News & Analysis
Central Banking and 'The Edgy Optimist'
The Edgy Optimist – When did America get so pessimistic? ... Barely had the counting ceased in last week's presidential election when the news took a somber turn. Two of the next day's headlines read "Back to Work, Looming Fiscal Crisis Greets Obama" and my favorite, "America has Sown the Seeds of Its Own Demise." Politicians either celebrated or decried the results, but regardless of party affiliation most warned of formidable challenges and a perilous future. How did it come to pass that even the resolution of a contested election brings almost zero relief from the relentless focus on problems and threats? How did a country that for much of its history exhibited a (sometimes naive) willingness to ignore obstacles and plunge forward become a society that struggles to turn its gaze away from the dangers that loom just ahead? In short, how did the United States become so pessimistic? – Reuters
Dominant Social Theme: We need a resurgence of positive thinking.
Free-Market Analysis: So Reuters is starting a new column with Zachary Karabell, the president of River Twice Research and River Twice Capital. He is also author of How China and America Became One Economy and Why the World's Prosperity Depends on It.
This is surely a power elite dominant social theme of sorts, that what ails the West can be cured by the power of optimism. It is all a question of how you look at things.
That's why the column is called "The Edgy Optimist." It's going to be an optimistic column but one that recognizes that the current Western pessimism has its roots in reality. Here's some more from the article:
Without question, this has been a challenging time for America and much of the Western world. We can all recite the crises, disasters and failures: Y2K, the bursting of the Nasdaq stock market bubble in 2001, 9/11, Iraq, Afghanistan, Enron, WorldCom, the bursting of the housing bubble, the Wall Street implosion of 2008, the euro zone's troubles, chronically high unemployment, anemic growth, the continued emergence of China as a global economic force. I could go on.
The bleak attitudes of the past decade are in stark contrast to the giddy optimism of the 1990s, a consequence of the Internet revolution, a soaring stock market and the end of the Cold War. Yet even then, the growth model that so many Americans took for granted was showing signs of strain. Manufacturing jobs were quietly evaporating, and incomes for the middle class were stagnating. And so we have come to a point where even the conclusion of a peaceful, contested democratic election offers no pause in the drumbeat of negativity.
Few today are unaware of the problems that beset us. There is ample informed commentary, analysis and prognostication describing what is going wrong and could get worse: increasing deficits, waning economic growth, high unemployment, unstable financial systems, stock markets crashes, inflation spikes, geopolitical conflict, renewed recession, destructive gridlock, rising inequality, etc. No one could argue reasonably or rationally against the possibility that these issues will undo us or lead to worse times ahead. The problem, is that few argue consistently or cogently that our fears may, in the end, just be fears and that we will do more than muddle through.
That is the goal of "The Edgy Optimist," my new column. It will examine what might go right and how, and what is going right and why. To deny the challenges and perils of our world, particularly the changing nature of our material and economic lives in the West and how we can ensure sustainable prosperity and growth in the years to come - well, that would be foolish. But it is equally wrongheaded to dismiss arguments to the contrary as foolish, unlikely or ill-informed.
Behavioral psychologists have shown that when people feel fearful, anxious or pessimistic, warnings about the dangers that lie ahead sound smarter and wiser than alternate views that suggest more constructive outcomes. Alliance Bernstein recently sent a note to clients charting how the Dow could quietly reach 20,000 within five years. The reaction? Anger and outrage. Bernstein was flooded with complaints that they were naifs. Had they released a paper with the title "Dow 5000" they likely would have generated just as much reaction, but from clients wanting to know how to prepare for what seemed like a credible scenario.
What is interesting in this introductory column is how it is being presented. It is almost like a power elite dialogue itself, but one where the reality of fear-based memes is not recognized.
The dominant social theme might be characterized as "we have nothing to fear but fear itself." The subdominant social theme features, of course, the power of positive thinking.
The idea is to influence people's moods by positioning information in a certain way. This is the way the elites try to control people anyway, by playing on various emotional elements in order to encourage a commitment to globalism.
The rest of the article is a kind of rebuttal of the issues that The Daily Bell raises regularly. We won't take credit either for the issues or the rebuttals but the monologue is uncanny. Karabell writes about the election and then points out that the US government accounts for some US$6 trillion of "economic output" out of US$16 trillion.
As if anticipating criticism, he then writes (defensively, in our view), "Much of that $6 trillion is necessary and productive – it pays for schoolteachers, firemen, police, Federal Aviation Administration controllers. But even if you write that off as less productive spending, that leaves $10 trillion that has nothing to do with government."
After explaining the US fedgov is actually a modest beast, Karabell, is off and riding after government regulation. We learn that the emphasis is on costs rather than "uncalculated benefits."
But what is added to overall output by a judicial and legal system that enforces contracts? What boost is there to output because of rules against excessive pollution that reduce the healthcare expenses that would be required to treat those harmed? We are very good at looking at the inefficiencies and calculating the harm of over-regulation. We are less adept at weighing those against the benefits.
Finally we reach the so-called private sector itself. "Non-governmental activity remains incredibly dynamic." Of course, Karabell provides a sympathetic shoulder, explaining that the sector is full of "rapid change and disruption."
He admits that the West's labor force has been disrupted by private sector vertigo but points out that the flip side to stagnant wages and high unemployment is that billions of people in China, India and other BRIC countries are entering the middle class.
He concludes, "No one can say what the future holds, but the chances that it will see our fears realized only increase when the consensus is that they will be. We know the risks; it is time to pay attention to the possibilities."
Does Karabell really believe that people who are out of work in the West feel better that BRIC countries are doing well? Additionally, these arguments only confirm what we've pointed out previously, that the West is likely being torn down on purpose just as the largest part of the developing world is being lifted up.
The proximate cause is monopoly central banking that is capable of restructuring an entire society in only a few decades if the printing presses run hot enough and long enough. This is what took place in China and Japan and now India and Brazil. It must inevitably end in tears for it is a false prosperity that distorts society due to the great gouts of money that flow through the economy. Eventually, society cannot take anymore and the flood of money subsides. The prosperity is revealed as a kind of phantasmagoria and many industries are revealed as unstable or even unnecessary.
Economies are not in trouble because of irreversible globalist forces. The globalist forces are caused by great gouts of monopoly central banking money. What's going on in the world, in other words, is a kind of directed history. The powers that be WANT the current chaos and international leveling. This is not so much edgy as brutal. As for the optimism, it is best celebrated when one perceives that the elites' fear-based promotions are being pushed back.
Conclusion: Obviously, there is ongoing pushback or Reuters, a mainstream media sounding board, wouldn't be promoting "The Edgy Optimist."
Posted by Joe on 11/18/12 05:44 AM
When people are made fearful and indebted they are easier to control and manipulate. If they have little community or non state funded community resources, they are isolated atomised individuals... who are alone with no means of combat. The hierarchical caste system that has been created favours people in the upper echlons and disfavours the lower classes and those who benefit are not going to allow this to fail. Here in the UK we have people who work for the government that get salaries like 100, 000 pounds to 500, 000 pounds for work that no one is able to quantify as productive.
Posted by Charlie on 11/16/12 07:34 PM
I remember in government elementary school, second or third grade, reading in our "Weekly Readers", "newsletters" given to the kids, about how the US population was going to have to "sacrifice" so that other countries could be advanced. I recall thinking, even at that young age, "Why? What does this have to do with me? Why do I have to sacrifice?" This plan has been in effect for many years. I am in my 50's.
Posted by RonofAmerica on 11/16/12 03:05 PM
Pay no attention to all that bad news on the internet folks! Be optimistic!
Put your money back into the stock market,if you have any left, and forget the fact that you've lost your jobs and homes. Focus on the wonderful food stamps that you've received. Be thankful for the unemployment checks. Always look on the bright side.
Pay no attention to the men behind the curtain. They're doing this for your good.
Posted by taxesbyanyothername on 11/16/12 02:10 PM
To heck with edgy, can't we all just get alo, er, grumpy? Enraged might be better.
Posted by picomanning on 11/16/12 02:09 PM
Zachary Karabell will be engaging in a propaganda campaign. He will write 'that part of the truth which ought to be told' but the messy pessimistic part will have to be left out; for the good of the people right? It will be no different than the 'Pravda columns' that were written to encourage Hope and Change in an earlier failed era.
Only when men understand their individual condition they'll best be able to act in their self interest to cure their condition. Clearly it's time for Americans (and others) to think very selfishly in some respects and to consciously ignore messages of general optimism so generously ladled out by our general media. Their objectives have everthing to do with the 'collective' attitude, nothing to do with indidividual well being. To accept 'general optimism' is to swallow the propaganda of the media. Vomit first.
Posted by bwong on 11/16/12 01:36 PM
I wish DB would do some research into just who is Zachary Karabell. Erudite, intelligent and creepy in a way only a globalist can be, Karabell seems to be capable of just about anything his CFR masters assign. Among his multitude of pursuits he has an investment firm, a research boutique, a gig on CNBC Fast Money as a professional hedge fund manager, he speaks regularly at think tank luncheons and NGO conferences, he's a published author and now he's a regular columnist for the Rothschilds. How can one mortal man be and do so many things... and at such a tender age?
Posted by Don from the Republic of Lakotah on 11/16/12 01:20 PM
Karabell takes other people for granted. In "Cancun and Climate: Government Won't Act, But Business Will" ( Click to view link ) Karabell shares his optimism that mythical innovators can simply clean up other people's financial messes for them. Karabell imagines innovators who simply mitigate the soaring costs caused by central banking. Karabell went through the trouble of imagining it, which makes it real, at least for Karabell.
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Posted by IndyLyn on 11/16/12 11:44 AM
" Obviously, there is ongoing pushback or Reuters, a mainstream media sounding board, wouldn't be promoting "The Edgy Optimist."
... you can say that again!!!
Posted by victorbarney on 11/16/12 11:26 AM
HELLO! OBAMA ACTUALLY WAS RAISED IN MARXIST TERRORIST BILL AYERS HOME & HIS GOOD FRIEND & FELLOW MARXIST "WEATHERMEN" TERRORIST BERNARDINE DOHRNE EVEN DIRECTED CHARLES MANSON'S CRAZINESS IN CALIFORNIA! Remember CHARLIE? Oh, OBAMA ACTUALLY WAS RAISED IN OBAMA'S FAMILY HOME! Tell me about our CIA!!! DUH! "MARXIST"(ANTI-CHRIST) NEW WORLD ORDER EVERYONE? QUESTION? WHY DOES THE BIBLE ALWAYS USE "WOMEN" AS STARTING ALL REBELLION AGAINST OUR HEBREW-INSPIRED(ZEPH.:9, ACTS, 26:14, 1 COR. 4:6) CREATOR???... Just saying, what is, is...
Posted by EdwardUlyssesCate on 11/16/12 11:24 AM
Just a side note: When I first saw Karabell's name, I immediately thought of a clown. I tried to look it up in Wiki and found it was spelled Clarabell.
Freudian. Maybe not so far off.
Click to view link
Posted by EdwardUlyssesCate on 11/16/12 11:18 AM
I'm optimistic. When one has been manipulated down flat on the ground, one has no where to go but up. It's just so sad that we have to go through this cycle, again and again.
Posted by Danny B on 11/16/12 10:39 AM
50 million Americans living in poverty may very well affect the rate of pessimism.
I suspect that the 47 million surviving on foodstamps may feel a bit insecure. A generation of youth that have no employment prospects is a bit negative. While it is great to keep a positive attitude, it has to be connected to reality.
The reality is that the Western standard of living is falling fast. It MIGHT have a silver lining.
Click to view link
"Much of that $6 trillion is necessary and productive - it pays for schoolteachers, firemen, police"
He seems to have forgotten to mention all the tools of destruction.
"$10 trillion that has nothing to do with government."
Ahhh, the sins of omission.
He doesn't mention that GOV printed $ trillions of notes so that banks could claim huge chunks of the productive economy and call that "commerce".
"How China and America Became One Economy and Why the World's Prosperity Depends on It."
Only an idiot could think that shock-therapy of global wage arbitrage combined with currency wars could be of any benefit to prosperity.
The world morphs down to the required wage of the lowest priced producer.
Consumption falls to the commensurate level.
The bond market crashes because there isn't enough production-consumption to spin off the taxes and profits to support it.
We are currently at the point where consumption has crashed and GOV-banks print-and-spend to TRY to make up for the lost economic consumption/circulation.
It's obvious that Western consumption can't support either the stock or bond market.
GOV stupidly tried to fill the gap. Look at the GOV balance sheet.
This isn't a Keynesian blip in productivity. This is a major earnings/consumption readjustment.
GOV is now pushing the Trans-Pacific Partnership. The global-mean wage will be well entrenched. That should ensure our continuing employment loss.
Posted by dave jr on 11/16/12 08:54 AM
he he he, "edgy".
Fear is due the unknown. When people discover there are agonists behind their troubles, the fear turns to anger. Why so edgy Karabell?