Monthly Archives: February 2015

Economic Fallacies

You thought you could bet against the fed, the US consumer, the best and the brightest, the meritocracy and high-IQ and not be turned into roadkill?
You thought the incantations of doom and gloom from Zerohedge and Karl Denninger would supersede economic reality, HBD, and American exceptionalism? Oh how mistaken you were. For as far back as 2011, we’ve been telling readers to ignore the doom and gloom because all of these arguments for the why the economy is supposedly doomed are based on wishful thinking – a leftist desire to see the economy fail – not logic . How much higher will the market go? I know setting short-term targets tends to be a sucker’s game, but I’m looking at at least another 10% gain for the S&P 500 for 2015 and possibly another 50-75% by the end of the decade.

The most common errors of judgement by the left when predicting doom & gloom:

1. Fallacy of composition

The fallacy of composition is to make an inference about a large system based on a smaller component. This is best understood in regard to national versus household debt. The US government, unlike a household, is perpetual, so it can keep rolling its debt indefinitely, unlike an individual whose debt is discharged upon death. Another example is making an inference about a large system (the US economy) from a single data point (unemployment). In invoking the fallacy, if unemployment is high the entire economy must therefore be weak, for example.

2. Data taken out of context

Did you hear about the falling Baltic Dry Index? The economy is doomed, cuz, um, ..it is! The Baltic Dry Index is useless in terms of forecasting and ascertaining the health of the global economy, and the actual empirical evidence suggests the economy is not stuck.

A two-tenths of a percent decline in durable goods, for example, is taken out of context by the attention-seeking media as being a sign of economic collapse when, in fact, such fluctuations are very common during economic expansions.

3. “This time is not different”

The left assumes historical patterns must always repeat (“It’s never different!”), but what if it really is different this time? Historically, every bull and bear market is different than the one that preceded it, in terms of the cause, duration, the chart patterns, leadership, etc.

4. Conflating sociology with macroeconomics

Typical liberal logic: “Stocks should go lower because wealth inequality is too high” “People are losing their jobs, so who is going to buy stuff?”

We’re becoming a nation of whiners and crybabies, channeling our personal frustrations and irrational anxieties unto our assessment of the economy. Markets are driven by data, such as profits & earnings, not egalitarianism. If the data is strong, markets will rally in spite of rising wealth inequality. Same for unemployment – a proliferation of low paying jobs and a low labor force participation rate doesn’t change the fact consumer spending is growing from sources such as the rich and foreign consumption. Consumer spending keeps rising in spite of rising wealth inequality. Business to business is booming. For the 6th year in a row, over two-thirds of companies on the S&P 500 have beaten earnings estimates.

5. A pundit said so

Liberals (to understand why Peter Schiff, Taleb and other fed bashers are liberal read this) like Peter Schiff, Karl, and Nicolas Nassim Taleb are broken clocks who should be ignored, or at least ridiculed for their ineptitude. For years, these libs have been beating the drums that the financial system is on the edge of collapse due to leverage, risks, blah, blah – to no avail. In attacking the fed and low taxes, the gloomers fail to realize is that pro-growth spending (tax cuts, defense) and aggressive monetary policy policy (QE, rate cuts) in a risk-averse, low-rate environment, such as the one we are in today, only has upside and no downside. The Bush tax cuts, for example, din’t cost anyone anything but helped the economy (how much is disputable). Same for the bank bailouts, which pretty much ended the crisis in one fell swoop and indirectly paid for itself in the perdurable economic and asset boom that followed. If the market were concerned about those things, such fears would be reflected in the bond market; however, rates are very low – long after the fed ended QE. Pundits like Schiff predicted that the end of the fed’s bond buying program would cause inflation, but the bond market actually surged in 2014. The reserve currency means the USA can spend its way out of recessions, with impunity.

Buy and hold beats waiting for the Black Swan that will never happen. Had you bought the S&P 500 at the very peak in 2007 you would would be up 30% today, versus someone who went to cash. If you sold stocks in 2011 and went to gold, at Peter Schiff’s recommendation, you would have not only missed a huge 70% rally in stocks, but you would be down 30% in gold. Terrible.

Nazism = Marxism?

Hitler and the socialist dream

Of course, there are many similarities between Stalinism (along with Maoism and other Marxist/Leninist variants) and Nazism: unwavering fealty by the citizenry to the apparatus of power, extensive central planning, ‘ends justifying the means’ taken to an extreme, and grave punishment exacted on those either deemed unworthy or disloyal to the state/cause. Hitler’s Germany had some degree of a mixed economy and its citizens had more personal autonomy than individuals under Marxism. Stalinsm was less nationalistic than Nazism because Stalin did not rule Russia. He ruled the Soviet Union – a country made up of 15 republics that all had different languages, histories and cultures. The main difference is that Nazism is predicated on racial ‘struggle’, whereas Communism is about class ‘struggle’. Besides the evocation of class struggle, another theme of Communism is the perfectibility of man through the force of the state – whether it be through a work camp, a reeducation camp, or state conservatorship. This is like original sin (a Religious Right concept) taken to an extreme, which is why the use of banal left/right labels on these extreme ideologies is unhelpful. To Communists, humans are born imperfect and only through the state can they be saved. Fascists, on the other hand, tend to believe some individuals by virtue of race are irredeemable by default and others are born superior. So there are major differences; it’s not like Hitler just slapped a Swastika on Das Kapital. The whipping boy of eugenics is predictably trotted out as reason for the Nazis being progressives, but the progressives of today want nothing to do with eugenics – they disavow it vehemently, to the extent of defaming public intellectuals that even intimate that some groups are smarter than others, let alone discuss eugenics. Again, this is why looking at Nazism and Stalinism though modern left/right labels is counterproductive, because liberalism as recently as 50 years ago bears less resemblance to liberalism today. Remember when the South voted solid Democratic? And Blacks were Republicans? It would seem like the sexual revolution is all about shielding the left from the consequences of their actions, foisting blame upon the patriarchy. The left wants readily available birth control because of a lack of self-control, but are outraged at the idea abortion can be used to reduce crime, as Steven Levitt and others propose.

The Daily View: Post Scarcity, Divine Rights, Doom and Gloom, The Two Tenets of Leftism

From Lion’s Blog: Scarce goods in a post-scarcity economy

The belief that ‘post scarcity’ will make all goods cheap and abundant is fanciful thinking. While it’s true that the price of some goods relative to income (electricity, food, appliances, computers, television) have fallen, other goods and services have not such as cable TV, internet access, healthcare, education, and insurance. One explanation for this apparent price stickiness is because the market is accustomed to charging a certain amount, and that is how much people are willing to pay. If with robots it costs a company $2 hour to nanny children versus $4 hour with humans, maybe prices for robot nannies will fall a little but not 50%. Despite technological advances and automation, healthcare has become more expensive, for example. Same for tuition. Even in the case of computers becoming cheaper, the ancillary services requires to make the computer useful (internet and software) have become relatively more expensive. The same for cellphones, which some companies will give away in exchange for a pricey long-term plan. In the case of services, automation doesn’t seem bring down prices. The quality of the services improves (faster connection speeds, more choices) but the prices relative to income doesn’t fall much, if at all. Ultimately, if incomes cannot be allowed to fall, the money consumers would otherwise spend if not for automation will have to be extracted somewhere. That source appears to be services.

Like Vox, I identify as Conservative (but I guess with a more libertarian bent), but I don’t necessarily fall into the ‘Christian Conservative’ camp. But this idea of ‘natural/divine rights’ is so bogus it hardly merits a response. Man legitimizes/enforces these so-called ‘divine rights’. And that’s all there really is to say on the issue, it so common sense and reductive. Belief in ‘divine rights’ didn’t save the millions who perished in the Gulag, for example. Maybe natural rights are an ‘ideal’ to strive for, but it doesn’t apply in reality.

The global financial system stands on the brink of second credit crisis

The doom and gloomers have been predicting crisis since 2009, but to no avail. You can only cry wolf so many times until credibility is lost, but that doesn’t keep them from trying, as these gloomers are very determined and persistent.

Monetary stimulus is at record highs, but inflationary indicators are at record lows. There is no evidence of overheating, despite steady economic growth in the US. Individuals are hesitant to borrow:

However, the total amount of loans on banks’ balance sheets has been stagnant. Today, it is up about 2% from a year earlier, well below the 10%-per-annum pace of the 2002-2007 period and also below the recent peak around 5% from early 2012.

The reasons for this are largely that potential borrowers are not interested in borrowing money. Businesses don’t see low-risk expansion prospects. Households have too much debt already. Almost all mortgage lending these days is done via the government agencies. The Federal government also oversees student loans, a major nexus of loan growth in recent years. Auto lending is largely handled by captive auto finance companies.

The Keynesian pump priming that has taken place on a colossal scale across the world is failing. The Chinese economy was growing at 12pc in 2010, but that slowed to 7.7pc in 2013 and 7.4pc last year — its weakest in 24 years. Economists expect Chinese growth to slow to 7pc this year. It is the once booming property sector that has turned into a bust, and is now dragging down the wider economy as the bubble deflates.

In agreement with republican economists’ 2008-2009 predictions of the failure of neo Keynesianism, I don’t dispute that neo Keynesianism (such as the Obama stimulus) was a dud that failed to live up to its expectations, but thanks to fed policy and the consumer, the US economy is still growing strong in spite of the failure of Keynesianism. GDP growth is back to the 1995-2007 range of around 2-4%. Not great, but nowhere near recession. Some could call it a Goldilocks economy of modest growth and very tame inflation.

China’s growth is slowing, but again, for over a decade, China has defied all predictions of its economic collapse. Political and economic conditions in China are as stable as ever, despite slowing growth. Whatever crisis slowing growth was supposed to auger hasn’t even even come close to happening, and there is no evidence of any problems on the horizon.

It is not only asset classes that that are wavering, the key indicators of international economic activity are also flashing red. The Baltic Dry Index which is seen as a leading indicator for world economic growth tumbled to a 29-year low at 559 points last week.

The Baltic Dry Index, a favorite of the gloomers, is easily debunked. The index fell between 1995-2002, a period of strong economic growth. The index was unchanged between 1985-2000, despite the size of global economy nearly doubling.

The falling bitcoin index is also completely irrelevant to the health global economy.

Good video by Davis M.J. Aurini: Politics Left Vs Right: There’s more going on than you realize

The left seeks crisis, such as financial crisis and class warfare, as a way to upend the existing power structure to be replaced with a more egalitarian one where everyone is closer to be being equal, even if it makes everyone worse off. It’s the conservatives, not the liberals, who want progress. It’s left, in their attacks on technology and free markets, who want the economy and society to regress. The left sees successful, disruptive technology or start-ups like Facebook, Uber, and Tesla and rather than celebrate these free market success stories, the left defaults to concerns about wealth inequality, alleged environmental degradation, imagined crony capitalism, or the disruptions of obsolete technologies as reasons for opposing these auspicious, life-improving technologies. In believing Marxian conspiracy theories, the left is paranoid/fearful of the rich, fearful of free markets, fearful of human biodiversity, fearful of the the fed and Wall St., fearful of technology and financial instruments, and fearful of the technocracy and meritocracy. Rather than going boldly forward, the left lets these fears hold themselves and the rest of society back. And furthermore, by seeking and precipitating crisis, can left can allay these imaged forces of oppression.

The second tenet of the leftism is the denial of individual congenital cognitive exceptionlism, a denial by the left that some individuals have an innate talent or innate skill at a cognitive endeavor (math, writing, trading stocks) due to genes, not because of environmental factors (parenting, schools, endless hours of practice, the state, etc). The left wants to believe they can perfect man and society with social programs and wealth redistribution, so the concept of individual excpetionalism upon conception is an affront to this. Rousseauism, the antecedent of welfare liberalism, will be discussed in a future post.

Blacks Being Underrepresented

From Scott’s blog Black People Less Likely

One must tread carefully when discussing matters pertaining to race. Emotions often run strong, and people tend to take arguments personally even if the subject matter has nothing to do with their personal lives.

Inevitably the question that arises is why blacks are underrepresented in science fields, and the the boilerplate explanation is environmental – poor parenting, poverty, oppression, etc. – never biological.

But even when taking into account pre-civil rights oppression, how do we account for the persistent post-1964 lag in academic performance among African Americans? Or the persistence of a 1-.5 standard deviation under-performance in IQ scores versus Asians and whites, or that blacks fail to meet the minimum IQ requirements to join the armed forces at a rate higher than whites? Or the Lynn maps showing significantly lower IQ scores in African countries. It’s not unreasonable to postulate that biology shapes culture, that people who are biologically predisposed to excelling in STEM would be more partial to pursuing STEM endeavors than those without such biological endowments?

But, okay, we can dismiss all of this as being attributable to environmental factors, but here is where the left becomes intellectually dishonest in their discourse, and this more inadmissible than merely being wrong.

No one seems to raise a fuss about short, puny whites being underrepresented in the NFL and NBA. Likewise, no one raises a fuss about obese and asthmatic people being underrepresented at endurance competitions such as the New York Marathon. The scientists who study these matters attribute it to whites being too short, having thinner bones, having short tendons, .. etc. – all reasonable explanations – and few on the left seem to raise any objections over this. Being obese means having to carry extra weight, sapping the energy required to be competitive in a a marathon. Pretty obvious. Samoans, who are biologically predisposed to being overweight, would fare much more poorly at marathons than the svelte Kenyans. Again, no objections over this by the left. But to try to pose biological explanations for blacks being underrepresented at cognitive endeavors, and suddenly you have all these white guys channeling their inner Farrakhan, leaving logic at the door. And then the discussion ends, because not being offended trumps any pursuit of knowledge or truth.

But this denialism is not surprising, because intellect is sine qua non to socioeconomic advancement and self-worth in a post-2008 society that increasingly rewards smartness and cleverness. Being less intelligent is equated with being less human and less evolved, and this is a notion that many could understandably find unsettling. But liberals also take umbrage that if intellect is biological, and intellect plays an outsize role in socioeconomic advancement, then therefore the ability of the state to create egalitarian outcomes is hamstrung.

Is Going to Work Really So Bad? Jobbers vs. Self-Actualizers

From an article and discussion from Return of Kings about work being dehumanizing:

The capitalist system pushes us to work as hard as possible to increase our wealth and therefore our social status. In a world with less emphasis on tribes, community, and extended family, wealth has become the primary indicator of social status. Communists/socialists and libertarians/capitalists are equally obsessed with wealth, money, and their distribution, speaking of them as if they were the beginning and end of all human value, providing us not with just essentials for living but also the substance of social status and the arbiter of self-worth.

Interestingly , this sentiment is shared by both liberals and conservatives – work sucks, it’s boring, it’s exploitative, and so on. But let’s take a step back and remove heated emotions from the argument and consider the facts, there are two types of people: jobbers (those who go to work for a steady paycheck to pay the bills) and self-actualizers (those who work to create indirect value, often in the hope of a large payoff either monetarily or in social status).

The self-actualizers are typically individuals with an above-average IQ and who are ambitious enough to pave their own way. This includes coders out of high school or college who are making six-figures either on the side or in a snazzy start-up, with the potential to earn millions or even billions if the company becomes a huge success and goes public or is acquired. Unlike Jobbers, they have a lot of autonomy and control over their career, and a huge theoretical potential payoff. Self-actualizers include the high-IQ people who make tons of money trading options, despite the left’s insistence that the market is rigged or a bubble. By exploiting small market inefficiencies and patterns, these traders can make tens of thousands of dollars a week or month with relatively little effort, and do it over and over. A third group of self-actualizers are academic nerds such as writers, historians, physicists, mathematicians and economists, as well as those involved in the financial sector, such as hedge funds managers and investment bankers. The big payoff for academics is global recognition and adulation for making discoveries, versus the jobber who works not for recognition but subsistence. Unless the jobber becomes promoted to a c-level position, he will work in obscurity and then retire a nobody.

That sounds great for the self-actualizers, and it is, which is why I recommend parents teach their kids the skills and values of self-actualization.

But because of intellectual limitations imposed by the Bell Curve, not everyone can become a self-actualizer. And not everyone who is smart enough to become a self-actualizer chooses to become one.

So it must be hellish to be a jobber, and the monotony and not being appreciated for your talents is frustrating, but all is not lost. The first myth is that jobbers are being exploited because they are working for less than their ‘true’ value, a Marxist exploitation theme that is popular among some libertarian types such as James Altucher. There are many reasons why this premise is flawed:

1. Only unlocking some of your theoretical ‘true’ potential is better than earning nothing and being homeless. A company may only mentally stimulate you 10%, but if you go your own route you may find yourself fully stimulated but not earning any money. A company has an infrastructure (clients, customers, office space, software, supply chain) that an entrepreneur would have to acquire on his own. An employee ‘leases’ this infrastructure by ‘paying’ his 90% wasted potential in exchange for a steady paycheck at no monetary cost to the employee. 50-95% of small business fail with five year and unless you’re in the coding/web 2.0 space, costs tend to be high – further making matters worse.

2. Getting a raise means more work for disproportionately less pay, therefore you are being exploited. But this liberal argument fails to take into account the preferences of the worker. A worker may ‘lose’ two happiness ‘points’ by having to work harder, but the extra cash from a raise gives him four ‘points’ of happiness, a net gain of two.

3. When a company goes bust, it’s labor that gets paid first before shareholders and bondholders. Yes, this is a major advantage labor has over capital, and the left overlooks this fact. You would think that with labor being exploited so much, companies would become more profitable by hiring more employees? I guess not, considering all the companies that go bankrupt and have to layoff all their employees. Maybe they aren’t doing a good enough job exploiting them.

4. Litigation galore. Another advantage employees have is they can sue for the smallest of perceived infractions – and employers, rather than fight it off in a costly and prolonged legal battle, with the potential for a PR disaster, choose to settle. Then there is the endless regulation – from Obamacare, to disability, OSHA, insurance, compensation, etc. Not only does an employer have to worry about the competition, he has to worry about not being put out of business an overzealous judge.

5. Labor has no accountability for the future of the firm; all labor has to do is show up, put their butt in a chair, and get paid. Unlike investors, labor is guaranteed 100% of the income for every hour that their butt is in that chair.

The left, in playing the maternal role, thinks they know what’s best for people, trying to ‘save’ workers from being exploited by the big greedy corporations. Again, these are liberal fears are grounded in emotive class warfare, not logic.

Don’t Bet Against America (America as an HBD success story)

We’re still in the eye of the storm of the slowest news cycle ever, in agreement of earlier predictions that 2015, like 2014, will go down as yet another uneventful but prosperous year for America, web 2.0, Silicon Valley and the overall economy. There are the usual things going on – Greece, ISIS, Ukraine.. stuff like that – but it’s pretty predictable and slow moving. It’s not the kind of news that has you on the edge of your seat or glued to the TV. Still got a decent sized backlog of posts

Agree: Don’t Get Too Bearish On America

As stated in the inro WHY GREY ENLIGHTENMENT?, I care more about bearing witness to reality than being enconsed in an ideologically motivated make-believe world. Second, I strive for self-consistency. For example, the Republican party is supposed to be the party of free markets, but some on the right join the left in griping about America’s super-rich, creating conspiracy thoeries about how the wealthy are buying up American and enslaving us. But these fears are not logically consistent with being a republican, because a free market should not be limited by size; to impose some arbitrary size restriction based on an irrational fear contradicts the very idea of a free market. And what evidence is there that anyone is enslaved? At a personal level, we all have choices (to watch TV (to watch a specific channel), to read a book (to read a specific book), to surf the web (to surf a specific website)), and capitalism through the free market – if anything – gives us more choices, not fewer. Another complaint is that the rich want to outsource jobs, but what is overlooked is that the wealthy also create millions of jobs in America, both directly and indirectly. This may seem oversimplified and reductionist, but you can thwart the most elaborate conspiracy theories with just some elementary facts and common sense.

As part of the libertarian-right, I’m among a minority who, in going against the prevailing doom and gloomism, is not bearish on America.I like to think of America as being, to some extent, an HBD success story, where the meritocracy allows the best and the brightest to thrive. Assortive mating among the high-IQ subset is having a positive eugenic effect, and in few contries is this more pronounced than in America. America has an academic environment (7 of the top 10 most prestigious research universities in the world, with generous financial aid and the National Merit Scholarship) conducive to intellectual flourishing; an economic environment ideal for the establishment of rapidly growing and innovative companies like Facebook, Uber, Snapchat and Tesla; and an ethos of individualism that engenders the creation of great personal wealth through hard work and IQ. Whether it’s stocks and bay area real estate prices surging, a new physics discovery or theory that captivates the public, or a start-up being valued at billions of dollars, America is a place that rewards and acknowledges individual exceptionalism and talent, despite the leftist forces of collectivism and egalitarianism. Look at the web 2.0 scene, for example, where anyone with a good idea and some coding can become a millionaire overnight; where a programmer can make a solid six figure income and retire early, and some can even become billionaires – all because of merit and raw talent. And that’s one reason, aside from strong consumer spending, the fed, exports and geopolitical stability, why I would never bet against America.

The welfare left insists we’re doomed because wealth inequality is too high, their shrill cries for crisis unanswered as stocks keep going up. Some on the left say America isn’t growing fast enough or that its best days are behind it. It’s all about perspectives, not absolute numbers. A 4% growth rate is unrealistic for an economy as large as the US. And then there is all of Europe and Japan, both of which are growing much slower, so compared to the rest of the world we’re doing pretty well. The economy is not growing slowly though. GDP growth is back to the 1995-2007 range of around 2-4% a year.

The reason why so many rich and smart foreigners can’t get enough of America and its institutions of higher learning, its tech companies and its real estate – despite the left insisting America is in decline – is because our free market, strong economy, and geopolitical stability is an ideal environment for the best and the brightest who immigrate here. America rewards individual talent and exceptionalism like so few countries can: through the free market and a business-friendly environment, it showers great wealth upon the smart and hard-working; through the universities and a culture that rewards intellectualism, bestows great recognition and prestige for those who are cognitively superior.

This talk of gentrification and the poor being ‘priced out’ is just more whining by the left and another reason why it pays to be smart. Real estate in high-IQ areas, just like high-IQ jobs, have retained and gained more value than low IQ jobs and real estate in low-IQ regions. Gentrification is fine by me. I would rather have private equity and rich buying homes than have to live among the losers of society, with the crime that goes with it. There is no solution that will please everyone, but for folks who own their own home, they don’t want to see more supply dilute the value of the market, and understandably so.

The Great Zerohedge Disappointment

It just dawned that the people who have been reading Zerohedge in anticipation of the next crisis have been wasting their time for the past six years (over 2000 days). Think about that: Six years of refreshing Zerohedge – sometimes multiple times a day – for that headline that is supposed to precipitate the next 2008 or 1929 – but only to come up empty-handed every time, like Sisyphus rolling the bolder up the hill over and over. With fancy graphs and clickbait headlines, Tyler Dangles the carrot of crisis before readers, but it’s never enough, because graphs and hype alone can’t make a crisis – one must actually have underlying fundamental weakness in the US economy, and the only weakness is in the imaginations of the people who seek crisis, looking for any excuse – however small – for the market to crash. Right now the crisis-seeking left is pinning their hopes on Greece presaging another 2011 or 2008, but we’ve seen this movie before. Greece has been a melodrama since 2010. The first time around, the pundits said Greece would pull the rest of Europe and the world into a crisis, but with the market indexes at record highs, so much for that. Like Russia and Ebola, Greece is just another molehill turned into a mountain by the doom and gloom liberal media. Meanwhile, the fundamentals of the US economy, despite all of the whining about wealth inequality, low paying jobs and debt, are still strong. There are probably a lot of people who read Zerohedge for the informational value, but to many it’s just another form of ‘crisis porn’, except it never delivers said crisis – just lots of graphs, intimations of crisis, and other ‘foreplay’.

Still Not a Bubble (in Bay Area Real Estate)

Tiny Home in Palo Alto Sells for $1.75M

Bay Area real estate it still not a bubble though, as much as the left wishes it were. Prices are surging due to limited supply, huge demand from rich foreigners and newly minted tech millionaires & billionaires, and the fact Silicon Valley is the center of the universe right now.

Charles Murray and others agree that the the economy and society is and will continue to be stratified by IQ, as what some could call Social Darwinism 2.0 or the high-IQ aristocracy.

Still no recession in technology:

What crisis? Wealth inequality still not hurting the economy, despite the left’s pleas that it should or is.

High-IQ, rich people will keep getting richer whether it’s through web 2.0, stocks, or real estate.

Two More Setbacks For The Left (Brian Williams & Global Warming Scandal)

A bad week for the libs: Global warming scandal and Brian Williams’ Iraq fabrications.

The liberal media is losing credibility among the millennials, and the Brian Williams scandal is just another blow to the left as sites like Reddit and 4chan gain popularity. Whether it’s storing distasteful nude selfies on icloud, fabricating global warming data, or making up a fake Iraq war story, the left thought they could get away with their lascivious, impertinent behavior with impunity- until now. Social media, web 2.0, and the unfettered dissemination of information is shaming the heretics and heathens among us. If you have something to hide, there is nowhere to hide. You will be found out, and prevaricating will only make things worse – because once the information is out there, you cannot try to undo the past and maintain any semblance of credibility.`In 2003 Barbra Streisand, a liberal, learned this the hard way in what is known as the Streisand Effect.

Global warming is just another conduit for the left to wage their war on capitalism, the rich, and free markets. They want society to regress to a more primitive state where everyone is closer to being equal, even if makes everyone worse off. It was never about science. It’s all about advancing a far-left, anti-technology ideology.

That ice floe with the polar bear is analogous to a liberal on slowly melting ice floe of credibility.

And finally, a shout-out to Josh Brown, a ‘liberal’ who gets it:

 

The left cares more about wealth spreading than wealth creating.

What Happens to Wealth During Market Crashes

There’s a misconception that tweeting can change the world or engender action. Unless you’re an established brand or well-known person the vast, vast majority of tweets are ignored. Tweeting at someone or tweeting within a conversation seldom elicits a reply. Tweeting is like yelling from your rooftop in a neighborhood where each house is spaced miles apart, to give you an idea of the lack of density of Twitter. There’s a lot of people and a lot of tweeting, but not much interaction between users. A person with 10k followers may only get 5 or so re-tweets/favorites – a very low interaction rate, much worse than Facebook.

With that said, there is a debate on Twitter about what happens to wealth during a crash. Obviously people lose money, but is there a counter-party who receives the lost wealth, akin to a conservation of wealth law? The answer to this wealth conundrum is obvious at first. Wealth that is tied up in unsold shares is called paper wealth, versus ‘hard cash’. So if you have a company with 1 million shares in the hands of investors, insiders, and institutions at a presently quoted price of $25/share, this represents $25 million of wealth. If the stocks falls in half, $12.5 million of wealth is gone. That is how trillions of dollars of wealth was lost between 2007-09.

But what about the conservation law? This is where it gets more complicated. As a stock is rising, in accordance to the chart to scalar theory, you have an ‘inflow’ scalar. When the stock falls there is an ‘outflow’ scalar. As a stock rises from $x to $x+n and falls back to $x, the two are equal: Inflow (to get from x to x+n)= Outflow (to go from x+n to x). The conservation law only holds for the rising/falling portion on the chart, but there may be millions of shares that are not subject to the inflow/outflow mechanism, so wealth is lost in that manner. The chart to scalar theory says that not everyone can redeem their shares during a crash; wealth of the many will be lost by the selling of a few. Profit can be made in a crash by short selling, but the maximum profit is limited by the inflow/outflow equilibrium equation. If there are tens of millions of shares outstanding and the price has risen from $25 to $40, selling maybe only 200,000 of them short (in accordance to the equilibrium equation) may be enough to get the price back to $25, indicating a limited profit potential. But the total losses from the millions of latent shares in the hand of shareholders is very large.