  US people into believing the economy is stronger than what it is by manipulating stats and dumping printed money into the stock market. However, they cannot hide the reality from the rest of the world, that is not seeing increased demand for their products, and is only seeing exported inflation from the US as a result of printing dollars that drive commodity prices higher. Thailand, one of the hottest markets is Asia, is now in a recession, and its stock index ETF (THD) has broken the neckline in a head and shoulders top that points toward another 30% decline.

Having an interconnected world economy has its pros and cons. The fact that capital is free to flow beyond national borders, not just state borders, means your country (or state) must be competitive when it comes to taxes, regulations, and the rule of law. Otherwise, capital will simply move to more favorable place. Our high corporate tax rate and the fact we tax international income twice are two big reasons we scare jobs away (see Armstrong’s answers in his debate with Steve Forbes).  A global economy also means one can observe what’s happening in one part of the world to understand where capital is flowing and what it means back home.

The unrest in the Middle East was sparked by youth unemployment and the rising cost of food. Everything is connected in a global economy, and like a liar trying to cover old lies, the problems only get bigger the more govt tries to manipulate markets and the business cycle.

The bigger question for US citizens is will we realize what’s coming after European’s have their deposits bailed-in and Indian’s ban gold? Or, like the roaring 20’s, will American’s interpret the flow of capital seeking the safe haven of the dollar as a sign of economic recovery? History, and the destruction of Rights in the US, says the folks will not know what hit them until it’s too late (just like the end of the 20’s).

The award-winning legal news website, Gloklaw, has stopped work, saying it cannot operate under current US surveillance policies. This follows on the heels of two other encryption companies (Lavabit and Silent Circle) that recently closed their doors, and was reported here back on Aug 9th. There is no longer a free press.

Daniel Ellsberg was set free for exposing govt lies after the Pentagon Papers were published. Today, Bradley Manning got 35 years in prison, Edward Snowden must hide in Russia, people want Assange taken out by a drone, and the UK govt simply pulverizes the hard drives of reporters and tries to intimidate others.

Things are moving fast, for anyone that cares to see. On 9-11-13, you can do something.


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