USA versus China

Recently MIT gave innovation awards in India. Guess who owned the innovations? American companies with Indian employees ! So the innovations will always be owned by Americans where ever there are. Look at the quality of American companies IPOs versus Chinese companies IPOs. There is a marked difference in the quality. The Chinese Communist Party members, as the world is beginning to realize, are the biggest crooks and cronies on the planet, looting their own country on a magnitude never seen in human history! To complicate matters, they have no law (much like the Russians). Its just another mafia country. Your business can be stolen at gun point in both the countries. To make matters worse, the Chinese speak like they have genuine ill-will towards Americans and they are totally immersed in arrogance. As the tide turns, may God forgive them for their arrogance. Their stupidity on increasing military spending for false nationalistic notions and spreading nuke techology foolishly to rogue countries will haunt no one else but themselves. Does Pakistan not haunt America? Did Iraq not haunt America? And whose allies were they? History will repeat for the Chinese. As long as America is a capitalist country (regardless of democracy), it stands a good chance to stay on top. But alas....what is the good of all the power and wealth when the richest country has citizens who are gun slinging psychos shooting in movie theaters and public schools ? When New Orleans was in trouble, American citizens proved that they do not need Chinese/ religious bigots as enemies. They suffice among themselves as THE most dangerous pyschos. When Thailand had a flood in the same year (I think), their citizens proved what true wealth really is. They helped each other. In America, they loot and rape minors when people are in distress! America needs to do some introspection. Otherwise Bhutan beats both US and China in true wealth. Atleast your 6 year old daughter can go to watch her Batman movies and come back home alive.

On democracy

In a recent interview, Hans-Hermann Hoppe — the author of the forthcoming The Great Fiction: Property, Economy, Society and the Politics of Decline — explained: “... it is democracy that is causally responsible for the fatal conditions afflicting us now. The number of productive people is constantly decreasing, and the number of people parasitically consuming the income and wealth of this dwindling number of productive people is increasing steadily. This can’t work in the long run.” Democracy is just a wealth-distribution (and ultimately wealth- destruction) scheme that pits the taxpayers vs. the tax eaters. In the case of Europe, Germany and the Netherlands produce and save, while Greece, Spain, Portugal and the rest consume. Eventually, a bankruptcy will bring to light the truth about democracy, which, Hoppe explains: “...is nothing more than an especially insidious form of communism, and that the politicians who have wrought this immoral and economic madness and who have thereby enriched themselves personally (never, of course, being liable for the damages they have caused!), are nothing more than a despicable bunch of communist crooks.” Democracy, simply, in Hoppe’s view, decivilizes society. Civilized people save and plan so as to take care of themselves and their families in the present and future. Fiscal conservatism and prudence is valued in a nondemocratic society, as are sound ethics. Democracy undoes the tendency for people to act cooperatively and responsibly. Politicians constantly look to appease voters with more benefits to care for them from cradle to grave, so as to win the next election. At the same time, the bureaucracy that hands out the benefits grows larger and larger and is unaccountable to anyone — especially voters. As the old saying goes, “No matter who wins, the government is always elected.” In order to distribute these benefits, the government must violate property rights. Government produces nothing; it must take from one group in order to give to another. Hoppe makes the case that individuals are powerless to protect themselves from government theft and view taxation as they would natural disasters. This alters the behavior of producers, who will tend to be less future-oriented, given that government is constantly stealing from them. This continuous theft, overtly through taxation and subversively by way of inflation, raises the producers’ time preferences, and they divert resources from producing future goods to present consumption. Over time, democracy leads to a lower level of capital being accumulated. With less capital, society is not only poorer, but less civilized. In Democracy: The God That Failed, Hoppe explains: “if government property-rights violations take their course and grow extensive enough, the natural tendency of humanity to build an expanding stock of capital and durable consumer goods and to become increasingly more farsighted and provide for evermore distant goals may not only come to a standstill, but may be reversed by a tendency toward decivilization: Formerly provident providers will be turned into drunks or daydreamers, adults into children, civilized men into barbarians and producers into criminals.” So what has kept this destructive force — democracy — alive for so long? Ironically, capitalism. Hoppe responds: “That the whole democratic house of cards has not yet completely collapsed speaks volumes about the still tremendous creative power of capitalism, even in the face of ever-increasing governmental strangulation. And this fact also allows us to conjecture about what economic ‘miracles’ would be possible if we had unimpeded capitalism liberated from such parasitism.” So many people mistakenly tie democracy and capitalism together, when in fact democracy keeps capitalism from making all producers prosperous. Laissez-faire is not a matter of electing the right person; it means simply “leave it alone,” something politicians cannot seem to do.

Deflation in progress...the healing

Livemint: Prices of Raw Goods Plunge on Slowdown Slump renews debate over longevity of the commodity super-cycle; glut of raw materials around the world The sudden economic downdraught has caused one of the biggest and broadest declines in commodities prices since the financial crisis, surprising producers and creating a glut of raw materials around the world. From crude oil to copper to cotton, prices were down an average of 9% since late February, based on the Dow Jones-UBS Commodity Index. Crude oil prices, well above $100 a barrel just two months ago, now fetch $84.96 on the New York Mercantile Exchange. Cotton prices have tumbled 22% so far this year. The benchmark steel price in the US for hot-rolled coil is down 13% in two months, according to commodity price reporting firm Platts. The declines mark a sharp turnaround from just a few months ago, when economists were optimistic about the prospects for a US economic recovery, China still seemed to be humming, and commodity supplies were generally tight.

India versus China

India is a democracy. It does not have a ponzi / mafia political party which focuses on looting the nation. Check out the number of billionaires in the Communist Party of China. Patents are relatively much safer in India. The press is free and vibrant. There is no "mad" overcapacity in anything like empty/ ghost buildings/ cities and the like. The Indian judiciary is slow but generally very fair. India does not have problems associated with the one child policy. Air pollution in Indian cities is probably lower. Most importantly- the fundamentals of the Indian economy in few ways are better than the Chinese. India does not control its currency artificially. There are fewer Indians trying to run out of India than Chinese trying to run out of China. Infact most Indians can take foreign currency outside the country upto a limit. But few Indians do it. Most Chinese will smuggle their moneys out buying fancy properties in Mayfair/ Kensington in London. India has a long way to go..... inspite of the government (if you know what I mean).

Martin Armstrong - How do empires die ?

Sorry, but you can die in a desert from extreme heat or freeze to death in Antarctica from extreme cold. To survive, we need a temperate client to live within. DEFLATION or INFLATION can kill an economy. Empires do not die by HYPERINFLATION – that is reserved for the fringe. When an empire dies, it historically has ALWAYS been by DEFLATION. How. Real wealth is driven from the ABOVEGROUND economy into the UNDERGROUND economy where it is hoarded and tucked away. This is why we find hoards of Roman coins. This reduces the VELOCITY of money and commerce is reduced. This is ALWAYS AND WITHOUT EXCEPTION how empires die. This is why there was scrip issued in the United States during the Great Depression. The VELOCITY of money came to a halt. The British Empire did not die of HYPERINFLATION. The pound collapsed in value. It did not inflate into oblivion. The British Empire simply rolled over and died. The decline of the sterling silver penny of England was no different a path than the decline and fall of Rome. The United States will follow the same path and that means there is a risk that it will break apart into regional sections ONLY AFTER the dollar is hit very hard following Europe and then Japan. This is fairly simple. All the hyperinflationists can point to is Germany and Zimbabwe. They can offer not a single historical example of how HYPERINFLATION ever destroyed any empire. I have no vested interest in HYPERINFLATION or DEFLATION. I simply do the research and let the evidence speak for itself. This is just not a personal opinion issue in the least. Both will lead to the same end result – the death of an empire. Why must there be an argument over such nonsense. It is DEAD! How Empires Die. The question how do empires die is absolutely critical to surviving the Sovereign Debt Crisis. You can buy gold and listen to this nonsense about HYPERINFLATION and $50,000 an ounce while everything else is worth shit. You will be right insofar as in the end the empire will die. However, you may not make it to the finish line with this myopic view of the world. The very word “suburbium" is what the Romans called it. People left the cities fleeing taxes. The population of Rome itself just collapsed. No city ever matched that size again until the Victorian era in London. This is how empires die. The cost of government always rises oppressing the private sector since the public sector is like a drunk – it just consumes and has the hand out claiming he needs money to eat instead of drink. The people either leave or revolt in their struggle to cope with the persistent unpredictable demands of government that historically NEVER lives within its means. The Goldbugs are not even in the right church forget the right pew. It has never been this battle against what is money or trying to create a “gold standard" that has never survived the folly of man because everything fluctuates in value – it has always been the perpetual battle against the spendthrift ways of those in power who squanders the resources of the people and assumes authority to extort from them whatever they desire at the moment. It matters not what period we look at, the end result NEVER changes. Most of the leading German cities freed themselves in the second half of the 13thcentury from all forms of subordination to territorial princes, yet they were not as autonomous as the independence republics enjoyed by the Italians. This movement towards autonomy was facilitated by various princes' urgent financial needs. The great episcopal cities of Cologne, Augsburg and Mainz became free cities. In the struggle for autonomy, possession of financial resources was a decisive factor in victory. Impoverishment, nonetheless, facilitated the return of the lords because of the failure to manage the fiscal spending of the city.

All commodities will rise- Martin Armstrong

All commodities will rise. This is inevitable. The idea that somehow Freegold will emerge as a solution is just absurd. Governments will

NEVER give up power until they are forced to do so. Gold will be reduced to the barter system and its value will rise largely as an alternative to ELECTRONIC money. If you had $1 billion, and you wanted to withdraw it from a bank, the best that could happen is there will be a cashier’s check. Even that is highly unlikely. The only way to withdraw that much money is by electronic transfer. So let’s get real. There is no role for gold to play in the future and the whole idea of a fixed exchange rate has been attempted many times and it has always failed. You cannot fix the value of money without fixing everything else from wages to stock values. That is why all fixed exchange rates systems have collapsed after brief periods of time.

What we do face is a rise in prices due to the

Sovereign Debt Crisis. Nothing will take place until we begin to see pressure put on the debt markets. That has not quite appears outside of Greece and Southern Europe. The politics is already starting to shift toward inflation rather than austerity. The only check against this trend is capital. It is not FREEGOLD we should be concerned about, but free capital in general. Once capital begins to shift as it did in 1925 away from debt and toward the free markets, then we will see interest rates start to rise. As that takes place, the debt structure of government will explode. 7

Indeed, when we look at wheat we have the spike high in 2008. This followed the low in 1999. The computer forecast was spot on for the last 12 years. What certainly appears to be on the horizon is a rather significant breakout to the upside. Here is a chart of wheat showing the

Breakout Line from the 1932 low. We exceeded that briefly during the 1974 rally. We exceeded that line for the first time closing above it at the end of 2006. That led to the spike rally into 2007. We exceeded that Breakout Line briefly in 2011 and then the market turned down. This was still quite critical for it indicates that this market is preparing for a blast to the upside.

Looking at wheat indicates that what we are facing is by

NO means something related ONLY to gold. When we look at the entire landscape of markets, we can see the true scope of the Sovereign Debt Crisis that we face. For the distinction between a wholesale decline in a currency value and a capital concentration that creates a bubble economy, is rather simple. The former is witnessed in all markets whereas the latter is concentrated within a single market such as the Mortgage Pools in 2007, the Internet Bubble in 2000, Russia in 1998, Japan in 1989, the dollar in 1985, gold 1980, and the agricultural markets in 1974.

Consequently, what we are looking at is a wholesale advance in the commodity sector and this implies a very broad based decline in the currency purchasing power rather than a single isolated capital concentration. Thus, this is not about just gold, it is about a systemic decline in the way Western government has functioned since World War II. The 1989 turning point was the death Nell for Communism. This is now our turn with unfunded socialism. So indeed repent for the time is near. Just not for the reason a lot of people have been saying. 8

What Would Graham Say About Goldman?

WSJ-

We were reminded, since the Greg Smith/Goldman Sachs brouhaha has still not died down, that Benjamin Graham had quite a bit to say about conflicts of interest in Chapter 21 of the 1940 edition of his great book Security Analysis. Remember, as you read it, that Graham always chose every word he used with the utmost care:

“An institution with securities of its own to sell cannot be looked to for entirely impartial guidance. However ethical its aims may be, the compelling force of self-interest is bound to affect its judgment. This is particularly true when the advice is supplied by a bond salesman whose livelihood depends upon persuading his customers to buy the securities that his firm has ‘on its shelves’….

“[T]he sale of securities is not a profession but a business, and is necessarily carried on as such. While in the typical transaction it is to the advantage of the seller to give the buyer full value and satisfaction, conditions may arise in which their interests are in serious conflict. Hence it is impracticable, and in a sense unfair, to require investment banking houses to act as impartial advisers to buyers of securities; and, broadly speaking, it is unwise for the investor to rely primarily upon the advice of sellers of securities.”

So far as I can tell, this passage didn’t appear in the first edition of the book, published in 1934. It seems plausible that Graham added this commentary in 1940, seven years into tougher banking regulation under the Glass-Steagall Act, in order to remind his readers that they shouldn’t let ostensibly tighter rules lull them into a sense of complacency.

To this day, Wall Street firms like to assert that their “Chinese walls” and detailed disclosures cure their conflicts of interest. As Graham knew and as all investors should remember, procedures and disclosures don’t cure conflicts; they merely describe them.

Revising or expanding these conflict-of-interest policies won’t solve the problem. “The compelling force of self-interest” will continue to taint the judgment of those who give financial advice until firms finally, somehow, concede that the only way to cure conflicts of interest is to avoid them in the first place. But that wasn’t part of their business model in Graham’s day, and it isn’t in our day either.

Putting on a white hat can’t keep your hand from turning red whenever it goes into the cookie jar.