| oct 11 2007 | | Real World. | Very few people know how the real world works. There is no real news from the media channels. There is not much that makes sense in the world. People die of starvation when we have surplus food. America spends more on its defence budget than the rest of the world put together and yet is in constant fear of terrorists when they haven’t had a terrorist attack since 2001 but have invaded and occupied two sovereign nations with plans to include another. It is Iran who is the target for the next invasion and yet they haven’t been the aggressor in a war in the last two thousand years, whereas America has invaded and deposed the democratically elected government in dozens of countries, either directly or by sponsoring terrorists. Is this the real world?
Lets imagine that black is white and truths are lies, does that make more sense in this confusing world? Are events more explicable in this Alice-in-wonderland world?
For instance we all ‘know’ from direct experience that inflation in prices is around 10% and yet we are told that most western nations have it capped in the two to three percent range. Most people believe whatever they are fed, even as they find it a struggle to make ends meet. A cynical person might say this gives the general population a ‘feel good factor’, as well as allowing governments to raise benefits by much less than they would have to, as well as keeping unions from bargaining for a real increase each year.
A suspicious person might be concerned that the new Governor of the Bank of Canada was previously employed by Goldman Sachs. Especially as the Governor of the Bank of Italy is also an ex-employee of Goldman Sachs. Not that there is a pattern forming here but Americas’ Treasury Secretary Hank Paulson is another Goldman Sachs old boy. Of course it would imply some sort of conspiracy to think that these guys talk to each other and remain in contact with the Firm. So we shouldn’t believe they derive any sort of benefit should we?
When Jim Flatulence raided the unit trust industry with taxes that previously the administration had promised (a politician promise now that’s an oxymoron) would never happen not only did he astound everyone in the real world but he trashed the values of the trusts. He did it to benefit the Canadian tax payer, except it didn’t work out that way and he wouldn’t produce the figures necessary to prove his case. Sound dodgy? Only an untrusting individual would see a scheme behind the fact that outsiders came in to buy up these assets at bargain basement prices. How could anyone believe there was a scam being worked?
Across the Atlantic when Gordon Brown in 1999 the then Chancellor of the Exchequer first announced that he would sell half of Britain’s gold reserves, then after the price of gold had plummeted unloaded them onto a prepared market, everyone wondered how a person in charge of the nations wealth could commit such a blunder. His actions did in fact bail out the gold carry trade which was about to crush significant players like Goldman Sachs America's unofficial treasury who it was rumoured had 1000 Tonne short position and later given US$4 billion by US taxpayers to indemnify the bank against their losses on Mexican bonds, not something you read in the press. Although that reason may have some plausibility it would be impossible to believe a public servant would work on behalf of foreign parties wouldn’t it?
The average person would think the trillions spent on war by America could solve their own problems of health care, crumbling infrastructure, housing, etc. Of course we all know the average person cannot understand the complex issues involved. So it is only right that the administration funnels unlimited funds into the Industrial Military Complex. And this is true of most other nations. Should we ask the question why governments have spin-doctors to manipulate unpalatable facts into truths the people understand? Or why there are departments within governments responsible for feeding the people propaganda. Are education systems there to teach individuals how to think, or to teach facts by rote? Why are the curriculums of private schools better than the public schools? Why do we need a freedom of information act? Who is trying to stop us from accessing information? Shouldn’t all information be available?
Maybe speculation on most of the above is not what you encounter in your average world, so let’s return to the question of inflation, something you experience every day, year in year out. You know you do not agree with the core inflation figure put out by your government yet you believe it because experts are telling you it is so. A lie told often enough becomes truth and as Hitler said “if you are going to tell the people a lie, tell a big one.” As governments print more and more fiat currency they generate more inflation. When you hear them talk about the fight against inflation, it sounds as though they don’t know where it is all coming from. In reality it is a fight against their own proliferate spending. To deal with it they would have to admit to what they are doing and have the guts to deal with it but their time horizon is the next election so someone else can deal with it. In the mean time they remain popular with the public as they are spending lots and lots of money. A sceptic might also draw the conclusion that inflation is getting out of control and we are running the risk of stagflation. Think that only happened back in history? Google Zimbabwe I promise you it is grim reading. Zimbabwe is living stagflation today. July 2007 record 7634% inflation and the American ambassador predict 1.5 million percent inflation by the end of ’07. Yet their stock market is booming. Likewise, China has inflation is in the high teens and climbing. And what is happening in these countries? People have lost confidence in the currency. Money in the bank loses value very quickly. So they pile into stocks and shares and their stock markets boom way past any reasonable valuation. Could this be why developed countries stock markets are constantly making new highs, while for all intents and purposes the countries themselves are bankrupt? And that is just the smart money. The ordinary smuck still has his money in the bank and watches its purchasing power grind endlessly down. Occasionally they wake up and there is a run on the bank as happened to Northern Rock in England. There will be a few more of those. So for now the party in equities continues, maybe another year or two, even as the fundamentals get worse and worse.
In our world we continue to worry about the lives of celebrities, sports and are bombarded with warnings of terrorism, when the biggest threat to our livelihoods and way of life is from within.
See you in the soup line.
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