Why Trump Is Winning

As i write this, Donald Trump is well on his way to becoming the Republican Nominee for the 2016 US Presidential election. It is already a historic run, even keeping aside the Trump histrionics. He has risen on a wave of widespread anger towards the establishment, self-funded his campaign for the most part, and his non-political demeanor has endeared him to swathes of middle America that has become nauseated by the stench of unfulfilled promises emanating from the D.C beltway.

I write this today specifically for my friends and colleagues, who have largely been confounded by the Hitler-esque enthusiasm that Trump has generated. He has breached the line of civil discourse so often, it has left the intellectual elite tattered and fumbling for explanations. 'Surely the American public can't be gullible enough to put up with this bile?' they ask with red faced exasperation. Exhausted, they just chalk it up to hatred and ignorance among the general public.

I think this is a mistake. What many don't seem to realize is that despite President Obama's protestations to the contrary, the economy is indeed in decline. The average household, which makes around $50K annually, is struggling due to high rents, rising healthcare premiums, record credit card debt, record student debt, which can't be serviced adequately even with multiple part-time jobs that make up most of the 'good' jobs numbers. Their savings have been decimated by the Fed keeping rates at zero for nearly a decade. They are living paycheck to paycheck, many requiring food stamps to feed the family, and are a layoff away from being kicked to the curb, dignity and all. 

Their anger is economic, not racial.

First, let me lay out exactly why i think the economy is rolling back into a recession some time before the election, and why the mainstream media is missing the boat completely on Trump's popularity. I'll try to keep the data points as recent as possible. 

1. Chicago PMI: Expectation from the talking heads on TV was 52.5. The actual figure came out as 47.6 (below 50 is a contraction). Not only is that a big miss, it fits the contractionary trend of the last few months.

2. Pending Home Sales for Jan: Expectation was .5%. It fell -2.5%. Again, a big miss on expectations.
3. Dallas Fed Manufacturing: Expectation was -30(huge contraction). Came out at -31.8 (worse)

4. Markit Manufacturing PMI: Expectation was 51.2. Came in at 51.3, the lowest rise in output since Oct 2013.
5. ISM Manufacturing: Expectation was 48.5, came in at 49.5 (still a contraction, that has continued the trend from the last few months)

6. Auto Sales for Feb: Expectation was 17.7 million, came out at 17.43 million. Auto sales are in a bubble imo, driven by artificially low interest rates and lax lending standards. Housing Crisis 2.0 if you will. Subprime auto loan defaults are already at a record high.
7. Markit Services PMI: Expectation was 50, came out at 49.7 (contraction). This is important since services form a great deal of our economy.
8. ISM Non-Manufacturing: Expectation was 53.0, came out at 53.4, still lower than January's 53.5.
9. US Factory Orders: Expectation was 2.1, came in at 1.6.
10. Baltic Dry Index: All time low at 290. Shipping worldwide is falling off the cliff. 
11. Sales to Inventory Ratio: The inventory-to-sales ratio rose 1.35 in January from 1.33 in December, the highest ratio since April 2009.

12. Retail Sales for January: Expectation was .2% increase, came in at -.4%. Another huge miss for an extremely important economic indicator for the US consumer economy. 

This litany of bad economic news goes on and on. Export numbers for January fell for the fourth consecutive month. The national debt continues its inexorable march towards 20 trillion dollars. Corporate earnings were down 3.5% in the 4th quarter 2015 compared to 4th quarter 2014. Even the sole positive indicator being bandied about with much fanfare, the jobs numbers, falls apart at closer inspection. The latest jobs figures showed close to 88% of new jobs created to be part-time low wage jobs. All this facade of economic recovery has been kept alive under the aegis of ridiculously low interest rates kept for an unprecedented period of time. Not to mention low gas prices that should have propelled the consumer instead of stalling it to 1% GDP growth in the 4th quarter. 

Black Swans are circling the American economy in anticipation, yet the mainstream media continues to peddle the fiction the Obama administration is feeding it: that the economy is just fine. They just need this lie to stay the course until the end of the election. 

Without this necessary context, it is impossible to fully understand and appreciate the radical success of the Trump campaign. He is sourcing Howard Beale and his 'Im mad as hell, and im not going to take it anymore' moment. Sure, like most well meaning demagogues, in absence of real thought out policy, he goes after the low hanging fruit to direct people's frustration. Immigrants, terrorists, minorities, foreign threats, real or imagined. But he also mixes it with real concerns. Like the national debt. Like terrible trade deals in NAFTA and TPP, or the worldwide currency war. Like the absolute lack of a cohesive foreign policy, especially in the middle east. Even he's constantly surprised by how far he can push the envelope. That should tell you how desperate people are, how ripe the system is for a violent implosion, no matter who lights the fuse on the dynamite of discontent. 

Yet, we comfort ourselves with tired slogans that fit our trained Pavlovian responses. He must be a misogynist, a racist, a xenophobe, a fascist, a tyrant. He's none of those things, yet. He's a manifestation of our inability to listen. People are afraid, living hand to mouth, and you continue to berate them as 'Trump's stupid racist supporters'. If you do not open your eyes to what is happening in the economy, the real economy, not the New York Casinos, you will never see it coming. 

I worry about what a President Trump would do once he figures out that he can't fix the system by plugging it with the 'best people'. That the system is terminal. Would his megalomania be able to handle the failure? I worry about that.

The economy will be in much worse shape six months from now, and Donald Trump will be within a hair's breadth of the most powerful seat in the history of the world. If you want to stop him, listen to the people supporting him. They're not racists. And you're not listening. Your dismissiveness feeds their anger, and makes him stronger. 

Ramgarh Ke Sholay

The citizens of Ramgarh, a quaint village of interesting characters and abundant crop, enjoyed a tranquil existence. The farmers were productive, and managed enough of a surplus to sell to the entire village. Merchants, shoemakers, blacksmiths, weavers and other professionals kept the local Bazaar humming with activity, from the break of dawn till the last vegetable vendor pulled down the shutters and walked home happily to his family. Crime was low, and justice was meted out swiftly by the council of the village elders. All was well. 

But power can smell wealth like a shark smelling blood in the water, and so Gabbar Singh and his gang of marauders arrived on the scene. They shot up the marketplace, destroyed equipment, held the children hostage. A cloud of terror came over the simple village. 

'I want 2 out of every 4 bags of grain you have', thundered Gabbar, as he walked slowly across the deathly silent cobbled street, his cartridge belt dragging ominously behind him. 'I could have taken them all, but i want only half. That is the generosity of Gabbar.'

The villagers didn't feel it was particularly generous, but they had no choice. It was pay or die. So pay they did. Every month, Gabbar would send his vicious goons to collect the bounty. Sometimes they would prey on the women, and kill anyone who dared intervene. The grain surplus was lost, and the marketplace began to collapse. The farmers now had little to sell, and hence could not ask for services in return. The demand for professionals began to take a nosedive and soon the children began to starve due to the severe rationing of food.

The oppression began to take its toll and the grain output fell from 4 bags to 2 bags per family. Gabbar wouldn't relent, and the people became desperate. A group of brave young men, tired of watching their families suffer, organized an attack against Gabbar. Using pitchforks and other farming instruments, they waylaid a couple of Gabbar's men. But the taste of victory was short lived, and Gabbar's retribution was merciless. The village lost half their men that day.

As the gypsy woman danced late into the night around the campfire, Gabbar smoked his chillum and was lost deep in thought. The state of affairs with Ramgarh could not continue. A peasant revolution could only be quelled so many times, before they figure out a way to overthrow his dominion over them. Brute force would not do. He needed a more sophisticated and nuanced approach. 

He sent his foot soldier, Kaalia, to go find Jay and Veeru, Mumbai's noted thieves and scamsters. Gabbar had run into them once on a robbery, and had been impressed by their metropolitan intellect. Kaalia failed in his mission, and returned with somebody named Surma Bhopali, who claimed to be as good as JaynVeeru. Gabbar laughed manically at the idiocy of it all, and then shot them both. He then sent his second-in-command, Sambha to finish the job. Sambha broke out Jay and Veeru from a strange prison run by a Hitler lookalike, and brought them back to Gabbar. 

INTERMISSION

Gabbar, over tea and biscuits, explained to JnV what a pickle he was in. He could not continue in his current model without risking another uprising. But he could not give up the bounty either. He was a notorious and feared robber for god's sake. He had a reputation to protect, especially among children who wouldn't sleep at night. JnV expressed their sympathy with G, but explained that this problem had been solved a long time ago. No need to reinvent the wheel. Jay explained the plan as such:

"As you rightly pointed out Gabbar, the people will not stay oppressed forever. Productivity falls under dictatorship as freedom is restricted. Sooner or later, the lack of freedom and choice breaks them, and they resort to violence and revolution ensues. What you need to do is provide them with the illusion of Choice. They will still pay the bounty, but of their own volition. In the outside world, this scheme is called 'Democracy'."

"Demo-what-see-now?", inquired a curious Gabbar, who had never heard of such delicious deviousness before.

"Democracy", explained Veeru. "It is when people believe that those in power have their best interest in mind. Only because they 'choose' them in events called 'elections'. Once every 5 years, we will hold these elections, and let them 'choose' who will lord over them and get the bounty."

"But what if they choose someone among themselves?"

"Oh, but thats the beauty of it all." picked up Jay. "Nobody in their right mind would want the job. Only the power hungry and lazy like us seek the throne. No farmer, or butcher, or weaver would be attracted enough to the seat of power to quit what they want to do. Power makes them uncomfortable. Anybody who seriously considers it, we can buy off."

Gabbar's eyes shone as he understood it all. The answer to all his problems was Choice.

Next day, Jay and Veeru dragged a chained Gabbar into Ramgarh. There were howls of surprise, followed by exuberant fist waving and sporadic clapping. JnV stood on a pedestal and enamored the stunned audience with tales of bravery and sacrifice. They had heard of the trials of the people of Ramgarh, and with great danger to themselves caught the dreaded dacoit Gabbar and disbanded his gang. The days of indigence for Ramgarh were over. 

The village erupted in jubilation. Girls swooned over the heroes and clouds of color enveloped the previous grayness that had descended on the hapless village. Happy days were here again!

The next day JnV announced a new plan for the village. So the village is never at the mercy of the likes of Gabbar again, it was decided that the village would become a Democracy. Every 5 years the villagers would choose a protector from among themselves who would wield enough power to save them from external threats. Jay and Veeru would run in the first democratic elections of Ramgarh. Again, the village was overjoyed at this news. They would be protected, and all they had to do in return was give the 'representative' 1 out of every 4 bags of grain. Surely, that was reasonable. After all, they could Choose. 

And so elections were held. Both Jay and Veeru campaigned vigorously for the seat of power. Jay promised free grain to the poor mendicants of the village, whereas Veeru sold special privileges to some merchants who had trouble competing in the Bazaar. 

It was a close election, but Veeru won out in the end. As promised, he soon started forcing the competitors of his campaign donors to pay levies. He also made it easier for his friends to start businesses by enacting special laws that favored them. His close friend, a corn farmer, convinced him that corn was the best crop for the village. It also meant greater profits for Veeru. So laws were passed that made corn farming the most profitable by subsidizing the crop. Soon the entire village was just consuming corn and corn products. Disease became rampant, as diets became corn based. The children became obese and the doctors made more money than they knew what to do with. The local bank began speculating with the villager's money, once Veeru backed the speculation with the villager's bounties. It was a great time for anybody who could buy Veeru's favor. Monopolies began to form. Soon, even those who had previously succeeded in the Bazaar themselves, needed Veeru's blessing to stay afloat. Everybody got in line. It was the scam of the century. 

The common man was severely disappointed with Veeru's reign. So he eagerly voted for Jay in the next elections. Most of Jay's votes came from the poor, who had increased in number during Veeru's term and were thrilled by promises of free food. As soon as Jay came to power, he increased the monthly payment from 1 to 2 bags of grain. Yes, this was what Gabbar had been getting in his day, but the people Chose this option. Surely they can't go wrong. What about the poor!

As had happened during Gabbar's reign of terror, the extra bags of grain that were going to feed the poor, created stresses in the Bazaar. The surplus was gone, and soon productive jobs followed. The number of people that qualified as poor and needed free food went up exponentially. The war on poverty had created more poverty. The people were miserable.

Of course, Jay Veeru and Gabbar made out like bandits. Only this was legalized banditry and they couldn't be happier. Since only Gabbar could save the village from Gabbar's wrath, he became a private contractor and got paid handsomely by the administration for 'protecting' the village from himself! Veeru married the daughter of a religious clergyman, and cornered that market. Jay married the widowed daughter of a village intellectual named Thakur, who immediately hailed the elections and democracy as a victory of the people and freedom. He wrote extensively in the local newspaper, his hands now the property of Gabbar incorporated. Soon, his daughter became a political force of her own, and her family became a dynasty.

So life continues today in the village of Ramgarh, as miserable as it had been during the troubled days of Gabbar Singh. Jay and Veeru both had children, who have grown up to ride the streets of the village with impunity. Little children often come under the hoofs of their wild horses, and the princes wave it off with a flourish of their gun. The families of Jay and Veeru are now the law and the justice of the land. Every 5 years the villagers of Ramgarh, their hope broken, walk up to the ballot box to choose between the large families of Jay and Veeru. Surely, they tell themselves, and their children, it is not all bad. Because, at least there is that....at least there is Choice. 

ashes! ashes! we all fall down

I have often been accused of imagining the Federal Reserve to be the boogeyman of the world. I have never refuted this accusation. To me, all the roads to Hell lead back to the Fed. Whether its world hunger through inflation, or world tyranny by sponsoring a militaristic government, the Fed in my view is central to all that is vile. 

I will not indulge here in an exposition of why this is my belief. My beliefs aren't as relevant. But facts are. The future is. 

My cautionary tales often seem exaggerated and hyperbolic. But i would rather err on the side of caution when the fate of so many is at stake. So humor me. 

I believe that a perfect storm of economic calamity is brewing, has been brewing for a while, and is now gathering frightening speed. I base my assertion on the following observations:

1. Bonds

For the last several years, the Federal Reserve has been keeping interest rates at near zero values, by engaging in what is popularly known as Quantitative Easing. QE is fed-speak for money printing. In its latest avatar, QE is now engaged through Fed purchase of bonds worth $85 billion a month. In the absence of this Fed bond buying scheme, market interest rates would be much higher. So the Fed has effectively been keeping bond rates low by becoming the buyer of first resort. 

At last glance, the Fed balance sheet was close to $3.5 trillion. They have painted themselves into such a tight corner, that even 'talk' of tapering back the bond buying shot up the yield on the 10-Yr Treasury note by a 100 whole basis points. If yields continue to rise, bond values will fall enough to disrupt a multitude of funds. The bond market has a massive impact on both domestic and foreign fronts. From 401Ks to mutual funds to the trillions worth of treasuries held by China and Japan, an implosion in bond market would have a devastating impact on world markets. If the world becomes a net seller, the Fed will some day become the buyer of only resort. 

2. Stocks

With the Fed keeping rates at record lows through trillion dollar a year money printing, a big chunk of that liquidity has found its way into the equities market. While the economy is still on Fed life support, the stock market has managed to find all time highs. So deep is the perversion of the capital markets, that the S&P tanks every time there is positive news on the economy. The investors know that with every good news, the chances of a Fed tapering its extraordinary easing increases. So good news is bad news for the stock market. They thrive on data that keeps the Fed inconclusive. The days when economic indicators dont show a lot of strength, or a lot of weakness, are the ones where the indexes make new tops. Even a suggestion of ending the Fed's program sends the stock market reeling. 

There was a time when stocks indices were representative of the health of the economy. Not anymore. The Fed, by fixing the price of money through interest rate manipulation, has completely distorted the old indicators. The money supply has increased manifold, and the waves of liquidity dont know where to crash. The bond bull market seems ready to finally keel over, saving cash is a losing proposition with zero bank rates and rising inflation, and the scars of the real estate market have not yet healed for many. So the Fed is forcing the citizenry as well as investors to speculate in the stock market, which is increasingly disconnected with the state of the real economy. 

3. Real Estate

After the 2008 crash, experts believed that the housing market would not recover for many years to come. And yet, we find ourselves in the midst of another mini-housing bubble, which looks suspiciously like a 'dead cat bounce'. I think a 'pump and dump' is a more apt description. Institutional investors, flush with free money, are a substantial driving force behind this 'recovery'. As opposed to the the historical average of 10%, cash investors form more than 30% of the current buyers. Once again, speculation is rife in housing, and these investors will be the first to flee with their profits when the market begins to turn sour and houses become unaffordable due to rising rates.

After the bond and the stock markets, real estate forms the 3rd leg of the economic stool that is supported by the Fed's zero interest rate policies. For these 3 markets to remain intact, the Fed needs to keep printing money, creating further distortions, and many more bubbles. It is imperative that the Fed stop its madness soon, but its clear that it cannot. All the taper talk is nonsense. The Keynesian medicine has poisoned the blood, and any effort to restore it will now only result in withdrawal symptoms unlike anything seen before. The Fed will continue printing till it all comes crashing down.

4. Unemployment

The labor participation rate has been shrinking, and 70% of the jobs that are being created are non-tradable service sector jobs. Manufacturing jobs have actually been decreasing. The corporations have been able to show steady profits by cutting cost and moving more of their jobs offshore. The high paying jobs are being moved overseas, while the earlier full time jobs are being converted into part-time jobs to avoid Obamacare mandates and other labor expenses. While restaurants, malls and fast food chains seem to be the pre-dominant employers now, since the US economy is driven by consumption rather than production, the overall consumption will continue to fall as the rotation from high paying full time jobs to low wage part time jobs continues. 

5. Student debt

Student debt in the US is now higher than credit card debt. As students graduate into low wage service sector jobs, many are beginning to default on this debt. It is also affecting their behavior towards traditional investments/expenses that pulled the US economy : cars and houses. More and more graduates are moving in with their parents, burdened by excessive debt acquired all too easily from willing government lending programs. 

6. National Debt/Municipal Debt

Alan Greenspan and Ben Bernanke have effectively bankrolled the gambling at Wall St, as well as profligate government spending, for well over a decade. Greenspan's low rates along with Bush's populist housing policies precipitated the housing bubble, while Bernanke and Obama seem hell bent on outdoing their predecessors by creating multiple simultaneous bubbles of their own. The national debt now stands at a staggering $16.7 trillion. The interest payments on this debt could easily balloon from $250 billion to $850 billion a year, if interest rates resume their upward march towards historical averages. In an age of decreasing income revenue, this could put a tight squeeze on government spending. With food stamps, disability payments and other social handouts at an all time high, cuts in government spending will radically increase social tensions. 

Municipal debt is another ticking time bomb, waiting for the economic fundamentals to reveal the fraud perpetuated by the Federal Reserve. As rates rise, it will become harder and harder for cities to service their debt, increasing the likelihood of Detroit-like bankruptcies all over the country. Unmanaged bankruptcies have a deleterious impact on workers expecting a pension, basic government services etc.

7. Too big to fail

As capitalism was betrayed during the TARP bank bailouts, a dangerous precedent was set. Moral hazard was ignored. Risk was socialized, profits privatized. Those banks, now even more dependent on  making profits via low interest spreads, are bigger than ever. As rates rise, bonds stocks and real estate markets get knocked down one at a time, these banks will find themselves back at the government trough. 

8. Emerging markets

From China to India to Brazil, emerging markets have struggled to get their economies going. Facing currency wars arising at the Fed, most of the developing world has been forced to print money and create domestic inflation to maintain parity with the dollar and continue their export driven economies. None of these policies have worked to their benefit. China has a serious real estate bubble and shadow banking issues.  India is getting mired deeper into its socialist spending habits by guaranteeing food and employment to the poor, while ignoring the capital creation needed for such endeavors. Unlike the 2008 crisis, in the next financial collapse, there is nobody left to take up the slack. 

In the coming global reset, we are all looking at painful resolutions. This time, we all fall down. When will this reset happen? A few months from now? A few years? Who knows. But it does seem inevitable doesn't it. 

And yes, i blame the Fed. I blame the elite. I blame a system of ownership, that has decided to consume itself by not checking it's short term greed for long term ruin. A modern-day Ouroboros, oblivious of it's nature to eat itself. Human history is saturated with examples of strife during economic cataclysms, governments out of control, out of sense. We think it can't happen to us. 

It can. And it will. 

Crossing the Rubicon

When Julius Caesar marched on Rome with his legions, the Senate collectively exclaimed in shock. How could this happen? No Roman general had marched on Rome before. It was unprecedented. A direct attack on the Republic and the Constitution. It was blasphemy, treason. 

Of course, history reminds us that this was not really true. Caesar was not the first appointed dictator to turn on the Republic. Only a few decades ago, Sulla had marched on Rome as well and won handily. The purge that followed saw close to 10,000 anti-Sulla Romans massacred. The curious thing, not often seen in history, is that Sulla gave up his absolute powers and retired. Caesar, the embodiment of the hunger for power, would not make that mistake. The precedent had been set, and he would not waste it. 

It is also important to remember that when the Senate tried to correct this fatal error on the Ides of March, by slicing and dicing Caesar up on the Senate floor, they ignored the most basic tenet of life on this planet. Violence begets violence. Before they could claim the Republic restored, a civil war broke out between Marc Antony and Octavian, rendering the point of the assassination moot. Out of the ashes of Caesars pyre, was born the great Roman Empire, with Octavian transforming into the divine Emperor Augustus. 

For the next 400 years, the Senate tried in vain to go back to the Republic. But the dice as Caesar famously said, had been cast. Years later, senators loyal to the republican government conspired to kill the mad Caligula, who would become the first, but not the only, emperor to be assassinated. But the Praetorian Guard would choose the 'half-wit' Claudius as their next anointed one. And so it was, the power that had been unleashed, would not be reigned back in. Not until it had completely consumed the Empire, and the quaint idea of Republicanism with it. When the Empire finally dissolved in 476 AD, freedom and liberty were dangerous ideas, not to be trifled with. The stage had been set for the onset of the Dark Ages. The Roman experiment with democracy and a people's government had led to the greatest empire the world had ever seen. 

Flash forward 2000 years, and power seems to have lost none of its potency. The American experiment  in the republic and individual liberty has once again led to the most powerful government the world has ever seen. Rule of thumb seems to be, the smaller they start, the bigger they get. Just like with Caesar and the Senate, the US Congress today seems flummoxed by the NSA revelations. How could this happen under their watch? Has the surveillance state reached the point of no return? This of course ignores the fact that the power being abused was set in motion by the Congress itself, in the form of the Patriot Act a decade ago. Americans, like their Roman pleb counterparts, seem more interested in the bread and circus routine. They seem to forget that where power exists, it will be abused. For the longest time, conservatives challenged civil libertarians in finding Patriot Act abuse. Now that the abuse has been revealed, the public seems to be hiding behind the 'i have nothing to hide, so nothing to fear' sand of self-delusion. Liberals scoff at the apprehension behind the NDAA Indefinite Detention Act, safe behind their leader's assurance that he will never use it. Of course it is only a matter of time before the power that exists, shall find hands that are willing to abuse it. 

At the height of backlash against the NSA, things stand such - Snowden has been called a traitor by the highest ranking members of the Congress on both sides of the aisle, the Amash amendment seeking to end the NSA spying on citizens has been defeated, and other agencies like the FBI and the DEA, not wanting to be left behind, are seeking their own spying infrastructure, to rival the NSA. Meanwhile, Manning faces life in prison for uploading a video of American 'soldiers' gleefully cutting to ribbons unarmed men and children through what would look like a gaming console. As if to drive home the point, the Obama administration, that paragon of transparency, has persecuted whistle blowers under the Espionage Act seven times, more than all the previous Presidents combined since 1917. 

It may seem like we are on the verge of crossing the Rubicon once again, but like in the past, that too would be a misunderstanding of events. We have already done so. The public outrage over government overreach, whether in personal lives, or economic activity, or foreign policy, is decidedly anachronistic in nature. It is out of place, out of time. The Republic is dead, the emperors behind the curtains have become adept at pulling the strings, and the dice.....it was cast long ago.

The only question that now remains, is whether we will learn anything from history at all. Will we wait, till things fall apart completely, and we are forced to resort to violence and the irrationality of it. We must remember the Senators of Rome, who for centuries tried to overthrow the Empire through assassinations, never to succeed. We must remember the French revolution, led by the goddess of Liberty herself, only to pave way for Napoleon. How about the Russian revolution of the proletariat, that led to its own empire, and its eventual bankrupt collapse. Even the contemporary violent orchestrated overthrows in Iraq, Afghanistan, Libya, Egypt scream the same lessons. Violence is not the answer. We must don the cape of peace, in all aspects of our lives - personal, social and political. Economic peace (no coercion through taxation, no Fed distortions through price fixing of rates, zero support for warfare/welfare state, personal responsibility, charity, liberty). Social peace (no coercion through federal laws enforced by the State, let gay-rights drug-rights abortion-rights and other divisive social issues be decided at the most atomic community level, live and let live). Personal peace (in spite of our innate violence, never to give in to it, especially with children. violence begets violence). 

These are difficult choices to make. But make them we must. Only individual responsibility towards peace can turn us from the course we are on. Only a philosophical change in our mindset to shun violence and coercion in all its forms, State and Individual, can prevent the unmooring of our social fabric. We must abandon moral relativism, and stand strong for the defense of individual life, liberty and property. Only then can we break away from this gory pattern of history, the endless cyclical lust for power, and those few who seek and use it against the majority. 

What is the price of freedom?

'Eternal vigilance is the price of liberty'.

Thomas Jefferson, that stalwart of individual freedom (at least in theory), purportedly said these famous words. Given the somewhat distrustful stance of the founding fathers towards tyrannical governments, having just defeated one after a prolonged armed struggle, it is not hard to construct a context for this phrase. 

But what did he mean, exactly? Was he asking Americans to be vigilant against foreign invaders? Or was he concerned about threats to freedom from within the august borders of America? Who has to be vigilant, and against whom? The Department of Homeland Security could easily use this mantra as it's official motto. After the Boston Bombings, the whole security apparatus came down hard on the city, locking it down, making warrantless house searches, shutting down phone services etc. Weren't they being vigilant, trying to protect the liberties of it's citizens? You could also paste this message outside the gate of NSA's gigantic Data Center in Utah, through which it is estimated a huge percentage of the communication traffic, including calls and emails, is parsed. Add to this frightening infrastructure, the incessant efforts by Congress to create a legal framework justifying this surveillance through SOPA and CISPA, and a rather comprehensive picture begins to emerge. But again, isn't the government simply trying to be 'vigilant', in case a few miscreants among us are planning to rob us of our liberties?

The answer, as always comes down to the nature of Power. Does an individual, or a group of individuals, have the power to rob us of our freedoms?? Sure they can rob us of our lives, but thats not entirely the same thing. The loss of freedom is a loss of choice. Even a hundred bombers, can at most, threaten our lives. But they cannot destroy our ability to choose. For that, they need a structure, a legal entity that forces its will upon the citizenry through laws that operate through perpetuity. They need a government. 

9/11 caused incredible damage to life and property through violence. But its long term consequences were not initiated by al-Qaeda. Osama did not create the TSA. It wasnt Osama that made torture official policy, that continues to this day in the starvation camp of Gitmo. Osama didn't sign the Patriot Act, FISA, NDAA etc. It is these incursions that substitute liberty for security. And so it was this power structure that Jefferson was warning against. 

But a vital question still remains. What forms vigilance? If the government does indeed snap at the heels of liberty, when and what is the appropriate response? I fear the tragedy of current generation lies in the word 'response'. If you are 'responding' to a violation of individual rights, then its already too late. 

Take the case of Anwar al-Awlaki, an American citizen who was droned in Yemen along with his teenage son, also a citizen. He was essentially the head of Human Resources for al-Qaeda. A despicable career if there was one, but not worthy of an unceremonious end without a trial. No moral man would have shed a tear for this person if he had been found guilty by a jury and executed. But no trial was given. No evidence was presented. It was a summary execution, rather an assassination. Leaving aside the moral issues concerning bombing people without a trial on a weekly basis, Awlaki was special because he was still a citizen, not an 'other'. He wasnt armed when he was killed. There was no 'imminent' danger to anybody at the time of his death. So clearly, a legal conundrum has presented itself to the citizens of the USA. Can citizens be assassinated by the government if they are deemed 'enemy combatants'? Could the teenage Boston Bomber have been droned while he hid away in the boat? As police departments across the country begin to add drones to their arsenal, is now the right time to start being vigilant?

No. I'm afraid now is too little, too late. When the government has already crossed the Rubicon, and the media vultures are circling the dying right, it is too late. The time to act was before the government and the media got an opportunity to talk about it. The minute you get to talk about the loss of a particular liberty, you have already started on the narrow dark road to losing it. Americans, whether they realize it or not, have already lost the battle of the drones. Another exigent circumstance, this time on the home land, will be enough to let the local sheriff authorize a strike against a 'terror combatant', nullifying each and every right. Miranda rights? Bah. Lets talk about it. Habeous Corpus? Please. Lets talk about it.

The minute your rights are on prime time television, being deliberated upon by pundits, it is game over. It is too late. You just dont know it yet.

So vigilance, it is not a response. It is a pre-emptive strike at the heart of despotism. It is a prevention, not a cure. It is the price of freedom, and so far, we are failing miserably at it. 

What is capital?

These are polarizing times. Left or right? Right or wrong? People are beginning to realize that the time may have come to choose a side. What is moral? What is constitutional?  

I want to ask a different question. What is capital? As the polemical questions of our times go, this one is often ignored by most, other than perhaps academics and economists. Traditionally, capital is considered aggregate wealth. Wealth of an individual or a business. Wealth of an institution or a nation. Capital is the fuel that is burnt on the altar of human endeavor. It is the grease that keeps the wheels of human productivity rolling.  

But lately, propaganda and policy have unseated this humble and loyal servant of the people with a false God; Demand. Increasingly, public perception now is that capital means nothing without demand. Let us try and bring some light to this issue, and see if we can place our venerable friend back in the driver's seat.  

So the narrative is that businesses operate solely on demand. Unless there is demand for their products or services, a business is sure to fail. A fairly logical and acceptable conclusion on its face. Yet, it fails against reality. Proponents of government spending use this argument to argue against tax cuts, higher economic freedom etc. They claim that since demand will always stay, businesses can be forced legally to tow the government line. As long as demand exists, businesses will too. Regulations then can only do good.  

This is a pernicious argument. Because it puts the cart in front of the horse. Businesses value demand, yes. Their entire models depend on how well they calculate the demand for their products. But government regulations and higher taxes eat into something of limited and critical value: Capital. The consumer may demand the Sun and the Moon, but without capital, not even sliced bread is possible. Innovation and production play an elemental role in the success of a business, much more than demand. Without capital, there is neither.  

The internal combustion engine, the airplane, the computer, the telephone, electricity, the radio, the television and almost everything else we use in our daily lives; none of these were invented because there was a 'demand' for them. Most people didn't even understand the science behind them, much less demand their existence. They were invented and mass produced because of two kinds of people: the Creators and the Investors. Sometimes these were the same person. But most often, they were not. While the creators created, the investors utilized their own precious capital and carefully honed intuition to ensure that the wondrous creations made it to fruition. We should all be thankful to these two very special kind of people, for their effort and courage. Our lives today are a direct result of their passion and foresight.  

Now imagine the Government in control of most of the capital, that they of course acquired through force: laws and taxation. How different our lives would be today, if instead of angel investors and banks, Steves (Jobs and Wozniak) had to plead for a government handout for their creations? This is but the logical conclusion of Government interventions in the market. The more capital they control, the more is wasted, on ill-advised projects and election year promises. Now the Government and their apologists are well aware of this eventuality. Therefore its crucial that the public believe their 'demand' narrative through and through. They will claim that all those inventions happened only because there was a 'demand' for better means of travel, for better communication, better infotainment. These are classic straw men, designed to divert your attention from one basic fact, one we know but are asked to forget: Demand, sirs, is endless. And in itself, worthless.  

I want to live forever. Isn't that the ultimate in demands? I want to see the Universe unharmed. I want....oh, i want. There is enough demand in our hearts to keep the fires of industry burning forever. Yet, businesses fail. All the time. Why? Because capital is precious. And its dwindling. Capital to create, capital to invest, capital to buy worthy products and services. Its not the 'demand' that is falling apart, but the capital that is constantly being crowded out through incredible government spending. Spending on social programs full of trust fund IOUs, spending on unfunded Wars. Capital is constantly being eroded because the savings that once used to fund innovators is now at an all time low. Capital is dying because artificially low interest rates ensure zero savings, and money printing ensures capital devaluation.  

What is capital? It is the most noble consequence of our lives. It is value created through effort and hard work. And when we exchange one value for another, through trade and investment, we create a world where every demand is met. Government doesn't create capital. It appropriates it, and then kills it.

Bribery Is Not Corruption

In economics, the first thing you understand is that Prices are never wrong. You may perceive the price of a good or a service to be too high, or too low. But the price itself is just an indiciator of underlying fundamentals. Its not too high or low. Its exactly what it should be at that moment.

This principle applies to what you eventually pay a bureaucrat or a govt employee as well. The 'high' price (govt mandated salary + bribe) is the price you pay for dealing with a monopoly. The price is not right or wrong. It just is. If you think its too high, you need to understand the fundamentals behind it. Not categorize the price itself as immoral.

Bribery of a government employee is a crude, yet necessary process to make a wasteful, yet powerful organization work for you, in the face of no alternative choices. Bribery is an internal pricing mechanism by which a leaky monopolistic system re-evaluates its initial estimates. Bribery is not corruption.

Corruption in my mind is fraud and theft. When the govt is paid in taxes to perform certain functions, if that capital vanishes before it reaches the workers, that is theft, that is corruption. Is then the worker to be called corrupt for working on a paltry budget and non-existent infrastructure? Are the policemen, postmen, municipal workers, army men and scores of other low and mid level govt employees corrupt for subsisting on wages we wouldnt wish on ourselves, even though the govt collects enough tax revenue from corporations and the people at large to perform said functions with ease and money to spare.

We have never honestly and fully accepted the fact we have given the govt a monopoly over our lives. Yes, we pay their salaries, so they are obligated to provide us services. But we also give them the legal stature of being the sole provider of that service. Make no mistake, as low as his nominal pay might be, your Passport approver is the ONLY man in the known Universe who can give you your passport. The same with ration cards. And driving licenses. And thousands of other services where the govt allows no private competition. The number of these services (industries) has gone down recently due to privatization but not nearly enough. Because the govt does not allow competition, even a peon has power over you. If he 'misplaces' your file, you're done for.

That is INCREDIBLE power in one hand. Bribes are nothing but the premium you pay for dealing with such power. It is inevitable, even in the private industries. Thats why private monopolies (which i personally believe cannot exist without the express support of elements within the govt), are often broken down, and competitive elements are allowed to compete. But instinctively, we have an aversion towards the theory of dismantling the government. 'Privatization of airlines? Absurd.'. Till it goes bankrupt and the govt is forced to do it. And air fares go down and quality of service goes up. Same with telecom. Same story everywhere. Competition increases, prices go down, wages go up. Little to no corruption. Except when the transition happens.

In every monopoly, the consumer has little power. The best it can do is withdraw from the market, not pay for the expensive service. But the govt is a special monoply. You CANNOT withdraw. You have to pay through taxes. And the money vanishes. Into a politician's foreign bank account. Leaving the workers with no recourse but to manually correct the price inequilibrium. They are a monopoly, daily bribery should remind you. Services HAVE to be expensive. Irrespective of what your taxpayer moral code says.

So, bribery is a crude pricing mechanism by which a leaky, wasteful monopolistic system re-evaluates its initial estimates.

Bribery is not corruption.