“It’s Gut-Check Time, America” with Graham Mehl

When in the course of human events it becomes necessary for one…. We’re sure that almost all of you will recognize the beginning of this historic document. Notice its title; it was a declaration. Could just as easily have been called an affirmation. But it merely stated in words what was already reality. For all of Jefferson’s wisdom, his most popular piece was merely a restatement of fact. That it needed to be restated was the problem. In today’s world – on so many levels, we have this type of ersatz freedom rather than the real thing. We’re not independent. We’re not really free in any sense of the word. But because we can hop on a plane and, after having ourselves and our companions treated like cattle, fly off to Disney World, we think we’re free.

It is from the above perspective that we compose this essay. It is not an essay about markets or statistics. These things have already been said a hundred thousand times by us and many others. Let’s face it, there’s not much more to say on any of these subjects, but what is left is only to report on the particular path of demise that the current system happens to take and then do the post-mortem. If we’re fortunate enough to get another shot at a fresh start, hopefully everything that has gone on will be remembered for a long time. We are also fully aware that without both acute and chronic pain there will be no memory. The past 7 years are a great example. After all that has gone on and continues to go on, look at our disposition as a nation. Examine our national memory regarding the great depression. Look at the rest of the world. Where is the impetus for reform?

Many of us have wondered for so long now what part of the human circumstance dictates that men will learn nothing from their past mistakes and cause them to repeat processes over and over again, hoping against hope for a different result. There are all manners of clichés and quotes about these things and yet the vast majority continue in their ways. We are guilty too. We continue to write articles and hope against hope that one of them will somehow trigger the awakening that sets the country on the right track. Is it an exercise in futility? Probably. We have history firmly against us, yet we hope for a different result each time we hit the send button.

“Before and After” - End Game Time?

The fact of the matter is that it is getting awfully late in the game. If you’re really of the opinion that the hari-kari we’ve witnessed on various fronts for decades now can continue in perpetuity then please stop reading here. There is nothing for you in the forthcoming paragraphs. For those of you who understand the reality we face, you already know there is no magic bullet solution. The thousands of ‘shock videos’ on the Internet leading you to believe otherwise are lies at their core. Anytime there is a bubble there are going to be hucksters. And there is a huge bubble in what has come to be known as the alternative media. In our own way we’ve become what we despise. There is a common set of talking points, most of which make perfect sense, and then there is the shuck and jive of opportunists of all flavors. Unfortunately these are the folks who have become the biggest names, just like their mainstream brethren. They’ll scream daily about the Internet being shut down to silence them, but why would the establishment silence something that it has already co-opted?

The alternative media was never really about a call to action or even a call to reform. We’ve heard terms like ‘waking people up’ for more than a decade. In our opinion, it has been of little more use than the tea party rallies of a few years ago. People had a chance to go out, wave a sign, yell a little and then go home and continue as usual. It was more like a ballgame than anything else. But these things all serve their purpose and that is to give people an outlet on which to dump their negative energy. It almost guarantees that nothing meaningful will ever happen just because of that. Furthermore, since the vast majority of these movements focus on using the corrupt existing structure to effect change, it is assured that there will never be change.

Much like investors always buy the tops and sell the bottoms, we do the same thing as nations as well. We dump our energies in the wrong places at the wrong times. We might buy the argument that it is human nature, but the sad truth is that it wasn’t always this bad. America’s broken education system has stolen from the last several generations the art of critical thinking. It has used gimmicks like the common core to create a lowest common denominator, free of all standards on which to base achievement. We overlook that public education was one of the ten planks of the communist manifesto. For all the things that Karl Marx and the rest might have been, stupid wasn’t one of them. We conveniently forget that their descendants, at least from a philosophical perspective, are firmly in control of what goes into the minds of our young people today. Should it come as a surprise then that upwards of half of those same young people are on at least one psychotropic drug? The human mind is not capable of absorbing evil of the magnitude we’re experiencing.

The bottom line is that we’re an easily duped society. Throw a couple of buzzwords out there, and we’re all in. Marginalize some folks in the media and we’ll break out the metaphorical gallows. Don’t forget that every lie has a whole lot of truth to it - especially today. Consider that the next time you’re sleepless on a Friday night and venture onto the Internet and start watching shock slideshow-type videos. We need to reclaim those long-lost critical thinking skills that propelled America to the pinnacle of achievement.

The Ukraine – The Seminal Moment?

The situation in the Ukraine and Crimea may well be the key defining moment in the modern, post WWII, era. It is humorous to a degree how our viewpoints change when we are forced to walk in the shoes formerly used by another. When the USA was the world’s policeman, it was all good. Nobody complained too much. Now that the roles are shifting, mostly because of economics, the crying has begun in earnest. The West has been playing conquistador for the past half century and has trodden the globe in pursuit of the ultimate empire. We here in America have done precisely the opposite of what our heritage very strongly suggested we do. We went from being laissez-faire to being interventionist in every sense of the word. And the bills are coming due both in economic and social terms.

Much like the dispute in Syria last September, America has been proven impotent in terms of driving world events. Others are taking center stage. Not because they’ve risen to a higher position, but because we’ve squandered our advantage. Knowingly and intentionally. America simply couldn’t be allowed to remain superior and outside the influence of globalism. First the superiority was attacked – from within - and now we’re falling to the position dictated to us so many years ago when the ink was still drying on the various free trade agreements and other documents of the global confab.

The situation in the Ukraine, as confusing as it is, is little more than another power play. As we endeavored to compile this essay, we’ve pretty much agreed that by the time all this is over, the maps are likely to look pretty much like they did before the faked death of communism back in the late 1980s. And it was a faked death. Communism has never died; it’s merely received a makeover of sorts.

Economically, communism is defined as the government controlling most of all of the factors of production. We in America don’t think of it so much in those terms, but we think of fallout shelters and little spies with red uniforms hiding in the bushes watching the goings on at the local park. Who would argue that today in America, the government controls most of the factors of production? With the government spewing out reams of new regulations every year, it is an easy argument to make. Just because the government doesn’t own all the factors of production doesn’t mean it can’t exercise owner-like control. Think of the factors of production: land, labor, capital, natural resources, and technology. One look at the mortgage portfolios of Fannie and Freddie, propped up with tax dollars and funny money, should give everyone an idea of the span of control of the government with regards to land. We have minimum wages and all manner of regulations on labor. While some of these regulations, such as workplace safety, are beneficial, the vast majority interfere in what would otherwise be an efficient market. Again, more control. And so it goes. Do the American people control the capital in this country? Not by a long shot – for what little genuine capital actually remains.

And so we proceed. It is a hard pill to swallow, isn’t it? Are we closer to freedom or to totalitarianism? We’re much closer to the Soviet model of the Cold War era than we are to any type of Jeffersonian independence. Painting Vladimir Putin or anyone else as the ‘bad guy’ while continuing along our present path just doesn’t cut any ice, yet that’s precisely what we do. We wave a flag and justify our own descent into that which we formerly pledged to fight to the bitter end.

So why is the Ukraine so important? Because it is a new power player’s first real foray into an arena that used to be owned by America: the arena of global conquest. It isn’t so much about the resource-rich nation-state as about what the whole thing, in its entirety, represents. And thanks to our own greed and ignorance, America is virtually powerless to stop it, save for a no holds barred, nuke-em-all war. There are no more rabbits in our hat. Our diplomats have been beaten like rented mules. The threat delivered, we’ve largely stood down. Some might mention the sanctions, but they’re largely token in nature and actually caused the Russians to laugh, then move right along with their plans. For as bad as things are, they’re about to get a whole lot worse.

In summary, it’s gut-check time. While it is very likely already too late to turn things around from an economic perspective, we could certainly find some misplaced old fashioned American courage and proclaim that, like most of the rest of the common folks of the world, we’ve had it with the status quo and the two-headed hydra that plays us like a cheap fiddle. Maybe this March, we can muster enough rancor for a decent calling out of the rackets instead of focusing on the brackets.

Graham Mehl is a pseudonym. He currently works for a hedge fund and is responsible for economic forecasting and modeling. He has a graduate degree with honors from The Wharton School of the University of Pennsylvania among his educational achievements. Prior to his current position, he served as an economic research associate for a G7 central bank.

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Andy Sutton is the Chief Market Strategist for Sutton & Associates, LLC – a Registered Investment Adviser in Pennsylvania. His focuses are econometric modeling and risk management. The firm specializes in wealth preservation and growth and recognizes the validity of non-paper assets in achieving a balanced approach. The firm is also currently working with a growing clientele towards avoiding the risks routinely visited in this column.