Micro Topics – 2016 Election – Latest from BHO

Capitalism makes our lives better without any plan for doing so; having such a plan however is a guarantee that our lives will become miserable.
Micro Topics – 2016 Election – Latest from BHO
By: George Noga – December 9, 2018

Micro Topics: Give a man a fish and he eats for a day; promise enough men free fish and you win elections. . . . .  Obama famously said “I have a pen”. Trump has an eraser and it is huge. . . . . The family deported together stays together. . . . . In California you go to jail for using a plastic straw, but crossing the border illegally gets you sanctuary and free stuff. . . . . Che Guevara: “I don’t need proof to execute a man; I only need proof it is necessary.”. . . . Capitalism makes our lives better without any plan to do so; having such a plan assures our lives will be miserable. . . . . There is only one everyday product in America that we must wait in long lines to purchase: a postage stamp.

Micro Topics II: Seen recently around a cauldron auditioning for Macbeth: Maxine Waters, Diane Feinstein, Kamala Harris, Nancy Pelosi and Barbara Boxer. California is like the mythical Germanic kingdom where candy grows on trees, lemonade flows in rivers and the fattest, ugliest and stupidest person is king or, in this case, queen . . . . .  “You can observe a lot just by watching.” (Yogi Berra) . . . .  Jubilee soon will be on the progressive agenda; it’s their version of biblical every 50-year debt forgiveness. . . . . If Trump nominated Hillary for SCOTUS, we could have had the FBI investigate her.

Hidden in Plain Sight: What really happened November 8, 2016? Two reporters spent the entire campaign on parts of the old Lincoln Highway in the American heartland. Their new book, What Really Happened, explains Trump’s victory. The book describes Bonnie Smith, from a small Ohio town. Her parents were Democrats; her husband is a Democrat, she was a Democrat and the county she lives in had not voted Republican for as long as anyone remembers. The county (Ashtabula) went for Obama by 55% twice but Trump beat Clinton by 19 points – a swing of 30 points. The same story played out in hundreds of similar communities throughout the area. Trump stumped there 18 times while Hillary was in California raising megabucks from elites.

Bonnie Smith is a mother of three who worked long and hard to save enough money to open a donut shop. She gets up at 1:30 AM to begin making donuts by 2:30 AM. Following are her words: “I am not sure what happened, but I started to look around my town and country and I was just not in the mood anymore to show up and vote for who my party tells me to vote for. I am kind of like that voter that was hiding in plain sight that no one saw coming. I was right there all along. I’ve seen the job losses here, the rise in crime, the meth and heroin problem, society losing hope and something just gave in with me.” Bonnie’s story speaks for many millions of other Americans.

Barack’s Baaaack: Obama now claims credit for the roaring economy. This from the same person who said, “Two percent growth is the new normal and we should get used to it.” Now, BHO and his acolytes put forth a metaphor of a lid screwed tightly onto a container. They assert BHO exerted superhuman efforts to loosen the lid such that once Trump took over, the lid (presumably holding back the economy) was easily removed and, voila, boom times followed – all due to Barack Obama loosening the lid.

For his entire eight years, BHO did all he could to tighten the lid on the economy, all the while preaching his little sermons whose subtext always was how smart he was and how his opponents were dim-witted, Neanderthal racists. I don’t believe Bonnie Smith and the other good folks in Ashtabula County, Ohio buy into Obama’s metaphor.

Our next post, about the four gifts of Christmas, is the last for this year. 

Enduring Lessons of Thanksgiving

We have become disconnected from and ignorant about the source of our great prosperity for which we give thanks. The earliest Americans, who lived under socialism, understood.
Enduring Lessons of Thanksgiving
By: George Noga – November 18, 2018

       Your children and grandchildren undoubtedly have been indoctrinated in the Thanksgiving narrative foisted on them by government schools and the media. You know, the one about Pilgrims celebrating their abundant first harvest and sharing it with Native Americans. It is a warm, fuzzy, politically correct, multi-cultural, feel-good myth, but it ignores the enduring lessons of Jamestown and Plymouth.

          Colonists arriving in Jamestown in 1607 found fertile soil and an abundance of game, fruit and nuts. Everything went into a common store owned by everyone and hence, no one. There was no direct connection between work and benefit. As with socialism everywhere, there soon was starvation amidst plenty. Within six months all but 38 died – most from starvation. In 1609 another 500 settlers arrived; six months later 440 more had died from starvation. In desperation, they turned to cannibalism.

          Then a new governor, Sir Thomas Dale, arrived. His first action was to give each man 3 acres, while requiring him to work one month a year for the common wheal, equal to a flat tax of 8.33%. Overnight the colony prospered; people became inventive and industrious. John Rolfe, husband of the real Pocahontas (not Elizabeth Warren), wrote about how private property had turned everything around. Jamestown’s first good harvest in 1611 was a direct result of abandoning socialism for private property.

       Fast forward to 1620; when the Pilgrims landed, they were governed under an arrangement that established communal property ownership. Everything went into  a common stock and was withdrawn by anyone as needed. This was pure communism: from each according to his ability, to each according to his need. Soon enough, they were reduced to eating rats and 50% of them died. Again, starvation amidst plenty.

     Governor Bradford took action. As Dale had done in Jamestown, he instituted private property rights, granting a parcel of land to each family. In Bradford’s words: “This led to good success, for it made all hands industrious. Much corn was planted; women now went willingly into the fields and took their little ones with them, which before was thought to be tyranny and oppression.” At the next harvest in 1621, there was enough of an abundance to share – thanks once again to private property rights.

       If the Pilgrims could not make socialism work, no one can. They were deeply religious, homogeneous, few in number and their survival depended on one another. Nevertheless, they starved to death en masse rather than work collectively. They did not tinker with, modify or seek to perfect socialism; they abandoned it as a failure.

         Over 400 years ago, the earliest American settlers understood socialism far better than Bernie Sanders, Andrew Gillum and Ocasio-Cortez, who are advocating that America return to the principles that created mass starvation in Jamestown, Plymouth and now Venezuela. Without liberty and property rights there is no abundance and there is no Thanksgiving. Socialism is pure evil and incapable of being refined.

       Teach your kids and grandkids the authentic lessons of Thanksgiving; you can begin by having them read this post. When society breaks the link between work and benefit, the inevitable results are privation and misery. No socialist scheme has ever worked; they all fail for the same reason, i.e. they are antithetical to human nature. If you want a veritable cornucopia to share with others, only capitalism can produce it.

       As in Jamestown and Plymouth, socialism always creates starvation (and even cannibalism) amidst plenty. Our ancestors found it so repugnant, they died rather than alter their human nature to make collectivism succeed. This year, let’s be thankful for the ineluctable lessons of early America: socialism fails and capitalism succeeds!

Next week’s post is about the politicization of science. 

Financial Repression

At the darkest hour of the crisis, I can see the state confiscating all IRA, 401(k) and private/corporate pension assets and transferring them into Social Security.
Financial Repression
By: George Noga – November 11, 2018

     If the term financial repression is new to you, get used to it! You already are experiencing it and it will get much worse as the spending crisis ratchets up. Financial repression is government action that insidiously transfers wealth from the private to the public sector and, in particular, facilitates government financing of its massive debt.

        Repression is already here; thus far, we have seen only less virulent forms: (1) artificially low (zero) interest rates that savaged savings and deferred the consequences of the government’s debt binge; (2) multiple bouts of quantitative easing, driving up prices of government bonds and suppressing interest rates; (3) regulations for banks to hold more government bonds to meet capital requirements; (4) increases in bank reserve requirements; and (5) early salvos in the war on cash. Following are the top five forms of repression you can expect as the spending crisis goes thermonuclear.

1.  Negative Interest Rates and the War on Cash  These go hand-in-hand; negative rates won’t work if citizens can hold cash as they are much better off with cash than negative rates. In Japan, the sale of safes soared when rates went negative. Europe wants to ban the 500 Euro note and the US the $100 bill. Canada, Singapore and many other countries have phased out large denomination notes. Cash can protect citizens from an overpowering state and that is precisely why the state has declared war on cash.

2. Currency and Capital Controls  As the spending crisis heats up, citizens are better off moving all or some of their funds to other countries. There is no doubt the government will put a stop to this with currency controls – as have all other nations in similar straits. Government also will regulate the flow of capital and capital markets by various means including taxation, regulation, prohibitions and mandates.

3. Bail-Ins During the spending crisis, banks will fail. Governments have established bail-in provisions requiring depositors of such banks to make the banks solvent by confiscating a portion of their deposits. Recently, Cyprus proposed taking 9.9% from every depositor. The state may palliate this by proffering worthless equity or bonds in the failed bank as compensation. Again, this ties into the war on cash; bail-ins won’t work unless citizens are forced to keep their money in banks or other institutions.

4. Seizure of IRA, 401(k) and Pension Assets Throughout history, pension funds have proven the quickest and easiest for politicians to steal. In recent years, Poland, Hungary, Bulgaria, Ireland and France have, through one artifice or another, seized money from personal, company and/or public pension accounts. Currently, there is $30 trillion of pension assets in the US; if you believe these are safe, you also believe in the Tooth Fairy. The Obama Administration once prepared a working paper outlining how government could seize 25% of Americans’ assets in IRA and 401(k) accounts.

5. Debt Restructure The state can forcibly restructure its debt, which can take many (or multiple) forms: (1) lengthen maturities; (2) impose a haircut, i.e. writedown of principal; (3) lower the interest rate – even to a negative rate; (4) require rollover; (5) delay or prevent redemption; (6) conversion to other securities; and (7) repudiation.

         Opportunities for financial repression are limited only by the imagination. More than likely, government will use all five of the forms of repression listed supra. I can see the state requiring IRA, 401(k) and private/corporate pension plans to own a mandated amount of government debt. At the darkest hour of the crisis, I can see the state taking over all (by then $50 trillion) private pension assets and converting them into highly politicized government pensions that revert to the state upon death.

       Government created this problem. Its ham-handed attempts to fix it will destroy America as we know it and create a lost generation of unfathomable desperation. That is why we passionately believe America needs more liberty and less government!

Don’t miss our special Thanksgiving posting – next from MLLG.

Our Choice: Depravity or Fecklessness

Whatever the outcome, the election will not slow our march toward Gomorrah.
Our Choice: Depravity or Fecklessness
By: George Noga – November 4, 2018

       Many readers have asked for my take on the election, probably because my 2016 pre-election posting proved incredibly prescient; you can read it at: www.mllg.us. My take on the 2018 election is likely to prove far less satisfying because the data are conflicting and do not lead to any logical conclusions. Following is what I know.

      The party in power usually loses seats in midterm elections; this is a powerful historical force not to be minimized. The economy is booming; every economic metric is the best in generations; normally, this would provide a strong tailwind for the party in power. Although Trump remains hugely popular with his base, he is much less so among independents. The fallout from the Kavanaugh brouhaha is unclear and could significantly advantage either party. Polls are unreliable; they undercount Trump’s support and cannot capture late swings among voters nor anticipate turnout.

       For the aforementioned reasons, I have no special insight to offer. It will come down to who is more motivated to vote and any possible late swings in sentiment, which often are powerful enough to change the outcome of many races. Although we all tend to get caught up in the moment, the outcome of the election will not slow our inexorable march toward Gomorrah nor delay the onset of the spending crisis.

        You can tell how disconnected from reality we have become by the issues in this election and comparing them to the issues we ought to be debating. Following are the top fake election issues versus the top real issues critical to America’s future.

Fake Election Issues 

1. Russia: There is not one scintilla of evidence supporting Trump/Russia collusion. In fact, it is more likely those making the allegations will be the ones implicated.

2. Abortion: There is no credible basis to believe there will be any new laws or court rulings significantly impacting abortion or any women’s issue. It is a scare tactic.

3. Victim/Identity Politics: These are strictly talking points and scare tactics. Whatever the election outcome, there will be no adverse impact on any victim or identity group.

4. Climate Change and Gun Control: These are dog whistles for progressives. Climate change ranks dead last out of 20 issues of voter concern. The ugly truth about gun control is that there is no real difference between the parties on gun issues and no proposed action would make any difference in preventing mass casualty attacks.

Real Election Issues Not Being Discussed


1. Protection of electric grid: A cyber or EMP attack tomorrow on our grid could kill millions of Americans; it easily could be prevented and/or the harm minimized.

2. Prevent the Spending Crisis: The worst economic crisis in our history is approaching and we totally ignore it because we refuse to face difficult and painful choices.

3. Maximize economic growth: The proper role of politics is to create conditions that grow the economic pie as big as possible and then decide, via the political process, how to slice the pie. The worst possible situation is to shrink the pie due to class warfare. Maximizing the pie also solves other issues like defense and infrastructure.

4. Iran/North Korea: How far are we prepared to go to stop their nuclear ambitions?

       In any sane, rational universe we would be debating the real issues affecting our future and our children’s future. However, politicians appeal to the electorate’s lowest common denominator because we allow it to work. Our true choice is one between depravity and fecklessness; I will hold my nose and vote for fecklessness.

We next return to the spending crisis with a discussion of financial repression.

Special Posting: Birthright Citizenship

You are being told that children of illegal aliens, who are born in the USA, become citizens automatically and that this is ordained by the Constitution.  Neither is true!

By: George Noga – November 2, 2018

       This is a special unplanned posting. Suddenly, the issue of birthright citizenship has been thrust into the national spotlight and the media (surprise) have it all wrong. We first wrote about this seven years ago. What follows is not political or partisan, but simply a logical, fact-based and principled assessment of birthright citizenship.

       You likely have heard that children of illegal aliens, born within the USA, ipso facto are US citizens and that is explicitly ordained by the Constitution. Neither proposition is true! The 1789 Constitution did not define citizenship; however, the 14th Amendment ratified in 1868 states, “all persons born in the US and subject to its jurisdiction” are citizens. The purpose was to grant citizenship to former slaves in the aftermath of the civil war. Being born in the USA is only one of two conditions.

If the intent of the 14th Amendment was that everyone born in the USA is a citizen, then why was the conjunctive “and subject to its jurisdiction” added?

       Those five words, and subject to its jurisdiction, is where all the controversy lies. At the time (1868) it was generally understood to mean full political allegiance. That’s why Indians were excluded – because it was assumed they owed allegiance to their tribes. However,  Section 5 of the 14th Amendment gives Congress power to “enforce by appropriate legislation” provisions of the amendment. Congress subsequently has done so, giving Indians and other explicit categories citizenship. But Congress never has given citizenship to children of illegal aliens or to everyone born in the USA.

      There have been Supreme Court cases on topic. Proponents always cite U.S. v. Wong Kim Ark (1898) (decided 5-4) as a source of birthright citizenship. However, in that case, the court held only that children of legal permanent residents automatically were entitled to citizenship. The court never has opined on children of illegal aliens.

Four Takeaways About Birthright Citizenship

1. A constitutional amendment is not required to address birthright citizenship. Congress has this power under Section 5 of the 14th Amendment and could pass a law either granting or denying citizenship to children of illegal aliens born in the USA.

2. There is nothing in the Constitution, laws passed by Congress or cases decided in the Supreme Court that grant birthright citizenship to children of illegal aliens.

3. Because of the lack of legislative or judicial clarity directly on point, an executive order by the President of the US is entirely appropriate. Such an order could instruct the executive branch how to deal with children of illegal aliens – including instructing them not to confer birthright citizenship unless mandated by Congress or the courts.

4. Ultimately, this matter will wind up in the Supreme Court – whether as a result of an executive order or a law enacted by Congress and signed by the President.

      No European or western country grants citizenship based on place of birth. Nearly every country on earth bases citizenship on blood rather than on soil, i.e  on parental citizenship – not on place of birth. Ideally, Congress should settle this question as one part of comprehensive immigration reform legislation. Good luck with that!

Watch for our special pre-election posting on Election Day – November 6th.

Our next post November 6th offers perspective about the midterm election.


Special Posting: Birthright Citizenship
By: George Noga – November 2, 2018

Slaves, Socialism, Supreme Court and ICE

Did the US Constitution consider slaves 3/5 of a person? Can socialism ever appear to work? Can the world run out of money? These questions and more.
Slaves, Socialism, Supreme Court and ICE
By: George Noga – October 28, 2018

Micro Topics: “Medicare for all” is the new cry of lefties. Single-payer health care has been tried and it failed miserably – with Native Americans and veterans. It adds trillions to the deficit, but the real cost is in lives. . . . . “The left destroys everything it touches, sports, comedy, schools, fun, everything”. (Charlie Kirk) . . . . . In the latest PC craze, schools abolish homecoming kings and queens, substituting “royals“. But aren’t royals a privileged hereditary aristocracy? . . . . . For 2015-16, uber-liberal NPR can confirm only 11 school shootings; with 96,300 schools, that is one shooting per 8,755 schools. . . . . Not long ago, liberals and media applauded when jack-booted ICE agents conducted a pre-dawn raid to seize a 6 year old boy; his name: Elian Gonzalez.

Only 3/5 of slaves were counted per the Constitution but it was not due to southern racists, but northern abolitionists. Nor did the 3/5 have anything to do with the putative human worth of a slave. In 1789, there were 1.8 million freemen in the north but only 1.1 million in the south. The south wanted to count all 650,000 slaves to achieve equal representation in the House of Representatives; the north didn’t want to count any, hence, the 3/5 compromise. The Constitution refers to slaves as “persons“, nowhere as 3/5 of a person. This issue is misunderstood and often demagogued by liberals.

Socialism can appear to work  briefly because socialists plunder a nation’s wealth to create the illusion of progress. They confiscate assets, loot industries, banish managers and pad payrolls with hacks. They strip natural resources and despoil the environment. They run giant budget deficits and borrow all they can before defaulting. They tax the upper and middle classes into oblivion. They hyperinflate and print worthless currency. They pillage banks and make phoney loans to acolytes. They impose price and rent controls and prohibit evictions. They freeze prices and impose currency exchange controls. Wealth creators flee along with their capital and knowhow. After socialists ransack a nation’s patrimony, it always ends the same, i.e. starvation amidst plenty. Never has socialism created sustained prosperity, only short-term pillage and plunder.

The world is running out of money. The supply of money is finite and when it’s gone, it’s gone. Seriously! We can’t just keep printing money because that only inflates, i.e. more money chasing the same supply of goods and services. Space aliens, pandemics or climate change won’t do us in; in the end, the planet simply runs out of money. World government debt is $64 trillion while GWP is $76 trillion for a ratio of 84% and spiraling upward. Total global debt (public and private) is $230 trillion, over 300% of GWP. Who will be the one to borrow the last dollar in the universe?

SCOTUS confirmations are circuses as Congress quit legislating, leaving lawmaking to courts. Uncertainties about vacancies create angst, as justices now can serve 40+ years. To fix this, MLLG resurrects an old, but simple and elegant, idea which may be new to readers. Justices (limited to one term) would serve staggered 18-year terms with one term expiring every 2 years. Every president would have 2 appointments each term. This removes all the angst and uncertainty and no president could ever appoint a majority. Eighteen years is enough to serve; moreover, this change would enable more experienced justices to be appointed because longevity would no longer matter.

Our next post November 4th offers perspective about the midterm election.

Protect Your Assets During the Spending Crisis

Protect assets during the spending crisis; fortunes will be made at the bottom.
Protect Your Assets During the Spending Crisis
By: George Noga – October 21, 2018

         This is the second and final post about protection during the coming spending crisis. Last week’s post, available on our website www.mllg.us, focused on timing issues and on protection for your family. This post is about protecting your assets.

         Protecting assets during the crisis is hugely complex as it is difficult to know what peril to protect against and when. We must consider (1) deflation and depression; (2) economic collapse; (3) inflation and hyperinflation; and (4) repudiation, restructure and repression. Moreover, we must consider these perils singly, successively and in combination. We will address each scenario and suggest essential protective actions. Finally, we will reveal how you can profit from the greatest crisis of our time.

Deflation and Depression

           Deflation, followed by depression, is likely but may follow a period of inflation, as government initially floods America with newly printed money. Assets that provide the most protection from deflation and related perils are cash (treasury bills), US dollars, long bonds and quality dividend-paying stocks of companies that make products essential for survival. Avoid real estate, commodities and precious metals.

Economic Collapse

       A prolonged depression (or hyperinflation) could lead to economic collapse. Many banks will go under. For protection, you should have an account at an ultra safe US bank, of which there are only a few; research this on the internet. You also should have a foreign bank account; for simplicity, consider opening an account in a Canadian bank denominated in Canadian dollars. During the crisis, government will prohibit new foreign accounts and will impose exchange controls to prevent money leaving the US.

      Avoid debts and US government securities. Be dependent on government for as little as possible. Protection can be gained from precious metals and foreign currencies. Consider government or corporate bond funds in developed countries with low debt ratios such as New Zealand (22%), Chile (24%), Switzerland (44%), Nordic countries (40%), Germany (64%) and Canada, which has a high, but stable or declining, ratio.

Inflation and Hyperinflation

      Government’s first instinct will be to print money, at least temporarily while it gropes for solutions. Prolonged inflation is distinctly possible. Protect with TIPS (Treasury Inflation Protected Securities), commodities, real estate, precious metals and foreign assets. Avoid stocks, bonds, cash and US dollars. It is better to be a borrower than a lender. To combat hyperinflation, own blue chip foreign equities and assets in resource rich countries such as Australia, Brazil, Canada and New Zealand.

Repudiation, Restructure and Repression

      Although outright and total debt repudiation is unlikely, restructure and repression are very much in play. Government could: (1) reduce interest rates or even impose negative rates; (2) lengthen maturities; (3) accrue (rather than pay) interest; and (4) mandate conversion into some other (less desirable) security. As happened in Poland, government could confiscate a portion of all IRA, 401(k) and pension assets. As in Cyprus, there could be a forced “bail in” whereby government overnight confiscates a percentage of all bank accounts. Cash transactions can be banned. To counter this, avoid government debt directly and indirectly in money market accounts. Keep funds outside the US and denominated in other currencies to the extent possible.

Five Low Risk Actions to Consider Now

       To get started, following are five actions to take now. These are the most obvious, embody relatively low risk, work under the most crisis scenarios and deliver the most bang for the buck. Nor will they be unduly penal in the unlikely event you are wrong.

  1. Open a foreign bank account denominated in foreign currency. Switch most of your cash into uber-strong US banks – of which there are only a precious few.
  2. Hold 5% to 10% of your assets in precious metals. Keep small denomination gold and silver coins at home for use during a crisis.
  3. Invest a portion of your assets in TIPS.
  4. Own bond funds focusing on highly rated bonds in places with low debt ratios.
  5. Retain some portion in a quality stock portfolio, invested mainly in dividend paying stocks of companies producing essential products.

How to Profit from the Spending Crisis

You can profit by leveraging safe assets, shorting government bonds and through options, derivatives or hedge funds geared to benefit from the crisis. However, merely protecting and preserving your assets will result in considerable profit. If you preserve your assets intact while everyone around you loses most of theirs, you are a big winner.

The bottom of the spending crisis will represent the best buying opportunity of a lifetime. Many fortunes will be made acquiring valuable assets at or near the bottom. This is harder than it appears. Everything seems darkest at the bottom and precious few investors will be able to summon the courage to act at that time. Will you?

Next we present ultra short topics including socialism and the Supreme Court.

Protection For Your Assets and Your Family

Protect your assets and your family against the inevitable spending crisis.
Protection For Your Assets and Your Family
By: George Noga – October 14, 2018

         The United States is on track to surpass the critical 90% public Debt to GDP ratio within the next few years; however, the crisis may not begin until years later when the ratio is much higher. The timing is highly uncertain and depends on economic cycles, interest rates and events, many of which are unknown and/or unknowable.

      The crisis will begin abruptly at the Minsky Moment, after which nothing is the same. The Minsky Moment could be an event of seemingly little consequence like a routine Reuters or Bloomberg story that goes viral and, by the end of the day, the government no longer can borrow on acceptable terms and the crisis is upon us.

     Timing is crucial. Repositioning your assets too soon may mean many years of missing out on higher returns. Waiting too long has serious and obvious consequences. The best approach is to reposition assets gradually, beginning now and culminating as the debt ratio is around say 125%. Your actions can be phased such that early changes won’t be unduly penal if the timing proves wrong. There is one timing issue about which we can be fairly confident. After the Minsky Moment, the Fed will create money to keep the government running, but it soon will become apparent that this is a short term fix to buy time. Printing money can work for only about 6-18 months.

       I am confident about the final outcome but the timing is highly uncertain. For example, if the Fed keeps interest rates ultra low, the US may be able to survive a much higher debt ratio and postpone a full blown crisis for many more years.

The Spending Crisis Goes Thermonuclear

      After the Fed money printing is no longer effective and it becomes obvious no magic solutions exist, the crisis will be in full bloom. Treasury securities owned by banks, insurance companies, mutual funds and pensions will plummet in value like Venezuelan bonds, triggering a financial meltdown of epic proportion. Simultaneously, government must slash spending, including on Social Security, Medicare and pensions.

       There is but one certainty, i.e. all the excess debt must be purged. The only ways to accomplish this are through some combination of: (1) tax increases and spending cuts; (2) hyperinflation; (3) debt restructure and repudiation; and (4) financial repression. No matter how we purge the debt, it will require a generation (15-25 years) to accomplish and when the US crisis hits, it will plunge the entire planet into a period of darkness. Note: MLLG will publish a post in the next several weeks about financial repression.

Protecting Your Family

         Before the crisis begins, it is prudent to plan for civil unrest, breakdowns of law and order, interruptions in public services and financial/monetary chaos. I have faith in the American people that lawlessness will be limited, but given the volatile situation in our country, anything could happen. During the crisis we also will be highly vulnerable to foreign threats due to defense cutbacks. Even if you consider societal collapse or foreign aggression to be remote, it is judicious to take steps to protect your family.

        Caution dictates you do at least the following: (1) maintain a supply of gold and silver coins in small denominations; (2) have firearms and ammo; (3) stockpile water, available in 55 gallon drums; (4) keep a supply of non-perishable foodstuffs; and (5) have a supply of propane or a generator as well as batteries, flashlights and candles.

Part II Next Sunday

       The second and final part of this posting focuses on protecting your assets from the various perils that could happen during the worst of the spending crisis. And yes, it is possible to profit from the crisis and that will be addressed as well in Part II.

Nordic Nations and Socialism

Liberal politicians and media celebrities conflate Nordic nations and socialism. 
Nordic Nations and Socialism
By: George Noga – October 7, 2018

         The stunning victory of democratic-socialist Alexandra Ocasio-Cortez squarely inserted socialism as an issue for 2018 and 2020. Polls show more Democrats have a favorable view of socialism than of capitalism. Bernie Sanders and Hillary Clinton praised Nordic countries as veritable socialist utopias. Joy Behar on The View cited Nordic countries as proof socialism works. The media, millennials, progressives and many regular Americans believe Nordic nations owe their success to socialism.

          This post addresses that issue head on. Please visit our website www.mllg.us and read our posts of April 24, 2016Is Scandinavian Success Due to Socialism? and October 15, 2017, Socialism, Sweden and Scandinavia for background information. For brevity, this post focuses on Sweden; however, the same narrative, to varying degrees, applies to the other Nordic nations: Denmark, Finland, Iceland and Norway.

The Progressive Nordic Narrative

         Circa 1970, Sweden (and other Nordics) morphed into a big government, social welfare state; Swedes sharply increased taxes and public spending and discouraged private enterprise. Over the next two decades, public spending soared from 30% of GDP to 60%. Sweden instituted a cradle to grave welfare state with uber-generous benefits including heavily subsidized child care, preschool, university, maternity, family and sick leave, unemployment benefits, pensions and health care.

       During this same timeframe (1970-1990), Sweden was rich; in 1970 it was the fourth wealthiest country. Therefore, the liberal perspective is that Sweden was both wealthy and socialist at the same time. This narrative of the Nordics as successful socialist states is beguiling because, taken without context, it has the color of truth.

The Truth About Nordic Nations and Socialism

            During the 19th century, Sweden was so dirt poor it sent waves of immigrants to America. Circa 1870 Sweden turned to classic laissez-faire liberalism and began a century of rapid economic growth culminating in becoming the fourth richest country. During the 100 years it took Sweden to get wealthy, public spending was 10% of GDP and it was a capitalist economy. Also, Sweden was neutral during both world wars, profited from trade with all sides and preserved its industry and male population intact.

             From 1970 to 1990 Sweden was a social welfare state as described supra. By 1990 it all unraveled. There was Kafkaesque bureaucracy, drug addiction, welfare dependency and crime; the educated and affluent fled Sweden. The economy ground to a halt; inflation skyrocketed and no new private sector jobs were created for 20 years. Sweden dropped from 4th to 14th in wealth. By 1990 Swedes viewed their socialistic experiment as a colossal failure and reversed course; they cut taxes, deregulated, privatized, restored free markets, cut pensions, and voted out leftist governments.

Takeaways from Nordic Nations and Socialism

1. No Nordic ever was truly socialist, i.e. with government ownership or control over the means of production, distribution and finance. They were big-government, social welfare states, which liberals conflate with socialism when it suits their purpose. True socialist states are Venezuela, North Korea and Cuba. Sweden was a capitalist success and a socialistic failure; today, all Nordics have capitalist market economies.


2. Nordic people saw their socialistic experiment as an abject failure and rejected it. Moreover, their big-government social welfare model also is vastly underperforming. Nordic GDP growth is about half that of the US and other more laissez-faire states.


3. Sweden was rich prior to its socialistic flirtation; it became much poorer during it. Socialism turned Sweden’s big fortune into a small one, just as Venezuela, once the richest nation in South America, has been rendered a basket case under socialism.


4. No socialist economy ever has generated enough wealth to fund social benefits on a Nordic scale. No socialist economy ever has produced sustained prosperity; they only plunder wealth that already has been created. They create hunger amidst plenty.


5. Nordics are not as wealthy as Americans believe. The GDP of Houston, Texas is bigger than Sweden’s; if Sweden were a state, its per capita GDP would be similar to our poorest state. But Sweden is 30% more expensive than Mississippi, which means, that in terms of purchasing power, Sweden would be the poorest US state by 30%.

Next: Protecting your assets and your family during the coming spending crisis. 

Victory in the War on Poverty!

The War on Poverty is over. America won – poverty, hunger and homelessness lost.
Victory in the War on Poverty!
By: George Noga – September 30, 2018

          We have written for years that poverty per se barely existed in America; now,  it’s time to declare victory in the War on Poverty! The White House Council of Economic Advisers recently issued a report which included the following: “Based on historical standards of material well-being . . . our War on Poverty is largely over and a success.” Predictably, progressives and poverty pimps won’t accept victory; they continue to rant that anti-poverty programs are insufficient and must be expanded.

          Please note we use the term “per se“. There are about 8 million Americans, or 2.5%, living in material poverty. The normal distribution of human IQ dictates 2.5% will have IQ below 70, which is de facto retardation. That means there are 8 million Americans in that category – the same number as in material poverty. It should be incandescently obvious that those two cohorts are one and the same; a Venn diagram would show the two circles nearly 100% overlapping. This is the basis of our statement that there is no poverty per se, because the real problem is retardation, not poverty.

          In addition to poverty, low cognitive ability accounts for hunger, homelessness and a host of other social pathologies. Venn diagrams for these also would mostly overlap with low IQ. As with poverty, hunger per se has been eliminated. Nearly 40% of Americans are obese and food insecurity has replaced hunger in the liberal lexicon. We have reversed the centuries old paradigm; today, the wealthy are thin and the poor fat. Homelessness also is extinct, apart from low IQ and untreated mental illness.

        By far, the biggest flaw with usual measures of poverty is that they are based entirely on reported income. When we look at spending instead of income, the picture changes dramatically. The poorest quintile of Americans spend $2 for each $1 of reported income. Official measures of income fail to take into account benefits such as SNAP, EITC, public housing, Medicaid and many others. They ignore the underground (cash) economy estimated at $3 trillion and concentrated among low income groups. They also fail to account for quality changes and shifts to uber low-cost stores.

       Today, the bottom quintile of Americans live as the middle class did a generation ago – as measured by size of homes, number of rooms per person, air conditioning and  other amenities. The top income quintile spend only about twice as much per person as the bottom quintile, showing low inequality. The poorest 10% of Americans live equal to or better than most Europeans. If Sweden, touted by many as a socialist paradigm, were a US state, its per capita GDP would be similar to Mississippi, our poorest state.

         No discussion of poverty is complete without noting relative poverty, defined as less than 50% of a nation’s median income. By this stilted metric, the US has more people in poverty than many third world countries. A country uniformly and utterly destitute has less relative poverty than America because in places where everyone is dirt poor (Haiti, Congo, Guinea), no one is relatively poor. When you see news stories asserting high poverty rates in America, they invariably are based on relative poverty.

         America has extinguished poverty, hunger and homelessness per se. Nonetheless, there are 8 million still living in material poverty – many of whom also are hungry and homeless. These people deserve our compassion and assistance. We do not help them by being politically correct and ignoring the true cause of their predicament. Instead, we need to tailor solutions to deal with low ability and untreated mental illness.

         We also should recognize our victory over poverty. This truly is a great American accomplishment and worthy of being honored and celebrated throughout the land.

Next: The definitive account of socialism in the Nordic countries.