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InsidersPower

AnInterAnalystPublication July2016

Any fourth grade history


student knows socialism has
failed in every country, at
every time in history.
President Obama and his
fellow Democrats are either
idiots or deliberately trying to
destroy their own economy.
Vladimir Putin
Link To Article


InsidersPower

WhatdoesthismeanforGovernment?
TherehavebeenplentyofarticlesaskingwhetherCapitalismisnowdead.Theproblemisthequestion
alreadypresumesanoutcomeandfailstorealizethatwearestillinthemiddleofthegreatestEconomic
Transformationinthehistoryofmankind.Weareinfactnotseeingthecollapseofcapitalism,butarein
thefinalstageofthedeathofSocialism.
GovernmentswillrailagainstthecollapseofSocialismbecauseithasbeenthesourceoftheirpower
voteformeandyougetsomethingfornothing.Weareinthefinalphaseatransitionwhichistaking
theformofa"tsunamiofspending"totrytomakeitallbetter.
WehaveseenthiswithPresidentObamapromisingfreeorcheaphealthcareandmorerecently
BernieSandersofferingfreeeducation.
Hereismypredictionduringthispresidentialcampaign.Hillary,atsomepointwilloffertheforgiveness
ofstudentloansorsomederivativeofthis.Why?BecauseasDonaldTrumprevealshistruecolorsof
Saving,Building,andProtectinghishomecountryanditscitizens,shewillhavetopromisemoreand
more,thatswhatpoliticiansdointhefinalthrowsofsocialismasitdies.
Whatwemustbeconcernedaboutwillbewhogetsblamedwhenitfinallyfails?
Liftingthisrockallowsthescorpionstosurface.ItismoreakintoopeningPandora'sBoxandallowinga
swarmofevilstoescapeandtormentmankind.Wehavenochoicebuttospeakveryfrankly,forunless
wetrulyunderstandthenatureofevents,thereisnowaytoclosetheboxandmakeitallbetter.As
SaintJeromesaidofRare:"WhenRomefell,theRomanswerestilllaughing."Theyhadnoideaofwhat
wastakingplaceandjustassumedRomewasimpregnable.Wecanonlystopaneventifwerecognizeit
ishappening.
Ifweareafraidtoaskthecorrectquestion,thenperhapswearetoobiasedtocomprehendwhatwe
havedoneandtakeresponsibilityforourownactions?ToparaphraseEdwardGibboninhismemorable
epitaphonRome:Wewerethecapitolofdemocracy,thecitadeloftheearth,theterroroftyrants,
illustratedbythefootstepsofsomanytriumphs,enrichedbytheleadershipineconomicfreedomthat
wasthebeacontosomanynations.Thisspectacle,howisitfallen?


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TheGreatestEconomicTransformation
Itmayseemstrange,butwehavebeenundergoingabattleofeconomicphilosophythattranscendsso
manyconceptsthatunlesswestepback,wewillhavedifficultyunderstandingthetrend.Thisbattlehas
oftenbeenlacedwitheffortstocontrolmankind.Forwithinthisbattle,wewillfightreligion,politics,
scientificinnovationandprogressspanningtechnologyinallareas,butalsoissuesthatincludeboth
slaveryandlaborthatallcreatewhathasbecomeknownasoureconomy.
Sometimeswearetooclosetoaproblemthatitisjustimpossibletosee.Whenmanlandedonthe
moonandsentthefirstpicturesofEarthrising,onlythencouldweseewhatourworldtrulylookedlike.
Wearefacingtheverysameproblem.Thechangethatwenowseeandaredebating,isstillfromthe
viewofaflyonanelephant'sback.Wedonotknowweareevenonanelephantorwhatisanelephant.
Oursocietyisstillgrowingandchanging.Wearegoingthroughpubertywheretheyouthrebelsagainst
theparent.Theprofoundchange,theGreatEconomicTransformation,becamebluntlyvisiblebackin
1989wheretheworldeconomybegantochangewiththefallofCommunism.Thatfundamentalchange
wastrulyanEconomicTransformationwavewhichisnowcausingthecollapseofsocialisminthe
Westernnations.Whatwearefacingisconfusing.Nevertheless,ifwewanttoseetheelephant,itis
timetotakeflight.
Thereisaverycorestructuretotheeconomicsocietyofman.TheIndustrialRevolutionwasnotjusta
slogan.Itishardformodernmantolookbackfromwherehenowstandsandcomprehendthemeaning
of"revolution"asitwastrulyexpressed.ThewayoflifepriortotheIndustrialRevolutionremained
essentiallythesamefromGreektimes,Rome,middleages,andthebirthoftheUnitedStates.Theword
"Economics"wasanEnglishtranslationofabookwrittenbyagreatmindandadiversifiedmanof
tremendousexperienceXenophon(ea431350BC).Xenophonwasabrilliant,practicalman.Hebegan
lifeearlyonasthecommanderoftheeliteGreekforceknownasthe"TenThousand.Xenophon
admiredSocratesprofoundly,anddevelopedadislikeforextremedemocracyfortheverycrimeithad
committedbyorderingSocratestobeexecutedforhisideas.Xenophonwrotethreeworksonthe
subjectcastingSocratesinadifferentlightthanthatofPlatothe"Apology"Symposium
"Memorabilia."Yetinthefieldoffinanceandeconomics,hispoliticalworkiswhatthepowerful
committeeonCapitolHillisnamedafter"WaysandMeans"writtenaround351BCadvocatingpeace
ratherthanwarbetweentheGreekstates.ButweowetheverywordEconomics"tothetitleofhis
trulymasterwork"Oeconanicus"thatsimplymeantinancientGreekhowtoregulatethehousehold.
ItwasaHowToBookforGentlemenDummiesthatexplainedhowtomanageyourestatefromgrowing
crops,managingslaves,andyourwife.
WhatdoesthishavetodowiththeIndustrialRevolution?Everything!Lifeassocietyknewitwas
completelydifferentbeforethe19thcentury.Thesameeconomicmodelhadexistedforthousandsof
yearsaroundaselfcontainedfarmlikeenclave.TheRomanscalledthem"villa"andwecallthem
"plantations."Thisishowsocietyoperated.Villawereindependentestatesthatwerevirtuallyself
sufficient.Theworkforcewascomposedofslavespurchasedafterbattleinancienttimes,orserfsinthe


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middleages,orimportedAfricanslaves.TheKingofEnglandhadevenusedthecriminallawstocreate
labor.AnymisdemeanorallowedtheKingtosellsomeoneasalaborerforacertainperiod.Insteadof
prison,youweresent,atfirst,toAmerica.WhentheAmericanRevolutionbegan,thedestination
changedtoAustralia.
Duringthe3rdcenturyAD,moneybecamerarefollowingahyperinflation.Thiscausedtremendous
hoardingandaneconomiccontractionstrengtheningthevillamodel.TheRomanEmperorDiocletian
(284305AD)tried,torevivetheempirelikeRonaldReagan&MargaretThatcher,andcreatedmanyof
thepracticesstillemployedtoday.Tobeabletocollecttaxes,passportswerecreatedandpeoplecould
notmovewithoutpermission.Totackleinflation,hesubstitutedwageandpricecontrolsasdidRichard
Nixon.Heredesignedtheentiremonetarysystem,i.e.BrettonWoods1944.
WhenRomefellafter476AD,theconceptofthevillaprevailed.Lifesurvivedbecauseofthisself
containedeconomicmodel.Thisevolvedintofeudalismduringthe9thand15thcenturiesduetothe
increaseinpopulationandtheinabilitytoacquirewealthtoestablishavilla.Townswouldformandthe
landlordbecamethenobility.Castleswereconstructedbecauseofthelackofsecurity.Charlemagne
(742814)begantoreconstructtheoldRomanEmpire.Thiseconomicmodelreceiveditsfirstmajor
shockthatnoteventhefallofRomehadinflicted.TheBlackPlagueinthe13th14thCenturieskilled
about1/3rdofthepopulationmakinglaborscarceandcausinglandlordstostarttopaywagesin
additiontoapercentageofthecropandfreehousing.Yet,predominantly,theeconomywasstill
agrarianandthemodelwasstillthevilla.
InRussia,theseedsofthe1917RevolutionweresowedduringthereignofIvanIV(theTerrible)(1530
84),whenheconfiscatedlandsofhisenemiestogivetohissupporters.Ivanfoundthelandsworthless
oncetheserfsfled.Hethendecreedthattheserfswouldbeboundtothelandforlifeinorderto
maintainitsvalue.HeessentiallymadeallRussianslivingonfarmsslavesofthestate.Thiseventually
createdthepoolofdiscontentthatfueledintothebonfireofRevolutionyearslater.
OfcourseintheUnitedStates,theslaveryissuewasrecognizedaswrongandarealproblem,especially
afterthelanguagewrittenbyThomasJeffersonintheDeclarationofIndependence.Thisissue
dominatedearlypolitics,andperhapscametoaheadwhentheSupremeCourtshoweditwasindeed,
asJudgePosnerreferstoit,the"PoliticalCourt."In1857,theSupremeCourtheldthatblackswerejust
propertyinthecaseofDreadScott,whosuedforhisfreedomwhenhismastertraveledtoastatethat
didnotallowslavery.TheCivilWarwasnotfoughtoverracism.Itwasfoughtoverthecollapseofthe
economicsystemoflabor.RacismemergedmoresoasabitterresponsebytheSouthattachingblame
fortheirdemisetothefreedomoftheslaves.
WecanseethatslaverywasaveryancientpracticeasoutlinedbyXenophonin"Oeconanicus."Itwas
howthevillamodelmaintaineditseconomicviabilityforthousandsofyears.InRoman&Greektimes,
theeconomywas90%agrarian.However,thatdeclinedto70%inthe1870s,40%in1929,andfinally3%
by1980.IthasbeenthisvillamodelthatwasundergoingtheGreatEconomicTransformationtothe
IndustrialRevolution.


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TheGreatEconomicTransformationhasbeenthegrowthofsocietythroughprogressandtechnologies.
Wehavebeenevolvingeveninourunderstandingofeconomics,sincethenatureoftheeconomyisin
factchangingwitheachpassingyear.Wemustlookatthistransformationandunderstandthatasthe
changesinlaborhavetakenplace,everythingelseinourworldalsochanges.Haditnotbeenforthe
BlackDeath,therewouldneverhavebeenashortageinlaborgivingbirthtowagesthatledtopayroll
taxes.

TheBattleLines
Beforewewagefurther,wehavetoexplorewhatcausedthebattlebetweencommunismand
capitalism.WecanattributethistoKarlMarx(18181883)butthisdoesnotexplainwhyMarxcameto
theconclusionsthathedidandsetinmotiondecadesofgeopoliticalconflictsthathascostthelivesof
countlessmillions!
WemustunderstandthatfromtheschoolofPhysiocrats,whobelievedthatallwealthwascreatedonly
bynature,weendupwiththerunawayideathatmancancreateutopiatheimaginaryworldwhere
mancouldliveindefinitelyundertheperfectplan.ThisideawassparkedbySirThomasMorein1516
thatcreatedawholeclassofthinkerswhobelievedinthisUtopianworldwaspossible.SirThomasMore
(14781535)wasamajorinfluenceandcontributedtowhatwenowfacetodayunderSocialism.
Marxrailedagainstthechangefromtheagrariansocietytotheindustrialrevolution.Hedidnotseethe
Stateastheissue.Whathesawwasthatthisneweconomicmodelwouldleadtopaidworkersin
factorieswhowouldbeexploitedtomakeaprofitfortheemployer.Marxsawthis"new"economic
modelaschangingtheworldtakingpeoplefromthetraditionalfarmandturningthemintoconsumers
ofproductsmanufactured.However,hebelievedthattheiremployerswouldbesogreedy,theywould
declinetopaytheworker.Eventuallythisnewsystemwouldcollapsebecausethegreedofthe
employerwouldsuppresstheincomeofthelaborer,andthatwouldresultinthecollapseofthisnew
evilexperimentindustrialcapitalism.
ThebattlebegunbyMarxbetweenhisUtopianidealofcommunismvs.capitalismisnotover.The
Communisticsystemtransferspowertothestate,asdoesSocialism.Thishassanctionedthepowerofa
centralgovernmentattheexpenseoftheeconomicfreedomofCapitalism.Whatwearereallysaying
whenweaskwhetherCapitalismisdead,isshouldweabandonfreedomandrunbehindthewallsofthe
castlesincethestateisthemoderndaylandlord?DowereversethisGreatEconomicTransformation,or
understandwhatisgoingonforjustonce?

AmericanLabor
Marxbeganaclasswarfarethatcouldyettaretheveryfabricofoursocietytoshreds.Thebeginningof
theendofthelaborunionmovementwasmarkedseventytwoyearsafterthefirstreallaborriotthat
tookplaceonMay4th,1886knownastheHaymarketRiot.TheTaftHartleyLaborActof1947was
designedtotakeawaythepoweroftheunions.Bythe1960s,theunionswerecastinthelightasbeing


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evilandcontrolledbyorganizedcrimeaftertheJimmyHoffaincident.Thiscriticalshiftinperception
curtailedtheunionmovementafterjustone72yearpoliticalcycle.
ThecollapseofGeneralMotorsisthecollapseofthelastvestigeofMarxismthelaborunions.The
foreignautomanufacturershavesetupshopintheSouthwherethelaborlawswerefarmorefavorable
tocreatenonunionworkforcesthathavebeenquitesuccessful.Theforeigncarmanufacturershave
demonstratedthatunionsareabadidea.Theunionmovementshadtheirpointsfromtheoutset.But
workingconditionsshouldhavebeenattackedinapoliticalcontext(democracy).Unionsassumedthe
mantleofcommunismcreatingconfrontationandtransferredthepowerfrommanagementtolabor.It
didnotsolvetheproblemsandonlybecamelikeadrunkwhothenhadthekeystotheliquorstoreself
destructive.
Thereasonwhyunionswereabadexperimentwasbecausetheymerelyturnedtheemployerintoa
slaveandalteredthefreemarketsthatwascontrarytothenatureofmankind.Historically,whenthe
cropsfailedinanagrarianmodel,peoplesimplymigrated.ThePhilistinesoftheBibleweremostlikely
GreekswhomigratedduetocropfailuresattheFirstHeroicAge.InvasionsoftheGoths,Germans,and
evenAttilatheHunwereallcausedbythe"grassisgreener"ontheothersidebelief.Unionsjust
promotedincreasedwagesratherthanincreasedskills,diminishingtheindividualmotivationtolearn
newskillsandmigratebetweenjobs.Thisisthesamereasonwhycommunismdied.Creatingasystem
whereonesizefitsall,promotesadeclineinhumangrowththatisthenmanifestwithintheeconomic
decline.
Wehavetounderstand,thatthefatalflawinCommunismwastodiminishtheessenceofmankind.They
saynecessityisthemotherofallinvention.Thatissotrue.Ifwetrytocreateutopia,wedestroythe
veryenginethatcreatesprogress.Donotforoneminutethinkthatalaborunionisanydifferentthat
thecommunisticmodel.Itisnot.Whereinanormaleconomicmodel,toearnmoreoneimproveshis
skills,theCommunisticmodelpromotesadvancesincomewithoutimprovementinskills.
Thisunionlaborsystemstymiednaturaleconomicprogressandcreatedmuchdamagetothebenefitsof
theIndustrialRevolution.ThisisthefatalflawthathadledtothedestructionofAmericanjobs.Itfroze
thenaturaleconomicevolutionandbeganatrendtowardtransferringjobsoverseas.Thetrendwasonly
acceleratedbytheimpositionofthepayrolltaxthatessentiallyincreasedthecostoflabor.Historically,
mankindmigratedinanagrariansociety.Thisverysametrendstilltakesplacetoday.However,instead
oftheworkforcemigratingtobetterlands,thecommunisticmodelreversedtherolesandcausedthe
employertomigrate.Whatgovernmentdidnotnotice,wasthistrendwasnotcausedbythe"greed"of
theemployer,butbytheInvisibleHandofAdamSmith.Labordemandedthehighestwageswiththe
lowestproductivity,andconsumersdemandedthelowestpricewiththehighestreliability.The
employermigratedtosurvive.Throughouthistory,humannaturehasnevermigratedfornoreason.
Migrationstakeplacewhenproddedbytheficklefingerofnecessity.
Communism,whenimplementedasagovernmentpolicy,lastedonlyone72yearpoliticalcycle.In
1917,wefindtheRussianRevolutionandSunYatsensetuptherivalgovernmentinChinaat


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GuangzhouastheNationalists.Seventytwoyearslater,Tiananmen Square in1989wasfollowedabout


fivemonthslaterbythefalloftheBerlinWall.Thesechangeswereeconomicallydriven.Thestagnation
ofthehumanspiritledtothesteadydeclineinproductivity.Thisisthesametrendwehaveseeninthe
Americanlaborunions.
Whatwemustunderstandisthatonlywhenpeoplelosetheirsecurity,thenandonlythendowesee
politicalunrest.Justashumansdidnotmigratewithoutreason,allpoliticalunrestisunleashedfollowing
economicimplosions.Asweshallsee,thecollapseoftheMississippiBubblesetinmotiona
irresponsiblegovernmentpolicyregardingthemoneysupplytheinventionofpapermoney.This
collapseofaEuropeanwidespeculativeboomin1720,setthestageforthegreatwaveofrevolutions
thattoppledthelastvestigeofFeudalismMonarchy.ItwasnotjusttheAmericanRevolution,withits
slogan,NoTaxationWithoutRepresentation,"butalso72yearslaterwecometo1792andthe
overthrowoftheFrenchmonarchy.

UnderstandingtheMississippiBubbleandtheFrenchBailoutthatsetinmotiontheAgeof
Revolution
Atfirst,youmightask:Whylookatsomethingfrom1720?Well,theanswerissimple.TheFrench
GovernmentwasinpartresponsiblefortheMississippiBubbleandcontributedtoitsexponentialriseat
theend.TheGovernmenthadtothenbailoutthemessand,topayforit,implementedhighertaxes.
Thisisnotsodifferentfromcurrentevents.
TheMississippiBubblewasafinancialschemenotsodifferentfromthewildunbackedderivatives
createdbyAIGandothers.TheschemewasatfirstengineeredbyJohnLaw,anearlyeconomictheorist,
whowasfriendwiththeDuked'Orleans.In1716,JohnLawfoundedBanqueGenerale,withthe
authoritytoissuenotesthatweretheearliestformofpapercurrency.Thefollowingyear,hefounded
Compagnied'Occident("CompanyoftheWest")withtheexclusivedealtodevelopthenewFrench
territoriesintheMississippiRivervalley.ThisenterprisebegantomonopolizethetobaccoandAfrican
slavetradeaswell.By1719,hethenformedthe"CompagniedesIndes"thatwasessentiallyjust
renamingthe"CompanyoftheWest"withacompletemonopolyoverallFrenchtrade.Thisnewentity
alsoassumedthepowersasifitwereaRomangovernorship,withthepowertobothcollecttaxesand
tocoinmoney.ThisoperationinessenceassumedcontrolofboththetradeandfinancesoftheFrench
government.
ItwasthislinkandexclusivepowerwiththeFrenchgovernmentandthevastexpansionofunlimited
profitsintheNewworld,thatcreatedtheimageofthebestpossibleinvestment.Thepublicwasnaive.
Buttheywerealsoexploringhowcapitalcouldbeusedtoactuallyworkandmakemoremoney.This
wasanovelideaforsincethefallofRome,duringtheMiddleAges,therewasnonationalorganized
statethatpromotedinternationalinvestment.ItwasakintothefallofCommunismandtheinterestin
investinginanewworldofprivateinvestmentinChinaandRussia.


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Itwasthisexpectationofpotentialprofitsthatcreatedperhapswhatmaystillremainasthewildest
speculativeboominhistory.BetweenthediscoveryofAmericain1492and1700,themajorityof
investmentwasprofessionalorsolelybythestate.Therewasnoopportunityforthepublictoget
involvedonaspeculativenature.Sothiswasthefirsttrueexperienceofallowingthepublicto
participateisthenewfrontier.Asthiscycleunfolded,itsdurationwouldbe224yearsfromthe
discoverytothebustthatsetinmotionRevolution.Thesharesoftheleadenterprise,Companiede
Indes,rosefrom500livresto18,000.By1719,625,000shareshadbeenissued.Thisboomgaveriseto
theterm"millionaire.Theboomwassoprofound,CompagniedeIndeswasmergedthereafterwith
BanqueGeIleraleandtheschemewasexpandedtoretirethenationaldebtofFrancebyexchanging
sharesforthebonds.
ThisledtoamonumentalspeculativebubblethatspreadthroughoutEurope.Asimilarthemeplayed
outinEnglandwiththeSouthSeaCompany.TheSouthSeaBubbletransformedintoaschemetoretire
thenationaldebtofEnglandinreturnforshares.Thatentireincidentoccurredbetweenlate1711and
lateAugust1720.Thelaststagesofthespeculativeboomsawthesharesrisefrom1281/2penceto
1,000betweenJanuaryandAugust1720.
BackinFrance,the"CompagniedeIndes"wassosuccessfulwithoutreallyproducingprofitsthatthe
Frenchgovernmentbegantogetinvolved.TheFrenchgovernmentbegantoissuepapermoneyitself.
Thiswasaformofderivativeforthemoneywaswidelyacceptedonlybecauseitwasconvertibleinto
sharesofthisnewcompany.Thevasteconomicexpansionwasfueledbytheunlimitedissueofpaper
currencybetweenlate1719andthefatefultimeoftheyearSeptember/October1720.

Thelinkagebetweenthespeculativesharesandthegovernmentfinancescreatedabustthatbecame
theclosestthingtoafinancialmushroomcloud.Thebearmarketcollapsewassosignificant,thatby
December1720,JohnLawhadtofleeFrance.Thecollapsewasfiercebecausetherewerenomarket
makers,middlemen,oramaturetwosidedmarket.Theconceptofputsandcallshaddevelopedinthe
earlierspeculativebubbleknownastheTulipmania(16341637)inNetherlands.Butthatpanicdidnot
involveadebtcrisisorthegovernmentissuingderivativeformsofmoneyconvertibleintostockshares.
ThelackofsophisticatedmarketfunctionsledtoaonesidedcollapseinboththeSouthSeaBubbleand
theMississippiBubblewithinthreemonths.TheEnglishsharescollapsedfrom1,000to124by
December1720thoughthecompanydidsurviveuntil1853.
Itwasthecollapseindebtthatdevastatedtheeconomy.TheFrenchgovernmentwasforcedintoa
bailoutassumingallthedebtsofthecompany,andthen,topayfortheirownfolly,begantoraisetaxes.
ThatsetinmotiontheresentmentthatledtotheFrenchRevolution.

TheFrenchBailoutTheRevolution(TheBonfireofDiscontent)
TheinvolvementoftheFrenchgovernmentinthespeculativeboom,alsoplacedthefocusof
responsibilityforitupontheKing.TheraisingoftaxestopayforthebailoutsetinmotiontheFrench
Revolutionfuelingthebonfireofdiscontent.TheRevolutionbeganwiththestormingofthejail,Bastille


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Day(7/14/1789)asitisrememberedtoday.ThisledthekingtofleetohispalaceatVersaillesinOctober
1789,whichthepeoplelaterstormedonJune20th,1792.Attrial,theyreferredtotheKingnowas
"CitizenCapet"andtriedhimfortreasononDecember1792.HewasexecutedonJanuary21,1793
followedlaterthatyearbyhiswife,MarieAntoinette.TheFirstRepublicwasdeclaredonSeptember21,
1792.ThiscitizengovernmentsimplyfaileduntilNapoleontookpowerin1799andeventuallycrowned
himselfemperorin1804.
Consequently,itwasthedirectinvolvementoftheFrenchCrownanditsverycostlybailoutthatresulted
inraisingtaxesandoppressingthepeoplethatledtothecollapseoftheFrencheconomyandended
withaRevolution.LookingatgovernmenttobailoutthefolliesoftheInvestmentBanksisadangerous
courseofaction.ItshiftstheburdentotheGovernmentandraisestheriskofpoliticalinstabilityinthe
longrunshouldtheGovernmentfailtoreversethetrend.Whatifweendinhyperinflation?The
massivemonetaryprintingandfundingofdebtscoulddriveinterestrateshigher,whichwillcompete
withthecommonmananddestroyhisabilitytosurviveeconomically.Ifwethenturntohighertaxesto
makethosewhodidnotcausethecrisispayforit(lettingtheinvestmentbankersoffthehookonce
again),howcanwejustifythisvasttransferofwealth?

ItIsAlwaysDebtThatDestroysTheBestPlansandFoundationsofMankind!
Thedebtcrisisisalwaysdistinguishedfromthemerespeculativebubble.TheTulipmaniadidnotchange
thecourseofhistoryasdidtheBubbleof1720.Likewise,theexcessiveborrowingbySpainandthe
desperateattempttoinvadeEnglandtopayoffthosedebtswithitsArmadain1588,resultedinthe
collapseofSpaintakingwithitItaly,whowasitsbanker.Intheend,SpainandItalylosttheirabilityto
beanysortofaworldpower.Itisalwaysdebtthatdestroysanation.ItdestroyedevenRome.
Whatwemustunderstandisthatwehavebeenevolvingasaneconomyforaverylongtime.
CommunismandSocialismareamerebliponascreen.Governmentssteppinguptobailoutthecrisis
raisesconcern.ForhadwejustlettheInvestmentBankersfailandstoodbehindthepublicdeposits
100%inCommercialBanks,wewouldhavebeenbetteroff.Sometimes,itishonestlybesttoletthefree
marketssortouttheweakfromthestrong,becauseitisquitefrankly,fartoocomplicatedtoanticipate
correctlythisiswhyCommunismalsofailed.
MarxrailedagainstthecomingoftheIndustrialRevolution.Hesawevilandwasblindtotheevolution
oftheeconomyasawhole.WearestillcaughtupinthephilosophyofMarx.PhaseOnewasthe
collapseofCommunism.PhaseTwo,willbethecollapseofsocialismstatepromisesthatareunfunded
yetseektostillcreatetheworldofMarxismtoalesserdegree.Thereisnotmuchdifferencebetween
thestatetakingtitletotheland,orallowingyoutokeepthetitlebutdictatehowitistobeused.Labor
cannolongermigrate,onlycapital.
TheCommunistic/SocialistictheoryofMarxiscollapsing.

ThisispreciselywhytheGreekCrisishasonlystarted.
ThisispreciselywhytheVenezuelaisdying.


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ThisispreciselywhyBrazilisintrouble.
ThisispreciselywhyPuertoRicoisintrouble.
ThisispreciselywhyBrexithappened.
ThisispreciselywhytheEUisdyingandtheEurowillcollapse.
Thisisjustthestart.
Oursocialisticlifemaybecomingtoanendbecauseourpromisesexceedourresources.
Ifwecannotseehowwemakethesamemistakesoverandoveragain,whathopedowehave?Wecan
surviveasasocietyonlywhenweopenoureyes.Ifwecannotdothat,thenwemaybeheadedintoa
newdarkageoffeudalismwiththebreakupoforganizedstates.Texasisalreadyconsideringitinthe
USAandBritainisnowstartingthepathtofreedomfromtheEU.
Wehavetostopthedebtandinsanetaxesbeforeitistoolateonceagain.Weareinthelastdeath
throesofMarxsideasofCommunism/Socialism.HerailedagainsttheGreatEconomicTransformation,
becauseheremainedjustaflyonanelephant'sback.

Today
Unfortunately,thefundamentaltransformationourcurrentpresidentstatedhewasgoingtodowas
reallyjustputtingthefinaltouchesonstartingthecollapseoftheonlyeconomicsystemthatcould
surviveandsavetheglobaleconomicsystem.
Fortunately,therearetwocountriesthathavetheknowledge,experience,andpowertoturnitaround
atthistime;BritainandtheUSA.
GreatBritainhasdonetheirparttostarttheturnaroundwithBrexit,buttheymustcontinueontheir
pathtocompletethetask.
TheUSAcanquicklyturnitaroundifwearerationalandobjectiveandthisispreciselywhytheDonald
Trumpphenomenonhasarisen.Believewhatyouwill,butthismanisbrilliantandunderstandsprecisely
whatisatstakeandknowshowtocorrectit.Ofcoursehewontdoithimself,butheknowswhatneeds
tobedoneandthepeoplethatcangetitdone.
Weneedtorestructureallagreement,eliminatesocialisticprogramsingovernment,andmakeall
departmentsprofitablewithoutsubsidy.
Thisisonlythebeginning.Wehavealongwaytogotogetbacktofreedom.
Letshopeitstartsnowandhelpitonitswayback.
Thealternativetofreedomis...is...
...wellletsjustsayitiseconomicdestructionandpoliticalslavery.


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TheS&P500marketisimmediatelyinaneutralpositionforrightnow.

Whilethismarkethasbeeninabearishconsolidationphaseoverallforthepast6months,thepast3
monthshaswitnessedarallyof15.84%percent.

Systemically,myexpandedviewrecognizesthatthecurrentbearishprogressioninS&P500CashIndex
reflectsonlyatemporaryreactionwithinabroaderbullmarkettrend.Thisiswhywepostedabuyalert
whenthefalloutfromBrexitoccurred,weboughtsomeemotionallydiscountedassets.

Resistanceconspicuouslystandsatlastyear'shighofasindicatedbythegreenbarinthechart.Sofar,
thismarkethasremainedinabearishtonesincethe2134.72majorhighestablishedbackin2015.

PleasefollowyourWealthPreserverarrowsandkeepreadingourprivatemarketalert;theyare
astoundinglyprofitable.


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Abodyofresearchinpositivepsychologysuggeststhatoptimismhasanumberofbenefits:social,
psychologicalandphysical(Schneider,Grumman,&Coutts,2011).Optimismhasbeencorrelatedwith
improvedmentalandphysicalhealth,betterworkandeducationaloutcomes,andrichersocial
relationships.
Whileoptimismappearstobeahealthyorientation,thingsarenotquitesosimple.Someresearchers
identifytwoclassesofoptimism:realisticandunrealistic(Weinstein,1980).Unrealisticoptimistsareat
riskforselfdeception,especiallyindomainssuchasriskassessment(Collingwood).Realisticoptimists,
ontheotherhand,moresuccessfullyincorporatedataaboutsituationsandevents,balancingthebest
ofoptimisticandpessimisticperspectives.Therealisticoptimistpointofviewcouldbesummedupby
theadage:"hopeforthebest,preparefortheworst".


Tomakemattersmorecomplex,theideaofoptimismandpessimismasdispositionalattributesisgiving
waytoamorenuancedviewoftheseconstructs(Paul,2011).Neitherperspectiveisinherentlygood
nor"bad",bothcanbeadoptedasneeded,bothmaybeconsideredhighlyfunctionaldependingonthe
situationalcontext.


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Copyright2016InterAnalyst,LLC

InsidersPower

Insomesituations,"defensivepessimism"canbeapowerfulmotivatortomakebetterchoices.For
example,beingpessimisticabouttheeconomymaybeamotivatortoavoiddebtandmanageyour
moneymoreeffectively.
Personally,I'vealwaysconsideredmyselfsomethingofarealist.
Onascaleofhalfemptytohalffull,mostofthetimeIthink"oh,there'saglasswithsomewaterinit,
let'smeasureit".
Insomecontexts,I'mmoreoptimistic(e.g.,ifI'mworkingonthisnewsletterandIhaveasufficient
degreeofcontroloverit,I'musuallyreasonablyoptimisticthatitwillsucceed),inothercontexts,I'm
lessoptimistic(e.g.,ifI'moutfishingonaSundaymorning,andthetidesareallwrongandI'moutof
bait,I'mreasonablypessimisticaboutbringinghomedinner).
InsidersPower
Ibelievesocionomics,socialmood,andcapitalflowsdriveeconomiesincyclesglobally.Becauseofthe
WorldWideWebthereisnotimeinhistorythatallowsforeasierdatagatheringandtrackingbecause
allcountriesarenowhighlycorrelated.
ThisInsidersPowerNewsletterisacompilationofcurrenteconomicarticleswritten,notbyus,butby
globalauthorswithinthelast90days.Theyrepresentthecurrentglobalsocialmoodandcreatesa
globalPointofViewthathas,bytheway,beenextremelyaccuratefromancientGreeceandRometo
ourowncurrentsociety.
Itrepresentscurrenteconomicrealityonaglobalscalewhetheritspositiveornegative.Ultimately,Be
mindful,preparedandverydiversifiedandmostimportantly...watchyourWealthPreserver
SubscriptionGreenandRedArrowsontheequitymarkets.Itdeliverstheopportunityofanoptimistic,
positiveandprofitableoutcomeforyou.
Basedonthecriteriaalreadyoutlined,IbelieveInsidersPowertobeanextremelyREALISTICnewsletter
thatcarriesbothOPTIMISTICandPESSIMISTICcontentthatdeliversanOPPORTUNISTICoutcome.
Ultimately,Ijusthopeyouenjoyitscontentandprofithandsomely.
InsidersPowerhasreceivedbothpositiveandnegativecommentsbyreadersandweappreciatebothso
pleaseopineanytimetoInsidersPower@InterAnalyst.us.
Bytheway...whichpointofviewdominatesyourpersonality?Nowaskyourfriendorspousetosee
iftheyagree!


13
Copyright2016InterAnalyst,LLC


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andmaynotberedistributed.

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