The Art of the Absurd
Monetize. Monetize. Monetize. Monetize.
“We live in a time which has created the art of the absurd. It is our art.”
“Economists do not simplify reality and then study it.
They get rid of it and replace it with make believe.”
It’s Not Priced In
Nice piece from Rabobank on the new National Security Strategy, which sounds pretty good to me, if they mean it. An excerpt:
“…the US Supreme Court appears ready to overturn decades of precedent to grant Trump the power to fire a swathe of government officials. Reversing ‘Humphrey’s Executor’ will allow him to overcome legal and bureaucratic resistance to the Gramscian changes he’s introducing to the political economy. That isn’t priced in. Indeed, despite Justice Kavanaugh’s opposition, it could put the Fed in the firing line too, with Governor Cook’s court case in January and a Fed Chair nominee, likely Hassett, promised within weeks. That isn’t priced in either.
Neither is Friday’s US National Security Strategy (NSS) even if for some countries and many markets it implies staggering changes ahead.
It’s America First, starting with “protecting the country and its way of life” and ending with “restoring US spiritual and cultural health”.
Its working principles are a focused definition of national interests; peace through strength; a predisposition to non-interventionism; flexible realism; the primacy of nations; a balance of power; pro-American worker; fairness; and competence and merit.
Its priorities begin with “The era of mass migration is over”; protection of core rights and liberties; burden-sharing and burden-shifting; realignment through peace; and economic security, focused on balanced trade, access to critical supply chains and materials, reindustrialisation, rebuilding the defence industrial base, energy dominance, and financial sector dominance.
In the Americas, the US wants to “enlist” new friends to work with it, and it will expand its military presence there via a ‘Trump Corollary” to Monroe Doctrine. The goal is for “partner nations” to build up their domestic economies, while a “stronger and more sophisticated” Western Hemisphere grows for the US. That’s not the traditional US model of US cheap labour and resource extraction. The plan is also to “expand” its list of partners while pushing out influence from “nonhemispheric competitors”, which sounds like regime change, a long-standing tradition.
In Asia, the aim is to “win the economic future” and “prevent military confrontation. Even with Trump agreeing to sell older Nvidia chips to China, the NSS states: “we will rebalance America’s economic relationship with China, prioritising reciprocity and fairness to restore American economic independence. Trade with China should be balanced and focused on non-sensitive factors.” Indeed, the US will “resist predatory, state-directed subsidies and industrial strategies,” etc. Moreover, “We must encourage… prominent nations in adopting trade policies that help rebalance China’s economy toward household consumption.” So, a US bloc with a common external tariff against China. This “must be accompanied by a robust and ongoing focus on deterrence to prevent war in the Indo-Pacific”, and from Taiwan to the South China Sea, this means much more military burden-sharing from US allies and partners.
For Europe, the emphasis is on decline and the starker “prospect of civilisational erasure.” There is a litany of US complaints about the EU’s strategy and the view that “should present trends continue, the continent will be unrecognizable in 20 years or less. As such, it is far from obvious whether certain European countries will have economies and militaries strong enough to remain reliable allies.” This is then sharpened to, “Over the long term, it is more than plausible that within a few decades at the latest, certain NATO members will become majority non-European. As such, it is an open question whether they will view their place in the world, or their alliance with the US, in the same way as those who signed the NATO charter.”
While the FT talks of ‘Trump’s America and a clash of civilisations with Europe’, the NSS argues “Europe remains strategically and culturally vital to the US…Not only can we not afford to write Europe off - doing so would be self-defeating for what this strategy aims to achieve…. Our goal should be to help Europe correct its current trajectory. We will need a strong Europe to help us successfully compete, and to work in concert with us to prevent any adversary from dominating Europe.” So, the US wants to remake Europe state by state, ignoring the EU. The NSS says policy will prioritise “Cultivating resistance to Europe’s current trajectory within European nations.”
The NSS also says “It is a core interest of the US to negotiate an expeditious cessation of hostilities in Ukraine.” Yet after meeting Macron, Merz, and Starmer yesterday, Ukraine’s Zelenskyy says he won’t yield any territory to Russia. The war may grind on… and the US may walk away, leaving Europe to pay and provide materiel for it. In parallel, Reuters reports the US plans to hand over the running of European NATO by end-2027. If so, European plans to raise core defence spending to 3.5% of GDP by 2035 would be completely inadequate, more so if there is war nor peace. This could require spending 8-10% of GDP for the next two years; or Russia might win, which Europe has said is “existential” for it. The Deputy Secretary of State also just posted that the US will no longer accept NATO meeting with it and talking ‘alliance’, then after it leaves, the same countries changing hats to ‘EU’ and pushing policies that undermine US interests. He implies one or the other will have to change. That has huge implications of its own, including the US openly playing divide and rule via security with the EU: east/north vs west/south.
In short, the NSS puts Europe --as currently constituted-- in a terrible geopolitical position with no good options. The response so far has been silence (‘As Trump goes on the attack, von der Leyen goes into hiding’). Limited conversation around the topic focuses on the mistakes that the US is making. OK, **but what will EUROPE DO**? Chatter of ‘working with China’ rather than the US --as Macron was maybe angling for when not threatening to use Europe’s trade-bazooka on Beijing-- would just ensure the US becomes openly antagonistic; and Chinese trade practices are set in place, as its trade surplus hit a new high. We were here on tariffs too, before the EU yielded.
Tellingly, the NSS plan for the Middle East – “Shift burdens, build peace” actually looks like the easier region to deal with, as does Africa’s “Look to partner with select countries to ameliorate conflict.” Cynics might add that reads like a future NSS Europe text.
This might all seem abstract to markets (“What does this mean for the ECB?”) but it was the ECB’s Lagarde who underlined the world which made Europe prosperous is disappearing. The one that opened up on Friday is likely to be even more transformative as: JP Morgan’s Dimon attacks Europe’s economic record; Ford’s CEO warns Europe is risking the future of its auto industry; the EU steel industry is “in disarray”; France is shielding an €18bn Russian asset pot from the EU ‘reparations loan’ push, where Germany faces a €52bn potential bill for guaranteeing it – and Japan won’t join in.
That leaves one hope for the EU to cling to: that the NSS is just aspirational shelfware. Yet if the Supreme Court rules for Trump on Humphrey’s Executor, the NSS may be backed by new US political-economy hardware and software. That’s called a fat tail risk - and it’s NOT priced in!
Here’s friend of the show Marty Bent’s take on the NSS: Exactly What You Love To See
Oil vs Silver since 1990.
Everything is Awesome
Who needs “earnings”?
Howard Marks on Bubbles
One of the most interesting aspects of bubbles is their regularity, not in terms of timing, but rather the progression they follow. Something new and seemingly revolutionary appears and worms its way into people’s minds. It captures their imagination, and the excitement is overwhelming. The early participants enjoy huge gains. Those who merely look on feel incredible envy and regret and – motivated by the fear of continuing to miss out – pile in. They do this without knowledge of what the future will bring or concern about whether the price they’re paying can possibly be expected to produce a reasonable return with a tolerable amount of risk. The end result for investors is inevitably painful in the short to medium term, although it’s possible to end up ahead after enough years have passed.
Marks above reminds me of this passage from John Kenneth Galbraith’s, “A Short History of Financial Euphoria”:
Contributing to and supporting this euphoria are two further factors little noted in our time or in past times. The first is the extreme brevity of the financial memory. In consequence, financial disaster is quickly forgotten. In further consequence, when the same or closely similar circumstances occur again, sometimes in only a few years, they are hailed by a new, often youthful, and always supremely self-confident generation as a brilliantly innovative discovery in the financial and larger economic world. There can be few fields of human endeavor in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.
The second factor contributing to speculative euphoria and programmed collapse is the specious association of money and intelligence. Mention of this is not a formula for eliciting reputable applause, but, alas, it must be accepted, for acceptance is also highly useful, a major protection against personal or institutional disaster.
The basic situation is wonderfully clear. In all free-enterprise (once called capitalist) attitudes there is a strong tendency to believe that the more money, either as income or assets, of which an individual is possessed or with which he is associated, the deeper and more compelling his economic and social perception, the more astute and penetrating his mental processes. Money is the measure of capitalist achievement. The more money, the greater the achievement and the intelligence that supports it.
Further, in a world where for many the acquisition of money is difficult and the resulting sums palpably insufficient, the possession of it in large amount seems a miracle. Accordingly, possession must be associated with some special genius. This view is then reinforced by the air of self-confidence and self-approval that is commonly assumed by the affluent. On no matter is the mental inferiority of the ordinary layman so rudely and abruptly stated: “I’m afraid that you simply don’t understand financial matters.” In fact, such reverence for the possession of money again indicates the shortness of memory, the ignorance of history, and the consequent capacity for self- and popular delusion just mentioned. Having money may mean, as often in the past and frequently in the present, that the person is foolishly indifferent to legal constraints and may, in modern times, be a potential resident of a minimum-security prison. Or the money may have been inherited, and, notoriously, mental acuity does not pass in reliable fashion from parent to offspring. On all these matters, a more careful examination of the presumed financial genius, a sternly detailed interrogation to test his or her intelligence, would frequently and perhaps normally produce a different conclusion. Unfortunately the subject is rarely available for such scrutiny; that, too, wealth or seeming financial competence often excludes.
Finally and more specifically, we compulsively associate unusual intelligence with the leadership of the great financial institutions— the large banking, investment-banking, insurance, and brokerage houses. The larger the capital assets and income flow controlled, the deeper the presumed financial, economic, and social perception.
In practice, the individual or individuals at the top of these institutions are often there because, as happens regularly in great organizations, theirs was mentally the most predictable and, in consequence, bureaucratically the least inimical of the contending talent. He, she, or they are then endowed with the authority that encourages acquiescence from their subordinates and applause from their acolytes and that excludes adverse opinion or criticism. They are thus admirably protected in what may be a serious commitment to error.
Marks continues:
“Mean-reversion bubbles” – in which markets soar on the basis of some new financial miracle and then collapse – destroy wealth. On the other hand, “inflection bubbles” based on revolutionary developments accelerate technological progress and create the foundation for a more prosperous future, and they destroy wealth. The key is to not be one of the investors whose wealth is destroyed in the process of bringing on progress…
AI-related stocks have shown astronomical performance, led by Nvidia, the leading developer of computer chips for AI. From its formation in 1993 and its initial public offering in 1999, when its estimated market value was $626 million, Nvidia briefly became the world’s first company worth $5 trillion. That’s appreciation of around 8,000x, or roughly 40% a year for 26+ years. No wonder imaginations have been fired…
As Warren Buffett pointed out in 1999, “[The automobile was] the most important invention, probably, of the first half of the 20th century. . . . If you had seen at the time of the first cars how this country would develop in connection with autos, you would have said, ‘This is the place I must be.’ But of the 2,000 companies, as of a few years ago, only three car companies survived. So autos had an enormous impact on America but the opposite direction on investors.” (Time, January 23, 2012)…
Noteworthily, OpenAI has made investment commitments to industry counterparties totaling $1.4 trillion, even though it has yet to turn a profit. The company makes clear that the investments are to be paid out of revenues received from the same parties and that it has ways to back out of these commitments. But all this raises the question of whether the AI industry has developed a perpetual motion machine.
(On this subject, I’ve been enjoying articles questioning the ability of people to relate to the word “trillion,” and I think this idea is spot on. A million dollars is a dollar a second for 11.6 days. A billion dollars is a dollar a second for 31.7 years. We get that. But a trillion dollars is a dollar a second for 31,700 years. Who can get their head around the significance of 31,700 years?)…
Here’s one vignette:
Thinking Machines, an AI startup helmed by former Open AI executive Mira Murati, just raised the largest seed round in history: $2 billion in funding at a $10 billion valuation. The company has not released a product and has refused to tell investors what they’re even trying to build. “It was the most absurd pitch meeting,” one investor who met with Murati said. “She was like, ‘So we’re doing an AI company with the best AI people, but we can’t answer any questions.’ ” (“The Is How the AI Bubble Will Pop,” Derek Thompson Substack, October 2)
I’m reminded of this list of bubbles from the 1852 book, Memoirs of Extraordinary Popular Delusions and the Madness of Crowds:
But that’s ancient history. . . already two months old. Here’s an update:
Thinking Machines Lab, the artificial intelligence startup founded by former Open AI executive Mira Murati, is in early talks to raise a new funding round at a roughly $50 billion valuation, Bloomberg News reported on Thursday. The startup was last valued at $12 billion in July, after it raised about $2 billion. (Reuters, November 13)…
Oracle, Meta, and Alphabet have issued 30-year bonds to finance AI investments. In the case of the latter two, the yields on the bonds exceed those on Treasurys of like maturity by 100 basis points or less. Is it prudent to accept 30 years of technological uncertainty to make a fixed-income investment that yields little more than riskless debt? And will the investments funded with debt – in chips and data centers – maintain their level of productivity long enough for these 30-year obligations to be repaid?
…In 1927, Charles Lindbergh flew the first solo nonstop transatlantic flight from New York to Paris. . . . It was the biggest tech demo of the day, and it became an enormous, ChatGPT-launch-level coordinating event – a signal to investors to pour money into the industry.
“Expert investors appreciated correctly the importance of airplanes and air travel,” Goldfarb and Kirsch write, but “the narrative of inevitability largely drowned out their caution. Technological uncertainty was framed as opportunity, not risk. The market overestimated how quickly the industry would achieve technological viability and profitability.”
As a result, the bubble burst in 1929 – from its peak in May, aviation stocks dropped 96 percent by May 1932.
Marks’ conclusion:
“Since no one can say definitively whether this is a bubble, I’d advise that no one should go all-in without acknowledging that they face the risk of ruin if things go badly. But by the same token, no one should stay all-out and risk missing out on one of the great technological steps forward. A moderate position, applied with selectivity and prudence, seems like the best approach.”
[Never] Unwinding quantitative easing
“No central bank has managed successfully to reverse quantitative easing over the medium to long term. In practice, central banks have engaged in quantitative easing in response to adverse events but have not reversed the policy subsequently. This has had a ratchet effect and it has only served to exacerbate the challenges involved in unwinding the policy. The key issue facing central banks as they look to halt or reverse quantitative easing is whether it will trigger panic in financial markets, with effects that might spill over into the real economy.”
They’re going to re-start monetizing debt.
With inflation well above their made-up 2% target since April 2021.
While their balance sheet sits at $6.5 trillion, above the less than $1 trillion Bernanke claimed would happen in 2010.
And they’re cutting rates.
Ben Bernanke on monetizing the debt, 2012
“No, that’s not what is happening, and that will not happen. Monetizing the debt means using money creation as a permanent source of financing for government spending…
We are acquiring Treasury securities on the open market and only on a temporary basis, with the goal of supporting the economic recovery through lower interest rates. At the appropriate time, the Federal Reserve will gradually sell these securities or let them mature.”
Mr. HENSARLING. Will the Federal Reserve monetize this debt?
Mr. BERNANKE. The Federal Reserve will not monetize the debt.
[FUTURE FRONTLINE NARRATOR]: In reality, they had monetized the debt.
Fun Fact: Hensarling later went to UBS.
Jim Grant
“The trouble with administered rates is they return so little information to the administrator. Right? So the Fed in that sense encounters the problems of any central planner, and these problems were last and most vividly on display in September 2019. One day out of the blue, you know - no press release, no brass band announcing anything - the overnight rate on loan collateralized by Treasury Securities jumped from like 2% to about 10%. It didn’t stay there long, but it stayed there long enough to send shock waves of astonishment and fear through the institution of our central bank.
And the Fed intervened with a great injection of funny money - which we kind of euphemistically called liquidity - printed up some dollars, and the Fed then was kind of uh noodling over how to present this to the world, because it had just not so long before this had begun to tighten up the balance sheet. Powell wanted to put the financial crisis and its aftermath behind it. And lo and behold, the market revealed that there were cracks and rivets popping, and there wasn’t enough liquidity in the market, right? Although in 2019 the Fed had every reason to believe it was perfectly adequate, this level of reserves.
Okay. So they didn’t know, they couldn’t know, but they thought they knew. Realizing that there were not enough dollar bills floating about the system, the Fed undertook to inject about $60 billion a month, if memory serves - which it so infrequently does - but 60 billion or so a month beginning in September. And, well, let me add that it looked like QE, didn’t it? All this $60 billion. And the Fed and in an intimate conversation among the members of the Federal Open Market Committee said, “God, it does kind of seem like more QE. That’s not good. But how do we sell this?”
They sold it as a temporary technical fix for a problem of reserve provisioning. Huh? Yeah, it sounds like a five and a dime thing, right? So, then Jay Powell gets up and says this is not QE. In no sense is this QE. But six months later, the Fed had added $350 billion plus to its balance sheet.
And that took us to March of 2020, when the corona virus manifested itself to all and sundry to see and to suffer from. So those six months were the entrée to the complete sense of abandonment of monetary discipline, and monetary discipline was thrown to the side to combat the pandemic. Anyway, it’s a very long- winded way of saying that the year-end difficulties we’re having in the money market now, and the calls for help on the part of the big banks, could be the prelude to a turn in the Fed’s operating procedures such that we are once again adding liquidity rather than pretending to withdraw it or to keep it the same.
Getting back to the reason we’re all here talking together today is because that would be good for gold.”
“It is more and more looking like Argentina before the ouster of the Peronists. I don’t know. It’s quite concerning to me where we’re going. This must be the least conservative Republican administration on record. Certainly, it’s the most venal, by which I mean the most self-interestedly interested in money for itself.”
They “never let a bear market proceed too far, so excesses accumulate, and misallocations build on each other, and pretty soon you have a dysfunctional economy. Recessions exist for a reason, and bear markets exist for a reason. It’s not just the glib business returning money to its rightful owner, these downturns and these slumps and these recessions clear out investment mistakes, and they’re not pretty, but they’re necessary. And to forestall them through constant liquidity injections is to sentence us all collectively to an economy that is increasingly rigid and incapable of correcting its errors.”
“It was the shenanigans and financial markets leading up to early 2020 that created the crash. The fact that they blamed it on a virus is entirely up to them, and that’s what everyone believed, because it was convenient, and that allowed them to lockup the economies and then bring in what in fact they decided to do in 2019”
“Yet another reason the EU should borrow more”
John Hoffman with Todd Sachs
Mortgage Fraud Implications as Foreclosures Rise
Hoffman’s “been dealing with bank-owned and foreclosure properties as his specialty dating back during the GFC.”
“The BPOS are completely off the rails. They’re coming left and right…Basically, when you’re two, three months behind on your mortgage, they order a Broker Price Opinion, a driveby…the BPO’s I’m accepting, the exterior of these properties are in really rough shape. So these people have no money. They’re not able to take care of these properties at this point…the government is basically the subprime lender now…I know a lot of the FHA loans are fraud. A lot of people bought those for Airbnbs, there’s a ton of that out there…they just don’t want the values to drop. So, they got to keep pumping whatever they can get to keep people buying this stuff.”
“You can see the workouts as they move along in the system, where they keep putting the the $15,000 in mortgage payments they haven’t paid back on the back. Boom. 6 months goes by. Boom. Then they get a 40-year mortgage from FHA at 6 and a half %. And what’s really sad is that these people are refinancing them into a 40-year loans with a higher rate than what they had when they bought it. It’s just moving this big blob down the street, you know, but but this information…is all in the MLS, easily accessible, you know.”
I posted previous interview with these two last month here.
Banks are in Worse Position Than Reported, Hiding Credit Loses with Bill Moreland
There was another great interview with Moreland back in September.
“What I’ve learned through 20 years of looking at the bank data is you can’t underestimate the policy maker’s ability to change the rules. If you have problems and you can’t deal with the problems and the way of dealing with the problems is recognized and tracked, would you stop reporting?”
“I‘m old enough to remember Dodd Frank, right? And the mortgage back security problem, and people pounding on tables in Senate hearings saying we’re never going to allow mark-to-market losses to create problems and risk in the banking system, where the taxpayer has to bail out banks. And so we talked about a lot about the rules changing during that time frame. And the banks said, “Fine, if you’re going to basically make us mark to market all our securities, we’re just not going to hold mortgage back securities, because the risk is too high.”
At that time, the US banking system held about a hundred billion dollars of US treasuries. Today, that number is close to 1.5 trillion. So we sit there and we lament China’s going to dump their treasuries. Japan’s going to dump their treasuries. The U.S. banking system holds way more treasuries than each of those independent parties. Right?
And so part of that is the devil’s bargain that the government made with the banks -we’ll allow you to go back to held to maturity. You don’t have to mark to market. But it sure would be grand if you could soak up a lot of this excess money. If the question is do we think the U.S. banking system is going to take more exposure to Treasuries, oh yeah, we’re going to take an enormous amount.”
Fascinating explanation of how we got surreal credit score inflation - leading later to lending to riskier borrowers - when we threw out “300 years of contract law.”
I think he’s talking about Discover here:
“Upwards of 7% of their loan book has been modified. Those are unheard of numbers. We’ve never ever had levels that high.”
“One way to hide these losses is to merge these banks together and do a series of one-offs.”
CRE: “This is all managed…we basically kicked in massive amounts of loan modifications...almost like they had the exact same phone call, at the exact same time…[delinquency] is well more than 9%…it’s reporting. It’s fake. It’s what I call a Potemkin Village”
This is the opposite of what we normally hear, about the big banks being bulletproof:
“Mostly what we’re having right now is very much a large bank problem in the United States, which also goes a long way to explaining why they’re changing the rules…I think most of the community banks in the United States are extremely healthy. It’s the largest banks you have to watch.
But understand, never underestimate the capacity to avoid pain. So if we have to change rules on reporting, they will. I don’t think that changes the dynamic of whether or not the banks are still going to be problems, but it makes it much more difficult, and it gives them a longer time frame. I think you’re going to hear a lot of reporting about how things are better, and I think there’s a better than even chance that you’re going to start seeing the delinquencies rebound in 2026 for the larger banks. The market may or may not care, but I think we are going to see a rebound in delinquency rates for a lot of the larger banks uh in the upcoming year.”
Melody Wright with George Gammon
“We have over 15 million vacant homes in this country - not abandoned, vacant - as well as three million seasonal properties that the census tracks. So what you have is a lot of second and third home ownership, as well as all of these mom and pop investors, and the institutional investors, but the mom and pops are much larger and everybody got in on this gig.”
“Lennar - if they don’t sell anything in a subdivision, they don’t have to mark to market. It only kicks in if they take a 10% loss on a subdivision - that’s when they have to do mark to market. Instead they use a model, and so I’ve seen so many subdivisions where there’s nobody in them. And so they haven’t even started to realize these losses. And I think that’s what you’re about to see happening.”
Average homeowners insurance costs have risen nearly 70% over the past five years, according to ICE Mortgage Technology.”
Hmmm.
The BLS PPI for Home Insurance is only up 24% over the past 5 years (Sept. 2020-Sept. 2025)
Must be better insurance.
I put this out over seven years ago:
You: How much is this thing I need?
Cashier: It’s $20.
You: But last year it was $15?
Cashier: Yes, but now it’s cheaper because it’s better.
You: But it’s not cheaper. It’s 33% more. It’s $20.
Cashier: No, it’s 50% better and $20.
You: What?
Cashier: Do you have an econ PhD sir?
You: Can I just buy the old one for $15?
Cashier: No.
Nice explanation of how “hedonically-adjusted” and “chain-weighted” CPI prices are far lower than reality, and how this math PhD delusion we live under compounds over time. (Mike Green and Adam Butler)
Someone sent me this quote:
I always look up original sources (to see if quotes are real), and I found the source, a November 2004 Rolling Stone piece by Hunter Thompson, “The Fun-Hogs in the Passing Lane.”
I’m not necessarily endorsing (or not endorsing) these comments, but since I went to the trouble to look them up, I will save this for posterity - with this necessary caveat:
“That is why George W. Bush is president of the United States, and Al Gore is not. Bush simply wanted it more, and he was willing to demolish anything that got in his way, including the U.S. Supreme Court. It is not by accident that the Bush White House (read: Dick Cheney & Halliburton Inc.) controls all three branches of our federal government today. They are powerful thugs who would far rather die than lose the election in November.
The Republican establishment is haunted by painful memories of what happened to Old Man Bush in 1992. He peaked too early and he had no response to “It’s the economy, stupid.”
Which has always been the case. Every GOP administration since 1952 has let the military-industrial complex loot the Treasury and plunge the nation into debt on the excuse of a wartime economic emergency. Richard Nixon comes quickly to mind, along with Ronald Reagan and his ridiculous “trickle-down” theory of U.S. economic policy. If the Rich get Richer, the theory goes, before long their pots will overflow and somehow “trickle down” to the poor, who would rather eat scraps off the Bush family plates than eat nothing at all. Republicans have never approved of democracy, and they never will. It goes back to preindustrial America, when only white male property owners could vote.”
Read up on what Washington said about political parties here (he was against them).
“Anarcho-Tyranny: Power Through Disorder and Control”
Anarcho-tyranny describes a political condition in which the state abandons its duty to restrain real threats to public order while smothering the daily lives of law-abiding citizens under layers of surveillance, regulation, and punishment. What results is a strange inversion: violent criminals and rioters walk free, while ordinary citizens are fined, censored, or even arrested for words typed into a phone. What should be the bedrock of justice (the equal application of law) becomes a weapon of selective enforcement, used to intimidate the compliant while ignoring the truly dangerous.
The term was coined by the late Samuel T. Francis, whose posthumously published Leviathan and Its Enemies offers a searing analysis of twentieth-century America. Francis argued that the rise of the “Managerial State” marked a profound transformation of Western political order. Old forms of authority such as family, church, and local enterprise gave way to sprawling bureaucracies and corporate behemoths, organizations devoted less to the common good than to efficiency, control, and the management of populations. These entities, Francis observed, are largely insulated from accountability, and they exist first and foremost to perpetuate themselves.
Within this system, anarcho-tyranny becomes not a bug but a feature. By allowing chaos to simmer (unpunished crime, lawless streets, constant insecurity) the regime manufactures the pretext for further control. Meanwhile, the full weight of state authority falls on those who obey the rules, precisely because they are easiest to police. It is safer for the state to punish an office worker for an ill-judged social media post than to confront gangs who rule neighborhoods with impunity. It is easier to squeeze the citizen who files his taxes than to discipline the oligarch who launders billions. Disorder distracts, and tyranny pacifies. Together they reinforce the grip of the managerial class.
The dynamic Francis described echoes the darker warnings of George Orwell. In 1984, when Winston Smith asks O’Brien about the future, the reply is blunt: it will be a boot stamping on a human face, forever. Orwell’s image is more than a metaphor for violence. It captures the deliberate humiliation and permanent subjugation that defines totalitarian rule. The boot is the power of the state; the face is the human person, stripped of dignity and crushed into silence.
Anarcho-tyranny embodies this same logic. The tolerated disorder creates the fear; the suffocating regulation delivers the humiliation. Citizens are trapped between insecurity and repression, robbed of the protections that government owes them while being constantly reminded of the penalties that government can inflict. The people sense the betrayal: the state that once promised justice now offers only a choice between chaos and control.
It is little wonder that frustration in the West grows sharper by the day. Ordinary men and women watch as violent offenders are released in the name of reform, while petty infractions are punished with zeal. A mother who questions ideological lessons in her child’s school finds herself investigated. A man who makes a joke online is dragged before a court, while mobs who burn, loot, and terrorize face no consequence. A violent criminal is released immediately, while a citizen who defends his family from a home invader is arrested for “endangering the life” of the intruder. The very inversion Francis described has become daily reality: anarchy for the lawless, tyranny for the lawful.
This is not incompetence. It is not accidental. It is not random. It is strategy. Anarcho-tyranny is a method of rule, designed to sap resistance, normalize fear, and preserve the dominance of an elite that thrives on disorder it refuses to stop and on obedience it never ceases to demand. Orwell’s boot and Francis’s managerial state are not just abstract theoretic concepts. They are the shape of our present.
Hat tip to Greg Weldon, who brought this passage to my attention here.
I recently mentioned Vegas roulette. Here’s another Las Vegas vignette on blackjack: Lost Vegas
Vegas seems to have exported its triple-zero philosophy across the Strip. Another casualty is blackjack, which remains the most popular casino attraction in the city. Historically, the game has followed a golden rule. If you are dealt 21—an ace and a 10—you’ve hit blackjack, and your wager is paid out on a 3-to-2 ratio. (A $100 bet nets $150, and so on.) But Vegas has since altered the rules. Now, on most tables, blackjack is rewarded with a 6-to-5 equation; that same $100 kicks back only $120, significantly curtailing just how lucky someone is allowed to get. Again, it’s not hard to see why Vegas casinos made the change. “They’re tripling the house edge,” John told me. “It went up from about 0.66 percent to 2 percent.”
Even if a gambler is willing to tolerate these perversions of tradition, the price of admission in Vegas has skyrocketed. According to John’s research, in 2020, 38 casinos in the greater Las Vegas gambling market featured tables dealing 3-to-2 blackjack capped at a $5 minimum bet. (As in, to play, you need to risk at least $5 per hand.) These days, that group has dropped to six casinos. Prowl through the Strip after dark, sift through the pits, and you’ll feel the difference. Most table games in 2025 force patrons to sacrifice painful amounts of cash to its maw—$25 minimums are basically standard. Fifty-dollar minimums aren’t uncommon either. Even more deviously, some Vegas properties force customers to pay a premium to access friendlier rules. I came across exactly one ultra-rare single-zero roulette wheel on the Strip, which felt a little bit like uncovering the hutch of the last surviving dodo. Naturally, it was stowed away in a high-limit room.
LinkedIn
Statement on the Venezuelan Economy from Nicolás Maduro:
STOCK MARKET JUST HIT AN ALL-TIME HIGH!!! When will the Fake Polls show that I am doing a great job on the Economy, and much more??? Thank you!
“Pessimism of the intelligence, optimism of the will.”
With the dollar defined as one-twentieth of an ounce of gold from 1792 to 1932 and presently closed at $4,300 for an ounce of gold, over 99.5% of the value of the dollar has been destroyed in less than a century. The stock market is not at an all-time high if you are willing to measure in 1932 dollars, but is much lower than it was in 1929. The system has been broken a long time, as far as meaningful value. It was 1976 when Hayek concluded that only competing currencies had any chance of bringing clarity back to markets. By 1990 when he published his third edition of _Denationalisation of Money_ he was convinced that devious means were needed to ensure that those issuing free market currencies were not suborned or destroyed through confiscation. Bitcoin and its fourteen million emulators represent the realisation of those means envisioned by Hayek. This year over $40 trillion in economic exchanges are taking place in crypto currencies, which is up from zero at the beginning of 2009.
Thanks for the diverse collection of great reads. I especially appreciate the Anarcho Tyranny piece which is spot on. Hard not to want to become a doomsday prepper somewhere remote. 🤔