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A “real” economy vs. an “unreal”?

12 Jan

Market Manipulation by the Federal Reserve [courtesy Google Images]

Market Manipulation by the Federal Reserve
[courtesy Google Images]

Richard Fisher was the president and CEO of the Federal Reserve Bank of Dallas from A.D. 2005 to A.D. 2015 . He’s now a director of PepsiCo and ATT, a senior advisor to Barclays, and a CNBC contributor. The man is accomplished and “connected”.  We he talks, we’d do well to listen closely.

In reaction to the dramatic stock market sell-off during the first week of A.D. 2016, Mr. Fisher “talked” in a recent article entitled “Don’t blame China for the sell-off”:

 

•  Fisher:

 

“Recent volatility and downside slippage in the equity markets has been ascribed to China and the potential for slowing global economic growth. To be sure, these are factors worth watching but they are hardly newsworthy.

“While I would not completely pooh-pooh the effect of developments in China on the rest of the global economy, I believe another factor is of greater importance in pricing the U.S. stock market going forward: the effect of accommodative Federal Reserve policy.”

 

Mr. Fisher is telling us that, contrary to popular opinion, the recent US stock market fall was not triggered by China’s economic problems—it was caused by Federal Reserve policies.

Few would be surprised by Mr. Fisher’s statement.  We all pretty much suspect that the Fed is responsible for the current economic problems.  Still, given that a former president of the Dallas Federal Reserve Bank is making these admissions, they are amazing.

•  Fisher:

 

“I spent 10 years (through last March) as a participant in the deliberations of the Federal Open Market Committee, setting monetary policy for the U.S.  The purpose of zero interest rates [ZIRP] engineered by the FOMC [Federal Open Market Committee], together with the massive asset purchases of Treasurys and agency securities known as quantitative easing [QE], was to create a wealth effect for the real economy by jump-starting the bond and equity markets.”

 

Interesting choice of words.

In fact, when I think about it, Fisher’s word choice might be revelational.

Mr. Fisher wrote that the purpose for ZIRP and QE was “to create a wealth effect for the real economy . . . by jump-starting the bond and equity markets.”  His word choice implies that the “bond and equity markets” are something external to, and not part of, the “real” economy.  His reference to the “real” economy implies that he recognizes that there’s also an alternative, “unreal” economy that includes the stock and bond markets.

Fisher doesn’t precisely say so, but his use of the word “for” (in “to create a wealth effect for the real economy by jump-starting the bond and equity markets.”) implies that the “real” economy is analogous the internal combustion engine on your car.  That’s the primary engine that truly makes the car “go”.  However, that “real” economy can only be started by means of a second, “unreal” economy that’s analogous to the electrical starter motor on your car.

You might suppose that I’m jumping to conclusions based on Mr. Fisher’s text.  However, as you’ll read, Fisher later raises the same implication for a second time.  That’s good evidence that my reading of his text is not unreasonable.

More, Mr. Fisher’s extraordinary background makes clear that he must be a very competent communicator.  I doubt that he ever speaks or writes a single word without precise intent.  As such, he can be expected to pick his words very carefully—especially for an article as important as the one I’m describing here.

Fisher’s decision to use the adjective “real” to modify the word “economy implies that he—and perhaps other members of the Federal Reserve—think in terms of the US (and even world) as having two economies:  a “real” economy and a second, alternative economy that I’ll label as the “unreal” economy.

Mr. Fisher doesn’t define the “real economy,” but I presume that he means the free market where the laws of Supply and Demand set prices based on economic fundamentals.  In broad strokes, we might describe the “real” economy as “Main Street”.

Mr. Fisher’s exclusion of the stock and bond markets from the “real” economy implies the existence of a second, alternative and “unreal” economy that does include the current stock and bond markets.  More, this “unreal” economy does not rely on the laws of supply and demand to set market prices.  Instead, his “unreal” economy relies on central planning and market manipulation by government and the Fed to set market prices. We might label this hypothetical, “unreal” economy as “Wall Street”.

 

•  The Fed’s use of stock and bond markets to stimulate the “real” economy, implies that the Fed’s plan was to artificially stimulate the “unreal” economy in hopes that the resulting growth in the “unreal” markets (higher stock prices) would result in higher public confidence which would then indirectly stimulate growth in the “real” economy.

I.e., the Fed would use ZIRP and QE to stimulate the unreal/fictional economy we see on “Wall Street” to stimulate (raise confidence in) the “real” economy seen on “Main Street”.

Assuming that it’s even possible to directly stimulate an “unreal” (fictional) economy in order to indirectly stimulate the “real” economy, the Fed’s plan failed.  The unreal/fictional economy of stock and bond markets (Wall Street) was stimulated to reach record highs and some investors reaped fabulous profits.  But, the “real” economy (fundamentals, free markets, Main Street and the middle class) was largely unenriched by the fictional/“unreal” economy’s record highs and remained stagnant or even tended to disappear.

Despite all the Fed’s trickery, public confidence never really rose.

 

•  Some readers might suppose that I’ve gone way too far by inferring the existence of an “unreal” economy from Mr. Fisher’s reference to the “real” economy. Maybe so.

But my inference might not be as unreasonable as some would guess.  Have you ever followed the stock market and noticed a “disconnect” between stock prices and “reality”?  For example, even though the economy never really recovered after the onset of the Great Recession in A.D. 2008, the stock market went into a bull run that lasted until the end of A.D. 2014.  What fundamentals, what elements of economic reality justified that bull run?  If you agree that there was a peculiar “disconnect” between economic reality and the stock market’s bull run, you’re not far from admitting that there may be a “real” economy (that didn’t really recover after the Great Recession) and an “unreal” economy that includes the stock market and its mysterious bull run.

Market Manipulation by the Federal Reserve [courtesy Google Images]

Market Manipulation by the Federal Reserve
[courtesy Google Images]

More, anyone who doubts the existence of the “unreal” economy that I’m suggesting need only look to gold commodity markets where there may be 200, even 300, ounces of “paper-gold” claims for every 1 ounce of physical gold available for delivery.  If that’s not “unreal,” what is?

How ‘bout setting the price of physical gold with the naked short selling of piles of paper-gold claims?  Are those prices set by the laws of supply and demand or by the central planning of the Fed?  Are the resulting prices “real” or “unreal”?

Look at fractional reserve banking that allows banks to lend nine fictional dollars to consumers for every $1 in capital (Treasury Notes) held in the bank’s vault.  “Real” or “unreal”?

The whole idea of a “debt-based monetary system” is almost too fantastic to be believed, and also violates the constitutional mandate for gold or silver money—and yet we have a debt-based monetary system.  “Real” or “unreal”?

What about “fiat currency” backed by America’s “full faith and capacity for self-delusion” vs. an asset-based currency backed by something tangible like gold or silver?  Which currency is “real”?  Which is “unreal”?  Which one do we have?

Then there are the economic “bubbles” that the Fed and/or government routinely create to stimulate the economy.  Those bubbles look huge, but they’re illusory, empty and always destined to “pop”.  Are those bubbles part of an economy that’s “real” or “unreal”?

What about negative interest rates?  Doesn’t that concept sound a tad “unreal” to you?

Sub-prime mortgages, anyone?  Banks lending currency to people the banks know won’t be able to repay the debt?  Real or unreal?

And then there’s the alleged “existence” of over $1 quadrillion worth of derivatives in a world economy with an annual GDP of $60 trillion.  In other words, the value of our derivatives (which didn’t even exist a generation ago) is roughly 20 times greater than the world’s annual GDP!  How is that even possible?!  One, maybe even two, quadrillion dollars in “derivatives” is about as illusory, fictional and fraudulent as me claiming to have 400,000 tons of gold hidden in my closet.  It can’t be.  The world’s derivatives aren’t even possible in a “real” economy.  They are a largely fictional concept that could only exist in an “unreal” economy.

So, do you still doubt the existence of an “unreal” economy?

In fact, when you stop to think about it, the “unreal” economy is all around us.  Our entire financial system is about as “unreal” and “fictional” as anything H.G. Wells and Arthur C. Clark might ever have imagined.  It’s like a bunch of Federal Reserve economists came up with the current system after they were completely stoned on LSD.  And We Duh Peepul have accepted this “unreal” system just like the townsfolk in the fable about the emperor dressed in invisible clothes.

There’s undoubtedly a “real” world and a “real” economy where most of us mistakenly think we live.

But, apparently, Mr. Fisher (and the Fed, itself) recognizes that there’s also another “unreal,” fictional and fraudulent economy which has been centrally planned and controlled by the Fed.  Most of us are currently and unwittingly ensnared in that “unreal” economy just like the people in the fable who all agreed that the emperor’s invisible clothes were simply “fabulous, dahling”.

Mr. Fisher’s warning implies that the Fed is no longer able to control the “unreal” economy and that, as a result, the “unreal” economy (including stock and bond markets) may be about to implode.

 

•  Mr. Fisher continues:

 

“The impact [from QE and ZIRP] we had expected for the economy and for the markets was achieved.”

 

Whether the Fed’s expectations were truly “achieved” depends on which “economy” Mr. Fisher referenced:  the “real” economy of Main Street or the “unreal”/fictional economy of stocks, bonds, central planning on Wall Street.

Undoubtedly, the Fed’s ZIRP and QE policies did stimulate the unreal/fictional economy of Wall Street to reach record (irrational) highs and push the price of gold down to irrational lows.

However, there was no similar “achievement” for the “real” economy of Main Street.  The middle class is disappearing.  The “real” economy has been neglected, sacrificed and in some places destroyed.  Why?  Perhaps, in order to save the “unreal”/fictional economy from collapse.

Get that?

The “real” economy (where you and I live, work and produce real wealth) may have been intentionally sacrificed by the Fed, to feed the “unreal” economy of Wall Street and central planners.

If so, Mr. Fisher’s suggestion that the Fed directly stimulated the “unreal” economy in order to indirectly stimulate the “real” economy is a lie used by the Fed and Wall Street as a pretext to loot the “real” economy.

 

•  Fisher:  

 

“By February of 2009, the Fed had purchased over $1 trillion in securities. With interest rates throughout the yield curve moving in the direction of eventually resting at the lowest levels in 239 years of history, the stock market reacted: It bottomed in the first week of March of 2009 and then rose dramatically through 2014. The addition of a third round of QE, which had the Fed buying $85 billion per month of securities to ultimately expand its balance sheet to over $4.5 trillion, juiced the markets.”

The lowest interest rates in 239 years takes us all the way back to this country’s beginning with the “Declaration of Independence” of A.D. 1776.

Mr. Fisher served as president of the Dallas Federal Reserve Bank during the A.D. 2009 through A.D. 2014 period he just referred to (when the markets enjoyed a fabulous bull run).  He should therefore know what he’s talking about.

When Mr. Fisher admits that the Fed intentionally “juiced” the stock markets to cause the “dramatic rise” (bull run) from A.D. 2009 through A.D. 2014, we must believe him.

More, Fisher’s admission should scare every ordinary American who’s invested directly or indirectly (through pension funds) in the stock market.

Why?

Because Fisher has pretty much admitted that the 9,700-point difference between the Dow’s low of 8,100 in March of A.D. 2009, and its high of 17,800 in December of A.D. 2014 is mostly fictional.  I.e., almost 9,700 points out of that 5-year bull run were probably based on the Fed’s fictions and stimulation of the “unreal” economy.

All of which implies that as much as 8,000 points of today’s Dow (currently at 16,350) may be as “unreal” as the emperor’s invisible clothes.  As such, those 8,000 points could disappear at any moment.

How many of you really want to invest your wealth in the “unreal” economy that Mr. Fisher has implicitly revealed?

 

•  Fisher:

 

“I voted against QE3 but the majority of the committee embraced it. One could argue—as I did—that QE3 and its predecessor rounds front-loaded the equity market. Stated differently, I believe we engineered a version of the “Wimpy philosophy”: We gave stock-market investors two hamburgers today in exchange for one or none tomorrow. We pulled forward the price-reaction function of markets.”

 

Again, Fischer expressly admits that the Fed artificially stimulated the stock markets of the “unreal” economy.  The Fed artificially increased (“engineered”) the stock market rise to reach much higher prices than fundamentals and the “real“ economy” would warrant.

 

•  Fisher:

 

“If that is a correct assessment, then there may well be a payback period of lesser movement in stock prices to follow. 2015 might have been the beginning of that balancing out: Minus dividends, the S&P and every other index experienced minor negative returns last year. . . .  It would not be unreasonable to expect subdued returns this year given that stocks are still richly priced by historic standards.”

 

Fisher’s language obfuscates.  His reference to a “payback period of lesser movement in stock prices” means that he anticipates that stock prices are currently due to stagnate and probably fall.  His “subdued returns” in A.D. 2016 because stock still “richly priced” means that stocks are currently overpriced that they should soon suffer a significant decline.

Fisher is simply saying that the Fed’s ZIRP and QE policies artificially raised stock prices in the “unreal markets” for most of the past seven years.  However, now that the Fed’s stimulus is ending, we should expect a correction (“payback period”) wherein the artificially high stock prices in the “unreal” economy will fall back (“balance out”) to a level (Dow 8,000?) more closely aligned with the fundamentals of the “real economy”.

More, given that ZIRP and QE have failed to stimulate the “real” economy, the Fed has run out of economic “tricks” to artificially stimulate both the unreal and real economies.  Without those tricks, there’ll be no way to sustain the artificially high stock prices.  Therefore, stock prices will “balance out” (fall dramatically).

The Fed/Atlas is shrugging.

 

•  Fisher:

 

“We will see what ensues. But one thing to bear in mind is that the Fed is focused on the real economy looking out to the intermediate term, not necessarily on sustaining the stock market today.”

Again, Fisher distinguishes between the “real” economy and the stock markets.  He implies that the stock markets are not in the “real” economy.  For the second time in his “Don’t Blame China” article, Fisher implies that there’s also an alternative, “unreal” economy.

Fisher’s claim that the Fed is now “focused on the real economy” is bunk. If the Fed was ever focused on the “real” economy, it would’ve given its trillions of dollars in monetary stimulus to Main Street rather than Wall Street.

The Fed is not currently “focused” on the “real” (unmanipulated economy) except in the sense that one tied to a railroad track might be “focused” on the sight of an approaching freight train.  In the end, there’s no point to the Fed “focusing” on the “real” economy because there’s virtually nothing left that they can do to directly control it.  At this point, they can’t even control the “unreal” economy enough to generate a positive result.

The Fed no longer has the resources to maintain and enrich the stock markets to the same extent as they did over the past several years.  Fisher is warning that the Fed is no longer able to continue the charade.

 

•  Fisher:

 

“In an effort to revive the economy, the Federal Reserve floated all boats with its hyper-accommodative monetary policy. The real economy has been extensively repaired.”

Again, Fisher’s reference to the “real economy” implies the existence of an “unreal” economy.

Even so, Fisher is trying to cover his backside.  He’d have us all believe that the Fed used its “hyper-accommodative monetary policy” altruistically to float “all boats” in both the “real” and “unreal” economies.

In fact, the Fed did float a lot of boats in the “unreal” economy of the stock and bond markets.  Some people got rich.  However, by doing so, the Fed simultaneously sank a lot of “boats” in the “real” economy. A lot of people were wiped out.  How many Americans lost their jobs, businesses or homes in the Great Recession.  Wasn’t that recession triggered by sub-prime mortgage failures in the “unreal” economy?

Contrary to Fisher’s claim, the free markets of the “real” economy have not been “extensively repaired”.  They’ve been generally abandoned, made more vulnerable or nearly destroyed.

We’re left to wonder if the Fed trashed the “real” economy by accident or by intent.

I suspect that a thorough analysis of the “real” and “unreal” economies would show that trillions of dollars in wealth have been siphoned out of the “real” economy and either disappeared into the maw of the “unreal” economy or outright destroyed.  Under the Fed’s “central planning,” we’ve either seen the greatest transfer of wealth (from the “real” economy to the “unreal”) in history—or we’ve seen the greatest destruction of wealth known to man.

I doubt that such transfer or destruction could be unintended.

 

•  Fisher:

 

“And the easy money in investing has been made.”

 

Yes, indeed.

“Easy money” was made by investors in the “unreal” economy because the Fed’s “accommodative policies” rigged the game.

Wanting to increase public confidence in the “real” economy, the Fed made sure that those who invested in the stock markets of the “unreal” economy couldn’t lose. So long as the Fed continued to manipulate markets and artificially stimulate ever-higher stock prices, almost any fool could make “easy money” in the stock markets.

But now, Mr. Fisher warns that the Fed is withdrawing from market manipulation and artificial market support.  Without that support and market rigging, the “unreal” markets will collapse.  More, the last six years of “easy money” will be replaced by several more years of “hard money” (perhaps even “real” money) and by spectacular losses for those invested in the “unreal” economy.

Soon, the Fed won’t be here to hold the investors’ hands and ensure that everybody wins.

Big trouble is headed our way.  Those with eyes to see might do well to “come out of her, my people.”

 

•  Fisher:

 

“Now we will see who the truly smart investors are and who merely looked smart by having ridden the rising tide engineered by the Fed.”

Again, Fisher admits or implies that:

1)  The stock market’s bull run of A.D. 2009 – 2014 was “engineered” by the Fed;

2)  The reason some investors profited handsomely was not because they were smart—but, because the Fed rigged the game to favor investors and fool consumers into believing there was an economic “recovery”; and more,

3)  Without the Fed to rig the game, a lot of people who thought they were brilliant are about to discover that they’re actually pretty dumb when the real wealth they’ve invested in the “unreal” economy’s stock and bond markets simply disappears.

 

•  Fisher:

 

 “As Warren Buffet has often said: ‘you only learn who’s been swimming naked when the tide goes out.’

“My guess is that, going forward, the view will be quite revealing.”

 

In other words the “tide” of Fed central planning is about to go out.  When it does, those who’ve been skinny-dipping in the stock market (that is, investing without understanding of the differences between the “real” and “unreal” economies) will lose their assets and be exposed as naked fools.  The “easy money” of the “unreal” economy is about to give way to “hard money” (real money?) and incredible losses for those invested in the “unreal” economy.

 

•  Incidentally, what is the premier investment of the “unreal economy”?

Paper—as in stocks, bonds, paper gold and other debt-instruments.

What’s the premier investment of the “real economy”?

Gold.  Physical gold.  It’s “real”.

Reality is coming.

In preparation, you should also get “real”.

Get gold.

 

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11 responses to “A “real” economy vs. an “unreal”?

  1. Colin

    January 12, 2016 at 10:01 PM

    The unreal/fictional economy of stock and bond markets (Wall Street) was stimulated to reach record highs and some investors reaped fabulous profits. But, the “real” economy (fundamentals, free markets, Main Street and the middle class) was largely unenriched by the fictional/“unreal” economy’s record highs and remained stagnant or even tended to disappear.

    You would have saved yourself a lot of time if you’d looked up the term “real economy.” It’s a fairly standard economics term:

    “The physical side of the economy dealing with goods, services and resources. This side is concerned with using resources to produce the goods and services that make the satisfaction of wants and needs possible. This should be contrasted with the paper economy, or financial side of the economy.” http://glossary.econguru.com/economic-term/real+economy

    In other words, the opposite of the “real economy” is the “paper economy,” not an “unreal” economy. That’s like saying the opposite of “real estate” is “unreal estate.” It doesn’t make a lot of sense, and suggests that you don’t understand the terminology or the issues.

    For example, gold locked up in a vault as (or backing) currency isn’t a resource used to produce goods or services, the way gold used to make electronics would be. I don’t think it’s part of the real or paper economies, but if it’s either, backing paper probably makes it part of the paper economy. I’m not an economist, though–like yourself, I’m only speculating.

     
  2. Adask

    January 13, 2016 at 2:44 AM

    Colin McRoberts–you haven’t commented on this blog for what? Four months? Six? Where’ve you been? Another mission to Europe? I’ve missed your persistent criticism. I thought maybe you’d been fired.

     
    • Colin

      January 13, 2016 at 3:00 PM

      Thanks. Yes, pretty busy actually–looking at trips to Germany, Denmark, Indonesia, and Spain coming up. Also attending the Conspirasea Cruise as research for the book (http://www.divinetravels.com/ConspiraSeaCruise2016.html).

      What are your thoughts on the Oregon standoff? I’d be interested in reading your perspective. Apologies if you’ve discussed it on the air and I missed it, I haven’t been able to keep up with the show.

       
  3. Steven

    January 13, 2016 at 1:00 PM

    Colin McRoberts?

    A graduate of Harvard Law School, Colin is a consultant and trainer with The SAB Group. An attorney and commercial litigator by training, he brings a wealth of negotiation experience to SAB. In addition to pro-bono work on legal cases, he has worked with clients in a diverse range of sectors, including finance, technology, real-estate and insurance. Prior to SAB, Colin worked for federal appellate and trial courts and then as an attorney at a prominent national law firm. Colin is also active in the arts community and serves as an instructor and executive director for a community photography center. A native Texan, Colin studied the Russian language in St. Petersburg, Russia, before settling in Chicago.
    Is this the real Colin McRoberts http://www.sabonline.com/meetteam.html or is this http://www.prismlg.com/team/ ?

    Who is this guy?

     
    • Adask

      January 13, 2016 at 2:35 PM

      That sounds like him. I don’t know anything about the SAB Group, but the Colin McRoberts who was, for a time, the single most prolific source of comments on this blog, is a former Harvard Law School graduate who, strangely, claims he still owes money on his college loans, but quit practicing law and put his bar card into suspension so he could spend more time with his sweetie pie. I find that story implausible, but that’s what he’s claimed in the past. If he was so in love with his girl friend that he quit the racket, why did he spend time posting scores, perhaps hundreds of posts on this blog? Virtually every blog was critical of me or my articles. I came to view him as highly intelligent, articulate, and superbly educated–and a troll paid to discredit this blog. It never made sense to me that a Harvard Law School graduate would devote so much time to criticizing this blog. Why spend your time on a blog or website that you viewed with disdain? It didn’t make sense to me. Then, he just stopped appearing here for a number of months. Now, he’s back for at least one more critical remark. The photo on the “prismag” link looks like his college grad photo. He looks about ten years younger in that photo than I think is probably the case. Interestingly, Colin goes to countries around the world to teach “negotiation”. That also seems odd to me. Is negotiation such a highly sophisticated and possibly secret art that people wanting to learn need to important an American to teach them? Perhaps so, but “negotiation” sounds like a topic that almost anyone could learn by picking up a book or even some magazine articles. Colin might put on some seminars and role-playing exercises that help illustrate the principles of negotiation, but it still seems strange that someone wanting to learn the art of negotiation in Europe would pay the high cost of bring in an instructor from the US. To my frequently overly imaginative mind, Colin’s work as an international negotiation instructor sounds more like a “cover” than a job.

       
      • Colin

        January 13, 2016 at 3:13 PM

        the Colin McRoberts who was, for a time, the single most prolific source of comments on this blog, is a former Harvard Law School graduate who, strangely, claims he still owes money on his college loans

        Yup! It’s not like they forgive your loans when you graduate, you know. Everybody goes on a long-term payment plan. Even when you’re making good money, it takes a long time to pay down student debt.

        I find that story implausible, but that’s what he’s claimed in the past. If he was so in love with his girl friend that he quit the racket, why did he spend time posting scores, perhaps hundreds of posts on this blog?

        Because it doesn’t take very long, and I have an abiding interest in people and ideologies outside the mainstream. I’m writing a book on it, remember? http://www.goodfightbook.com

        I came to view him as highly intelligent, articulate, and superbly educated–and a troll paid to discredit this blog.

        Thanks, and no–I’m not paid for commenting. I have an actual job. Which is why I disappear when I’m busy with actual work.

        The photo on the “prismag” link looks like his college grad photo. He looks about ten years younger in that photo than I think is probably the case.

        Not too far off! It’s probably about ten years old by now. I guess I should get new headshots. Comes from my law firm days though, about ten years after college.

        Interestingly, Colin goes to countries around the world to teach “negotiation”. That also seems odd to me. Is negotiation such a highly sophisticated and possibly secret art that people wanting to learn need to important an American to teach them?

        Sophisticated yes, secret no. Teaching negotiation is a pretty well-established business. Harvard has a busy sub-school dedicated to it: http://www.pon.harvard.edu/ We do basically what they do, but we go out to client sites rather than having them come to a central location. It’s much cheaper to fly someone like me in than to send an entire procurement department somewhere else to get trained, after all.

        If you’re curious about what negotiation training is like, I always recommend that people read Getting to Yes. One of the best books about negotiation strategy. Getting Past No and Negotiation Genius are good too, and I really like Thinking, Fast and Slow. (That last one’s not technically about negotiation, but I think it has a lot of useful insights.)

        To my frequently overly imaginative mind, Colin’s work as an international negotiation instructor sounds more like a “cover” than a job.

        That does sound like an overactive imagination! And a bit egotistical, if I can say so. You think secret agents are targeting you? No, I’m not a secret agent. I don’t have a cover. And I’m not targeting you. Sometimes a cigar is just a cigar.

         
      • Adask

        January 14, 2016 at 10:52 AM

        Colin McRoberts:

        Yes, a cigar is still a cigar. But while a strange cigar may still be a cigar, it’s also still strange.

        I doubt that you’ve made a single comment on this blog that wasn’t ultimately critical of me, the ideas presented on this blog or one of the other “commenters”. I’ve seen some of your comments on your friends’ blogs and the ones I’ve seen are short and terse as Tweets. So far as I know, this is the only blog where your comments aren’t short and “Tweet,” but are extensive and lengthy as small lectures.

        I can’t help wondering why.

        If you don’t believe the ideas found on this blog, or at least find them provocative, why do you spend so much time and energy here? What is your motive? What is your incentive? Your presence here is somewhat like an adamant heterosexual preacher hanging out in a gay bath house while he evangelizes on sin, sex, and “abomination”. I can understand that the “evangelists” seem compelled to sometimes “save” the queers, but I can’t help wondering about the real motives of someone who insists that he’s absolutely straight, but still spends five nights a week in a gay bathhouse. If the evangelist completely disagrees with the gay lifestyle, why does he frequent a gay bathhouse? Aren’t there any “straight” sinners he could be saving?

        Why don’t you git yer bar-card back, sonny, and go save some litigants and make a fast buck while you’re at it?

        Similarly, if you view all of the ideas expressed on this blog as stupid, why do you waste your time “evangelizing” about the glories of the legal profession of which you are no longer a member?

        My point is that while you may be a “cigar,” you are also a “strange cigar”.

        For example, you’re icon (a white shirt and tie with no face) creates a sense of mystery and seems to suggest that you don’t want to be known or identified. I looked at a couple of the blogs you’ve been associated with and one featured a woman (maybe your sweetie pie, maybe only a friend) who is the principal behind the blog and she’s wearing a mask of the sort seen on doctors in hospitals. She, too, apparently wants to conceal her identity on her own blog. How odd. It’s kinda like “Mrs. & Mrs. Smith”–a man and woman who prefer to conceal their appearance.

        And, whatever is going on with your decision to surrender your bar card, that does not make sense. Again, we see evidence of the “strange cigar”. You probably spent a good quarter million dollars getting a undergraduate and Harvard law degree, you borrowed the money to get through college, you still owe money on your college loans, and yet you’ve voluntarily quit the bar racket to spend more time with your one true love?! (And, of course, engage in the high-paying career of negotiations instructor.)

        Well, different strokes for different folks, but you gotta admit that yours is a strange story. In fact, yours may be one of the great romances of all time. Why don’t you write a book about how you quit the lawyer profession so you could be with your one true love (and make extensive critical comments on a blog that you think pushes stupid ideas). Could even be a movie. I’m thinking Brad and Angelina to play you and your sweetie. Maybe we could get Jack Nicholson to play my part. How’s that work for you? I smell OSCAR! (or maybe it’s something else I smell–like BS).

        As for my “overactive imagination,” that’s the cornerstone of this blog. I like to speculate. I like to consider. I like to imagine and propose new perspectives and new ideas that have been previously overlooked. I like to explore hypotheses. I make no secret of it. I don’t ever tell anyone that my ideas are perfect or even necessarily true. I often warn people not to believe what I’ve written, but only to consider what I’ve written and see if it makes sense to them. I issue those caveats in large measure because I’m well aware that much, most, maybe all of what I write is based substantially on imagination.

        But I don’t see imagination as bad. I see it as every bit as good as any “moot” court you attended at Hahvad.

        In fact, if I had to guess, I’d guess that the primary difference between you and me is imagination. I may have too much imagination, but I at least have some.

        You, on the other hand, show virtually no sign of imagination (except, perhaps, in your stories about why you turned in your bar card). For example, I’ve looked at some of what I believe are your “pretty pictures” posted on the internet. Lots of flowers. Bright colors. No people. Landscapes and buildings. Your subjects are all properly centered. The camera is always properly focused and level. The photos look like the work of a semi-talented high school freshman. They’re pretty good. They’re decent. Nothing wrong with them. They are definitely better than Aunt Marge’s photos of the prairie dog towns from her vacation to South Dakota. But photos I’ve seen that appear to yours show no trace of imagination. There’s nothing original there. There’s no trace of Ansel Adams in your “pretty pictures”.

        And, strangely, I don’t recall seeing any portraits of people–no self-portraits (didn’t Ansel Adams pose for a few self-portraits?). Not even a couple of shots of your one true love. How strange that a man who professes to like photography and love his sweetie pie has apparently not posted any “pretty pictures” of one true love. Maybe you’ve posted those sweetie pie photos on some website that I didn’t find. But judging from what I’ve seen, I’m reminded of the idea of the “strange cigar”.

        And it’s not just photographs where you seem to show no imagination. After I referred to Copernicus in one of my earlier articles, you took that reference as an opportunity to comment that I’m “no Copernicus”. I never claimed to be one. Nevertheless, you used my reference as an opportunity to belittle me. You claim you’re “not targeting” me, but I’ll bet that at least 70% of your comments are critical of me and/or my hypotheses–and I don’t recall a single comment by you that was favorable concerning me or any idea I’ve advanced. So, when you claim you’re “not targeting” me, I’m not convinced. I think you’re fibbing.

        I don’t know if you’re a “cigar” or not, but if you are a “cigar,” you’re definitely a “strange” one.

        In any case, while I may not be a “Copernicus,” I have a much better chance of rising to that level than you do. Why? Because the secret to Copernicus’ success was his imagination. Copernicus could imagine things that he hadn’t been taught and were even contrary to what he’d been taught. Relying on his own eyes and ears, Copernicus imagined that the solar system was heliocentric while the “learned experts” of his time insisted that the earth had to be the center of the solar system and universe.

        Who were the “learned experts”? They were the “intellectuals” who had advanced degrees in astronomy. These “learned experts” had received degrees in astronomy comparable to the law degree you received from Harvard. They knew the earth was the center of the solar system because they’d been taught to believe in earth centricity by some “prestigious” university. (They may have even owed some money on their college loans to their prestigious universities.) But they weren’t about to doubt the veracity of what they’d been taught and therefore could not “imagine” that heliocentricity that might be be apparent to their eyes and ears could possibly be true. The “learned experts” fought Copernicus and his ideas tooth and nail.

        Result? Copernicus–the guy with some imagination–won. Today, the world still remembers Copernicus (ultimately, for his courage to dare to imagine a different truth) while the highly-edumacated “learned expert” have been forgotten.

        It’s true that my imagination may never elevate me to the stature of Copernicus–but it might.

        It’s also true that your advanced education qualifies you as a member of today’s class of “learned experts” who, believing only in their education and never daring to imagine, will make no intellectual contribution to the world that anyone is likely to remember.

        You can mock my “over-active imagination,” but can you name any truly “great” men who achieved that stature without imagination? Artists? Musicians? Photographers? Lawyers? Businessmen? Writers? Scientists? Virtually every step in advancing civilization is based on someone’s imagination. I may never be responsible for one of those “steps,” but so long as I have some imagination, I might. So long as you remain one of the unimaginative “learned experts,” you can’t.

        Your advanced education has become a box, a prison of sorts. You are the prisoner because, as a “learned expert,” you can’t think outside that box.

        Before he died, Steve Jobs (co-founder of Apple) basically agreed. He said he wouldn’t hire an “expert” because “experts” know all about the past but know nothing about the future. Jobs said he’d prefer to hire the guy who likes to tinker with stuff and build thing in his garage. What does “tinkering” mean besides “imagine”? “What if we mounted the carburetor on the front of the engine, instead of the top?” That’s tinkering. That’s imagining. Maybe that’s a dumb idea, but maybe not. And maybe, by imagining even a dumb idea we can learn something that we didn’t know before that will later increase our engine’s efficiency.

        “Learned experts” don’t tinker. They don’t imagine. They don’t question, doubt or challenge the premises of the dogma that they’ve been taught to regurgitate.

        Given my “over-active imagination,” I may come up with some dumb ideas. But, often those ideas are at least new, provocative and perhaps even true. And, like the blind pig, I may find an acorn every so often. I find those acorns with my imagination.

        So long as you insist on being the “learned expert” whose only role in life is to tell the would-be “Copernici” that they’re all crazy, ignorant and sure to fail because Hahvad said so–you may have a paycheck to collect, but you’ll make no real contribution. Until you can appreciate imagination, you’ll show no creativity. Until you can become imaginative, you’ll not be creative and you’ll make no real mark in this life.

        Remember that old saying? “Those that can, do; those who can’t, teach”?

        My over-active, egotistical imagination has an update:

        “Those who can imagine, create; those who can’t imagine, teach.”

        As you said, sometimes a cigar is just a cigar.

        Sometimes a “cigar” is a strange cigar.

        And sometimes an apparent “cigar” is not a cigar at all.

        Colin, you’re no cigar.

        On more point, the difference between regurgitating whatever you’ve been taught and real thinking is imagination. To think is to imagine–and vice versa.

         
      • Colin

        January 14, 2016 at 11:59 AM

        I doubt that you’ve made a single comment on this blog that wasn’t ultimately critical of me, the ideas presented on this blog or one of the other “commenters”. I’ve seen some of your comments on your friends’ blogs and the ones I’ve seen are short and terse as Tweets. So far as I know, this is the only blog where your comments aren’t short and “Tweet,” but are extensive and lengthy as small lectures. I can’t help wondering why.

        Because your comments are so long! I tend to respond point-by-point.

        If you don’t believe the ideas found on this blog, or at least find them provocative, why do you spend so much time and energy here?

        Because I do find them provocative, and it’s not very much time or energy. I think I probably spend about ten or fifteen minutes a week on your blog, Alfred, on average—maybe more if there’s a topic or conversation that’s really interesting to me, like tax protesters, but less in most weeks when I don’t check at all. I timed this comment, for example, and it turns out it took me ___ minutes to write.

        What is your motive? What is your incentive?

        http://www.goodfightbook.net – I think these conversations matter. People should have conversations with those they think have strange or wrong ideas. It’s much better to talk with someone who disagrees with you than someone who agrees with you.

        And my biggest, most invovled comments are those that address your commenters with really dangerous ideas, like tax protesters. People can ruin their lives following crooked tax gurus (I think we agree on that point), and I think it’s morally good to point out that the tax protester emperor has no clothes on.

        Your presence here is somewhat like an adamant heterosexual preacher hanging out in a gay bath house while he evangelizes on sin, sex, and “abomination”.

        That’s certainly not the tone I’m going for. Am I overly harsh?

        Similarly, if you view all of the ideas expressed on this blog as stupid,

        I don’t.

        why do you waste your time “evangelizing” about the glories of the legal profession of which you are no longer a member?

        I don’t.

        For example, you’re icon (a white shirt and tie with no face) creates a sense of mystery and seems to suggest that you don’t want to be known or identified.

        It’s just a photo I took—I’m an amateur photographer. I used to teach photography as a volunteer at a community center in Chicago, and that was a shot I took for one of my classes. You can read between the lines all you want, but all it means is that I like the shot.

        And, whatever is going on with your decision to surrender your bar card, that does not make sense. Again, we see evidence of the “strange cigar”. You probably spent a good quarter million dollars getting a undergraduate and Harvard law degree, you borrowed the money to get through college, you still owe money on your college loans, and yet you’ve voluntarily quit the bar racket to spend more time with your one true love?! (And, of course, engage in the high-paying career of negotiations instructor.)

        Your estimates on how much law school costs are wild. I haven’t added it up, but it’s way less than that—I had financial aid in college, so it’s basically just whatever law school cost. Which I measure in terms of the loan payments, not a total dollar value. Student loans aren’t fun, but I’m lucky that mine aren’t terrible.

        I quit the “bar racket” so that I could move to be with the woman I married, yes. And because I found another job that pays reasonably well and that I like better, teaching negotiation. I honestly don’t understand why that seems so strange to you—I doubt you get paid a lot to do your radio show, so why do it? People don’t always make choices based solely on how much money they could make. In fact people leave big law firms all the time, because it’s a famously unpleasant job.

        As for my “overactive imagination,” that’s the cornerstone of this blog. I like to speculate. I like to consider. I like to imagine and propose new perspectives and new ideas that have been previously overlooked. I like to explore hypotheses. I make no secret of it.

        And I don’t think there’s anything wrong with that. I think it’s worth pointing out when you get something wrong or miss something, like when you speculated needlessly on what “real economy” means. But does that mean your speculation is wrong? Some of your thoughts on how the stock market relates to the real economy seem right to me, although I’m not an economist. I just thought it was worth mentioning that the term has a meaning outside your speculation. Do you not?

        I don’t ever tell anyone that my ideas are perfect or even necessarily true. I often warn people not to believe what I’ve written, but only to consider what I’ve written and see if it makes sense to them.

        I agree, and I respect you for that. It’s why I contacted you for an interview in the first place, because I think you’re very different from the crooked tax gurus who run in similar circles. As I’m trying to learn more about how people come to have irrational ideas, you’re a great example, because you’re honest about your ideas. You aren’t making things up to cheat people the way some do.

        But I don’t see imagination as bad. I see it as every bit as good as any “moot” court you attended at Hahvad.

        I agree! As long as you can stop and observe where your imagination runs contrary to the real world. There’s a huge difference between “this might be true” and “this might be true, but we know it’s probably not.”

        You, on the other hand, show virtually no sign of imagination (except, perhaps, in your stories about why you turned in your bar card). For example, I’ve looked at some of what I believe are your “pretty pictures” posted on the internet. Lots of flowers. Bright colors. No people. Landscapes and buildings. Your subjects are all properly centered. The camera is always properly focused and level. The photos look like the work of a semi-talented high school freshman. They’re pretty good. They’re decent. Nothing wrong with them. They are definitely better than Aunt Marge’s photos of the prairie dog towns from her vacation to South Dakota. But photos I’ve seen that appear to yours show no trace of imagination. There’s nothing original there. There’s no trace of Ansel Adams in your “pretty pictures”.

        Thanks, I guess? Photographing people means asking them for permission, and ironically I’m shy in person and don’t like asking strangers if I can take their picture. And I don’t like portraits because I (also ironically) think they tend to lack imagination. My favorite shots are macro, where you take a picture of something really small and blow it up. I do a lot of spider and insect photography, and one of the things I love about it is that you can imagine life on that scale—seeing the fine detail in a bee’s wings or how a spider’s eyes are arranged. Maybe you just don’t understand me as well as you think you do? I certainly don’t understand you very well. And that’s the point! That’s why I like these kinds of conversations.

        Who were the “learned experts”?

        Copernicus was a learned expert. Also, the guys who went to the moon. That’s the thing about Copernicus, Alfred—he was right. He didn’t just imagine that he was right, he proved it. That’s what I’m looking for: the intersection between imagination and fact.

         
    • Colin

      January 13, 2016 at 3:01 PM

      That’s me. Same company, just rebranded. Bio’s out of date, since Chicago we lived in Austin and now Kansas.

       
  4. Steven

    January 14, 2016 at 10:35 AM

    Yep, – Student loan debt in the US has topped $1.3 trillion from Yahoo news.

    The complaints,

    From Yourconscience says
    Like healthcare the source of the trouble is high cost meeting ability to pay. Instead of attacking the public with hostile regulations to force payment out of them (Obamacare, collection agencies) they should instead be checking the inflated costs at our universities and healthcare providers.

    Start weeding out the professional students that drain the system of funds. Incarcerate the billions of dollars in Medicare/Medicaid fraud, the proverbial $50 aspirin, the un-necessary treatments and the pharmaceutical industries out of control profiteering.

    Scale down college president salaries, cut out the billions spent on basketball and football scholarships to the athletes that aren’t there for the education but just a stepping stone to the pros.

    We are addressing all this backwards. Wages are not going up to match the increased glut of monopolies we have. Do what we do at home, cut out some of the expense and pass on the savings to the students.

    From Oneyedking says
    Let’s don’t forget WHY college is so expensive. It is solely because the Federal government keeps throwing money at it to make college “more affordable” — so schools never, ever have to try to be cost efficient. In 2009 when wages were plummeting, people losing jobs all over the country I received a letter from my son’s college BRAGGING they had kept tuition increase to ONLY 10%. That included a 15% pay increase for all faculty; that’s right, the worst teacher on campus got a 15% pay raise while everyone else in the country worried about keeping their jobs. There are two categories of expenses that increase faster than the rate of inflation, year in and year out. They are college tuition and medical costs–the two where the Federal government has most intervened to make things “more affordable”.

    From OldBiker says
    My 2 cents. Step back away from the “college” scene and see what it gets you. There are so many good for nothing degrees out there that don’t get you a job when you get out. In addition, these schools have become all about the money and very little about education. Just like the athletic programs that represent many of them. When schools are advertising on television and they have amenities like Starbucks, climbing walls, virtually all new, multi-million dollar facilities and the faculty is well payed and tenured, something is wrong. The Bernie Sanders of the world want everybody “educated” and for free. My question is, if everybody could and would get a college degree, what would they all do? Somebody still has to weld, plumb, do secretarial work, clean rooms at hotels, do law enforcement, etc. If you go to college, get a degree in liberal arts, psychology, criminal justice, communications, social work, marketing, etc. Getting a degree is probably still better than nothing, but it WILL NOT guarantee you a good paying job. I got a degree in management many years ago and could not find any jobs for 6 months. I finally found a $19,000/year job with decent benefits. Switched jobs 2 years later and have worked my way up for years. This whole thing is geared toward money making for Universities. Many people would be better off getting skill training and not a degree.

    From https://finance.yahoo.com/news/student-loan-debt-us-topped-013000007.html

    The Fix, Aldi is giving

    ALDI to hire for jobs, some pay up to $90K a year

    ALDI hopes to fill store associate positions that pay $12 per hour, shift manager positions that pay $12 per hour plus a $4.50 per-hour premium when performing manager duties, and manager trainees who make $22.25 per hour for an average of 45 hours a week.

    Manager trainees have the opportunity to make $82,000 to $90,000 a year if they get promoted to store manager. Anyone who works at least 25 hours a week will get health and dental insurance.

    Applicants must have a high school diploma or GED, and retail experience is preferred.

     
  5. Steven

    January 14, 2016 at 3:03 PM

    Colon said “Because I do find them provocative, and it’s not very much time or energy. I think I probably spend about ten or fifteen minutes a week on your blog, Alfred, on average—maybe more if there’s a topic or conversation that’s really interesting to me, like tax protesters,”

    By the way Colon if you were one of the creditors in Commerce aka Living Temple Workshop with Jack Smith, Brandon Adams, Gordon Hall you owe me some united states notes for a contract we made.

    Colon tax protesters don’t think like this…….

    Simple Definition of usury. The practice of lending money and requiring the borrower to pay a high amount of interest. https://www.americanexpress.com/us/small-business/openforum/articles/how-the-federal-reserve-sets-interest-rates/

    DEFINITION of ‘Easy Money’
    In the most literal sense, money that is easily acquired. Academically speaking, the term specifically denotes a condition in the money supply. Easy money occurs when the Federal Reserve allows cash flow to build up within the banking system. This lowers interest rates and makes it easier for banks and lenders to loan money. Money is therefore easily acquired by borrowers. http://www.investopedia.com/terms/e/easy-money.asp

    DEFINITION of ‘Lawful Money’
    Any form of currency issued by the United States Treasury and not the Federal Reserve System, including gold and silver coins, Treasury notes, and Treasury bonds. Lawful money stands in contrast to fiat money, to which the government assigns value although it has no intrinsic value of its own and is not backed by reserves. Fiat money includes legal tender such as paper money, checks, drafts and bank notes. Also known as “specie”, which means “in actual form.” http://www.investopedia.com/terms/l/lawfulmoney.asp Read the rest there.

    You have a problem with that they a contact us page.

    Usufruct Law & Legal definition.
    Usufruct is a right in a property owned by another, normally for a limited time or until death. It is the right to use the property, to enjoy the fruits and income of the property, to rent the property out and to collect the rents, all to the exclusion of the underlying owner. The usufructuary has the full right to use the property but cannot dispose of the property nor can it be destroyed. http://definitions.uslegal.com/u/usufruct/

    You have a problem with that they a contact us page.

    31 U.S. Code § 5115 – United States currency notes. The Secretary of the Treasury may issue United States currency notes. The notes—
    (b) The amount of United States currency notes outstanding and in circulation—
    (1) may not be more than $300,000,000; and ( ? every year? every three months?)
    (2) may not be held or used for a reserve.
    https://www.law.cornell.edu/uscode/text/31/5115

    You have a problem with that they a contact us page.

    The Secretary of the Treasury serves as the U.S. Governor to the IMF, and the U.S. Executive Director of the IMF one example is http://ppjg.me/2009/03/24/treasury-secretary-does-not-work-for-the-united-states/

    Another is https://www.treasury.gov/resource-center/international/int-monetary-fund/Pages/imf.aspx

    Job duties of the Secretary of the Treasury. https://www.ssa.gov/OP_Home/comp2/D-USC-31.html

    You have a problem with that they a contact us page.

    The statutory definition of a dollar.
    31 U.S. Code § 5112 – Denominations, specifications, and design of coins. https://www.law.cornell.edu/uscode/text/31/5112

    You have a problem with that they a contact us page and make a donation while your there,

    So far were you paid with dollars, it said you were on the paycheck doesn’t it?

    People not persons (28 U.S. Code § 453 – Oaths of justices and judges) who express their voice here are not “tax protesters”, the might be considered usury protesters for the usufruct that the federal reserve note attaches with it for using the script.

    That federal reserve note absolutely is not a product of the USA, just ask Washington when they need a new budget who’s bank they go to borrow currency from.

    Are you lost at sea in the international law admiralty / maritime process?

     

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