This is Our Seldon Crisis, Part II

By Rich Kozlovich

Every Saturday I receive an economics lesson from John Mauldin from his free newsletter "Thoughts From the Front Line".  Mauldin's one of the economist/investors I find to be more understandable than most.  

 I prefer Mauldin's weekly analysis mostly because he's into history, and he deals a great deal with spending and debt analysis.  Last week in his offering, Supercycle of Debt, I felt the thoughts he expressed deserved a lot of attention, so, I forwarded it to Andrea Widburg at American Thinker saying I would like to see AT take some time and publish commentaries dealing with this issue.  She very graciously asked me to do an essay on it for their perusal.  I wrote this piece, This is Our Seldon Crisis!, which appeared at American Thinker on Tuesday, Our Economy is Facing a 'Seldon Crisis'.

So many others remind me of the Oracle of Delphi mumbling cryptic answers to specific questions.  It was believed they were getting their answers from the gods, such as Apollo, answers that "could determine the course of everything from when a farmer planted his seedlings, to when an empire declared war."

Unfortunately, as I said, the Oracle's answer were always cryptic, and "arguments over the correct interpretation of an oracle were common".  Of course the oracle was always happy to give another prophecy if more gold was provided.  

Do you see the pattern?  

The world worships at the feet of these economic babblers, who are often wrong.  They spew out cryptic claptrap economists argue about and no one understands, including them.  But, they're paid well, just like the Oracle at Delphi.  

I think the ridiculous ideas and solutions offered by these econ-nitwits, is in effect acknowledging they don't have a clue, and worse yet, they have no idea how to fix any of this.  But they don't dare say it in fear of offending their cabal of economic Oracle worshipers, so they just babble out any logical fallacy that works to look like they have something to say that's worth listening to.  Krugman is an excellent example in my view.

 

* Reconstruction of the Sanctuary of Apollo at Delphi

The fact of the matter is those who are handling the world's economics have no idea what they're doing, and this piece he published a year ago, Pension Sandpile, dealing with pensions demonstrates the economically disastrous "cascade" effect that's already in motion.

John Mauldin is into books dealing with historical cycles, and so am I.  I've found the patterns of life keep repeating over and over again, but I also find these books are almost as cryptic as tarot card reading.  They need to be read, they have good history, they give insights you won't get elsewhere, but unfortunately most have poor coherence through connectives, and correspondingly are hard to understand, i.e. cryptic.  

Truthfully, all that stuff is so complicated and so interconnected to so many scenarios, I don't know if anyone could make them more understandable.  The fact is, this kind of historical analysis needs a classroom setting, but that's not going to happen with the corruption of education that's occurred in America.  

This week he offers more insights regarding the debt crisis America, and the world, is facing, in Debt Catharsis.  And we're running out of time!

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He states fixing this is extremely hard, and offers charts to show where the money is going, and why fixing the debt crisis is so hard. He also states balancing the budget is a good start, but that doesn't resolve the debt load facing the nation, and he's right, especially when blithering idiots like Sen. Blumenthal who in 2021, thought $28.4 Trillion in federal debt wasn't any big deal.  Yet, in 2021, the "true national debt" as a result of mandates, was over  $123 Trillion dollars.  Does he think that's too much?  And I hate to think what that "true"number is today. 

The argument for fixing the national debt is is between the cutters, the spenders, the tax reducers, and the tax raisers, everything else is a red herring.  

He discusses those who claim to offer some solutions.  Solutions with some stuff that's useful, and a lot of solutions I think are insane because each and every one of the solutions being presented raise taxes and even add a VAT tax.  That's the same mentality Hoover and FDR ascribed to  that brought about the Great Depression.  Not a one of them does the five things, and actually six things, that absolutely need to be done:

• Cut spending.  Massively.  Period!!!!!
  
• Pass legislation that creates a hard debt ceiling that requires three quarters of each chamber of Congress to overturn, on each and any occasion that situation may occur, and then automatically return to the previous debt ceiling. 
• Cut the size of the federal government by 80%.  
• Big Business and Big Government: The Big-Rip Off
• We Do Need to Return to the Past
• Reduce the regulatory authority of the federal bureaucracy.   
  
• Another Reason to Purge the Federal Bureaucracy
• Carthage Must Be Destroyed!
• Sell off the 150 trillion dollars in assets held by the federal government.  
• Get Out of Debt Card
• It's Time to Sell Federal Properties 
•  Let Me Tell You About Sisyphus, and Our National Debt
• My National Debt File 

Dismantle Departments, agencies and bureaus, which amount to hundreds and hundreds, by slashing their budgets until they hit zero.  Repeal the 16th Amendment, that will pretty much eliminate the IRS, and the billions of dollars it costs just to maintain them.  As of 10 years ago the government of the United States has assets of 150 trillion dollars, and it's high time those assets were sold, including the approximately 24% of the land mass of the U.S.

I've said in the past my grandfather who was a coal miner and a farmer was also one of the world's great economists.  He said if you spend more than you make, you go broke.  That's foundational, that's unavoidable.  

As I've said, I'm impressed with John Mauldin, but perhaps John Mauldin should talk more often to the coal miner's grandson rather than the editors of economics publications?   Just a thought. 

* Reconstruction of the Sanctuary of Apollo at Delphi, Albert Tournaire, 1894,  Wikimedia Commons; with The Oracle, Biacca Camillo Miola, 1880, J. Paul Getty Museum

This is Our Seldon Crisis!

 By Rich Kozlovich

What's a Seldon Crisis?  For old science fiction readers, like me, that's an understood term.  One of the truly great science fiction writers of all time was Issac Asimov, and his greatest contribution to that genre was the Foundation Series, which featured a character named Hari Seldon.  

The character Hari Seldon was a mathematician who created what he called "psychohistory".  Psychohistory was "an algorithmic science that allowed him to predict the future in probabilistic terms."  He outlined the future going forward for hundreds, and even thousands of years, and even created a programmable hologram that would appear many years in the future explaining what they needed to know, or what needed to be done regarding a "crisis" he predicted, AKA, a Seldon Crisis.

There was only one problem.  As quantum physicist Niels Bohr noted:  "It is difficult to make predictions, especially about the future."   I don't care how smart anyone may be, or how well read, or how much experience in life one has, you can't predict the future unerringly, especially for long periods of time. 

 As it turned out they were facing a crisis Hari hadn't predicted, and couldn't have predicted, so, when Harri's scheduled hologram appeared and he told them everything was going along wonderfully, so be happy, that created a real Seldon Crisis.   Since he was wrong, that upset the apple cart, and that's where we are today, entirely too many economists and political leaders have been wrong, it's getting worse, and entirely too many people are willing to go along with that.

When it comes to economics I've concluded if you put the top 25 economists in the world in a room and asked them if they thought two and two really was four, and to explain why they believed what they believed, you'd get 25 different answers. That's clearly an oversimplification, but the concern about what come out of the minds and mouths of economists is valid.

Economics, as a field, is in many ways like statistics. Arcane! Economists can make up anything and make it sound like it's something, but so often all they're doing is justifying preconceived notions that are politically expedient.  I've often stated in my articles my grandfather, who made his living as a coal miner and a farmer, was one of the world's great economists.  He said if you spend more than you make, you'll go broke!  That's foundational!  That can't be overturned!  Eventually that becomes reality!

There is one economist/investor I find more interesting, and understandable than so many others, John Mauldin.   I receive a weekly economics update from him called, Thoughts From the Frontline, which is free so you may wish to subscribe.  On Saturday he sent out this piece called the, Supercycle of Debt, (pdf here).  

In this piece he discusses books that explain historical cycles, which I've believed in for years.  I've found the  patterns of life repeat over and over again.  It seems everyone wants to be a real life Hari Seldon, me too, but while I see historical patterns repeating over and over again, and I think it's important to read these "cycle" books for their historical oversight and insights as to what's going on, I also think they're not predictively useful.  I've defined them as historical tarot card reading.  While they need to be read, and they outline concepts that are judgmentally useful, they're not road maps to the future. 

The biggest take from this article is the massive debt that's being accumulated by the world's governments and individuals. He notes:

Just as an individual can go bankrupt no matter how rich she starts out, a financial system can collapse under the pressure of greed, politics, and profits no matter how well regulated it seems to be.............. But highly leveraged economies, particularly those in which continual rollover of short-term debt is sustained only by confidence in relatively illiquid underlying assets, seldom survive forever, particularly if leverage continues to grow unchecked.................Last week the Congressional Budget Office estimated the FY 2023 federal budget deficit was $1.7 trillion, about $300 billion more than the prior year. Spending actually fell slightly but tax revenue fell even more. This brought the gross national debt to $33+ trillion, of which debt held by the public was $26 trillion (a distinction without a real difference!). I have been saying for a long time we would have a $50 trillion debt by 2030. That now looks laughable naive.  

 

This mess in the Republican House for Speaker, and the Israel/Hamas War, is going to change things dramatically in my view.  Both of these crises are exposing more and more people for who and what they are, on both sides of the aisle, and that picture isn't a pretty one.  I'm expecting to see a massive primary shakeup in 2024, for both party's.  

We're going broke and unchecked immigration is killing the nation's homogeneity, which is putting America existentially at risk.  That's just foundational, but someone has to say it, everyone needs to recognize it, and then act on it.  Especially those in powerful positions.  One thing is clear, the forces aligned against doing so are powerful and entrenched.  To do so will mean completely upsetting the apple cart.  That will require guts, perseverance, the willingness to be unliked and most importantly, the willingness to fight the good fight and do battle irrespective of the personal consequences. 

Everyone's worried about BRICS, but at some point the debt load worldwide will be so great it just won't matter whose currency is being used since no currency will be worth the paper its printed on, and like Venezuela, the cost of printing the money will become too expensive.  Which is why I think cryptocurrency will be forced on humanity, which I believe is a system for corruption beyond imagination.  The Sam Bankman-Fried trial clearly exposes just how corrupt that system can become, and he's not alone out there.

The fact is the people in charge of the nation's money have no idea what they're doing.  Massive debt, unrestrained borrowing, massive spending, inflation at a 40 year high, a banking crisis, frozen housing market, de-dollarization abroad, massive corruption, massive government activity that's blatantly criminal, international political and social instability, and cryptocurrency.  Things aren't wonderful, and there's not one logical reason to be happy about it.

This our Seldon Crisis.  And it's not fiction.