Mass Delusion – American Style

Mass Delusion – American Style

by Jim Quinn
by Jim Quinn
Recently by Jim Quinn: John Paulson Will Be Wrong This Time

“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.” – Charles Mackay – Extraordinary Popular Delusions and the Madness of Crowds

The American public thinks they are rugged individualists, who come to conclusions based upon sound reason and a rational thought process. The truth is that the vast majority of Americans act like a herd of cattle or a horde of lemmings. Throughout history there have been many instances of mass delusion. They include the South Sea Company bubble, Mississippi Company bubble, Dutch Tulip bubble, and Salem witch trials. It appears that mass delusion has replaced baseball as the national past-time in America. In the space of the last 15 years the American public have fallen for the three whopper delusions:

  1. Buy stocks for the long run
  2. Homes are always a great investment
  3. Globalization will benefit all Americans

Bill Bonner and Lila Rajiva ponder why people have always acted in a herd-like manner in their outstanding book Mobs, Messiahs and Markets:

“Of course, we doubt if many public prescriptions are really intended to solve problems. People certainly believe they are when they propose them. But, like so much of what goes on in a public spectacle, its favorite slogans, too, are delusional – more in the nature of placebos than propositions. People repeat them like Hail Marys because it makes them feel better. Most of our beliefs about the economy – and everything else – are of this nature. They are forms of self-medication, superstitious lip service we pay to the powers of the dark, like touching wood…or throwing salt over your shoulder. “Stocks for the long run,” “Globalization is good.” We repeat slogans to ourselves, because everyone else does. It is not so much bad luck we want to avoid as being on our own. Why it is that losing your life savings should be less painful if you have lost it in the company of one million other losers, we don’t know. But mankind is first of all a herd animal and fears nothing more than not being part of the herd.”

Stocks for the Long Run

The book Stocks for the Long Run was written by Jeremy Siegel in the mid-1990′s. The premise is that if you just buy and hold stocks over a 20- to 30-year period, you will always make money. This was exactly what the Wall Street witch doctors ordered. They pounded this message into the brains of every American incessantly in their advertising campaigns, literature and propaganda. It became an unquestioned truth. Just one problem. It isn’t the truth. Valuations matter. The Dow Jones was at the same level in 1982 as it was in 1966. On an inflation-adjusted basis, the Dow did not get back to the 1966 level until 1990. That is 24 years of no return in the stock market. The American public ignored the true facts and piled into equities during the late 1990s. The result was one of the greatest examples of mass delusion in history. The Internet bubble drove the NASDAQ market to a peak of 5,048 in March 2000. Today it sits at 2,180. Ten years after the bubble burst, the NASDAQ is still down 57% from its peak.

Delusional Americans all over the country believed in the new Internet paradigm. Fools thought “bricks and mortar” retailers were dead. Morons quit their jobs so they could get rich day trading. Wall Street hucksters took advantage of this hysteria by attaching .COM to every ridiculous IPO they shilled to the American public. Wall Street knew these companies were pieces of crap, but they churned out the IPOs as quickly as possible while the getting was good. The Wall Street oligarchs made billions and the delusional American public got screwed. You would think that average Americans would have learned their lesson after this experience. They did not. They continued to buy into the Wall Street lies about stocks being a sure path to riches. The fact is that the S&P 500 is currently at the same level it was in March 1998. On an inflation-adjusted basis, it is 25% below the level of 1998. You don’t hear this information on CNBC because the oligarchs that control the media need the delusion to continue in order to harvest more riches from the ignorant masses.

Home Sweet Home

“The continuing shortages of housing inventory are driving the price gains. There is no evidence of bubbles popping.” – David Lereah – Chief Economist for National Association of Realtors – 2005

“We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.” – Ben Bernanke – 2005

“House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.” – Ben Bernanke – 2005

Why was it that two supposedly brilliant, highly trained economists, with countless degrees and high paying positions could be so very wrong? Were they just mistaken or were they purposefully encouraging a national delusion? With the bursting of the Internet bubble in 2000–2002, Americans immediately proceeded to the next bubble. Alan Greenspan was an almost God like figure in the early 2000s. He had “saved” the economy countless times during his 15-year reign of terror at the Federal Reserve. When he spoke, the American people listened. After the Internet bubble and 9/11, he proceeded to reduce interest rates to 1% for an extended period of time. He then gave the all-clear sign to Americans to take out adjustable rate mortgages. Lastly, Mr. Free Markets decided that banks and mortgage brokers could police themselves. The result was the greatest housing bubble in US history and a near collapse of the worldwide financial system.

Sane economists like Robert Shiller saw it for what it was. He calmly pointed out that home prices had pretty much tracked inflation for over 100 years. A 100% increase in home prices over the course of 3 years was irrationally exuberant. He was scorned and ridiculed by the delusion propagators at the NAR, the cheerleaders on CNBC, the Wall Street money changers, the Federal Reserve stuffed suits, and the corrupt politicians in Washington DC. The usual drivel about positive demographics, low interest rates, strong income growth, and limited land to develop were spewed out by the corporate media complex. The beneficiaries of this mass delusion were the Wall Street banks that created mortgage products and derivatives faster than Obama spreads our wealth around.

Mass delusion is always encouraged by those who benefit most from the mass delusion. David Lereah has admitted that he lied about the housing bubble because he was employed by realtors. Realtors made millions in commissions. Appraisers made millions in fees by inflating appraisals. Mortgage brokers made millions by encouraging people to lie on mortgage applications. Wall Street whores made billions by creating toxic packages of mortgages and selling them to Irish nuns, old ladies and clueless municipal administrators. The ratings agencies made hundreds of millions in fees for slapping AAA ratings on toxic derivatives. Politicians got rich from political “contributions” from Fannie Mae, Freddie Mac, Wall Street, and the NAR. Any reasonable human being could look at the chart above and see that this would end badly, but Americans wanted to be deluded. They choose to believe. The housing market has now been falling for five years, with another five years to go. Ben Bernanke has reduced interest rates to zero. I wonder how that will work out.

Who Benefited from Globalization?

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” – Mark Twain

From the time that Bill Clinton signed the NAFTA agreement in 1994, globalization has been touted by those in power as beneficial to all Americans. How could free markets and free trade be a bad thing? Corporate America, Wall Street, and the mainstream corporate media have blared the propaganda of globalization benefits from their loudspeakers. In theory, globalization appears to be a positive concept. It describes a process by which regional economies, societies, and cultures have become integrated through a global network of communication, transportation, and trade. The truth is that globalization is not inherently good or inherently bad. The idea is that each country has its own strengths and weaknesses. Each country will take advantage of their strengths and rely on other countries to help mitigate their weaknesses. This will result in increased trade, a larger world market, and economic progress for all. One small problem. Trade is not really free. Every country on earth protects various industries. Every country on earth manipulates their currency in order to get an edge. Every country on earth invokes tariffs to protect their national interests.

Bill Bonner and Lila Rajiva address the difficulties of globalization and “free trade” in Mobs, Messiahs and Markets:

“Unfair trade is yet another of the dodgy slogans festooning the spectacle of globalization like tinsel slithering around a pole dancer. How can different regulations and practices in different countries constitute unfairness? Isn’t the essence of trade that different countries have different things to offer – whether cheap labor, or better technology, or more bountiful natural resources, or more welcoming business environments? If all countries had exactly the same things to offer each other, there would be no reason to trade at all. But what “fair” trade advocates are really advocating, of course, is unfair trade! They want to make sure their foreign competitors divest themselves of the very advantages that they bring to trading.”

“We notice, for instance, that when Americans in Detroit lose jobs to other Americans in California, they might grumble a bit. But, by and large, they accept it as part of the nature of things. They move, or retrain, or change jobs. But when they lose their jobs to Japanese in Osaka or Indians in Bangalore, then a cry goes up. Unfair trade, howl the trade unions; race to the bottom, scold the social activists; yellow – or brown – peril, shriek the xenophobes and racists.”

It seems the American middle class was sold a false bill of goods. They bought the Big Lie that globalization would benefit them. They bought into the delusion that even though their high paying manufacturing jobs sailed away to China and India, they could maintain their lifestyle through brain work, easy credit, cheap goods made in China by the people who took their jobs, and the ever increasing value of their homes. Noam Chomsky notes the fallacy of this delusion:

“The dominant propaganda systems have appropriated the term “globalization” to refer to the specific version of international economic integration that they favor, which privileges the rights of investors and lenders, those of people being incidental.”

Again, one must seek out who benefits from the delusion of globalization. The crony capitalists, Wall Street oligarchs, and corporate fascists who control the puppet strings in this country have benefited greatly from the Big Lie. Over 5 million manufacturing jobs have been off-shored since 2000. These good paying jobs are never coming back. Millions of service sector jobs continue to be shipped overseas. The global conglomerates like GE, HP, Oracle, IBM, and Boeing continue to rake in billions of profits, distributing millions to its high paid executives, while gutting middle class America. The ruling oligarchs convinced Americans to take advantage of cheap goods and easy credit, to buy electronics, cars, appliances, new kitchens, and take the vacations of their dreams. This Big Lie has left the American consumer with $2.5 trillion of non-mortgage debt and the lowest level of home equity in history. Retailers like Wal-Mart, Target, Home Depot, and Best Buy reaped billions in profits as Americans whipped out one of their 10 credit cards to buy HDTV’s, economy bags of tube socks, iPads, iPods, stainless steel refrigerators, and Dell computers. Small town America’s mom and pop economy was gutted by Big Box retailers selling the globalization delusion. The biggest beneficiaries of the globalization delusion were the Wall Street banks. They control 80% of credit card market and have reaped billions in interest at rates exceeding 20%, while sucking $20 billion per year in late fees from the clueless public. Wall Street bankers have rewarded themselves for their brilliance in destroying the middle class by reaping multi-million dollar bonus packages.

Vincible Ignorance

“Most ignorance is vincible ignorance. We don’t know because we don’t want to know.” – Aldous Huxley

Based on all available evidence, it seems the American public wants to be misled. They have chosen ignorance over knowledge and understanding. They want to believe their corrupt leaders. They want to believe that things always work out in the long run. They want to believe that the economy is about to get better. They don’t want to think about unsustainable debt, unfunded liabilities, saving for retirement, or Simon Cowell leaving American Idol. Americans desperately want to be deluded into another bubble, but there are no evident bubbles left to blow. The existing American delusion is that the current fiscal path will not lead to the utter destruction of our once great Republic.

America resembles a 40-year-old aging baseball icon with two bad knees, a pot belly, receding hairline and delusions that he is still the ball player he was at 24. He doesn’t realize that his skills are shot, as he flails at curveballs in the dirt thrown by 21-year-old kids. The rest of the league knows he is washed up, but he refuses to accept reality. America isn’t even running on fumes at this point. It is running on delusions. Politicians think they have saved the country from a Depression by adding $3 trillion to the National Debt and allowing Wall Street banks to pretend they are solvent. Americans have been deluded by the ruling oligarchs that a $700 billion bank bailout, an $800 billion pork filled stimulus plan, the Federal Reserve buying $1.2 trillion of toxic mortgages, and the Treasury forcing taxpayers to pick up a $400 billion tab for Fannie Mae and Freddie Mac’s bad loans has actually solved a problem created by too much debt.

The American herd has gone mad. A few people have regained their senses, but the vast majority still exhibits the behavior of sheep being led to slaughter. The ruling oligarchs have utter contempt for the average American, but they fear the masses. In order to retain their power and wealth, they gladly hand out two years of unemployment payments, food stamps, and welfare payments to keep the masses sedated. The working middle class foots the bill. Corruption abounds and is sustained by the passage of more laws and regulations. The sociopathic powers that control the levers of power in this country need to be brought to justice if this country has any chance at survival. The den of vipers and thieves have trampled on the Constitution, speculated with the country’s funds, risked blowing up the financial system, committed fraud on a massive scale, and continue to rape and pillage the American citizens. Vincible ignorance by the American people is no longer a legitimate excuse. The criminals on Wall Street and Washington DC must be routed out and Americans must awaken from their delusional state before it is too late. I weep for the liberty of my country.

And you run and you run to catch up with the sun, but it’s sinking
Racing around to come up behind you again
The sun is the same in a relative way, but you’re older
Shorter of breath and one day closer to death

Pink Floyd – Time

August 16, 2010

Jim Quinn [send him mail] is Senior Director of Strategic Planning at an Ivy League university. This article reflects the personal views of Jim Quinn. It does not necessarily represent the views of his employer, and is not sponsored or endorsed by them.

Copyright © 2010 Jim Quinn

Free Range Serfdom

An Introduction to Free Range Serfdom

We are commodities – livestock – living within a variety of different systems of management (capitalism, socialism, communism, fascism, etc.).

Under our current managers, we could be considered free range serfs, meaning that we are given the illusion of freedom as we roam free throughout our farm, but in the end our purpose within the system is to produce goods and services for our masters.

The United States is Collapsing

Editor’s Note: The following article by Anthony Tomei was brought to our attention by SHTF Plan contributor Eagle Claw. Pay special attention to Mr. Tomei’s views on the global monetary system and gold. While we often recommend gold and silver as a store of wealth for turbulent times and economic collapse, Mr. Tomei’s view is that gold will no longer be a redeemable form of currency in the event that a debt insolvency of the United States (and other countries) comes to pass. According to Mr. Tomei, “gold is the banksters” money.

To some extent this is true and Tomei’s recommendations for focusing on non-perishable foods and sustainable living investments is something with which we are in agreement. However, we stress to our readers that gold and silver’s history as a medium of exchange cannot be denied, dating back nearly 5000 years. The banksters, as Mr. Tomei refers to them, have always wanted to control the real gold, as is evident from one of financial history’s most well known adages, “he who has the gold makes the rules.”

So long as there is a demand for precious metals, be it from central banks or investors around the world, gold will retain value in a sort of trickle-down effect. The people of the world are looking to precious metals now more than any time in recent history, as we can see from what happened in Greece a few months ago when the “street” price of gold rose to $1700 per ounce while the bankers’ paper price was trading in the $1150 range. Additionally, we suggest to those who haven’t yet watched the video to take a look at how some Islamic countries are dealing with “banker criminals” as they refer to them, by eliminating the use of paper transactions and choosing to personally engage in transaction with precious metals.

While we share Mr. Tomei’s views on the coming collapse of our current monetary system resulting from excessive and un-servicable debt, we would not simply discount gold. For the coming collapse, we strongly suggest to those looking to preserve life, liberty, wealth and the pursuit of happiness to consider a multi-pronged approach to diversifying assets that should include perishable goods, sustainable living tools and skills, real estate, precious metals and any other tangible asset that has survived debt and political collapse historically.

Of note is that we also share Mr. Tomei’s sentiment regarding a possible move by government (sponsored, of course, by the world’s largest bankers) to either seize physical gold assets similar to what was done in the 1930’s, make it illegal to redeem, or to simply tax it at extreme levels. Thus, for those who have chosen to acquire precious metals, we strongly recommend contingency plans for such events.


The United States is Collapsing

by Anthony Tomei

PHOENIX, AZ – 2010. On July 27th, The Congressional Budget Office released a brief which crashed their main website from massive traffic and visitors. The CBO dropped a bombshell…

‘Deficits will cause debt to rise to unsupportable levels’

Click Here To Read The Article

The Debt Fiscal Crisis Brief is also be downloaded via PDF…

Click Here To Open The PDF File

Fiscal adjustments if any are too little, too late. The only 2 options the U.S. has to boost investor confidence levels are unpopular, painful, and we are past the rubicon for both! The 2 options would be massive tax increases, or drastic spending cuts.

I will now make a prediction based on the negative debt and public admission of a fiscal crisis… Take note, the U.S. is collapsing.

This March Moody’s investor services warned the U.S. that unless it got it’s spending under control there would be a possible future downgrade of it’s triple-A credit rating… (see here)

Regardless of how long Moody or S&P try to stretch and prolong the inevitable downgrade and regardless of how much Tim Geithner says all is well DO NOT BE FOOLED BY THE COSMETIC SMEAR JOB! We, like the rest of the world are quickly approaching debt insolvency if we aren’t there already! There is no turning back now and what we will see is that things will start deteriorating very quickly now.

Watch the news, keep an eye out for new developments. We are now moving very rapidly to a cashless society. Don’t buy into the gold and silver manipulation schemes out there and stay away from those that prey on the helpless and try to get you to invest in gold. Gold is the banksters money, and they will confiscate it just like they did during the 1930’s because it is their money!

What you should be doing with your dollars is buying non-perishable foods, and anything that will sustain you and your family throughout this global transition. When they introduce the global electronic cashless system your gold won’t be redeemable.

This economic impending disaster is one that Americans do not understand and will overtake the mass majority like a thief in the night. Your typical American will not fully realize what has actually happened until they go to the bank to cash their check and find it closed with military guarding the front door.

The day is coming soon when the U.S. Treasury will declare a force majeure on debt. The U.S. is now so far in debt that collapse is inevitable and unavoidable. Make preparations for it now.

Should America (along with Israeli forces) launch a war against Iran – the costs of such a war will overwhelm an already crippled economy and push the U.S. over the edge into oblivion. I believe this is all pre-planned and orchestrated. I predict within 2 years time Americans will be begging for food and the bare necessities just to survive. Contingency plans by our military and FEMA are already in place for riots, and possible insurrection.

The greatest depression ever is currently underway and about to get worse. This is going to be global in scope. The blackmarket will rule, so stock up now on things like lighters, whiskey, cigarettes, canned protein, oats, rice, batteries, first aid kits, medicine, toilet paper, etc. people will trade their silver and their gold just to get their hands on simple pleasures.

There is no more time left…

You have been forewarned.

The End of Medicare, Medicaid and Social Security

The End of Medicare, Medicaid and Social Security

On August 7, 2010, in US Empire, issues, by Admin
Medicare, Medicaid and Social Security are the major components of the “safety net” which was put in place by the federal government for the supposed reason that Americans are too stupid to plan for their own retirement and health care. These programs are socialist institutions that rob property from all Americans and distribute it according to the federal government’s whims. They all started with the promise that the government would take a percentage of everyone’s income and stash it away in a safe account, and would only pull from that account to pay out benefits of these programs. However that promise was quickly broken, the money was spent, and the programs have since been funded by inter-generational theft. In other words, a Ponzi-scheme of epic proportions. The people who are working for a living now are paying the current bills for the people who are retired. This is exactly the same scam that Bernie Madoff was pulling, except that the amounts are in the Trillions instead of in the Millions, and we are all forced to participate unwillingly. At least Madoff’s investors had a choice.

No Ponzi-scheme is sustainable, just as no socialist program is sustainable, and so what we are facing now is the inevitable end of these social programs as they bankrupt the United States government, as the following chart illustrates:

Image Source

What you can see here is that the amount of government spending on these programs (green, blue, light blue) has become the largest chunk of the federal budget, equal to the total amount of all of the other government programs. What’s worse is that the government is doing nothing to reduce its debt, and in fact these programs are adding to the debt, so the interest owed (red) is ballooning out of control. This graph shows this trend proceeding out to 2080, but the fact of reality is that investors are not dumb, and they will not continue to invest in the US government if nothing is done to change these trends. Countries like China who buy US Debt as well as individuals who buy US Bonds won’t continue to do so forever, especially in light of their current policies. Long story short, all Americans are headed for a train wreck thanks to the actions of the federal government.

If there’s one thing the federal government loves it is power, and so they are taking measures to try and delay this catastrophe. One such proposed measure is to raise the legal age of retirement so that the feds can delay paying out the benefits owed to those folks who have been robbed their entire lives. (Notice I don’t say they have paid into the programs: you don’t pay the government, the government takes your money. It isn’t voluntary, therefore it is theft.) A neat little feature of this system the feds have put in place is that every year the retirement age increases automatically by two months, but apparently that isn’t fast enough for our current high-spending politicians, so it has been proposed that the age be raised to 73. Meanwhile, the average life expectancy of an African American man is 70 years, and about a third of South Carolina’s population is African American.

The conclusion that we can draw from all of this is a tragic one, but it is one that we as South Carolinians have to face. Socialism has consequences: Social Security, Medicare, and Medicaid are coming to an end, and the United States Federal Government is going bankrupt. If we do nothing but try and vote in new representatives, we will be caught on that sinking ship as they destroy every remaining bit of freedom and prosperity that we enjoy. The feds have the use of force on their side and the ability to print money out of thin air, so when they go down it won’t be like an individual going bankrupt, where they just lose everything and start over. No, they will try everything possible to prop up their image of legitimacy including printing more and more money (causing rapid inflation), starting wars, stealing more property from Americans, and defaulting on promises they have made in the past, including the “safety net.” All of that money that has been taken from us over the years is gone, and just like with any robbery it is very unlikely that we’ll get any of it back.

So what could we do as a free South Carolina to compensate those who have had so much of their money placed into these programs through the years? If we are successful in reclaiming our independence, what will happen to all of those folks who are expecting to get something back out of medicare, medicaid, and social security?

First of all, and most importantly: we as South Carolinians will be able to make this decision for ourselves. Instead of sending a few representatives to Washington, DC to be outnumbered by the populous states, we will be able to solve these problems ourselves through our State government.

Let’s consider a few possibilities:

  • South Carolinians decide to simply end Social Security, Medicare, and Medicaid.
    This solution is the most improbable, but it deserves some discussion. People who have been robbed all their lives to pay for these programs would lose all of that money, so it would probably be a very unpopular solution. (note that they will also lose all of that money when the US goes bankrupt if we don’t secede.) However, the economic prosperity that would come from the lack of taxes and debt required to pay for these programs might be worth it, along with the moral clarity of not using younger folks as slaves to pay for benefits.
  • South Carolinians decide to phase out Social Security, Medicare, and Medicaid.
    We could devise an interim solution consisting of two parts: an age cutoff and a temporary funding source. The age cutoff would be a number such that anyone younger than that number would not receive any benefits. It could be set at 40, 45, 50, etc, depending on how long we want to have this crushing debt burden and how many people are willing to give up the benefits. The funding source could be one of many things: the state could sell off land, the state could run a lottery system, people could voluntarily donate to the funds, there could be a temporary sales tax, etc. This interim solution will need to be worked out by the representatives of the people, but it is probably our best hope at taking care of our seniors and avoiding catastrophe.
  • South Carolinians decide to continue Social Security, Medicare, and Medicaid.
    A third possible solution would be that in a free South Carolina the people decide to keep the existing programs as they are. While I personally would hate to see this happen because of the nature of socialism, it is a possibility. An independent South Carolina wouldn’t have to pay for things like hundreds of military bases and hundreds of thousands of troops around the globe (as the US government does,) so the people could decide to keep the payroll taxes and keep the social programs. I believe this is the worst option because it would lead to high taxes and runaway debt just like we have with feds.

In summary, the “safety net” of the federal government is quickly turning into a death trap that is sucking our economy dry and eroding all of our liberties. Along with these unfunded liabilities, the most populous states are going bankrupt and getting federal bailouts, yet not changing any of their policies. The federal government is creating money out of thin air to pay for all of these things, but that simply cannot go on forever. The longer we wait as South Carolinians to reclaim our own independence, the worse things are going to get. If we want to restore our liberty we are going to have to make sacrifices and make hard decisions, but at least we’ll be free and independent so we can do what is in the best interests of the people of South Carolina.

Upcoming podcast: What is ‘America’?

On August 8, 2010, in SC, Secession, US Empire, by Michael

On our regular podcast/internet radio call-in show tonight (Sunday) at 8 PM we will discuss what “America” means? What does it mean to you? Are there multiple Americas? Does it mean different things to different people? Is the popular meaning and love for America manipulated by government and others for their own good? Why does this topic matter for modern people who love liberty and independence?

Click here to listen or call-in this evening at 8 PM EST.

The number to call is (724) 444-7444, the call ID is 83081 and if they ask for a pin it’s 1.

You might also like: