The archive is catalogued by 'Politics', 'Economics', 'Mockery', 'In other news' and 'On other things' 


"Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world" - Henry Kissinger

and yet...

"Sooner or later everyone sits down to a banquet of consequences" – Robert Louis Stevenson

It will end in a knockout - and then there will be excuses


On 30th October 1974 in Kinshasa, Zaire, Muhammad Ali challenged George Foreman for the Heavyweight Championship of the World. None of the ‘experts’ gave Ali a chance against Foreman, who had brutalised Joe Frazier in 2 rounds to win the title, and had subsequently annihilated Ken Norton, also in the second round…two fighters who had beaten Ali before he mastered them in the rematches. All four of those fights went the distance. No opponent had lasted 6 minutes with George Foreman since 1971, when a Brazilian called Luis Faustino Pires had the fortitude to withstand the punishment until the fourth round…Foreman was unbeaten and ‘invincible’…everyone knew that. Except Ali…he had other ideas.

After the fight Foreman left the ring battered, bewildered and ‘broken’ – he didn’t know what had happened and couldn’t believe that he had lost. Over the next few months, as he has since admitted to his great credit - he told himself, the press, and anyone else who would listen that he’d lost the fight because his preparation hadn’t been right, because the ropes were too loose, because his manager didn’t tell him to get off the canvas in time to beat the count, and even because his shoes were too big.

Big George eventually came to terms with what had happened.  He lost his title because he didn’t understand what he was up against…because he spent 8 exhausting rounds missing his target, and then got hit by a combination of punches from which he could not recover…and then came the excuses…


Anyone who has followed economic news and ‘analysis’ over the past 8 years will be aware of the ‘mainstream’ narrative that governments, largely through the efforts of their central banks, have been leading the world through a hard fought ‘recovery’ from the financial crisis of 2007-09.  Statistics are carefully collected, selected and rejected in order to support this narrative.  In the US, it is stressed that the number of jobs are growing healthily. The inconvenient truth that the majority of these are part-time, minimum wage jobs and that one person with two of them is counted twice…is not. It is stressed that the percentage of the working population who are ‘unemployed’ has been falling consistently. The fact that the number of people who have given up looking for work, and who are therefore no longer counted, is at decade level not. Inflation is officially very low, but the cost of putting a roof over your head, buying your education and paying for your health care are accelerating rapidly…but are underweighted in the ‘official’ calculations.

In short, the picture of a ‘recovery’ is an officially sanctioned chimera that the majority of the media is, consciously or unconsciously, complicit with. The ‘real’ world of ‘real’ people living ‘real’ lives is very different to the world portrayed by the politicians and the ‘elite’, who have a vested interest in everyone thinking they should keep their positions at the ‘top’ of society…calling the shots - doing their ‘public service’ on behalf of the plebs and the know-nothings. This ‘disconnect’, or as I prefer to call it, the ‘lie’, is why the establishment is getting its backside kicked in referenda and elections throughout the developed world. A growing number of people have finally started to notice that the establishment have not been doing a very good job running the world, and that whilst the elite have being doing rather well for themselves, the majority of people have been doing progressively worse.  To the amazement of the establishment…the great unwashed have decided, in sufficient number, that they don’t like being ignored, ripped off, and lied to. Go figure.

Amongst all the officially sanctioned ‘bullshit’, which makes up the official ‘narrative’, little rays of ‘truth’ sometimes shine through…because legally they have to be reported. They are usually tucked away in boring statistical reports… where nobody will notice and nobody will care. One such report, which is released annually, is ‘The Financial Report of the United States Government’. The 2016 report, comprising 266 pages was released on January 12th.  Here is a link to it for anyone with a lot of time on their hands:

Fortunately, there are people out there who do have the time, the staff, and the jargon busting knowledge necessary to read reports like this, and condense them into the salient points necessary for us mortals to come to our own conclusions about what they mean.  One such fellow is Simon Black, an analyst, an entrepreneur and an investor, who has done a great job in that respect. His analysis and audio commentary on the Treasury’s latest tome can be found here:

Here are ten interesting ‘snippets’ that you may find disturbing:

1. In 2016 the US government spent $1 trillion more than it received in ‘income’…this is almost double the previous year’s deficit, and comes 8 years into a so-called ‘recovery’: a 12 month period in which there was no major war, no recession, no big new infrastructure spend, and no bank bailouts or other crises

2. The largest portion of the deficit was accounted for by Social Security, Medicare & interest payments on the debt. Note that interest rates were subdued and only a shade higher than their historical lows, due to the activities of the Federal Reserve

3. If the government had decided to ditch all of its other commitments to defence etc, and just funded Social Security, Medicare and interest…it would still have made a loss

4. Despite eating up the largest portions of the budget, Medicare is running out of money, Social Security is running out of money – let’s be clear - they are going bust

5. The Net current position of the government is this – it is in debt to the tune of $19.3 trillion

6. On top of this, the long-term projected costs on Medicare & Social Security, based on historical data & measurable demographic trends, accounts for a further liability of $46.7 trillion

7. If you include all the other stuff, all the stuff off-balance sheet…the total liabilities of the US government, in today’s money, is $95 trillion. That is $280,000 per man, woman and child in the United States

8. The biggest asset of the US government is the $1 trillion in student debt on its balance sheet. (Yes, that’s right, it counts as an asset, even though a huge chunk of it will never be paid back). This is slightly more than the $980 billion that the government ‘owns’ in the form of military equipment and Federal land

9. The Treasury Department failed the audit carried out by the Government Audit Office (GAO), as it frequently does. The GAO reported that they were unable to get their hands on all the accurate data, because for example, the Pentagon doesn’t possess an accurate inventory. (The Pentagon is also notorious for money ‘disappearing’ – see ‘Donald Rumsfeld’ for more details)

10. If the Treasury were a private organisation, failing its audit in such an egregious manner, would result in dire consequences for the organisation and individuals responsible. However, the Sarbanes-Oxley Act does not apply to the government itself, which means that nobody will go to jail. There is no incentive to change

I hope you are suitably disturbed by that list. If you are, then here is a question to consider, which may heighten your discomfort further:

What will happen as an increasing number of the ‘pissed off’ people I referred to earlier, wake up to the reality that their government is an insolvent, criminal organisation that has no way of paying back what it owes, and no incentive to clean up its act?

It gets even worse I’m afraid.  The guys responsible for this problem, the ones who talk about the ‘recovery’, are in denial about the import of those ten points. In the positions they occupy that makes them dangerous. They are dangerous because they don’t understand what they are dealing with.

Nobel Prize winners, former Treasury Secretaries, ex-Chairmen of the Federal Reserve, IMF notables…the ‘class’ of people that Nassim Taleb calls IYIs – Intellectual Yet Idiots…tell us not to worry.  They give us pearls of wisdom such as ’we owe it to ourselves’…’debt doesn’t matter’…’we can always print some more’…’we are the United States of America, we print the global reserve currency’…’the dollar is as good as gold’.

One of the points Simon Black makes is that ‘we owe it to ourselves’ is a very misleading statement.  Who are this we that academics like Professor Krugman are talking about? And what happens if we default on us? What happens when we wake up to the fact that we can’t afford to pay us back…ever…and in the meantime we are struggling to pay us the interest?

Who are these we…and what might be the real consequences in the real world that still exists outside of the neo-Keynesian delusion occupied by Paul Krugman?

1. We owe the biggest chunk of this money to the Social Security and Medicare Trust Funds. Old people and sick people. So for example…Social Security keep some of the fund in cash to pay people, but most of it is invested in the ‘risk free’ instruments that the government insists upon…it is forced to buy Treasuries. I.e. it lends money back to the people who under-funded it in the first place…do you think we would be upset if us defaulted? I don’t think there’s a politician alive that wants that conversation do you?

2. We owe the banks a huge chunk too. We could default on them but for the fact that they contain most of our money, which would also lead to them coming back to us for another bailout.  Not such a good idea then

3. We owe trillions to other nations, including over £1 trillion to China. Surely it would be OK to default on people who your own president calls a ‘currency manipulator’? Not unless you’re keen to start a war. Also, if you make selective defaults everyone else asks ‘who’s next?’ Before you know it people are selling your old debt, and driving up the interest rate on your new debt.  Another ‘no’ I’m afraid

4. How about the Federal Reserve then? The government owes the Fed $2.4 trillion for the bonds it bought in the process of QE.  Surely nobody will take to the streets over defaulting on a bunch of bureaucrats who printed the ‘money’ out of thin air? The trouble is that the Fed is supposedly a bank. They would then have the same liabilities but no assets - they would be insolvent.  What happens to a central bank when it is suddenly insolvent? (See ‘Iceland’, also see ‘currency crisis’)

The short answer, if you are an insolvent and criminally negligent government, is that there are no good options - despite what people like Krugman claim.  As Simon Black says, and I paraphrase ‘can you believe this bullshit passes as science?’  Sadly, having spent years reading the fawning nonsense written by the media branch of the Kool Aid Club…yes I can.



Governments, central banks, and their pet academics, the IYIs…have spent 8 years missing their target.  This is because they’ve been aiming at something that is even more illusive than Ali’s chin.  They think that if they can just land that killer blow to ‘aggregate demand’, if they can just get everybody borrowing and spending, that they will win this fight.  The more they swing at it, the more exhausted they get, and the worse the problem becomes.  This is because their attempts to solve the problem are the thing that is making it worse.  The problem is not lack of aggregate demand – that particular abstraction is an ‘effect’. The ‘cause’ is something that is much closer to home – they are insolvent. They promise too much, they deliver too little, and then they lie about it.

I do not have the foresight or the sheer ‘chutzpah’ of Muhammad Ali - he could predict the round that his opponent would fall.  I have no idea how long the control freaks and the IYIs can keep this sick charade running, but I predict the following: it will end in a collapse of the financial system after a combination of events that governments will fail to prevent, and cannot control.  There will be contagion and a chain reaction in the markets.  Banks will fail, as will governments. The so called ‘liberal’ elites will blame Donald Trump…they will rage against ‘too little too late’…they will blame prior ‘austerity’…some of them may even claim that their shoes were too big.  None of it will be the truth.

It will end in a knockout…and then there will be excuses.

Münchau strays further from the herd

Such sweet irony - not