Monday at the Asylum

The Futures are just about flat this morning, and in a way, it is kinda surprising.

Here’s why:

One is the item that we went into some detail for in our discussion this weekend on the Peoplenomics.com site about the possibility that the U.S. economy is being “run” by artificial intelligence, already, at some level.  Why Bush Policy = Obama Policy.

This should not be surprising, since A.I. has been used in wargaming circles for years and the Mac game Balance of Power dating back to the 1980s should have been a major clue that if one developer (OK, a genius, I will give him that) could figure it out, so could that large hungry government near you.

The second thing is companies in the UK are scamming to get out of having to file quarter financial reports with regulators and investors.  This is perhaps the worst idea out of the UK since monarchy or King George – take Ure pick.  (More in our Coping section to follow).

But the real reason I am reeling from this asylum-like buzz, at least as portrayed on television, having never been in the deal-deal, is the assortment of headlines that lead me to believe the greater part of the U.S. population is not comprehending the reality of what’s going on.

Let me give you some examples:

Mexico’s Biggest Export?

It’s PEOPLE.

And if you’ll give me a minute to explain, there is much we can learn about U.S. relations with Mexico with a quick once-over a Denmark….yeah…Denmark.

Found by legal-beagle Jeffrey W. for us in the Washington Post Sunday (he reads the high-end stuff), the nightmare story continues:

“Mexico is mounting an unprecedented effort to turn its permanent residents in the U.S. into citizens, a status that would enable them to vote — presumably against Donald Trump.”

This ought to give you occasion to pause and think a bit:  While Europe is entering the throes of fiscal disaster, having imported more people than could possibly make send (ah, but it was a short term fiscal stimulus) here in the USA the Obamanistas are quickly embracing the same concept:  People ARE Growth. But after the rush, the expense follows like day does night.

No one in the present regime has either the brain cells, or the inclination because of a bigger agenda, to come out and I say “Warning, Warning!  When a country wants to dump citizens on you, there is probably something rotten in Denmark!”  (I mean besides their population shift.)

OK, so let’s talk about Denmark:  Where the social version of the Islamic Reconquista of Europe has gotten so bad and demanding on their social system that Denmark Gives Large Bonuses To Get Migrants To Work.

Coming soon to a country near you.  I’ll remind you of this in a few years when the taxes go through the roof for the middle class, although that will be in the middle of a hyperinflationary depression outcome (where gold really does go to $20,000 an ounce) but before we get there, we need to do the deflationary extreme first.  Has it not always been so?

By the way, Denmarkers are just as dumb as America (like this is consoling, right?) in that we see headlines daily about the place pointing out how “Crown Princess Mary looks supremely chic in winter wear at a UN conference in Copenhagen…”  Which somehow made it to the news in Kneeler Land, but didn’t pass the corporate filters here.

Now if that sounds a little too much like the royal version of wrestling and the K sisters, its likely because the professional politician class took over Denmark a good while back.  In fact, over here you can read how Denmark’s ‘last real worker’ PM dies at 93.

Not sure when our last real worker president held office…Eisenhower, maybe?

Meantime, on O’s trip to Havana, should I bother to point out how “Tampa’s Last Cigar Factory Ponders More Competition From Cuba?”

Historical Reality

Along these lines, we know that history holds many answers.  In a recent Peoplenomics.com piece, I explained it to subscribers this way:  (this is a freebie but most of our deep thinking is over there, not here…)

And the Macro Conclusion from This?

Well, it’s pretty simple, really.

We roll first with the idea that when ideas come along to begin with, they are largely held in private hands.

It is no coincidence that the rise of the American colonies happened at about the same time the British lord were sopping up ownership of all the technology they could.

Look here:  Wikipedia rolls out some of the key historical dates that led to this point-break that happened around the time of the American Revolution.  The “garage start-up days analogy included things like this:

In 1738, Lewis Paul (one of the community of Huguenot weavers that had been driven out of France in a wave of religious persecution) settled in Birmingham and with John Wyatt, of that town, they patented the Roller Spinning machine and the flyer-and-bobbin system, for drawing wool to a more even thickness. Using two sets of rollers that travelled at different speeds yarn could be twisted and spun quickly and efficiently. This was later used in the first cotton spinning mill during the Industrial Revolution.

1742: Paul and Wyatt opened a mill in Birmingham which used their new rolling machine powered by donkey; this was not profitable and was soon closed.

1743: A factory opened in Northampton, fifty spindles turned on five of Paul and Wyatt’s machines proving more successful than their first mill. This operated until 1764.

1748: Lewis Paul invented the hand driven carding machine. A coat of wire slips were placed around a card which was then wrapped around a cylinder. Lewis’s invention was later developed and improved by Richard Arkwright and Samuel Crompton, although this came about under great suspicion after a fire at Daniel Bourn’s factory in Leominster which specifically used Paul and Wyatt’s spindles. Bourn produced a similar patent in the same year.

1758: Paul and Wyatt based in Birmingham improved their roller spinning machine and took out a second patent. Richard Arkwright later used this as the model for his water frame.

As the machines came along, so did 12-hour shifts and a ton of labor trouble.

It is no surprise, therefore, that we can apply my 3-axis model on the evolution of technologies to something as old and stodgy as the American Revolution and the split from the Crown.

On the OWNERSHIP axis, the Brits were keeping the money in the hands of the Few.  The model in the US was that the ownership ought to be spread around more, particularly when it came to public policy decisions.  The Crown wasn’t going there and who’s to blame them?  Must be nice to have wage slaves and tax chattel who kneel, after all.

On the EVOLUTIONARY axis, the Colonies were a solid competitor, but breakthroughs in cotton processing eventually pushed the U.S. ahead.

On the third axis, BREADTH OF USE, the American model of governance gave more people more opportunity…and that allowed one country to go one and grow like wildfire for a couple of centuries while England is still, well, just England.

We are at another inflection now, however.  Time to update the mental quad chart.

An uber class of elitists has declared the world their own oyster, and so they are in the process of using financial tools to break down and take over individual disparate nations and conglomerate them into a series of mergers which (thankfully) are so far failing.

Ultimately, as the EU continues to move toward blowing up, we can see how another massive aggregation is likely to implode over time as well.  That’d be ISIS.

The reasons, however, are not especially clear to most.  People don’t look at most disconnected news elements from all over the world and try to arrange them into a working whole fabric, as we do around here.

Yet we can see the strategic disadvantage that the ISIS folks have with their global caliphate designs in just this way.  They will ultimately fail in the West because they don’t understand the OWNERSHIP axis, which in their world reserves all power to a theocratic core.

This is being largely attempted  to be downplayed by pretending that their movement is EVOLUTIONARY on that axis, but the BREADTH OF USE (or adoption if that works better for you) is limited to the number of people than can be threatened with death and capitulate.

We can look at this model in a lot of other applications, as well.  Organized crime is a good one, and so is the current implosion of both political parties because they have made an unbespoke effort that has been highly successful to take the American model of democracy and “take it private” which is why the quickest way to become a multimillionaire is probably to get elected to Congress.

Oh, and to fnish the point:  Once the technology has run a significant portion of its S-curve of growth (after Marchetti’s work on S-Curves) is it then at the exhaustion of grown that even governments go socialist?

After parting ways with the British model, we are now heading down that path with more and more government with less and less relevance.

Sadly, it’s mostly the only way to feed a population which is suffering from a lack of dynamic internal growth.

This doesn’t answer our core question, but we can sure articulate it better:

Is open source essential socialism?

The Creeping Political Insanity

So this gets us to looking at the current  crop of political candidates.

You are supposed to forget that there is a huge problem on the democratic side of the aisle being articulated by the NY Post in “Will Hillary get charged, or what?”  Not only that, but there are predictions that  the “FBI Will ‘Explode’ If Hillary Not Indicted Over Email Scandal Due to Politics.”

On the other hand, that comes from former UN Ambassador John Bolton and I trust him no more than anyone else to get things right.

On the other hand, can either Trump, or Bernie, trust the results out of Utah when it has been revealed that a George :Soros friend runs online voting for Utah.”

And then, like that’s not enough, we have the pandering to the Mormon’s this weekend as it’s revealed in the “Salt Lake Tribune — ‘Cruz in Utah: Glenn Beck Says He’s Fulfillment of Mormon Prophecy.”

In my more deluded moments, I picture myself as a reasonable fellow and this being one of them, most of the headlines this morning just aren’t making sense.  I would think that people who can make things happen in secular society would be praised and elevated to high office.

But, instead, we have a class of professional politicians (suck-ups) running things.  And a person’s level of spirituality is not something any of us should be prepared to vote on.

Not when we need the national pothole (the budget deficit) filled.

Or, maybe I’m wrong.  Maybe I should start drinking heavily or get a bottle of those mood enhancers…maybe then this country would make more sense.

“No, dear, they really are all crazy,” my wife pointed out. “Why, people don’t even know what sex they are anymore.”

Touché’.

Yeah.  If folks don’t know which bathroom to use, they maybe shouldn’t be voting.  Just a guess, mind you.  I don’t care which gender, but emotional stability in the populace might be useful now and then.  Like around, oh, election time.  So the talking swindlers don’t win every time.  But hey!  That’s just me…

Another Huge Money-Making Idea

Remember, a while back, I told you to get out there and make a fortune for yourself simply aggregating all the news stories about how Bombers were going off everywhere.  In fact, if you look in our index, you’ll find many references to The Daily Bomber.

Got a new one for you – and this will not only make zillions in advertising, but you could become a cult classic.  Try this one on and see how you like it:

THE DAILY BENDER

We notice the Harvard Crimson is all over Gender-Neutral Bathrooms and Transphobia.

50:50 By 2020: Virgin Boss Urges Gender Shift

Michigan Schools To Let Students Choose Gender, Name And Sex.

Pediatricians Call Gender Discordance Conditioning Child Abuse

Trooper claims lack of promotion based on gender discrimination

And last but not least: Gender inequity on display at women’s basketball NCAA Tournament

OMG, does this last one ever have me scratching my head:  Does this mean we get rid of women’s everything?  Soccer, baseball, track & field….uh…where’s my ViseGrips?

I don’t think I could write The Daily Bender with a straight (haha, bad pun, huh?) face…so Ure welcome to go for it.

The Wrong Worry?

Fed’s Jeffrey Lacker confident inflation will return to 2% reports CNBC.  But wait, with the Fed smashing the brakes on money creation (1.9% M1 latest 3-month average) how can inflation NOT return.

Methinks there’s something questionable in Denmark, but we’ve already been over that this morning.

Senator David Perdue’s remarks this weekend about how the Washington political class is “losing control” makes for an interesting second cup, if you have time.

Around here, I’m on the third cup and about to tear into the recent Fabian Winker paper (among Fed working papers) about “The Role of Learning for Asset Prices, Business Cycles, and Monetary Policy.”

Abstract

The importance of ?nancial frictions for the business cycle is widely recognized, but it is less recognized that their e?ects depend heavily on the underlying asset pricing theory. This paper examines the implications of learning-based asset pricing. I construct a model in which ?rms’ ability to access credit depends on their market value, and investors rely on past observation to predict future stock prices. Agents’ expectations remain model-consistent conditional on their beliefs about stock prices, which disciplines the expectation formation process. The model matches several asset price properties such as return volatility and predictability and also leads to a powerful feedback loop between asset prices and real activity, substantially amplifying business cycle shocks. Agents’ expectational errors on asset prices spill over to forecasts of economic activity, resulting in forecast error predictability that closely matches survey data. A reaction of monetary policy to asset prices is welfare-improving under learning but not under rational expectations.

So if you’re learning it’s one thing but if you’re rational, it’s another?  (Didn’t Trump just go through a that in Chicago?)

All this goes nicely with our own iteration of learning-based asset pricing, which for now includes eyeing the price of oil which is trying to get semi-stable over $40.