Nobody Saw Inflation Coming? Really?

Here's a puzzler, a piece that asks "Why Did Almost Nobody See Inflation Coming?" Really?

According to Jason Furman, "a survey of 36 private-sector forecasters in May revealed a median inflation forecast for 2021 of 2.5 percent."

Maybe their fearless economic models didn't factor in a doubling of the Fed's holdings of federal debt. Or wave after wave of "stimulus" otherwise known as free handouts. I mean, the federal government doesn't usually go pedal-to-the-metal like that too often.

Furman starts his piece with Queen Elizabeth II asking back in 2008 why "Why did nobody see it coming" with respect to the Crash of 2008.

Well, the answer is that a stock market crash reveals a lot of hidden rocks as the tide goes out.

Plus, of course, there is no telling how the central banks will fail to act as lenders of last resort. In the case of 2008, it was little Ben Bernanke who flinched from bailing out Lehman Brothers in September 2008. Because, he whined, he didn't have the legal authority.

And, with respect to 2008, what are you going to do? You had the Fed pumping out money. You had Congress demanding that Fannie and Freddie hand out low-down real-estate loans to minorities. So, at some point your get this, from usgovernmentspending.com.

Yes. That first peak is in 2003, and nothing happened. Then there's another peak in 2006 when the Fed started fighting inflation and the the Treasury yield curve went inverted. Agency debt, by the way, is principally Fannie Mae and Freddie Mac debt, which is mostly repackaged real-estate mortgages.

The point is that, if you were sitting looking at the numbers of Agency Debt back in 2000, you would be saying to yourself: Hmm. I wonder when this little bubble is going to pop, as Agency debt was going north of 40 percent of GDP.

As Herb Stein said many moons ago, "if something cannot go on forever, it will stop." But the question is: when will it stop? 

The answer is: nobody knows.

And that is why fearless forecasters tend to get caught on the wrong foot. If you are a fearless forecaster you have to hedge your bets. You cannot say: the world will end in 47 days. Because the world might end in 37 days, or not for 20 million years.

Now, in the aftermath of the Crash of 2008 we learned about The Big Short by Michael Lewis. But that book was written after the crash. If the chaps shorting mortgage debt had been wrong, or had mistimed their shorting there wouldn't have been a book. They and their investors would have slunk off back to their holes and we would never have known about them.

Same thing about today's inflation. Anybody could have told you that the money printing of 2020 and the succession of stimulus packages would not end well. But when? And why? In a year? In two years? No doubt there are some fearless investors that have made the right call, and we will be hearing all about them in a couple of years. But, as yet, we do not know how it will all turn out.

The only sure thing, I would guess, is that the Biden boys will screw it up. It's the one thing that Barack Obama got right in his life. "Don't underestimate Joe's ability to (expletive) things up."

Race Politics Ends When We Don't Care

Today is Martin Luther King Day and a holiday in the United States. Rev. King is famous for leading non-violent protests against racial discrimination in the Jim Crow South in the early 1960s. It is said that he got his inspiration from Mahatma Gandhi's non-violent opposition to the British in India.

Now comes multiracial Ryan Bomberger to celebrate the spirit of Martin Luther King Jr.

A hard-fought Dream has become a reality here in America. The codified systemic racism heralded as “heritage” met its demise because good people—both black and white—refused to stand by and do nothing.

But actually, it should be added, the non-violence concept only works against governments that already accept your premise. The ruling class in liberal America believed back in 1960 in ending racial discrimination. The Brits in India, from just after the "Indian Mutiny" in 1857, knew they would have to get out of India. Just not yet, old chap.

In the years after the Civil Rights revolution of the 1960s concerns about racism declined, according to Bomberger. But not any more.

From the mid 1970s through 2014 (except during the early 90’s Rodney King riots) 2-4% of Americans cited racism as the most important problem facing our country. It wasn’t until Obama’s second term when it jumped to 13% and 18% after the emergence of the Black Lives Matter Movement. Following a bumpy decline, it spiked again to 19% in 2020 under Trump as the rhetoric of Critical Race Theory spread like wildfire, sparking the very bitterness and hatred MLK denounced. 

So what is going on? Is racism increasing as a problem, or is it something else?

My belief is that it is "something else."  And that something else is the need of every politician or political party to have an enemy. It was such a glorious experience for liberals to fight the racist Jim Crow enemy in the 1960s, and it felt so good, that our liberal friends just cannot let go.

The over-under politics of the present day requires an enemy. Back in the day it was capitalism, employers, "robber barons," "malefactors of great wealth" who were pressing down upon the brow of labor. Capitalism, employers, bankers, exploiters were the enemy, and the Democratic Party would save the workers from their malevolence.

The Narrative, of course, to this very day is that but for beneficial legislation -- including wage and hour laws, unions, and government education -- the worker would still be exploited and poverty-stricken. I deny it. I say that the worker would be much better off today if the government weren't taking 35 percent of GDP and redistributing through a gubmint loot and plunder operation. But I could be wrong.

The Narrative today is that but for liberals and progressives the "oppressed peoples" would be as poor and helpless as blacks were in the South during the rule of Jim Crow.

Could that be true? The original Jim Crow was a cultural and political regime that deliberately discriminated against blacks. And there were laws to make sure that discrimination was the order of the day.

But today, our laws say that it is illegal to discriminate against blacks. And the whole of the ruling class is united to stop any re-emergence of a Jim Crow culture. And big corporations are along for the ride.

Yet the dreaded "white oppressors" are everywhere?

Actually, I'd say that 2014 mentioned by Bomberger is a tell. See, the first thing that happened after Barack Obama got elected as the First Black President in 2008 was that Republicans won 64 seats in the 2010 midterms. 

How could such a thing happen? President Obama was the liberal dream come true: I remember my university faculty wife friend expressing her emotional delight in that event at lunch in December 2008. A new era had dawned, so how come the Republicans won back 64 seats in the first midterm after Obama's election? There was only one possibility: racism, flat-out white racism.

It was after that that Democrats started with the race crisis in even -- i.e. election -- years. George Zimmerman shot Trayvon Martin in 2012. Michael Brown was shot by a cop in 2014. George Floyd died under restraint while resisting arrest in 2020.

You might call these incidents merely lower-class small-time criminal blacks getting their comeuppance. Or you might call them representative of systemic racism in the United States. I don't know; more research is needed.

But Democrats and their pals in the media have built a huge narrative on the assumption that these events are examples of "systemic racism" arising out of a culture of "white supremacy" and executed by "white oppressors."

Only, of course the white ruling class of the United States is composed of liberals, progressives, lefties who have been spending the last generation or two doing a Gramscian "march through the institutions" and purging anyone that wasn't a card-carrying lefty. Eevil conservatives need not apply.

So what gives? in my narrative our liberal and lefty friends are finding that they are coming to the end of the era in which there is even a tenuous argument about helpless victims discriminated against by powerful right-wing whites. I dare say they were honestly shocked in 2010 when, instead of confirming the glorious new era of Barack Obama's First Black Presidency the American people voted against pedal-to-the-metal liberal agenda including Obamacare. But they couldn't admit that the world had moved on. And that Americans didn't really want huge new gubmint programs.

And like a businessman facing bankruptcy, they started to cheat, with fake racist incidents blown up into narratives of systemic racism.

There's another aspect to this. Liberals, lefties, and Democrats have spent the last 50 years insisting to black voters that, but for them, Americans would turn back the clock and institute Jim Crow 2.0. You can see how easily this narrative -- any narrative -- can work when you note how eagerly our liberal friends all drank the COVID KoolAid and bought the narrative of the moment on how to fight COVID, again and again. In other words, humans are tribal and they believe the narrative that their tribal leaders communicate to them. Doesn't matter how educated or racist they are. People are groupish and they believe the narrative. They believe the narrative up until the moment that it becomes inescapable that they have been roundly lied to. And sometimes even past that moment, because to abandon the narrative, the saving faith that defines their lives, is unthinkable.

My analysis of the liberal/progressive era involves what I call Little Darlings. Liberals operate their over-under politics by adopting and protecting a class of voters that they encourage to believe are hopelessly oppressed by "the system" and that but for liberal power would be ground into dust. And so these groups become virtual mistresses, serfs, of the ruling class.

But then the ruling class tires of their Little Darlings and leaves them in the lurch, as Democrats did for the white working class after 1965, and as, someday, they will leave blacks in the lurch.

I think the over-under politics with its necessary helpless Little Darlings is a monstrous injustice, for it encourages lower class people to stay as lower class, deriving their life and means of support on government loot and plunder and not from developing middle-class skills and culture. And when I get to set the Next Narrative I will create a politics where upper-class educated white liberals are the enemy, and are to blame for everything that went wrong in the last century.

Wouldn't that be fun! Actually, not really. I don't feel that liberals are evil, just fools and knaves.  They do need to be brought down a peg or two -- in their own best interest, you understand. But not made into enemies.

At the End of the Old Regime

OK. I'm not feeling too good right now. What with 10 percent inflation. What with Dems trying to ram trillions in loot and plunder spending down my throat. What with President Biden going to Georgia to wave the bloody shirt on race. What with Dems trying to federalize elections so they can vote by mail and harvest votes at will.

Then there's the stupidity of anti-racism and DEI at our universities. There is even a curious piece about a Cal State psychologist equating Jews and liberalism and how that is not good for non-Jewish whites and should this guy even be allowed to publish. Or there's this CIA-funded extremism expert who, of course, thinks that right-wingers in the US are just a few guns short of an insurrection. Because international NGOs agree.

Look, I get it. The glorious dawn of progressive administrative government that lightened the sky a century ago has become a dull wintry evening drizzle.  Or, if you like, the glorious nubile young thing of 1905 has become the monstrous old hag of 2021.

The problem is best illustrated by the race issue. Racial discrimination was abolished in the United States 55 years ago.

That means, sports fans, that it is illegal to discriminate on the basis of race. Does that mean the end of racial discrimination and racial stereotyping? Of course not. But it makes it illegal.

Guess what! That opens opportunities for people that want to make a buck on race. You can lower your wages a bit, so that whites won't show up, but blacks will. Or you can raise your rents so that whites won't want to rent. But blacks, who experience landlords telling them the apartment has "just been taken," will probably pay a premium to get a place to live. OMG! Raacist!

Look, I'll tell you what's racist. Flogging the race issue fifty years after race discrimination was outlawed.

And I get where the lefties and liberals and race-baiters and all the ships at sea are at. There is no politics without an enemy. If you want to strut your stuff in the ruling class you need some enemy to fight against. 

Jews? Hell no: literally Hitler. 

Welfare mothers? Hell no, it's not their fault. 

Black aspiring rappers? Racist! 

Corporations? But corporations are all woke these days. 

Racist whites? Ah, there's an enemy we can live with! 

Climate change? Hoo boy: and then anyone who disagrees with the vital importance of windmills and rooftop solar arrays is an evil climate denier, almost as bad as a Holocaust denier.

Pointy-headed intellectuals? Yes, but that's what George Wallace ran for president on in 1972.

Deep state? Now you're talking.

I tell you, the big thing in the next few years is for the nationalist middle-class leaders to find the right enemy to run against.

The enemy needs to be something of a joke, something or somebody that enables us deplorables to have a bit of fun, but not actually cancel or entrap with FEDS or impoverish with million-dollar legal bills. And certainly not put their heads on pikes.

As I say, the Age of Politics is over, because there really are no enemies at the border, against whom we must unite or lose our lives, our fortunes, and our sacred honor.

But how do we civilize politics into a sport, with two teams on the field, league tables, a national championship, and all that stuff. Without actually having a war, and without actually plundering the country for loot and plunder to reward the supporters?

I don't know how to do that, and I wish I did.

The Science Catches Up with Me on the Sexes

For a year or two, based on a lifetime of reading and especially since reading German sociologist George Simmel on women and the public square, I have maintained that men and women have profoundly different cultures.

Of course, being a man I like to make it jokey and insulting, and say that men have a Culture of Insult and women have a Culture of Complaint. Now comes Steve Sailer commenting on a piece in The New York Times and an email from Steven Pinker.

Men can cooperate while ribbing each other pretty hard. I finally watched the fine neo-Western movie Hell or High Water (script by Taylor Sheridan, creator of the hit TV show Yellowstone), in which the outlaws and the law both consist of pairs of guys constantly insulting each other while getting a lot done.

Women, in contrast, tend to compete with each other via snide remarks. So women tend to assume more that of course the authorities should silence anybody who is saying anything not nice.

This was in the context of "studies" that show that men support freedom of speech more than women.

So tell me: Am I right or am I right?

But I have a higher, nobler perspective on all this, which is my analysis of Simmel on women in the public square. He writes that the public square was created by men for men, but that the entry of women into the public square would transform the public square to suit "a more feminine sensibility." 

But actually, after long and harrowing thought, I decided that Simmel was wrong, and it looks like "the science" agrees with me. 

It is not that women will transform the public square, it is that women do not get the public square as constructed by men. The idea of guys sitting around insulting each other just does not compute for women. Wherever and whenever women get together they construct a culture based on the women's Culture of Complaint where women "compete with each other via snide remarks."

Now it is my belief that the women's version of the public square, of competition by snide remarks, is completely different and incompatible with the men's Culture of Insult. I expect that in the future we will see two cultures side by side, separate but equal. In areas where men predominate, there will be a Culture of Insult. In areas where women are more than 30 percent of the participants there will be a Culture of Complaint. 

And ne'er the twain shall meet.

Also, of course, there is the intersection of another Battle of the Sexes, that Women Expect to be Protected: as women public-school teachers who don't want to get into the trenches of COVID at school. While Men Know They Are Expendable: as men figure that, well, someone has to keep the grocery supply chain going, and if not me, then who?

But what happens in the future? I think that we will see a segregation of the public square into male and female sectors. Men will gravitate to areas where open competition is needed, such as in the culture of the Road Warrior, and women will gravitate to areas where competition is hidden, as with Burke, where "All the decent drapery of life is [NOT] to be rudely torn off."

I tend to be naughty about all this. But I really think that the feminists are wrong about "you go girl" and girl superheroes. As in clueless. That is just not how women interact with the world, and, more important, how women get their way in the world.

I think that this is an important thing to understand. Women don't get what they want and need by fighting or insulting. They get it by "manipulation," with their interpersonal skills with which they get what they want and need short of insult and actual violence.

As my daughter says: "my job is to keep my kids alive." This sounds rather trite. It is not, especially when you remember that back in the day human babies had a 50 percent chance of getting to age one. Really, there is no more important job in the world than keeping kids alive until it is time for them to leave the nest.

The point is, I think, that in the modern era the job of keeping kids alive has got a lot easier. And that gives women the opportunity to do other things than just keeping the kids alive.

But what? That is the question. And, given that all living things advance with two steps forward and one step back -- if they are lucky -- women aren't going to find a new role for themselves without lots of mistakes and heartache.

The Reign of Error

I was reading a piece at American Spectator about Soviet spies in the Roosevelt administration.

One of the things the spies did was get the US and Japan into a war. Why? Because the Soviets in 1941 were afraid of Japan attacking them "in the rear" and setting up a two-front war where they would be fighting against the Germans in the west and the Japanese in the east. They called it "Operation Snow."

The goal of Operation Snow was to influence U.S. policy in a way that would maintain Washington and Tokyo on a collision course. [Harry Dexter] White was told to draft policy and negotiating positions for the administration designed to further antagonize the Japanese government...

Yes, yes. I know. Roosevelt and World War II were the most glorious thing since sliced bread. I mean: Hitler! The Holocaust!

But if Pearl Harbor happened because the Soviets were stirring up trouble, with agents of influence encouraging the US to beat up Japan...

I know I shouldn't feel this, not as an ex-Brit. But I have been coming to feel that the US should have stayed the heck out of World War I. And let the Brits and the Krauts and the Frogs fight each other to a standstill.

Then we wouldn't have had the Treaty of Versailles that punished the Germans, and maybe not the hyperinflation in Germany after WWI and maybe not the opening for the Nazis to rally all Germans together, and maybe that would have meant no World War II and maybe...

Maybe in the 1940s we would have backed the non-Nazi Germans and the Japs in holding Stalin's murderous regime in check. Wow. Imagine that! Think of the movies!

There's another thing too, that you can see if you look at this chart of 20th century federal spending.

Notice how federal spending was about 3 percent of GDP before WWI? And about 5 percent in the 1920s. And then up to 10 percent of GDP in he 1930s after the failure of the federal government to deal effectively with the Crash of 1929 led, inexplicably to a doubling of federal spending. And then after the spending orgy of WWII, it was Katie bar the door, and now here we are with federal spending at 20 percent of GDP for the last 70 years.

Except for the temporary blip in spending in the late COVID disaster. I'm sure that won't result in permanent increases in federal spending. Could it?

Yes, but Social Security! OK, suppose that a wise federal government legislated a mandatory savings program that every private employer had to set up a retirement savings program for their employees, in which, we'll say, employer and employee each kicked in 50 percent. Imagine that!

See, with savings from that older people could mostly finance their own end-of-live health care and nursing care. So no Medicare.

Education? Well, how about the mothers in the neighborhood organize the 3 Rs. I'm sure they are all literate and numerate and qualified to do that. And I'm sure that public-spirited people could organize education for the children of aspiring rappers. And anyway, as soon as kids reached puberty they would bust out of schools and start apprenticeships, and eevil corporations would be legally bound to supplement work training with additional education.

But we don't have that system, do we? And I think there is a fairly simple reason why. It is that the whole point of the Progressive movement a hundred years and more ago was that the point of government was to provide scope for the education and intelligence and status of the educated class. Jobs for Gentry, you might say.

But the problem is that our educated class is really not that good at figuring out what the people need. That's why they got us into two world wars and a Cold War and a war against Muslims, and now a war against climate change. And why they built up an administrative full of Jobs for Gentry.

Actually, they are not that good at anything.

I'd say that World War I was a strategic error. I'd say that the New Deal was a strategic error. I'd say that World War II was a consequence of the follies of the previous 20 years and more. I'd say that the administrative state is a strategic error.

In fact I'd say that the rule of the educated class for the last century has been a Reign of Error, that has Made Things Worse, and will continue to Make Things Worse in the years to come.

But what do I know. I'm just a guy who has read too many books.

"Death March Through the Institutions"

Back in the day lefty icon Antonio Gramsci developed the idea of "the march through the institutions." The left would win by seeding and reseeding all politically related institutions with its supporters.

And then Justice!

The problem with this tactic is: suppose you are wrong? Suppose your brilliant plans to create justice on Earth are flawed? Suppose that, instead of creating Justice your ideas create Injustice?

How would you know? What would you do about it, given that everyone in The Institutions is now a card-carrying leftist?

Of course, we know what happens. You kill the institutions, as in Soviet Russia and Maoist China. And then what?

Then, as Scott McKay says at American Spectator, you have a "Death March through the Institutions."

The fact is that human society, like everything else in nature, is a work in progress, and the one thing it needs to do is correct mistakes, because life, the universe, and everything is one mistake, one disaster, after another.

But leftism, and government in general is a one-way bet. What is government designed for? It is designed to mobilize all resources to fight the enemy. And if it is defeated, it's the end of the government. Another regime takes its place.

Government is like debt. If you borrow money, say on a house, you are making the bet that you will keep your job and that house prices will not go down. If you are right, then life continues as usual. If you are wrong, then you lose everything. Governments, like debtors, put all their eggs in one basket. And that is not a good idea unless you are facing an existential peril and you are facing a choice of life or death, fight or be annihilated.

We have seen how the government applied this tactic to the COVID epidemic. Wear masks or we die. Lockdown or we die. Get vaccinated or we die. No wait! Today the CEO of Pfizer says, oh wow, maybe two jabs and a booster ain't enough. What? I thought you experts said that...

Well, so do-or-die isn't quite the right response in a complicated evolving situation like COVID..

Now, the miracle of the market economy is that it is an emergent, self-correcting phenomenon. The various actors make one mistake after another, but the prices tell you when you made a mistake, and you'd better fix it or you are out of business. The point is that even prices are always wrong. Today's stock prices? Tomorrow they are history, and the market will go up or it will go down, because the market is looking at the future through a glass, darkly, and every day is a new day.

Funny thing, isn't it. With religions and political systems and government the last thing you ever do is admit a mistake.

But the way to survive life is to be adaptable. Except when you are under attack from the Mongols or the Nazis.

But that's not what our lefty friends know. They live a life where they know they are under attack from systemic racism. They know that if they march through the institutions and purge the eevil racist-sexist-homophobes from power and then, then they can bend the arc of history towards justice.

OK. And then what, lefties?

It's Not Just a Political Malaise

Yes, everyone knows that politics in the US is broken. And the other guys are to blame.

But I believe in Downstreamism, from the famous Breitbart dictum that politics is downstream from culture.

I believe more than that. I believe that politics is downstream from culture is downstream from religion is downstream from the meaning of "life, the universe, and everything."

I go further than that. I agree with Kant that we cannot know "things-in-themselves," but only appearances. We spend our lives trying to figure out what the "things-in-themselves" are. Today the question is: are they atoms, aub-atomic particles, waves, probabilities, multiverses?

The fact is that all our fabuloso math and science and philosophy and religion don't tell us. So we make it up.

Thus every theory about the meaning of "life, the universe, and everything" -- the "things-in-themselves" -- is really a hot mess. It gets some things right and a bunch of other things wrong.

And every institutionalization of some theory of the meaning of "life, the universe, and everything" is also a hot mess. As in churches, sects, political parties, ruling classes, corporations, families, marriages.

The eternal problem is this: when something is going wrong, how do you fix it?

When your marriage is going wrong, when your kid is going wrong, when your career is going wrong, when your business is going wrong, what do you do about it?

And when you get to governments, political parties, religions, the problem is even bigger because big-time institutions are designed to resist change. In fact, change to governments, political parties and religions usually involves war and the associated butcher's bill.

I would say that the current political crisis in the US -- and elsewhere in the western world -- is about the fact that the political ideology of the last 200  years has reached its sell-by date. I would say that problem is that there is a profound disconnect with the faith of the educated ruling class, that its knowledge and wisdom and power are the right combination to rule modern human society, and the reality that all government is a war against some enemy and the distribution of spoils among the supporters. And that war and spoils is always a net negative.

I would say that the current social crisis in the United States -- that involves among other things the white working class "dying of despair" and heightened deaths by drug overdose -- is a consequence of the culture of our ruling class. Charles Murray in his Coming Apart shows how, for white America, things are pretty good for the intellectual elite, but not so good for the middle middle. And at the bottom the men don't work much and the women don't marry much. Ron Unz has a sprawling article about all this at his web site, starting with the fact that the death rate for US whites age 45-54 has gone up in the last 20 years while the death rate for US Hispanics aged 45-54 has gone down. Maybe the sharply increased death rate from "poisonings" has something to do with this.

The fact is that our educated ruling class has imposed its religion and culture on the rest of America and it is Making Things Worse. I think that the welfare state is a reason for this; the size of government and government regulation as well; the culture of women's liberation -- women entering careers and politics and sexual license just like men -- that assumes that women want to live in the public square is a wrong turn; the attack on middle-class religion is a brutal Reign of Terror.

And I believe that the ruling class's religious quest to transform the energy economy and the fight "systemic racism" are galloping disasters that will rapidly Make Things Worse.

I also believe that the educated ruling class believes in a false religion, that educated people are called by history to bend the arc of history towards justice, and everybody else should do what they are told. Problem is, I believe, that when you use government to bend the arc of history towards justice what you get is injustice. Always and everywhere, don't you think Stalin and Mao?

Yes, but what do we do about it?

Well, it starts with a new understanding of the meaning of "life, the universe, and everything" for our educated gentry, the present ruling class.

The idea is quite simple. The educated gentry must stop thinking of themselves as cultural and political metropolitans called to rule and correct the world for its sins. Instead they must think of themselves as humble sacrificial heroes, that sacrifice their lives, their fortunes and their sacred honor on the border between Order and Chaos. Do you see the difference? It means that the magnificent Names that strut across the political and cultural stage will be thought of as second-rate poseurs. The true heroes will be people that struggle all their lives trying the make the world around them a bit better, knowing that most of the time their efforts may well be mistaken, probably won't make any difference, and nobody will ever know about them.

We can't have mega governments creating a loot and plunder operation out of 30 to 40 percent of the economy. We can't have lifer unionized women teachers teaching our children. We can't have health care cramped into government-directed corporate-driven systems like the present. We can't have government welfare administrators doling out loot to the poor and smashing the family to smithereens.

But it starts with the devaluing of politics down to a dull roar. Because there is no politics without an enemy; and there is no peace unless politics and its war on enemies is downgraded into a low-status activity that no well-born person would dream of descending to. And that no well-born person would truckle to any politician.

Somehow, we have to turn politics into a form of sports. But I don't know how to do it, because I'm not a genius.