The main mantra on Wall Street is ‘Don’t Fight the Fed’, implying that if monetary policy is geared towards easing – lowering of interest rates - then riskier markets are the game in town, and if monetary policy is geared towards tightening – rising interest rates – then volatile markets are to be avoided. But do we know what the Fed is up to?
Both the DOW and S&P 500 are sitting at all-time highs. Since bottoming out in early March 2009 (DOW, S&P 500), the DOW is up approximately 150% and the S&P 500 approximately 180%. Astronomical returns no matter what period you compare this to.
After the initial shock that ‘free’ money was going to be less readily available subsided and the markets stabilized, the tapering continued; “after three additional reductions, the program currently stands at $45 billion per month. Fed Chairman Janet Yellen expects the program to wind down steadily through 2014 and conclude by year-end, assuming the economy remains healthy.”
“The FOMC will likely continue to taper the pace of its asset purchases by a further $10 billion — split equally between Treasuries and mortgage-backed securities — as hinted at in Chairman Bernanke’s press conference following the December meeting. While the Committee has taken pains to note that the path of asset purchases is 'not on a preset course,' a substantial change in the outlook would likely be required for the Fed to either pause or accelerate the gradual pace of tapering started at the last meeting. We think this relatively high bar has not been met, some weaker recent data notwithstanding. Based on a roughly $10 billion per meeting tapering schedule, the last QE3 purchases should occur in October 2014.”
“Further analysis of the source of funds to finance the U.S. deficit shows Belgium and the Fed are the only two buyers on the margin currently driving rates lower…
“The strange aspect of the data is that in the published figures, the tiny country of Belgium with a GDP of only $509B, somehow managed to purchase $40.2B in Treasury securities in the month of March. The purchases follow a six-month barrage of purchases by Belgium in which $214.6B in Treasuries were added to security accounts held in the country. Based on the data, Belgium has escalated to third, behind only Japan and China (mainland) in the rankings of foreign countries which hold the most U.S. Treasury reserves.”
In a three month period, from November 2013 through January 2014, Belgium, with a GDP of only $484 billion, miraculously acquired enough funds to purchase $141.2 billion of U.S. Treasury bonds. As Roberts and Kranzler point out:
“Is the Fed ‘tapering’? Did the Fed really cut its bond purchases during the three month period November 2013 through January 2014? Apparently not if foreign holders of Treasuries are unloading them.
“From November 2013 through January 2014 Belgium with a GDP of $480 billion purchased $141.2 billion of US Treasury bonds. Somehow Belgium came up with enough money to allocate during a 3-month period 29 percent of its annual GDP to the purchase of US Treasury bonds.
“Certainly Belgium did not have a budget surplus of $141.2 billion. Was Belgium running a trade surplus during a 3-month period equal to 29 percent of Belgium GDP?
“No, Belgium’s trade and current accounts are in deficit.
“Did Belgium’s central bank print $141.2 billion worth of euros in order to make the purchase?
“No, Belgium is a member of the euro system, and its central bank cannot increase the money supply.
“So where did the $141.2 billion come from?
“There is only one source. The money came from the US Federal Reserve, and the purchase was laundered through Belgium in order to hide the fact that actual Federal Reserve bond purchases during November 2013 through January 2014 were $112 billion per month.
“In other words, during those 3 months there was a sharp rise in bond purchases by the Fed. The Fed’s actual bond purchases for those three months are $27 billion per month above the original $85 billion monthly purchase and $47 billion above the official $65 billion monthly purchase at that time.”
Dr. Paul Craig Roberts: Fed Laundering Treasury Bonds in Belgium, Real GDP was Negative & More
III. What’s Going On?
Paul Craig Roberts explains in his article and the video above why the Fed is working off the books to prop up the markets. The gist of it is that the U.S. economy is not as rosy as the government claims it to be, and that the U.S. dollar is not a safe haven anymore.
So Wall Street’s mantra of not fighting the Fed is a little confusing. If you believe the official statements about QE and tapering, then you should be concerned about a market downturn with the taps turning off. If you know what’s going on behind the scenes, that the Fed is more worried about the economy and the U.S. dollar than ever before, pumping more funds into the markets than at any other time in history, then you might want to take advantage of more ‘free’ money and be inclined to go long.
Staying with the theme of the previous post, a review of Joon-ho Bong’s ‘Snowpiercer’, thought I’d share a review of David Lynch’s ‘Inland Empire’ that I posted on my previous site in 2007 after watching the movie for the first time - I ended up going back to the theater 2 more times within a week of making this post so that I could experience it again. This was one of my first extensive pieces and wanted to give it a home on this site as well. Suffice it to say, I highly recommend the movie.
I walked out of ‘Inland Empire’ seven hours ago and was too exhausted to tackle this recommendation. I ended up getting something to eat and after five hours of restless sleep I think I’m ready to at least pique your interest enough to consume David Lynch and go for a ride.
I want to get one thing out of the way before I go any further. The actors in this movie will blow you away. They catch you by surprise and amaze you with delight. If you are a casting director then this movie will teach you how to put the right people in the right place. If you are a director then you better line up now and make sure your script is strong enough and your vision brilliant, because if you win the lottery then you may hope to get the opportunity to work with at least one of these people. And if you think you are an actor then these roles, this director, this movie, this experience would have been an opportunity of a lifetime, if you could have pulled it off to perfection the way it was done by everyone involved. The flawless range of characters played by each individual actor will make you wish you had the ability to play just one of the personas from these schizophrenic personalities.
With ‘Inland Empire’, Lynch takes chaos, creates order within multiple timelines, through multiple characters, portraying different realities, each one more psychotic then the previous, just to tell us that life is worth the ride. He’s used psychedelic patterns everywhere and in every form. From the set and soundtrack, to the lighting and script, Lynch’s directing bonds every inch of the screen, playing with our emotions and sense of reality as if we were children trying to grasp the drama that comes with growing up.
Just when you think a perspective has been understood it changes. Infinite possibilities converge to a coherent rant that dissipates instantaneously, bringing to light pathways that lead into a panoramic view of realities yet before unseen.
The story is not the movie, the experience is. The emotional roller coaster that Lynch takes us on makes the worst psychedelic journey seem palatable. Within fractions we are taken from laughter to perplexity, to a fear that makes your bones rattle to the core, not just for an instant, but long enough to melt into other perspectives. A princess becomes a prostitute, a lover turns into a killer, a victim the hunter. Wives and mothers turn into disease ridden homeless whores doing a dance routine that puts a smile on your face, providing an interlude before you are catapulted into the next wave.
The events in this convoluted pulsating smorgasbord bring you to the brink of madness. The reasoning behind each word spoken, each sound bite, each gesture pointing towards the unknown just around the corner makes your heart misfire. You are unaware of your hypnosis until it’s too late. The logic embedded within each scene makes you believe each reality and possible outcome, witnessing the events unfolding with awe.
I’m not sure how Lynch did it, or how the actors maintained their sanity knowing exactly which lives they were living. It’s possible that the nexus is the lighting, or is it the music? I cannot be sure because I have only experienced it once. Like all-powerful psychedelic journeys it will require multiple exposures to decipher, but it is too exhausting to consume consecutively. So I will wait until I am ready to consult the Lynch oracle again. To know what it means to love and to obey, to take control and let go, and face my fear of circus clowns, now that I have one.
The title of this so-called review is a little misleading because this is not a review; it is, as I stated in the opening paragraph, a recommendation. To call this a review would be equivalent to calling a biography of a prophet a review. ‘Inland Empire’ needs to be experienced in the true sense of the word. It is not a story, it is a message. The lesson is life from a teacher that you will not soon forget.
Just make sure that you find a theater with comfortable seats and that you are dehydrated, because you will not want to leave the movie for a break, possibly missing a glimpse of a truth that cannot be. You will not be able to retain the facts because it’s all part of a Maybe Logic that embraces our collective. Just like life there are no absolutes in ‘Inland Empire’ and no guarantees of a coherent reality; however, one thing is for certain, as the curtains descend you will exit the theater from a Sinful Nina Simone wrap party.
Note: If you are a post-apocalyptic movie aficionado and appreciate the ones that provide an in-depth critique of our civilization and the problems that we face, then you should skip the write-up below and just watch Bong Joon-ho’s ‘Snowpiercer’, especially if you enjoy accessible Korean movies – the dialogue in the movie is mainly in English.
If you do plan on reading what’s below, please keep in mind that I don’t like providing spoilers, so I’ve refrained from discussing too many details, but instead have approached this write-up as a recommendation. The write-up will probably make more sense post-viewing.
There is a certain intensity about Koreans. I realized this during the early 1990’s while attending university. One of my roommates was Korean and he was kind enough to introduce me to his world. We became very close and he and his friends welcomed me into their midst. I spent a good three years among them.
I learned a lot about Korea during that period: the history of its people, their traditions, their passions, the depth of their camaraderie, the honor that they are bound to, and their love of gambling, drinking, and eating – so much eating, drinking, and gambling.
I tell you this because where they come from is ingrained in the Korean psyche, and if you know anything about their history, you will know why, and if you know this about Koreans then you will appreciate their movies that much more, which brings us to Bong Joon-ho’s 2013 masterpiece, ‘Snowpiercer’.
“In the near future, an experiment to counteract global warming causes an ice age that kills nearly all life on Earth. The only survivors are the inhabitants of the 'Snowpiercer', a massive train, powered by a perpetual-motion engine, that travels on a globe-spanning track. A class system is installed, with the elites inhabiting the front of the train and poor inhabiting the tail.”
English translation of ‘Le Transperceneige’, the French graphic novel created by Jacques Lob and Jean-Marc Rochette - source - click to enlarge
There are two main types of post-apocalyptic movies; the ones that are meant just for entertainment, and the ones that are not just about entertaining us but about providing a critical analysis of our society. Snowpiercer is of the latter type and one of the best that you will ever come across from this genre.
“There's a time when the operation of the machine becomes so odious, makes you so sick at heart, that you can't take part! You can't even passively take part! And you've got to put your bodies upon the gears and upon the wheels…upon the levers, upon all the apparatus, and you've got to make it stop! And you've got to indicate to the people who run it, to the people who own it, that unless you're free, the machine will be prevented from working at all!” - Mario Savio, Sproul Hall, University of California, Berkeley, 2 December 1964.
I’ll refrain from discussing the movie any further and just provide the trailer below, however, I don’t recommend watching it since it contains a lot of spoilers, spoilers that are best left unseen.
If you would like to experience the full brilliance of Snowpiercer, with its gradual revelations depicting bare the insanity of our society, just go directly to watching the movie; it is bound to stay with you for quite some time.
Snowpiercer International Trailer (2013) - Chris Evans Movie HD
II. NATO Military Bases Surrounding Russia and Around the Globe.
III.Why US fracking companies are licking their lips over Ukraine - “The way to beat Vladimir Putin is to flood the European market with fracked-in-the-USA natural gas, or so the industry would have us believe. As part of escalating anti-Russian hysteria, two bills have been introduced into the US Congress – one in the House of Representatives (H.R. 6), one in the Senate (S. 2083) – that attempt to fast-track liquefied natural gas (LNG) exports, all in the name of helping Europe to wean itself from Putin's fossil fuels, and enhancing US national security.”
IV.The Farce Is Complete: Joe Biden's Son Joins Board Of Largest Ukraine Gas Producer - “R. Hunter Biden will be in charge of the Holdings’ legal unit and will provide support for the Company among international organizations. On his new appointment, he commented: ‘Burisma’s track record of innovations and industry leadership in the field of natural gas means that it can be a strong driver of a strong economy in Ukraine. As a new member of the Board, I believe that my assistance in consulting the Company on matters of transparency, corporate governance and responsibility, international expansion and other priorities will contribute to the economy and benefit the people of Ukraine.’”
VII.CIA, FBI agents 'advising Ukraine government': report - “Dozens of specialists from the US Central Intelligence Agency and Federal Bureau of Investigation are advising the Ukrainian government, a German newspaper reported Sunday. Citing unnamed German security sources, Bild am Sonntag said the CIA and FBI agents were helping Kiev end the rebellion in the east of Ukraine and set up a functioning security structure. It said the agents were not directly involved in fighting with pro-Russian militants. ‘Their activity is limited to the capital Kiev,’ the paper said.”
VIII. Obama Calls Coup Government in Kiev "Duly Elected"
“Using evidence from a stack of historical movements, including safer sex and harm reduction, this talk will address how advocates of liberty and privacy can ensure that their work touches the mainstream.”
“WikiLeaks journalist Sarah Harrison, who rescued Edward Snowden from Hong Kong, is interviewed by Alexa O'Brien, the journalist responsible for the most comprehensive coverage of the trial of Chelsea Manning, about publishing classified information, protecting press sources, and defending the right to know.”
“If we accept that we cannot prevent science and technology from changing our world, we can at least try to ensure that the changes they make are in the right directions. In a democratic society, this means that the public needs to have a basic understanding of science, so that it can make informed decisions and not leave them in the hands of experts.” - Stephen Hawking, ‘Black Holes and Baby Universes’, p.28, Speech given in Oviedo, Spain, 1989.
“We live in an age based on science and technology with formidable technological powers… and if we don’t understand it, by ‘we’ I mean we the general public… then who is making all the decisions about science and technology that are going to determine what type of future our children live in, just some members of congress? But there is no more than a handful of members of congress with any background in science at all… and this combustible mixture of ignorance and power, sooner or later, is going to blow-up in our faces.”
“And the second reason that I’m worried about this is that science is more than a body of knowledge. It’s a way of thinking; a way of skeptically interrogating the universe with a fine understanding of human fallibility. If we are not able to ask skeptical questions to interrogate those who tell us that something is true, to be skeptical of those in authority, then we are up for grabs for the next charlatan, political, or religious who comes ambling along.”
“It’s a thing that Jefferson laid great stress on. It wasn’t enough he said to enshrine some rights in a constitution or a bill of rights, the people had to be educated and they had to practice their skepticism and their education otherwise we don’t run the government, the government runs us.” - Carl Sagan, 1996.
"There is a cult of ignorance in the United States, and there always has been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that 'my ignorance is just as good as your knowledge.'” - Isaac Asimov, Column in Newsweek (21 January 1980).
“As a wise man once said, ‘An error doesn't become a mistake until you refuse to correct it.’ We intend to accept full responsibility for our errors, and we expect you to point them out when we miss them.
“Without debate, without criticism, no Administration and no country can succeed, and no republic can survive. That is why the Athenian lawmaker Solon decreed it a crime for any citizen to shrink from controversy. And that is why our press was protected by the First Amendment, the only business in America specifically protected by the Constitution, not primarily to amuse and entertain, not to emphasize the trivial and the sentimental, not to simply give the public what it wants, but to inform, to arouse, to reflect, to state our dangers and our opportunities, to indicate our crises and our choices, to lead, mold, educate, and sometimes even anger public opinion.
“This means greater coverage and analysis of international news, for it is no longer far away and foreign but close at hand and local. It means greater attention to improved understanding of the news as well as improved transmission. And it means, finally, that government at all levels must meet its obligation to provide you with the fullest possible information outside the narrowest limits of national security.”
“And so it is to the printing press, to the recorder of man's deeds, the keeper of his conscience, the courier of his news, that we look for strength and assistance, confident that with your help man will be what he was born to be, free and independent.” - John F. Kennedy, 1961.
“We mathematicians need to put far greater effort into communicating mathematical ideas. To accomplish this, we need to pay much more attention to communicating not just our definitions, theorems, and proofs, but also our ways of thinking. We need to appreciate the value of different ways of thinking about the same mathematical structure. We need to focus far more energy on understanding and explaining the basic mental infrastructure of mathematics — with consequently less energy on the most recent results. This entails developing mathematical language that is effective for the radical purpose of conveying ideas to people who don’t already know them. … What we [mathematicians] are producing is human understanding. We have many different ways to understand and many different processes that contribute to our understanding.” William Thurston, On proof and progress in mathematics, Bull. Amer. Math. Soc. (N.S.) 30 (1994), 161–177
“Privacy by policy is where someone says, ‘I promise I won’t log any data about you.’ Okay, how do you guys feel about that promise?…
“Privacy by design is where that data is never produced in the first place. So every time you see a system and it says, ‘I need your name, I need your social security number, I need that stuff’, that is a system where they start to implement privacy by policy, almost always….
“They promise they won’t disclose all this data, that’s policy protection. Policies are weak. Policies at a company are always over-written by the law and government policy. But no, I love to say this phrase because I think it’s fantastic; no amount of violence will ever solve a math problem.
“They may torture that guy into giving up his passphrase, but you can’t take an encrypted message and shoot it with a machinegun, and have it decrypt itself. And that sounds totally obvious, but think about that, that means when you use strong mathematics that I can hardly comprehend, when you use that kind of strong mathematics and someone sees an encrypted message, the violence of the state is not actually so useful anymore.” - Jacob Appelbaum, 2012.
Jacob Appelbaum (Part 1/2) Digital Anti-Repression Workshop - April 26 2012
“No one is going to give you the education you need to overthrow them. Nobody is going to teach you your true history, teach you your true heroes, if they know that that knowledge will help set you free.” - Assata Shakur, 1973(?).
For me, the highlight of the lecture occurred during the question and answer period, at approximately 1:14:32, when one of the members of the audience asked the following question:
Question: “So, could you explain a bit more on measurement? You said that you have wave and it interacts with an entangled amount of waves and then pops out a particle, right?
I found the following response by Dr. Carroll to be the best description of quantum field theory that I have ever come across:
Sean Carroll: “Yes. I did say that, do you want me to say more about that?
“One reason why it’s confusing is because there is sort of two levels of waviness. Alright?
“So, if the world were really made out of particles, but quantum mechanics were true, there would still be a certain waviness about the world because quantum mechanics says that even if there are particles, the way you describe those particles is through a wave function; through a field that fills space and tells you what the probability is of observing that particle. So the world is made of particles, but the observations of the particles are governed by the rules of quantum mechanics, which involves some wave.
“But the quantum field theory philosophy says that there is not even a particle. What you start with is a field - something that looks waving, something that fills all of space, like the electromagnetic field or the gravitational field - then you apply the rules of quantum mechanics to that, and miraculously what comes out when we look at it are particles.
“So quantum mechanics says that what you see when you observe the universe comes to us - in very frequent circumstances - in discrete packets, discrete lumps. Even if the underlying reality is smooth, we see it in individual discrete bits, and it’s the particles that make up you and me that are the discrete bits we see when we look at fields.
“Fields vibrating and interacting with each other is just the most poetic language that I can think of. The math is perfectly straight forward. You’re young enough to study the math. Go for it.”
Q&A Segment: Particles, Fields and The Future of Physics - A Lecture by Sean Carroll (starts at approximately 1:14:32)
Full Lecture: Particles, Fields and The Future of Physics - A Lecture by Sean Carroll (starts at 2:15, after the introduction)
I. Government Sanctioned Monopolies, Net Neutrality, and the FCC
Capitalism is making way for the age of free - “Over the past decade millions of consumers have become prosumers, producing and sharing music, videos, news, and knowledge at near-zero marginal cost and nearly for free, shrinking revenues in the music, newspaper and book-publishing industries.
“Some of the US's leading economists are waking up to the paradox. Lawrence Summers, former US treasury secretary, and J Bradford DeLong, professor of economics at the University of California, Berkeley, addressed this in August 2001, in a speech delivered before the Federal Reserve Bank of Kansas City. Summers and DeLong focused their presentation on the new communication technologies that were already reducing the marginal (per-unit) cost of producing and sending information goods to near zero.
“They began by acknowledging that ‘the most basic condition for economic efficiency: [is] that price equal marginal cost’, and further conceded that ‘with information goods the social marginal cost of distribution is close to zero’. They then went to the crux of the problem. ‘If information goods are to be distributed at their marginal cost of production – zero – they cannot be created and produced by entrepreneurial firms that use revenues obtained from sales to consumers to cover their [fixed set-up] costs … [companies] must be able to anticipate selling their products at a profit to someone.’”
“Summers and DeLong opposed government subsidies to cover up-front costs, arguing that they destroy the entrepreneurial spirit. Instead they supported short-term monopolies to ensure profits, declaring that this is ‘the reward needed to spur private enterprise to engage in such innovation’. They realised the trap this put them in, recognising that ‘natural monopoly does not meet the most basic condition for economic efficiency: that price equal marginal cost’ but nonetheless concluded that in the new economic era, this might be the only practical way to proceed.
“The pair had come up against the catch-22 of capitalism that was already freeing a growing amount of economic activity from the market, and threw up their hands, favouring monopolies to artificially keep prices above marginal cost, thwarting the ultimate triumph of the invisible hand. This final victory, if allowed, would signal not only capitalism's greatest accomplishment but also its death knell.”
II. Capital Accumulation, Freedom-Crushing Legislation, and Rebellion
The Enlightened Capitalist - “Capitalists and corporations, we argue, are driven not to maximize profit, but to ‘beat the average’ and increase their differential power. In this approach, the redistribution of income and assets is not a ‘societal’ side effect of the economy, but the central conflict that propels modern capitalism. And the main weapon in this struggle, we claim, is not investment and growth, but what the American political economist Thorstein Veblen called ‘strategic sabotage’ – the restrictions, limitations, hazards and pains that capitalists impose on the rest of society in order to sustain and augment their differential power….
“In order to buck this trend, however symbolically, we wrote a short, pointy article titled ‘Why Capitalists Do Not Want Recovery, and What That Means for America’. The paper delivered a clear massage, backed by two highly contrarian graphs. The graphs showed that, contrary to the conventional creed, both mainstream and heterodox, accumulation thrives on crisis and sabotage. They demonstrated that, over the past century, the capitalist share of U.S. domestic income and the income share of the Top 1% have been tightly correlated not with growth and prosperity, but with unemployment and stagnation…. It suggested that upward redistribution and its associated sabotage were not unfortunate manifestations of ‘social injustice’, but the twin drivers of capital accumulation.”
"Our Only Hope Will Come Through Rebellion" - Chris Hedges
III. Working for the Spooks, Mathematicians' War, and Mesh Networking
Maths spying: The quandary of working for the spooks - “FOR the past 10 months, a major international scandal has engulfed some of the world's largest employers of mathematicians. These organisations stand accused of law-breaking on an industrial scale and are now the object of widespread outrage. How has the mathematics community responded? Largely by ignoring it….
“The NSA claims to be the largest employer of mathematicians in the US. It may be the largest in the world. It part funds GCHQ, also a major employer of mathematicians, and works closely with intelligence agencies in Australia, New Zealand and Canada. Some mathematicians work for these agencies full-time. Others do so during summer breaks or sabbaticals from their university jobs….
“Our work, then, can be used for both good and ill. Unfortunately for us, it is the latter that is in the public eye. Already unpopular for our role in the banking crash, we now have our largest employer running a system of whole-population surveillance that even a judge appointed by George W. Bush called ‘almost Orwellian’.
“So mathematicians must decide: do we cooperate with the intelligence services or not?...
“Eminent mathematician Alexander Beilinson of the University of Chicago has proposed that the American Mathematical Society sever all ties with the NSA, and that working for it or its partners should become ‘socially unacceptable’ in the same way that working for the KGB became unacceptable to many in the Soviet Union.
“Not everyone will agree, but it reminds us that we have both individual choices and collective power. Individuals can withdraw their labour. Heads of university departments can refuse staff leave to work for the NSA or GCHQ. National mathematical societies can stop publishing the agencies' job adverts, refuse their money, or even expel members who work for agencies of mass surveillance.
“At the very least, we should acknowledge that these choices are ours to make. We are human beings first and mathematicians second, and if we do not like what the secret services are doing, we should not cooperate.”
“One began to hear it said that World War I was the chemists' war, World War II was the physicists' war, World War III (may it never come) will be the mathematicians' war.” - Davis, Philip J. and Hersh, Reuben, The Mathematical Experience, Boston: Birkhäuser, 1981.