Cash Is Not Wealth

 

I haven’t posted anything here for a long time. Life gets busy, and there seems to be many other ways to make a positive difference in people’s lives…..and that is what I really like to do.

I am concerned about a trend I see in Canada. Maybe it is elsewhere, but I have not been traveling during the Plague, so I cannot offer firsthand testimony. What I see here is the widening difference between being Have-Nots and what that very astute MP Pierre Poilievre refers to as Have-Yachts. 25 years ago it seemed to me that there was a veritable slave class developing, and that maybe the best way out of it for most people was education. I have long encouraged people, both young and old, to get more education. Aside from the process being good for maintenance and development of mental faculties, knowledge is power.

I see Canada’s GDP per person rapidly declining. We are now #18 according to a list I recently saw (https://statisticstimes.com/economy/countries-by-projected-gdp-capita.php). $42k GDP per person. And when you consider that GDP is about production, and not usability of the production, that makes matters worse. For example, if production is wasted or destroyed, it is still part of GDP. GDP can be very high in a war economy even though huge amounts of resources are being blown up and do not increase wealth at all.

Our per capita income is reported as higher than the 42k. No wonder, with all the cash being freely given to people, ostensibly as “stimulus.” It’s sad that our financial policy makers are so economically illiterate that they think cash injected into an economy whose debt is several multiples of GDP will actually stimulate the production of goods and services. So far as I know, there is no empirical evidence to support such nonsense. Instead, what we have is an increasing amount of cash chasing a decreasing amount of goods and services. The economy is choking, and our governments are stuffing more cash down its throat.

I am not against distributing cash, but it must be accompanied by measures to increase the production of goods and services if our standard of living is to be maintained.  We do not eat cash, cover ourselves with it, nor drive it. If 100 people show up at an auction with $10,000 each, prices to which the items are bid will be a lot lower than if someone suddenly gives each attendee another $5,000. Our economy is like the auction. We are driving prices up at quite the rate. Far beyond the annual 2% rate that the Bank of Canada claims as a target. We left 2% over the rear horizon quite a while back. Yet the Bank of Canada keeps on with the story that sounds like it was written by a Liberal speech writer.  It looks to me like we have entered into an inflationary depression. Admittedly, there are deflationary pressures such as low consumer demand and the possibility of a credit collapse, but I think the Bank of Canada, with its fake excuses, will keep pumping cash into the federal buckets.

In the short-term, the deficit between growth of money and decline of production has been closed by imports, but that is not a sustainable solution. The value of our money is only what our creditors assign to it, and the more money have versus our own production, the lower the value of the money because essentially a nation’s money is a claim on its production. Ultimately, the lower our production, the lower our standard of living.

Come to think of it, in some ways the standard of living has been dropping since I was a boy. We used to have physicians making house calls and milk delivered to the door (from a horse drawn wagon even!). We used to sit in the car while the gas was pumped for us and the windshield washed and the oil checked. We used to be able to phone businesses and not reach a computer giving us a string of layered messages, adverts and monotonous music. We used to be able to drop in at a CRA (at various times CCRA and Revenue Canada) office and talk to a real person face to face. We had wood furniture. We had stay at home moms because families could live on one income. We didn’t have our public parks (such as Beacon Hill here in Victoria) turned into squatter camps. We had grade schools with classes of under 20 students.

No, this country is in a slide, mostly under the stupefied watch of its “natural ruling party” --- the Liberal Party, which long ago divorced itself from liberal values so far as I can tell.

Squeezing the Silver Shorts

 I have been noting lately some of the discussion around the short squeezes related to GameStop and certain other stocks. Basically, GameStop short positions exceed the total float of GameStop shares, and a crowd on Reddit decided to bid the share price up so that the shorts would suffer a huge losses. And they succeeded. So then they got the idea to ply their tactics on stocks of other companies such as Bed Bath & Beyond and AMC, with some success with those stocks also.

Flush with the exuberance of inexperienced success, they seem to have lately decided to squeeze the silver shorts. In doing so, they have shown they do not understand the market. It’s one thing to take on the GameStop shorts. Quite another to go up against the silver shorts. Now they are trying to enter the big league. I have very little doubt that the silver price will be energetically headed north, but that process needs no help from the Reddit crowd. Silver tends to be produced largely from mines that are primarily base metal mines, driven by industrial demand. Yes, there are mines that primarily function on account of the silver in them, but a large part of supply is a by-product of mining other minerals. The economic slowdown has reduced such mining activity. In some cases, mines have closed directly as a result of covid. There is a shortage of silver production, just like there is of uranium. Further, the demand for silver as a critical component in several key industrial processes, besides jewellery and investment, is likely to outstrip supply for some years to come so far as I can tell. So yeah, silver doesn’t need Reddit.

The Reddit warriors can’t squeeze the silver shorts anyway. GameStop has a float of less than 50 million shares. If you are short and the price starts getting away, you have to buy stock. You could buy call options to accomplish the same thing, but the short positions were cumulatively so big that buying calls would have driven the options to unreasonable prices. Silver is different. If you are short silver, you can buy futures, options on futures, silver ETFs, and shares in silver mining companies to hedge against losses. You won’t have to get squeezed. Further, I think the main silver shorts have the ability to affect trading rules. These people are powerful. The Hunt brothers, multi-billionaires when a billion was something, found out 40 years ago just how powerful the silver short interests are. If the Hunts could be squished, so can the Reddit mass.

Nothing succeeds like success, but nothing goes to the head like success either.

Is Humanity Being Positioned to Become a sort of Borg Collective?

A friend sent me a link (https://www.bitchute.com/video/OfUvXQAxGnsy/) to a recorded interview with Catherine Austin Fitts, a gal with an impressive resume (look up her details) as an in-the-know economics authority. In the interview, she engagingly makes the argument that the covid vaccinations are a tool for hooking us up to a sort of Borg collective. Her connections would tend to give her fantastic theory credence, but I have problems with it.

As I listened, it was not always clear to me what she meant. For example, she talked about the social security coffers being emptied and the blame being apportioned to the virus, but I don't see any sign of that. She also said, or at least implied, things that I don't think are true. For example, the deliberate destruction of small business to transfer their market share to mega-retailers such as Amazon and Walmart, and she even lumped into her small business category professional practices (CPAs and lawyers), implying they are having their income crippled so they won't support populist political candidates. If the aim of government is to put small business under, why all the grants and subsidies that have kept so many of them in business?

There is no doubt that the virus is real, not just an imaginary invisible affliction. If it wasn't real, someone in health care would have blown the whistle by now.

I agree that the lockdown isn't the way to deal with the problem. Lockdowns work in theory, but they do not seem to have worked in practice. The masks, social distancing and frequent hand washing seem to be what is needed more. They are efficacious and do not demolish the economy. Make no mistake: the economy is being shredded. Yes, we still have abundance, but that isn’t from our production so much as it is from China sending stuff to us.

I agree with the interviewee that there is an effort to get rid of cash, and probably as a tool to control the masses. Maybe someone will be able to use the pandemic as a context in which to do that, but I have yet to see signs of it.

I don't doubt that there are rich people who collaborate with the aim of changing the world. I expect that if I was super rich, I would want to use my wealth to change the world also. I think that what may be happening is that they talk to each other and get so exclusionary that their ideas are inbred. They get out of touch with reality, and their ideas do not have the power we might otherwise expect. The interviewee claims that the elite want to greatly reduce human population, replacing us with robots to serve them. The problem with that is that most disruptive and transformative ideas arise from the intellect of the common man, not from the elite. Get rid of most of humanity, and you have gotten rid of most creativity. I suspect the elite know that, but maybe they are more inbred in their thinking than I think they are, and actually do have the nefarious plan of which they are accused.

I did find it interesting that riots occur in areas where some rich guys might want to buy commercial real estate cheaply. I can believe that happening. So yeah, there are some assertions of Catherine Austin Fitts that do ring true, but I’m not buying her ideas as a package deal.