Does Credit Expansion lead to Waist Expansion or Waste Expansion?

Jeff Snider at EuroDollar Univesity discusses the Chinese Stimulant that ain't fentanyl -- increased availability of Bank Credit.

Back in the 1980's I read that the Soviet Union had the highest rate of capital investment in the world and on the whole (or rather, "hole"), that investment produced a negative return -- requiring more investment. I read that and thought, "Gee, that can't be good." I had the picture of being on a treadmill and running to stay in place but the treadmill speeds up so, in the end, you're running so you'll fall behind slower. In such a scenario, collapsing from exhaustion seems the logical outcome.

In "The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities," Mancur Olson didn't discuss the credit markets so much as the "credit to" markets. In his view, the growth of self-dealing special interest groups in an otherwise growing economy produces economic sclerosis that leads to failure. The CCP is a collection of self-dealing special interest groups. Its near collapse during Mao's Cultural Revolution allowed a multi-decade spurt in economic development. Its reemergence as society's "guiding force" will likely herald its decline.

We face a similar danger in the good ol' USA. It's not the dealings of the Fed that will determine our economic future so much as the self-dealing of a web of special interests and influence peddlers I call "The Crony Class." Are they anti-climate change or pro their control of the nation's resources -- and do they see a difference? Crony class interests require a lot of lying-and-believing at the same time. ESG, anyone?

A Telluride Tell-all

If you ask yourself, "where does this lead?" and the answer is "nowhere good," then don't ask the question.

A Black Professor Trapped in Anti-Racist Hell

If the seminar is slow food, the anti-racist workshop put on by college-age students is a sugar rush. All the hashtags are there, condensed, packaged, and delivered from a place of authority. The worst sort of anti-racist workshop simply offers a new language for participants to echo—to retweet out loud.

Way back in the misty-misty, I saw Pulp Fiction with a progressive black friend and afterward said that Quintan Tarantino must have a special license for the prolific use of the N-word. My friend seemed both baffled and distressed by that comment. To me, it was a simple display of movement power. Think of an individual who can say, "You, right here, can use this word but you, over there, can't," and be obeyed -- and obeyed because they can enforce their will. That's a display of power.

I'd noticed that the left often defends the guilty (the murderers Sacco and Vanzetti) and persecutes the innocent (Bret Kavanagh), which puzzled me. I mean, there are plenty of innocent people who need defending. I figured it was a recruitment tool as well as a display of power. Anyone can defend the innocent but it takes a potential activist -- a person willing to commit to the cause and the "new morality" the cause promotes -- to defend the guilty. Once you accept that the murderer is the true victim and the innocent defender of the "loathsome" status quo is the real criminal, you are on your way. How about a donation?

A Mauling by Maher

Nerdrotic discusses some Bill Maher clips where Maher takes the "Cancel Culture" Left to task for acting like the people they are -- and does it to great comic effect.

I first heard of "hate speech" as a political construct in the 1980s when in a bar talking to an admirer of the Communist dictator, Joseph Stalin. We'd been friends since childhood and I hoped that, after the revolution, he might help me get an exit permit. We discussed free speech and I said that the left often equates it with pornography, which the libertine left legally defends while the feminist left puritanically condemns. At the same time, both wings try to suppress political speech. He said, "You can't just let people say anything!" and went on to talk about hate speech. This came from a self-identified Stalinist who thought slave labor camps a necessary, if regrettable, phase -- which made me wonder about the enforcement mechanism he envisioned for his speech codes.

At the time I had a communist roommate who was in graduate school. He borrowed my car, got a flat, and drove it back to the apartment, shredding the tire in the process. He then used a can of fix-a-flat I had in the trunk. A short time later, I stared at the rubbery remains with the specs of foam clinging to the edges and marveled at the magical thinking involved. The fellow thought the contents of that can could knit that tire back together at the atomic level. He seemed confused that it hadn't worked. I joked that, come the revolution, he'd be the Minister of Science and Industry. Seeing the new direction that Science and Industry have taken, I'm thinking the revolution occurred when I wasn't looking.

Blackrock of Ages, Cleave Ukraine?

War, Good Lord! What is it good for? Well, that depends on the meaning of the word "good."

The Stoic over at Stoic Finance discusses the involvement of Blackrock in Ukraine. He provides a compact overview of both the Ukraine war and Blackrock. He claims he doesn't think Blackrock's overall intentions are good or evil but his presentation leans -- evil.

We should be careful not to credit malevolence to actions that can be explained by incompetence. Early on, the Biden administration canceled the "lethal" aid to Ukraine that the Trump administration approved, which was like ringing the dinner bell for Vlad the Invader. However, I don't believe they were sending an engraved invitation to war. They thought they were "lowering the threat level." Likewise, I don't think the administration or Blackrock wants to prolong Ukraine's agony. They're just doing a botched job.

I've no doubt Ukrainians remember the genocidal policies pursued by Moscow in the 1930s, so it's no surprise they decided to fight. By now the war has become a source of gainful employment for the non-refugee population, whose previous pursuits and careers were crushed. Russia's attempts to destroy civilian morale by attacking the infrastructure may increase their commitment to their current means of employment, which is war. Hopefully, that can soon be replaced with rebuilding.

Before the war, Ukraine was known for its corruption, not its scenic beaches or Alpine ski resorts. Under these circumstances, postwar aid would be confined to NGO soup kitchens. By partnering with Blackrock, they can provide some assurance that the thievery will be kept to a more reasonable level and economic aid may provide benefit to Europe and the wider world. Blackrock would not be my choice to run it but I'm not the one choosing.

Looking for a New Thermometer

The leaders of Argentina and Brazil hope to create a common currency to break the trade-denominated link to the US dollar. Joe Blogs compares their efforts to the creation of the Euro around the turn of the century.

Historically, most Euro participants lean towards "easy money" but Germany, having suffered from hyperinflation, is a hard-money, hard-nut to crack. That isn't the case here. Argentina currently suffers from roaring inflation -- not for the first, second, or third time -- which has tanked the value of their currency in dollar terms. Brazil has a similar record. Since their bilateral trade is largely denominated in dollars, this is highly inconvenient for businessmen and, more recently, politicians. The two countries are suffering from inflation fever and the leaders want a new thermometer in lieu of treating their policy problems. Even in the Euro's case, there was a financial crisis in the area because some countries did not follow the program they signed onto (ie limiting budget deficits and so on).

The proposed currency union is a bit like fixing a leaky roof. It's a good idea. What's a bad idea is trusting the job to "roofers" who cause more leaks than they fix. Meanwhile, the bewildered homeowners at the job site find half of their valuables have disappeared before the job is done. When they complain it is explained that the poor result is all the fault of people who live on another continent thousands of miles to the north.

Nevermind the Gap

There's a gap in the chart! Jeff Snider at Eurodollar University has a video where he discusses "real personal income excluding transfer receipts" (think government handouts), which fell "off trend" in 2020 and hasn't recovered. Transfer payments backfilled the gap for a time. Here's his chart:

I fear the "off-trend" has become the new trend. Perhaps people in 2020 were rioting for the wrong reason.

I blame "Cronny Class Consciousness" and the governing philosophy of "Feudalism with the Right People in Charge" for the developing economic malaise.

At its center, the Crony Class consists of politicians, hacks, bureaucrats, and those who acquire power through their ability to influence government action -- the lawyer, lobbyist, and dark-money crowd. This group took to heart the advice of Scarface, "first you get the power, then you get the money, then you get the girl." Confusingly, we now have to add the lawyer/lobbyist girls who want to be "the man" while still blaming "the man" when the man is actually, you know, a man.

The outer ring includes those who benefit from government action, such as corporations that fear bureaucratic overreach or seek government favor or the education establishment which devours government resources while avoiding societal accountability. To this add the legions of minions whose livelihoods depend on promoting Crony Class Interests, such as MSM Journalists (not to be confused with reporters), aspiring academics (not to be confused with actual scientists), and "house experts" (not to be confused with people who know what the hell they are talking about). The tentacles of this class reach far and wide, and gives the appearance of "Nerds working for Sociopaths."

"Crony Class Consciousness" allows them to act as a unit to protect class interest with a minimum of actual coordination. They framed Donal Trump (a minor threat) as a Russian agent for three years, knowing it was bunkum from day one. When it no longer played, the media Emily Litellas said, "never mind," and moved on to the next set of feeble accusations class members are required to promote. Objectively, these are the actions of horrible people. Subjectively, they have their reasons. This beast is hungry and needs to be fed. Those gaps in the charts are just the start.

"Feudalism with the Right People in Charge," says the rulers should come from an accredited, pseudo-intellectual caste (the true nobility of the mind), not a military one. The philosophy provides the justification for the rule of the Crony Class (i.e. Climate Change requires their control of resources) and the rationale for keeping their "expert" descendants in charge (having a lot of kids -- which will expand family contacts in an influence-peddling system -- is frowned upon). Diversity-Equity-Inclusion is sold as the ability to include but is actually the power to exclude. Everyone should get in their place and stay there. Mind the Queue.

Think of a War Where Only One Side Is Allowed to Fight

Media outlets keep promoting 'forest defenders' and ignoring that they shot a police officer

If the left campaigns to free an accused person, that person is likely guilty. When they are not trying to get the guilty off, they are trying to destroy the innocent (see: Sacco and Vanzetti = framed; Justice Kavanaugh = corrupt, and Joe Biden = honest). Even when I was on the left this tendency among those who claim to want a better world puzzled me. I came up with several reasons.

Recruitment: Most people would want an innocent person freed but only a potential true-believing, money-donating, self-deluding activist will campaign to free the guilty.

Delegitimizing the Justice System: The guilty person is on the "right side of history," combating an entrenched evil and therefore not just innocent but heroic. It's the other-way around for the so-called innocent person who is actually a cowardly defender of privilege.

A Display of Power: Freeing the guilty and destroying the innocent will attract supporters to the movement and discourage opponents. Also, it will strike fear in the souls of possible apostates (black conservatives, for instance).

The political left wants power above all else and believes that a highly disciplined and properly led band of activists can gain control during social chaos, hence "the worst the better" for the far left. Many would rather be a camp guard in a socialist state than a factory worker in a capitalist one.