May the farce be with you

People put so much weight on what the “experts” say – it’s easier to abdicate our own research and critical thinking and rely on others who are supposed to know more than we do. It makes sense to an extent – no one has time to do their own research on every question that comes up, especially complicated issues like science or economics – but blanket trust placed in others, simply because they have a degree or have been published somewhere, can be a dangerous thing.

Case in point: A scientist who blogs under the name “Neuroskeptic” wrote a spoof academic piece and submitted it to nine scientific publications, to see whether any would publish what was clearly and explicitly a farce. He chose a Star Wars theme for his submission, writing under the names “Dr. Lucas McGeorge” and “Dr. Annette Kin,” and focusing on the “midi-chlorians,” fictional entities that live inside cells and give Jedi their powers.

The bulk of the paper was a copy-and-paste of the mitochondria entry from Wikipedia, changed with a simple find/replace to turn mitochondr* into midichlor*. He then added clear Star Wars reference, such as:

  • “Beyond supplying cellular energy, midichloria perform functions such as Force sensitivity…”
  • “Involved in ATP production is the citric acid cycle, also referred to as the Kyloren cycle after its discoverer”
  • “Midi-chlorians are microscopic life-forms that reside in all living cells – without the midi-chlorians, life couldn’t exist, and we’d have no knowledge of the force. Midichlorial disorders often erupt as brain diseases, such as autism.”
  • He inserted dialogue verbatim from one of the movies, including the monologue on the Tragedy of Darth Plagueis the Wise.

He even admitted what he did in the footnotes, stating ““The majority of the text in the current paper was Rogeted from Wikipedia: Apologies to the original authors of that page.”

The result? In the author’s own words:

Four journals fell for the sting. The American Journal of Medical and Biological Research (SciEP) accepted the paper, but asked for a $360 fee, which I didn’t pay. Amazingly, three other journals not only accepted but actually published the spoof. Here’s the paper from the International Journal of Molecular Biology: Open Access (MedCrave), Austin Journal of Pharmacology and Therapeutics (Austin) and American Research Journal of Biosciences (ARJ) I hadn’t expected this, as all those journals charge publication fees, but I never paid them a penny.


Finally, I should note that as a bonus, “Dr Lucas McGeorge” was sent an unsolicited invitation to serve on the editorial board of this journal.

This should serve as a cautionary tale to anyone who uncritically quotes, or defers to, an expert simply because they’ve been published somewhere. They could well be legitimate – or they may not. Do your due diligence in any case.

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The age of selfishness

One of the great themes of our time is that we’ve largely lost a sense of the common good – that for most of us, our actions are based on what’s good for us, and screw everyone else.

Which is why the following chart is not surprising, courtesy of Zero Hedge:

Over the past eight years, we’ve seen the stock market more than triple, from 6,627 in March 2009 to 21,637 as of Friday (July 14, 2017). But as the chart shows, households and institutions have been net sellers in that time. Instead, one of the main reasons that stocks have gone up is that publicly-listed companies have been using cheap debt for stock buybacks, reducing the number of shares in the market.

Why would they do that? They do it to make their corporate performance, commonly measured in earnings per share, look better than it is. Think about a business with a million outstanding shares, and a net profit of a million dollars. That gives you earnings per share of $1.00. Now suppose that business has a bad year, and profits drop to $750,000, which is a drop of 25%. Sounds bad, right? Not necessarily; just use virtually-free debt to buy back half your shares, and your earnings per share actually increase to $1.50, an increase of 50%!

And why would companies do that, rather than use that debt (or, god forbid, those earnings) to invest in the company’s growth, either through hiring, R&D, or acquisitions? Because increasing earnings per share pays off for management, who commonly get bonuses and raises based on that metric, as well as an increase in their own stock portfolios. It’s good for the managers but bad for the company, which increases its debt load and doesn’t see any investments in its future.

So don’t assume the growth in the market indexes is a reflection of a healthy economy; like most things today, it’s actually a reflection of peoples’ greed and their me-first, screw-everyone-else mentality.

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Work till you die

Many of the projections of financial doom were predicated on the Baby Boomers retiring at age 65, going from taxpayers to welfare beneficiaries (not welfare as in poverty benefits, but in the general sense of entitlements like Social Security and Medicare). But thanks to our culture of not saving, those Boomers are financially unable to retire, stalling those projections and causing a host of other problems along the way.

As Bloomberg notes, US seniors are employed at the highest rate in 55+ years (since the creation of Medicare):

Certainly baby boomers are increasingly ignoring the traditional retirement age of 65. Last quarter, 32 percent of Americans 65 to 69 were employed. Even past age 70, a growing number of seniors are declining to, or unable to, retire. Last quarter, 19 percent of 70- to 74-year-olds were working, up from 11 percent in 1994.

Older Americans are working more even as those under 65 are working less, a trend that the Bureau of Labor Statistics expects to continue. By 2024, 36 percent of 65- to 69-year-olds will be active participants in the labor market, the BLS says. That’s up from just 22 percent in 1994.

For some, it’s because they can: The average 65-year old is much healthier and active than their counterparts of previous generations. For others, it’s because they can’t afford not to work. In fact, The Fool website, reporting on Census bureau data, notes that the typical American’s net worth at age 65 is $194,226; however, removing the benefit from home equity results in that figure plummeting to just $43,921.

This is how our money system plays out: We steal wealth from people via inflation, forcing them to work until they die. Meanwhile our younger people graduate into an over-full pipeline, unable to get jobs because the previous generations won’t/can’t leave them. This is the model offered by the Federal Reserve to make banksters rich at our expense.

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CNN is disgusting

As most people know, President Trump recently tweeted a short video from his WWF cameo days, in which a younger Trump body-slammed someone in a business suit – except in this video, the CNN logo was on the head of the victim. It was tasteless and completely non-presidential, although on the other hand it was awfully funny.

It was uncalled for and inappropriate, though it was well-deserved: CNN has been over the top in its relentless criticism of the new president, going so far as to publish lies and half-truths to make their case. As Project Veritas undercover videos show, that was done intentionally, for ratings, with full knowledge that there was nothing behind their assertions.

Yesterday, CNN left their façade of credibility behind completely, and jumped into the advocacy-not-journalism space with both feet. They tracked down the creator of that WWF meme and publicly threatened to unmask him unless he apologized and promised to never do it again. The “publicly” part is important, as it was a threat not only to him but to anyone else who might want to criticize the network.

This is a direct attack on First Amendment rights, which is ironic coming from a supposed news organization. The network was a joke before this; it has now, of its own volition, proven itself to be a malicious liar, and fully deserves to have its license revoked.

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Pets vs. kids

The definition of life is, surprisingly, not a settled issue. But one commonly-agreed to component is the fact that living things reproduce.

In humans, there is a strong natural instinct and drive to have children. It’s one of the main reasons – perhaps even the primary reason – that societies around the world have set up a culture based on marriage (and usually monogamy). At a biological level, “baby fever” is a real thing, not only for women but also for men.

As strong as this natural desire is, we can and do push against it. We’re not salmon, hard-wired to swim upstream to an ancestral nesting area; we can generally decide whether, where, when, and with whom to have kids.

And in America, we’re more and more frequently deciding not to procreate at all. While we are one of the most affluent countries in the world, our fertility rate of 1.87 births/woman is below both the world average (2.42) and the estimated replacement rate (2.1).

There are undoubtedly lots of reasons for that, ranging from changes in cultural standards to the ever-increasing cost of living and, in particular, cost of raising a child. And let’s not forget the economic dampeners of declining social mobility and record economic inequality.

But what’s clear is that biological mandate to have kids hasn’t left us, as evidenced by the growth in pet ownership among child-bearing-age Millennials.

Pets act as an economic substitute for children: They fill a similar need (shared love, and the feeling of taking care of a smaller being) but at a much lower level of cost and commitment. And the research says that more and more young people are opting for the path of least commitment:

As The Washington Post notes:

Three-fourths of Americans in their 30s have dogs, while 51 percent have cats, according to a survey released by research firm Mintel. That compares to 50 percent of the overall population with dogs, and 35 percent with cats.

The findings come at a time when millennials, roughly defined as the generation born between 1980 and 2000, are half as likely to be married or living with a partner than they were 50 years ago. They are also delaying parenthood and demanding flexible work arrangements — all of which, researchers say, has translated to higher rates of pet ownership.

And it’s not just about the companionship: We’re humanizing and indulging our pets just like we would otherwise do with our children:

A majority of millennials — 76 percent — said they are more likely to “splurge” on their pets than for themselves, including for expensive treats (44 percent) or a custom bed (38 percent), according to a 2014 study by Wakefield Research. By comparison, 50 percent of Baby Boomers — those born between 1946 and 1964 –– said they would do so.

Millennials were also twice as likely than Baby Boomers to buy clothing for their pets, a phenomenon Richter chalks up to the prevalence of social media.

While these numbers are for the US, the phenomenon of lower birth rates – of young people choosing not to have children (and often choosing not to marry) is widespread among more affluent countries, most or all of which are seeing stagnant or declining standards of living. I wouldn’t be surprised to see pet ownership skyrocketing in countries like Japan, which has one of the lowest rates of fertility in the world, at 1.41.

But while they may fill some personal needs, of course those pets aren’t children. And while this trend may be completely justified on an individual level, it spells disaster for a country that plans on a growing younger generation to accommodate the needs of its elders.


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Crumbling institutions

In their landmark book, The Fourth Turning, Strauss and Howe note that one of the signals of a fourth turning is the loss of faith in institutions. And we’ve certainly seen that in Gallup’s annual poll:

While Gallup’s focus is on institutions like banks or the media, there are other institutions, social institutions like marriage, that are facing a similar decline in influence. As Pew’s 2014 Social Trends survey points out:

Recent survey data from the Pew Research Center finds a public that is deeply divided over the role marriage plays in society. Survey respondents were asked which of the following statements came closer to their own views: Society is better off if people make marriage and having children a priority, or society is just as well off if people have priorities other than marriage and children. Some 46% of adults chose the first statement, while 50% chose the second.4

Opinions on this issue differ sharply by age—with young adults much more likely than older adults to say society is just as well off if people have priorities other than marriage and children. Fully two-thirds of those ages 18 to 29 (67%) express this viewpoint, as do 53% of those ages 30 to 49. Among those ages 50 and older, most (55%) say society is better off if people make it a priority to get married and have children.

What strikes me is that two-thirds of people between 18-29 – the primary ages for settling down and starting a family – believe that society is fine if marriage and children are not a priority.

There are lots of reasons for that, including cultural, financial (not earning a living wage capable of taking care of a family), and even legal (the lopsided divorce court system). But the bottom line is that one of the foundations of a solid society – marriage – is in decline and no longer considered important by the majority of people at the optimal age to start a family. A very scary situation to be sure.

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Will the stock market crash?

When I first woke up to the unsustainable and incredibly fragile nature of our financial system, I was convinced that the markets – already starting to bubble up in 2011 – would collapse. AT. ANY. MOMENT. And yet here we are, with the Dow over 21,000, more than triple the low that we saw just eight years ago, when it hit 6,627.

So what gives? And what do these record gains (which don’t correspond to any great economic or political developments) mean about the potential for a future crash?

What gives is that the central banks are much more imaginative, and much more aggressive, than anyone thought they would ever be. After the Fed “saved” the world economy by pumping trillions of liquidity into the system, it started changing the rules of the game – such as allowing banks to hide bad assets with “mark to fantasy” rules, introducing “quantitative easing” (ie naked money printing), and reducing the rate of interest to 0%.

Central banks around the world have coordinated their efforts, with several reducing official interest rates well below 0% and printing money – sorry, I mean quantitatively easing – at an unimaginable pace. This chart from Peak Prosperity shows the incredible amount that central banks – in this case, BOJ and ECB at the moment – are printing money to shore up the global economy:

Where is that money going, and why? Well, it’s going into financial assets mostly. The Bank of Japan is directly buying Japanese index funds; the Swiss National Bank is one of the top holders of Apple stock. And in aggregate, central banks’ portfolios of stocks and bonds continues to grow.

But why? Most people think it’s for the “wealth effect,” where people see their portfolios grow, feel better about the economy, and go spend money. And that might be part of it, though a record low percentage of Americans (52%) own any stocks at all.

No, I think the reason is much larger, and more critical.

When the Fed lowered interest rates to 0%, they helped borrowers (who we desperately need in a debt-based system). Who did they hurt? Savers – people who need a return on their investment. For most of us, that means older people trying to live off their investments, and certainly those people have been devastated. But the category also includes pension firms and insurance companies.

Traditionally, pensions and insurance firms invested quite a bit in bonds, which used to be a safe place to get a reasonable return. But now, with no return to be had, they’ve had to shift to riskier investments: The stock market. Pensions are already underfunded somewhere between $2.3 to $6 trillion, and that assumes they get really high returns – something like 7% or 8% per year on their investments. If the stock market crashes, they’ll be completely wiped out. And when pensions and insurance companies go down, they’re taking the rest of the economy with them.

So I no longer think we’ll see a stock market crash – at least not one that we’ll then recover from. Central banks will keep this going as long as they can, crash-free regardless of world events. But if it does actually crash, then buckle up – because it will CRASH in a way we’ve never seen before.

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