Gold Bubble Or Hyperinflation?

According to this source, the FRN-denominated price of gold has risen 12 out of the last 15 days, 16 out of the last 20 days.

Normally, prices follow a random walk. Gold is going straight up!

On another blog, someone wrote "My mother is thinking of buying some gold!" He said it was weird, when random people start thinking about buying gold. He drew conclusion #1.

Conclusion #1: Many people are seriously considering investing in gold. Therefore, there is a gold bubble.

Conclusion #2: Many people are seriously considering investing in gold. That's a sign of coming hyperinflation. It's a sign indicating the collapse of the State economic system and State paper money.

If you look just at gold and nothing else, you might conclude it's a bubble. If you look at gold/silver, gold/oil, gold/corn, gold/soybeans, or relative to any other commodity, there is no gold bubble. (In fact, the gold/silver ratio has been decreasing over the past few years. If anything, that indicates a silver bubble more than a gold bubble.) If you look at a 10 year price chart, metals and food and commodities are pretty tightly correlated.

If you invest in a checking account, money market account, or Treasury bonds, you're getting ripped off by inflation. You might as well directly write Lloyd Blankfein a check and cut out the middleman.

Corporate bonds are just as bad. The Federal Reserve keeps interest rates artificially low. That affects corporate bonds as well as Treasury debt.

Similarly, the stock market is a ripoff. Stocks pay dividends and have earnings growth. That's the pro-State troll reason to prefer stocks to gold. Unfortunately, stocks also have friction. The CEO pays himself and his buddies a huge salary and bonus. There's lots of waste and fraud and inefficiency. Corporation managers can spend $2M+ bribing policeman, and the CEO won't notice.

A stock earns a dividend, but there's also lots of hidden costs. Inflation leads to a rising stock market. It's still a loss when stocks underperform true inflation. Over the last 10 years, gold has *CRUSHED* the stock market.

So far in 2011, gold is still a couple percent better than the S&P and other stock indices, even though there were some periods where the FRN-denominated price of gold sharply declined.

Gold ETFs are risky. The GLD fund prospectus allows the fund to lend gold to short sellers. In the event of a default, the GLD fund shareholders are stuck with the loss. For any paper gold investment, even one that claims to be 100% full reserve like PHYS, there's always the risk that the fund manager will commit fraud.

In a SHTF scenario, GLD and ETFs and State paper investments will be worthless.

Even real estate is risky. Politicians can jack up property tax rates, stealing your home. Owning a home isn't really an inflation hedge, when inflation is 20% *AND* property taxes go up 20%.

I saw Cramer touting gold. He was advising ETFs and gold mining stocks. He said "Only a fool buys gold and buries it in your backyard." You should buy gold and bury it in your backyard. If the State financial system completely collapses, gold and silver buried in your backyard may be the only investment that preserves its value.

The price of gold and silver, over a 5+ year period, is the most accurate measure of inflation. If you believe "Gold is money!", then that's a definition of inflation.

It is misleading to say "The value of gold is skyrocketing." It is more accurate to say "The value of the paper dollar is crashing."

50 Hour Workweek

I saw a post elsewhere on "Unions and the 40 hour workweek".

I realized that's a lie, even if your job only requires 40 hours a week of work.

Why? You have to add commuting time. If you spend 2 hours per day commuting, then you have a 10 hour workday and not 8 hours.

Also, most employers don't pay for lunchtime anymore. Add another half hour per day.

Most Americans *NO LONGER* have a 40 hour workweek. A lot of jobs demand 45 or 50 hours. You should add commuting time. You should add unpaid lunch breaks. Many jobs demand more than 40 hours per week.

More Facial Personality Analysis

Some commenters have asked for more analysis of "evaluate personality type based on appearance". (I suspect I can do this better than most policemen.)

Here is another example.



Frank McCourt has the parasitic or psychopathic personality type, as you can see by his nearly vertical laugh lines.

Also, look at his facial asymmetry. Notice how the left side of his face is slightly disfigured (right side in the photo). His left eye is slightly smaller than his right eye. His left cheek also looks a little off.

I'm noticing this subtle disfigurement a lot more than I used to.

Here's the reasoning. For most men, the right side of the body is for logic and the left side is for emotions. If you have the "abused productive" personality type, the right side of your body is partially disfigured. If you have the parasitic personality type, the left side of your body is partially disfigured. (People with high logical intelligence are logically stressed. People with high emotional intelligence are emotionally stressed.)

In women, it's reversed (left=logic, right=emotions).

For homosexual bottoms, it's reversed again. (The reason is that the homosexual bottom takes the opposite of his parasitic partner. Homosexual tops are people who want to be parasites, but aren't intelligent/attractive enough to dominate someone of the opposite sex.)

Here is another example. Look at President Obama's facial wrinkle pattern. You can tell he had plastic surgery. His facial wrinkles and laugh lines move in an unnatural pattern when he talks.

You can read personality type by looking at laugh line patterns and partial facial disfigurement. There is no absolute proof, but these are indications.

Insanity Defense

This story is interesting. In a high-profile crime, Levi Aron murdered 8 year old boy Leiby Kletzky.

There is overwhelming evidence that Levi Aron did it. The boy's remains were in his apartment. He confessed to police.

Levi Aron's lawyers are preparing an "insanity defense".

The "insanity defense" is stupid. Everyone is responsible for what they do.

However, the "insanity defense" plays a role in the justice system farce. It gives defense lawyers something to do. In a case like this, the defense lawyers can't argue "The police got the wrong guy!" That would be too obviously silly. The "insanity defense" lets the defense lawyers pretend they're advocating on behalf of their client.

Of course, you don't need a corrupt legal system biased against defendants in a criminal trial like this one. A "guilty" verdict would be fair.

This bit was interesting:

Levi Aron, 35, had trouble making eye contact and clammed up when confronted with uncomfortable questions, his lawyers said Monday.

As I mentioned in "Two Kinds Of Psychopaths", Levi Aron is an "abused productive" person who couldn't fit in. He is not a psychopath in the sense of Bernard Madoff.

An intelligent "abused productive" person would get a decent job and otherwise fit in somewhat. Levi Aron had the "abused productive" personality type *AND* wasn't that smart.

Most people who commit violent crime have the "abused productive" personality type. They couldn't fit in and turned to violent crime. A parasite can usually get what he wants by emotionally manipulating people. Even a weak parasite will find a weak "abused productive" person to manipulate and control.

In this case, I suspect Levi Aron had some kind of suppressed homosexual desire. That's why he focused on a little boy. Based on my observations, homosexuality is a mental illness.

The mainstream media is downplaying "Levi Aron sexually molested the boy!" aspect of the story. The mainstream media is promoting homosexuality. That aspect of this murder can't be mentioned.

If you want a good example of "homosexuality is a mental illness", look at Jose Antonio Vargas on Thursday, July 14th's Colbert Report. If you look carefully, you can see that his facial gestures are the mirror image of a typical man. People who are "abused productive" and homosexual bottoms tend to have inverted polarity, compared to a typical straight person.

(Compared to before, I'm able to notice subtle tiny asymmetries in people's faces. These asymmetries are an indication of personality type. It was a shocking thing to suddenly start noticing this. That's probably why people with a "mental illness" are frightened when they watch TV. They're noticing things they didn't notice before.)

The "insanity defense" is stupid. Everyone is responsible for what they do. It was very traumatic for me to discover that almost everything I knew was a lie. I never murdered anyone or hurt anyone, even though I had a panic attack.

The "insanity defense" gives defense lawyers something to do. In a case like this one, the defense lawyers can't argue "The police got the wrong guy!" A lawyer who said that would obviously be a fool. There's too much evidence.

The "insanity defense" gives State-appointed defense lawyers the opportunity to do something on behalf of their client.

The "insanity defense" is an evil fnord. It gives defense lawyers something to do, when their client obviously totally did it. The "insanity defense" helps preserve the illusion of a fair trial.

"Not guilty by reason of insanity" is still a loss for the defendant. The only difference is that you go to a mental hospital prison instead of a regular prison. In fact, the regular prison may be better. In the mental hospital prison, you're forcibly drugged.

Also, if you're in a regular prison, you might have already been eligible for parole or served your whole sentence, while you're still in the mental hospital prison ruled "not mentally competent". "Not guilty by reason of insanity" can lead to a longer sentence than regular guilty, because there's no parole or release if you're not mentally competent.

There's another stupid aspect for State murder trials. If the defendant totally obviously did it, why not have a trial right away? When guilt is totally obvious, why not have a rapid trial and execution? Why pay the cost of keeping the criminal alive in prison? (Given a corrupt "justice" system, delays are necessary to preserve the illusion of fairness. In an honest justice system, cases like this could be disposed with a rapid trial and execution.)

Also, the police are portrayed as heroes, solving the crime. With State police, the police don't take action until after a crime. The police don't have an obligation to determine "Levi Aron seems disturbed. Let's help him and keep an eye on him." State police have no obligation to prevent crime; they merely clean up afterwards.

In the present, police have only two choices. They can kidnap someone or do nothing. In a fairer system, there would be more intermediate levels of help. In a free market police system, police would have an obligation to identify potential troublemakers. They would prevent crime and help potential criminals, without stealing their freedom.

(Here's how that would work in a really free market. Whoever Levi Aron purchased police protection from, would have an obligation to evaluate him and make sure he didn't commit any crimes. People would be very reluctant to deal with someone who didn't have "crime insurance". When Levi Aron tried to buy "crime insurance", they would have noticed something wrong with him and helped him, before he committed a serious crime.)

In a really free market with sane police, they could be more active at preventing crime. In the present, everyone is crazy, especially the police. That makes it hard for police to identify emotionally disturbed people, when the police are also insane. Also, State law doesn't provide for active preventative police work. State police are more focused on punishment and cleaning up afterwards, rather than actively preventing crime.

It is possible to identify "abused productive" people who are close to breaking. In the present, everyone is a little crazy, making that hard. In the present, the State doesn't encourage preventative police work.

With a "monkey number" of 200, and 0.5% of the people working as police, it would be possible for one policeman to personally know everyone. That would enable police to identify and prevent Levi Aron. In the present, this isn't feasible, due to the State and because everyone is a little crazy.

That's one problem with the modern Police State. There isn't a personal relationship between the police and the people they're supposed to be protecting. Police have much more of an "us vs. them" mentality. With free market police, there would be more of a personal relationship.

It may seem like I'm making two contradictory arguments. They aren't. First, I'm saying that Levi Aron is responsible for what he did, mental illness or not. Second, I'm saying that police should have a more active obligation to prevent crime and identify potential troublemakers, without taking away their freedom. Those two ideas don't contradict each other.

This crime probably could have been prevented, if Levi Aron got appropriate help ahead of time. In the present, that's difficult, because the police themselves are insane.

The "insanity defense" is stupid. Everyone is responsible for what they do. The "insanity defense" gives defense lawyers something to do. The "insanity defense" enables a farce of an impartial trial, even though the defendant is obviously totally guilty.

Also, in this case, the murderer Levi Aron may have some suppressed homosexual desires, due to his choice of an 8 year old boy victim. He probably sexually molested the boy before murdering him. The mainstream media can't mention that aspect of the story, because the mainstream media wants to promote homosexuality.

News Corp. Whisleblower Dies Of "Natural Causes"

This story was funny. The whisteblower in the News Corp. scandal mysteriously died of "natural causes".

The police were quick to point out that it was "natural causes". Whenever there's a suspicious death, the police seem to eager to call it "natural causes". That reminds me of the times when a group of researchers in the same military lab all died of "natural causes" or "accidents".

People don't spontaneously die of natural causes. They usually have a history of serious health problems leading to death.

Another aspect of this scandal is that it isn't just Rupert Murdoch, although the News corporation is taking most of the blame. The blame also lies with the State police monopoly. Allegedly, policemen took bribes to look the other way. Why isn't anyone saying "Due to this scandal, maybe a State police monopoly is a bad idea. What happens when the police take bribes to ignore crime?"

It was amusing to see Rupert Murdoch interviewed by Parliament. He's also going to be subpoenaed by the US Congress. That's good theater, when politicians take a scandal-ridden CEO and grill him. It lets them seem like the tough guys promoting "justice".

Whenever there's a scandal like this, the CEO uses the "stupid CEO" defense. The "stupid CEO defense" is "Duhh!! I didn't know my subordinates were committing crimes! They had me totally fooled! I'm not responsible! I'm a stupid CEO who doesn't know what his subordinates are doing! Duh!"

That is nonsense. Even if Rupert Murdoch had no personal knowledge of their crime, he still is partially responsible. A boss is responsible for what his subordinates do. Even if they fooled Rupert Murdoch, he's still responsible because he hired them.

Similarly the President says "Duh! I didn't know soldiers were committing war crimes! I totally had no clue!" At the same time, the President says "I take 100% personal credit, because my subordinates killed Osama bin Laden."

This is an important State brainwashing technique. When there is success, the leader gets the credit. When there is failure, the leader claims incompetence. The disgraced leader was tricked by his subordinates. The leaders have no accountability.

Similarly, during the housing bubble, bank CEOs got huge salaries and bonuses. During the bust, they got a bailout. Now, they're getting huge salaries and bonuses again.

The US economy cannot recover until there's real accountability for the leaders.

In a really free market, there's accountability for the leaders. If you mismanage your business, competitors will steal your market share. In the present, there's no accountability. The State has a monopoly. State insiders use violence to prevent competition. State insiders use violence to steal via taxes, and give themselves a bailout.

The rest of the mainstream media is ganging up on Rupert Murdoch, because his propaganda is slightly different than theirs and contradicts theirs. This really is a fight among two groups of criminals, rather than heroes vs. villains. Of course, "Other people are also criminal!" is not a valid excuse when you're accused of a serious real crime.

(This is a real crime. Hacking into people's personal accounts and E-Mails is a type of trespassing.)

Here is another important point. Most State leaders are criminals. Most State leaders are psychopaths, parasites, or people that psychopaths can easily control. When most of the leaders are criminals, other criminals pass undetected. Rupert Murdoch didn't notice that his subordinates were scumbags, because they have the same personality type as him!

When that whistleblower died of "natural causes", my reaction was "Who do they think they're fooling?" As leader, Rupert Murdoch is responsible for what his subordinates do. Even if he has no specific knowledge of their crimes, he's responsible for hiring them and for supervising them.

The "Chained CPI" Scam

This story was interesting. When calculating the cost-of-living-adjustment (COLA) for Social Security and other payments, State comedians are switching from the CPI to the "chained CPI".

Naturally, this move will lead to a lower inflation calculation. This will lead to lower Social Security payments. Whenever State comedians/economists change the inflation index, it leads to lower inflation. Why don't any formula changes ever lead to a higher inflation calculation?

The CPI matters because it's used to index pensions and Social Security. Also, a dishonest CPI enables politicians to lie and say "Inflation is low!"

Ben Bernanke says "I'm only willing to discuss the CPI. I'm not willing to discuss other measures of inflation." Ben Bernanke is a professional liar.

When I heard of the new "chained CPI", I realized I had to look into the Math behind the new calculation farce.

First, I will review the bias in the old CPI.

The CPI uses the geometric mean instead of the arithmetic mean. According to algebra, the geometric mean is always less than the arithmetic mean, for positive numbers.

Here is an example. Consider {1, 3, 9}. The arithmetic mean is (1+3+9)/3 = 13/4 = 4+1/3. The geometric mean is (1*3*9)^(1/3) = 3. By using the geometric mean instead of the arithmetic mean, inflation is understated.

(The geometric mean of {a_1, ..., a_n} is the product of a_i raised to the 1/n power. A theorem from algebra says that the geometric mean of positive numbers is always less than or equal to the arithmetic mean, with equality when all numbers are identical.)

Also, the CPI is reweighted. State comedians don't pick the weights ahead of time. Instead, they look at the price data, and then choose the weights. Naturally, they pick weights to underestimate inflation.

Here's the joke justifying that lie. When prices rise, people substitute what they buy. Therefore, things rising rapidly in price should be underweighted and things rising slowly should be overweighted.

Here is an example. Suppose that in year 1, chicken rises 30% but beef rises 2%. People switch from chicken to beef. Suppose that in year 2, chicken rises 2% but beef rises 30%. People switch from beef to chicken. In both years, "meat" rose 2% annually, even though actual inflation was much higher. The CPI component of "meat" is 2% annually instead of a more honest 14%, due to the reweighting trick. (sqrt(1.3) = 1.14)

Here is a second example of reweighting bias. The "cash for clunkers" discount was deducted from "price of a car", when calculating the CPI. When the "cash for clunkers" program was in effect, more people bought cars, leading to greater weight for "new car" in the CPI. When the "cash for clunkers" program expired, fewer people bought new cars, and therefore "new car" was given a lower weight in the CPI.

Here is a third example of reweighting bias. When the housing market was booming, State comedians said "A booming housing market is a negative CPI adjustment. It's negative implied rent for homeowners." When the housing market crashed, State comedians said "Housing prices are cheaper now for first-time homebuyers. That's a negative CPI adjustment."

Also, it's the "core" CPI and not the full CPI. The "core" CPI excludes food and energy and things that tend to rise in price quickly. (The supply and demand of energy is relatively inelastic, making it very sensitive to inflation. Similarly, the supply and demand for food is relatively inelastic.)

Also, the CPI is calculated via a multi-stage process. First, an index is calculated for each area and each category. Then, those are aggregated. The rebalancing trick and geometric mean trick is used at each stage, to understate inflation. (For example, prices are rising in California but decreasing in Texas. Therefore, people move from California to Texas. The actual census data is irrelevant.)

So far, I've described the *OLD* biased CPI algorithm. What's the new scam for "chained CPI"?

This is the sort of thing I can do better than anyone else. I'm illustrating exactly the formula that the "chained CPI" uses to lie about inflation.

Instead of using "price at time n", the "chained CPI" uses "average of past prices" (typically a year). How does this lead to bias?

Suppose that, instead of using the price at time n, I use a geometric-mean average of 3 prices.

Consider {1, 2, 4, 2, 4 } as the raw price data. (I.e., price is 1 in first year, 2, in second year, 4 in third year, 2 in fourth year, 4 in fifth year.)

I substitute with "3-chained geometric-mean average".

For each 3 adjacent elements, I replace those three elements with the geometric mean of those 3 elements.

The geometric mean of {1, 2, 4} is (1*2*4)^(1/3) = 2.
The geometric mean of {2, 4, 2} is 16^(1/3) = 2*(2^(1/3)) = 2.52
The geometric mean of {4, 2, 4} is 32^(1/3) = 2*(4^(1/3)) = 3.17.

Summarizing, via geometric mean 3-chaining, the series {1, 2, 4, 2, 4} is replaced with {2, 2.52, 3.17}. This "chaining" process smooths out price volatility when dealing with raw price data.

The "geometric mean" trick smooths out price data in one interval. The "chaining" trick smooths out price data over adjacent time intervals.

Notice how a 300% increase {1, 2, 4} is replaced with a 117% increase {2, 2.52, 3.17}. When this trick is combined with rebalancing and reweighting and multi-stage aggregation, this leads to a lower CPI. This "chaining" trick can be used at each stage of CPI index aggregation.

"Chaining" also leads to bias for arithmetic mean. {1, 2, 3, 2, 3} becomes {2, 7/3, 8/3}, via 3-chaining. It's unclear where the CPI uses geometric mean and where it uses arithmetic mean. I think they use geometric mean everywhere, but the documentation wasn't clear.

Why even bother with the farce? The CPI is a lie backed by really fancy Math. However, that Math has nothing to do with how people actually spend money. When I go to the grocery store, does the clerk say "OK, I'll charge you the average of the price over the last 12 months."? That is what the "chained CPI" means.

Here's my proposed price index. I call it the CPI-0. It has a very simple algorithm.

float get_cpi(BLS_Statistics *data)
{
return 0;
}

That's more intellectually honest than the actual CPI algorithm.

The CPI is a biased and manipulated statistic. The new "chaining" trick makes it even worse. The price at time T is replaced with an average of prices over the previous year. This leads to lower inflation, especially when combined with the rebalancing and reweighting trick.

This is a clever trick. Instead of admitting there's an inflation problem, State comedians change the definition of inflation! Each time State comedians change the inflation formula, they add new tricks that let them understate inflation!

This type of Math analysis is something I can perform better than almost anyone else. I've seen articles on the new "chained CPI", but none of them explained the details of the scam like me.

Debt Ceiling "Debate"

It is offensive to watch the "negotiations", regarding the debt ceiling increase.

This is not a true negotiation. Suppose I am negotiating for a job. I'm contributing my salary, and the employer is paying me. Each side is contributing something. (That distinction is blurred, when you're working for a corporation with a State-backed monopoly. A typical employment contract is take-it-or-leave-it, rather than a true negotiation.)

The Republicans and Democrats are not spending their own personal money. They are spending other people's money.

This is a common mistake. Politicians are spending other people's money. Via the Principal-Agent problem, politicians treat tax money like it's their own personal money. Anytime you control resources that you don't own, there's a temptation to line your own pockets, rather than spend it wisely.

As another example of the Principal-Agent problem, a CEO controls the corporation, but isn't 100% owner. The CEO is tempted to line his pockets at the expense of shareholders.

No matter what precautions you take, the Principal-Agent problem exists whenever you control resources you don't own. That's one of the key scams of the State. Via the State, many people control wealth that they don't actually own. This leads to theft, fraud, waste, and malinvestment, rather then people using that wealth wisely.

Suppose I'm 100% owner of a business. Then, "making a budget" is a reasonable exercise. I try to match my expenses and income, and maximize my profit.

Suppose I'm 50-50 equal co-owners with someone else. Now, there is a problem if we can't agree. Either party can threaten to torpedo the business, if we're equal co-owners. (Never enter a business with exactly 50-50 split. You can be SOL if your partner misbehaves. Similarly, if you're a minority owner, there are plenty of ways you can be cheated. I'd be reluctant to be the majority owner, because the minority holders can still sue and harass you if you're successful. Consider E-Bay vs. Craigslist, as an example where a minority shareholder can harass you.)

Democrats and Republicans act like they're 50-50 co-owners of the government. That's not true, because it's technically owned by the people. However, the average slave is nearly completely disenfranchised. The two groups of insiders act like co-owners of the government.

Government is not bound by the accounting rules of normal people. In a system of paper money, the government can have an arbitrarily high deficit and debt. The only cost is inflation. If inflation gets too high, then there's hyperinflation, and the monetary system and government collapse.

The deficit and national debt aren't free money. The cost is paid by everyone else via inflation.

If you cut taxes but don't cut spending, that's silly. Politicians could decrease the income tax, but that's offset by an increase in the inflation tax. The only thing that really matters is spending cuts.

Paper money gives politicians an unlimited fudge factor. If they want increased spending, they can run higher deficits rather than raising direct explicit taxes. Instead of raising the income tax, they can raise the inflation tax.

It also is a farce, that they're projecting $X budget cuts over the next 10 years. That is silly. No current agreement is binding on future Congress. The only thing that really matters is current spending. They can make an agreement for future cuts now, but change their mind later.

Due to the Compound Interest Paradox, the debt ceiling *MUST* be raised. Due to a flaw in debt-based money, the "national debt" must increase exponentially to keep the scam running. The "national debt" cannot be paid unless the Federal Reserve is reformed or eliminated.

The national debt is greater than the M2 money supply? Does that make any sense at all? How can the government be in debt by more money than there actually is? It's even more obvious if you add all private debt, which is $50T or more. How can people collective be in debt by a huge multiple of the money supply?

You might wonder "Why not print money to pay off the national debt?" Instead of printing new money, the Federal government continuously refinances its debt by printing more Treasury bonds. There is no substantial difference between printing new money to pay off the debt, and continuously rolling over the debt by printing new Treasury bonds; both are inflationary. The only real difference is that the banksters make a fortune on "interest payments on the national debt". The banksters borrow from the Federal Reserve at 0%-0.25%, and buy higher-yielding Treasury debt, making a guaranteed riskless profit. If the Federal government prints new money and pay off the national debt, then the banksters can't make easy profits speculating in Treasury debt.

The budget negotiations is a game of chicken. Each side threatens "I'm willing to end the criminal conspiracy of government, if I don't get what I want." Of course, they never would take such drastic measures.

The Democrats and Republicans are false opposites. They're colluding to rip off the American people. Many people think that the opposite of a Democrat is Republican. The President has more in common with Boehner than with the average slave. They're both politicians and parasites and insiders. They earn a living by corruption at the expense of everyone else.

They're pretending to debate and be responsible. Most politicians are not aware of the scam, which makes them more effective liars.

It's amusing to watch politicians argue about the debt limit and budget. They have to raise the debt limit. They have to agree on a budget. What else are they going to do? Give up, go home, and get a real job? They have to reach an agreement. They will phrase the agreement that both sides claim "victory". The losers are the slaves who suffer higher taxes and higher inflation.