Daily Digest

Image by sirqitous, Flickr Creative Commons

Daily Digest 7/13 - Finding Unity In Divided D.C., What's Next For Stocks, Bonds and Gold?

Thursday, July 13, 2017, 9:49 AM

Economy

Finding Unity In A Divided Washington (jdargis)

On any given day at the Capitol, you could wander around and find bipartisan conversations, Bible studies, prayer times, meals, and cooperation. You could also find division, conflict, and accusations. It just depends on where you look.

What's next for the dollar, stocks, bonds & gold? (Axel M.)

The Fed hasn’t announced how small a balance sheet they want to have; based on our interpretation of discussions of current and former policy makers, this is because the Fed neither knows, nor agrees of where they want to take the balance sheet. It apparently doesn’t stop the Fed from preparing the markets that they embarking on this journey because they believe they have years to make up their mind. Notably, as can be seen from the chart above, they might have until 2021. Basically, the Fed can reduce its balance sheet until excess reserves have been eliminated (this level varies on economic activity; the dashed line represents the current level of excess reserves and the potential maximum reduction holding all else equal). Whether the Fed will try to get excess reserves to zero or some other amount is an open question that not even the Fed appears to be able to answer internally.

Blockchain: The End of Gold Price Suppression (Kevin J.)

It is a point of reference that can be trusted, and it has meaningful impacts for gold. Using blockchain, state-of-the-art communications enable gold to be redistributed across the globe with the snap of a finger, without ever leaving vaults.

China's gold market is now the largest in the world, and it is increasingly moving online. The Precious Metals Department of leading Chinese bank ICBC explains is leveraging the Internet to drive gold investments among savers, from the young millennials to professional and seasoned investors.

Putin's Real Long Game (jdargis)

From beginning to end, the operation took three months. This is how the Russian security state shook off the controls of political councils or representative democracy. This is how it thinks and how it acts — then, and now. Blood or war might be required, but controlling information and the national response to that information is what matters. Many Russians, scarred by the unrelenting economic, social, and security hardship of the 1990s, welcomed the rise of the security state, and still widely support it, even as it has hollowed out the Russian economy and civic institutions. Today, as a result, Russia is little more than a ghastly hybrid of an overblown police state and a criminal network with an economy the size of Italy — and the world’s largest nuclear arsenal.

This Nation Just Became The World’s Newest Energy Superpower (Michael K.)

As a final point of interest, the IEA study also showed that — for the first time ever — electricity passed oil and gas as the top energy sector for investment in 2016. Coming as capital spending in the global petroleum space plunged 38 percent between 2014 and 2016.

Energy Independence: Chimera or Chameleon? (Robert W.)

Experts have called Energy Independence a "chimera". Which is either a phantom, a will-o-the-wisp, or a fire-breathing three headed monster; not a good object to pursue in any case. But in political discourse, it becomes a chameleon: a wily lizard that changes color to blend with its context.

Carter's specific policy, announced in a 1979 speech, was not to let oil imports grow beyond their value at that time- about 6,600,000 barrels a day. We've come close; imports have been higher and lower over the decades, but today are only 8% higher than 1979, in spite of a 40% increase in population.

The Louisiana Environmental Apocalypse Road Trip (jdargis)

One hundred miles south in Colfax, a company called Clean Harbors has been burning old military and industrial explosives out in the open on metal sheets, releasing arsenic, lead and radioactive strontium into the environment. “Here we are in the 21st century and they’re using Roman army methods,” fumes the General. The burns are illegal under the Clean Air Act but Clean Harbors was granted an exemption by Louisiana’s Department of Environmental Quality. “This is one of the few places in America an open air burn of military explosives would even be permitted,” he says. Activities too toxic for other parts of America are regularly shuttled to Louisiana, often at the eager request of the state’s politicians. “Louisiana,” says the General, “is a dumping ground.”

Garbage-Fed Seagulls Are Spoiling Our Lakes and Reservoirs With Their Poop (Chris M.)

“It costs local US governments an estimated $100 million a year in nutrient offset credits to address or prevent the problem and maintain nutrient levels at or below the total maximum daily load threshold for water quality,” noted study co-author Mark River, a doctoral student at Duke’s Nicholas School, in a statement.

Gold & Silver

Click to read the PM Daily Market Commentary: 7/12/17

Provided daily by the Peak Prosperity Gold & Silver Group

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

32 Comments

cmartenson's picture
cmartenson
Status: Diamond Member (Online)
Joined: Jun 7 2007
Posts: 5397
FBI nominee makes radical proposals

This is big news.  

Just look at the astounding list of "firsts" that the new FBI nominee has proposed!

He's proposing a major culture shift!

surprise

/Sarc

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 3986
Talk of Looser Fiscal Policy Grows Within Japan's Ruling Party

Talk of Looser Fiscal Policy Grows Within Japan's Ruling Party

Bloomberg-18 hours ago
Even though the rise of total debt has slowed, it's more than twice the size of Japan's gross ... Ando wants a supplemental budget of about 10 trillion yen.

Cash balance better, pension crisis worse, city audit shows

Chicago Sun-Times-19 hours ago
Chicago's general obligation debt backed by property taxes now stands at nearly $9.9 billion. That's $3,680.02 for each of the city's 2.69 million residents.

Illinois avoids downgrade to junk as S&P affirms BBB-minus rating

Reuters-19 hours ago
Illinois avoids downgrade to junk as S&P affirms BBB-minus rating ... on the state's appropriation-backed debt, which includes Chicago motor fuel tax bonds.

EDITORIAL: Illinois still is kicking pension crisis down the road
Chicago Sun-Times-16 hours ago

 

RoseHip's picture
RoseHip
Status: Silver Member (Offline)
Joined: Feb 5 2013
Posts: 146
Radical Proposal?

Under which misperception of reality does his awareness lie?

I believe he will do as he says, just that to have the chance at getting the job, his facts will be a very certain sort of propaganda in disguise. The law is already in the pocket of the most organized criminals on the planet. And the impartial pursuit of justice will be like trying to draw conclusions from Hubble's Ultra Deep field.

Sounds more like a statement of saying what you think people want to hear rather than anything that might resemble actual honesty. As long as he has made others think he is in pursuit of morality then his job is done here. Apply pencil check mark to correct box and avoid any real fact that might be disruptive and he'll do just fine.

Rose

 

Matt Holbert's picture
Matt Holbert
Status: Bronze Member (Offline)
Joined: Oct 3 2008
Posts: 65
Some truths but mainly propaganda

I would be interested in why jdargis submitted the Putin article. Also, I would be interested in what the Saker thinks about the article...

MasterOfMyDomain's picture
MasterOfMyDomain
Status: Member (Offline)
Joined: Apr 20 2011
Posts: 15
Putin/Russia article by Molly K. McKew

I second that.

I see this article as nothing short of lunacy: "The truth is that fighting a new Cold War would be in America’s interest."

I wonder who "America" is in her mind: Defense contractors?

Mots's picture
Mots
Status: Silver Member (Offline)
Joined: Jun 18 2012
Posts: 179
Putin/Russia article by Molly K McKew (jdargis)

I am glad to see this discussion.  I am slowly drifting away from peakprosperity.com because of the constant stream of Hillary Clinton memes presented by jdargis.  The Daily Digest section provides the most value (to me) from this site because of critical filtering and occasional comments/criticism by CM and others (thanks Dr. Martenson).  The constant Hillary memes from jdargis lower the value and is one reason why I cannot spend much time here and be a consistent paid member.

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 2767
Daily Digest Criticism - Be Careful

Mots/Master/Matt -

Be careful with your criticism. 

Jeanine has been managing the Daily Digest from Day 1 of PeakProsperity.com. Whatever value you have found in it over the past many years is due much more to her efforts than any other person by a country mile.

Jeanine makes sure the Digest is collated, curated and published every single day, 365 days a year. She is a tireless (and amazingly dependable!) workhorse.

The intent behind the DD is for the articles to be crowdsourced by the PP audience (with as many contributions as Chris and I are able to make). But many days, it doesn't receive enough submissions, so it's part of Jeanine's job to source enough additional articles to fill the gap.

Given the large volume of articles posted each week, not every one picked by Jeanine will resonate positively with every reader. And some articles are intentionally selected from sources whose opinions differ with Chris' and mine in order to give us all insight into how others with a contrary perspective think.

Jeanine has Chris' and my full support. We've never found her guilty of trying to push any bias, and have found her imminently willing to adapt her editing/sourcing of DD articles when given feedback. She has also frequently appealed to the PP audience to submit more articles -- she would much rather post those whenever possible/relevant.

So, if you have feedback to offer her, please make it specific and respectful. Handy tip: it's much more helpful if you offer direction/guidance on what you want to see more of vs simply berating an article you don't like.

Again, we are very fortunate to have Jeanine's work ethic and professionalism underpinning the publishing of the Daily Digest. Since we all value the aggregated intelligence within this daily news summary, let's offer her the best support and guidance we can to make it as custom-tailored to our collective preferences as is possible.

cheers,

Adam

robie robinson's picture
robie robinson
Status: Diamond Member (Offline)
Joined: Aug 25 2009
Posts: 1123
Doggonit Adam

I ain't got nuff thumbs up to give you,,, and Jeanine!

sand_puppy's picture
sand_puppy
Status: Diamond Member (Offline)
Joined: Apr 13 2011
Posts: 1625
Airplane Crash Site: Mississipi

It is sometimes good to see what a "normal" airplane crash site looks like.  This is from the C-130 that crashed in Mississippi about 4 days ago.  

NYT reports: "There were bodies everywhere."

Lots of big obvious airplane parts.  A track along the ground where the direction and velocity of the aircraft are clear as it tore up soil during impact.....

Not like other crash sites.

 

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1323
Hardwork does not mean not biased
Adam wrote:

The intent behind the DD is for the articles to be crowd sourced by the PP audience (with as many contributions as Chris and I are able to make). But many days, it doesn't receive enough submissions, so it's part of Jeanine's job to source enough additional articles to fill the gap.

I appreciate Jeanine's hard work and effort on the Daily Digest, but that doesn't mean there isn't bias in the articles presented.   Over the years I have certainly felt there was a strong "Progressive/Liberal" bias in the articles that Jeanine posts, she may not even be aware of the bias -  it may simply be due to the choice of places she looks for articles.  If I were to do the DD, it would certainly end up with a strong Libertarian slant much of it do to my preferred sources of information (Mises, RPI, etc) while hers appear to be the likes of  Polictico, The Atlantic,  and The Huffington Post.

As you said, the best way to make it balanced is for the PP community to submit articles so that any one source/political view doesn't dominate.  Another option is to look up one of the many lists that ranks sources by political leanings and to use it to help select articles from opposing sources - or you could just use only Libertarian magazines/blogs since they're the right ones anyway. wink

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4676
news feed

Two thoughts.

PP can be a bit of an echo chamber sometimes.  I see my friends, who only look at WAPO/HuffPO/"the failing NYT" (sad!), and I see how that limits them to their own echo chamber.  On the other hand, I actually run off to google news to see what their viewpoint is too.  For me its less about information I can trust, and more about a sense of the current mood.

I have my biases too.  Some would call me a shill for the banking establishment for even suggesting that an expandable money supply might not be the devil's tool after all.  I also think the Fed has a place - scaled back to being the buyer of good collateral at a discount to provide liquidity during bank runs.  Part of the expandable money supply thing again.  We really need an expandable money supply when a depression hits, and everyone is too scared to spend.  At that point, a fixed money supply dooms the economy to a massive slowdown until the collective fear passes simply due to lack of money.  Should money be servant or master?  While liquidation needs to happen during a downturn, the damage caused by a depression is - probably - societally excessive and could be remedied somewhat by elastic money.

But I digress.

I think progressives have important things to say.  Bernie is the only one talking about truly reforming healthcare.  The cartels are overjoyed with taking bits and pieces of libertarian rhetoric; they first discard any thought of competition or market forces (safety concerns, you know), and then promptly jump on the "no regulation" bandwagon.  We end up with cartels that are completely unregulated!  That's why we're at 18% of GDP for healthcare costs - and still rising.  Bankers love to borrow that "deregulation" mantra also.  Give me bailouts - and then don't regulate me!

Its the Bernie supporters who were trying to get single payer passed in California.  The HRC-like corporate weasel-democrats in Sacramento killed it off, so  "progressive" Jerry Brown wouldn't have an embarrassing situation on his hands - having to veto a bill he expressly said he wanted to see passed.

Anyhow, just my two cents.

pyranablade's picture
pyranablade
Status: Silver Member (Offline)
Joined: Nov 8 2010
Posts: 196
How do we do it?

The intent behind the DD is for the articles to be crowdsourced by the PP audience (with as many contributions as Chris and I are able to make). But many days, it doesn't receive enough submissions, so it's part of Jeanine's job to source enough additional articles to fill the gap.

 

Good. Please tell us again how to submit an article to Jeanine for the DD. 

cmartenson's picture
cmartenson
Status: Diamond Member (Online)
Joined: Jun 7 2007
Posts: 5397
At the bottom of every DD...
pyranablade wrote:

The intent behind the DD is for the articles to be crowdsourced by the PP audience (with as many contributions as Chris and I are able to make). But many days, it doesn't receive enough submissions, so it's part of Jeanine's job to source enough additional articles to fill the gap.

Good. Please tell us again how to submit an article to Jeanine for the DD. 

...you will find this statement:

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

Just copy a link and email it to the [email protected] address.  

Helps to include your screen name so Jeannine can attribute it properly.

jeaninedargis's picture
jeaninedargis
Status: Bronze Member (Offline)
Joined: Jul 13 2009
Posts: 28
Thanks Adam! Nice to know my

Thanks Adam! Nice to know my work is appreciated. 

As I've said before, the best way to lighten the load of articles posted by me is to submit articles yourself. Especially for Good News Friday! 

SingleSpeak's picture
SingleSpeak
Status: Gold Member (Offline)
Joined: Dec 1 2008
Posts: 492
Probably not a smart move

to question Dave's logic, as he understands money and financial markets as well as anyone I've encountered, but I'll do it anyway and take my lumps.

davefairtex wrote:

...I also think the Fed has a place - scaled back to being the buyer of good collateral at a discount to provide liquidity during bank runs.  Part of the expandable money supply thing again.  We really need an expandable money supply when a depression hits, and everyone is too scared to spend.  At that point, a fixed money supply dooms the economy to a massive slowdown until the collective fear passes simply due to lack of money. ...

Perhaps a "massive slowdown" is what we in the central bank controlled world really need. Sure the liquidity has provided unbridled expansion, but the consequences of this expansion by central planners is killing our planet.

I'm tired of playing in a rigged game. It is time to let the chips fall where they may IMHO. 

SS

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1323
Carefull -Media sites like Google News will feed your bias
davefairtex wrote:

PP can be a bit of an echo chamber sometimes.  I see my friends, who only look at WAPO/HuffPO/"the failing NYT" (sad!), and I see how that limits them to their own echo chamber.  On the other hand, I actually run off to google news to see what their viewpoint is too.  For me its less about information I can trust, and more about a sense of the current mood.

Make sure you use Tor or something if you want to get alternative views, otherwise you will get fed what the large social media sites think you want to see:

Beware Online Filter Bubbles

Also, this talk shows that there is bias in the search results, while the example is of extreme cases, there is probably a much more subtle bias always occuring:

The Moral Bias behind your Search Results

These last two are interesting.  The bias is an artifact of who is more prolific on-line.  I believe (note my belief) is that people tend to become more conservative as they age, if that's the case then political beliefs of younger people (more liberal) will show up in on-line activity (search results, articles) simply because younger people generate more of the content:

Why Googles Search Results Favor Democrats

Google's Liberal Bias May Be Distorting Your Research

VeganDB12's picture
VeganDB12
Status: Platinum Member (Offline)
Joined: Jul 18 2008
Posts: 718
Most articles are biased

Presumably we are smart enough to see the biases and interpret them.

Jeanine has been incredibly opened minded about the articles she posts. I have submitted articles to her from the beginning of her tenure and am always glad when she puts up something that I think is important even though I am Vegan :)

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4676
google's bias

Well, I think google corrected that bug a while back.  That is, they now seem to want to feed a consistent storyline to everyone.

I can't imagine how, given what it knows are the places I go, it consistently feeds me NYT, huffpo, wapo, etc.  It has to know me better than that!  I mean, it really has to!

Here.  Try going to news.google.com.  Is it showing you a libertarian wonderland?  Or is it showing you the usual crappy mainstream sources we all know and love?

CBS, NBC, WAPO, NYT, CNN, HuffPO.

All these places have turned into opinion shops.  Its really astonishing.  They are all, all of them, just as bad as Fox News before.  And that's all I get from google.

I'm totally with you.  It knows me better than this.

But I suspect it is now trying to "adjust my thinking" instead of giving me what I want to see.

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 742
The Fed and Single Payer
davefairtex wrote:

I have my biases too.  Some would call me a shill for the banking establishment for even suggesting that an expandable money supply might not be the devil's tool after all.  I also think the Fed has a place - scaled back to being the buyer of good collateral at a discount to provide liquidity during bank runs.  Part of the expandable money supply thing again.  We really need an expandable money supply when a depression hits, and everyone is too scared to spend.  At that point, a fixed money supply dooms the economy to a massive slowdown until the collective fear passes simply due to lack of money.  Should money be servant or master?  While liquidation needs to happen during a downturn, the damage caused by a depression is - probably - societally excessive and could be remedied somewhat by elastic money.

Dave,

Money as servant or master - depends on which side of the balance sheet you place yourself. Money is a master for debt serfs who have to borrow. It is an obedient servant for the those who have money to lend.

We've had recessions/depressions before the Fed was created ... and we've had them since the Fed was created. The Fed exacerbates the irrational exuberance during greed-based expansions and tries to paper over the inevitable fear-based contractions. Do they really do anything other than entice people into getting deeper in debt? We're literally borrowing from the future to apply a salve to errors of the past. If folks are shielded from the consequences of their actions, what lessons would they learn?

Of course, private bankers benefit tremendously by having a quasi-private organization create and administer our money. If I could put my excess reserves in the Fed's tank, my savings' interest rate would more than double. Why didn't the savers get any appreciable benefit from the recent FOMC interest rate increase?

davefairtex wrote:

I think progressives have important things to say.  Bernie is the only one talking about truly reforming healthcare.  The cartels are overjoyed with taking bits and pieces of libertarian rhetoric; they first discard any thought of competition or market forces (safety concerns, you know), and then promptly jump on the "no regulation" bandwagon.  We end up with cartels that are completely unregulated!  That's why we're at 18% of GDP for healthcare costs - and still rising.  Bankers love to borrow that "deregulation" mantra also.  Give me bailouts - and then don't regulate me!

Its the Bernie supporters who were trying to get single payer passed in California.  The HRC-like corporate weasel-democrats in Sacramento killed it off, so  "progressive" Jerry Brown wouldn't have an embarrassing situation on his hands - having to veto a bill he expressly said he wanted to see passed.

Anyhow, just my two cents.

Single payer healthcare won't solve the problem. In the short term, it may alleviate some of the rampant yearly insurance increases we've experienced, but it isn't addressing the root problems. As I see it, there are 2 main problems.

Firstly, the medical community has deep pockets that lawyers want to empty. The medical community has to be cognizant that anything they do may be used against them in a court of law. Errors can be extremely costly! (So far, so good, but there's a downside.) As an example, if you are obese and have high blood pressure issues, can the doctor prescribe a healthy diet without putting his/her financial assets at risk? You might get a friendly recommendation, but you'll also get a prescription for a medication proven (by the drug companies) to reduce blood pressure - YMMV. That protects the doctor from financial liability and adds costs to the patient's insurance.

Secondly, and very closely related to #1, the patient has insurance to limit the out-of-pocket costs of making bad choices. If there were no insurance and the patient had to cover all the cost of the pills to lower high blood pressure, there's a much stronger possibility that the doctor's "friendly recommendation" of a healthy diet would be followed. If reducing the weight didn't also reduce blood pressure, then medication may be necessary. Of course, that is a decision that the individual needs to choose.

I consider myself to be a Libertarian. I feel that you should have the freedom to live your life as you choose. That is, until it impacts others. A person's decision to lead an unhealthy lifestyle and then use medical insurance to limit personal cost (and thus responsibility,) increases everybody's insurance costs. The more expensive insurance becomes, the more likely people will use it (because they want their money's worth.) That drives the premium cost up even more. It's a vicious cycle. A single payer system will only remove the insurance company's profit (with a commensurate increase in long term government costs to administer the program.) It won't fix the underlying problems.

Grover

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1323
Definitely trying to adjust thinking
davefairtex wrote:

Well, I think google corrected that bug a while back.  That is, they now seem to want to feed a consistent storyline to everyone.

....

But I suspect it is now trying to "adjust my thinking" instead of giving me what I want to see.

It does appear that surfing from a normal browser or using Tor get's the same answers now-days.  Of course it's possible the browser is still leaking enough info to identify me as the same person.  angry

I decided to just do a quick test to see if they are trying to "adjust my thinking".  Interesting,  not a single right leaning blog or source.  So I guess they aren't biased, they just have carefully selected sources to pick from. surprise

Hey Dr. Martenson, back in 2009 at the Lowesville seminar I remember you doing a session where you pulled out recent news articles and went through analyzing them to pick out facts, opinions, and belief.  Perhaps an online version of that would be useful, since as Davefairtex points out most articles from main stream media are nothing but opinion pieces anymore.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4676
driving healthcare costs

Grover-

Sure, we can focus on people overusing their insurance, but that's not the primary cost issue.  I can point you at other countries with the same situation in place (and where the same tales of "overusing coverage" abound), but who happen to spend 50% of what the US spends (on a GDP basis) and everyone has coverage.  Literally everyone.  That's one of those things I call an "existence proof."  Your theory may say one thing about how to fix the system, but I can point to a system actually in place that provides a 50% savings that's operating today.

How can that be?

Well, entirely missing from your analysis is the cartel-like nature of the current healthcare system.  In a libertarian wonderland (tm), presumably the cost of generic drugs would be driven down to cost of manufacture.  How then is the Epi-Pen priced at $600?

Answer is simple: healthcare is run by a cartel, and thus is not a free market.

That means, applying solutions that addresses free market issues, to a non-free-market, are worse than useless.  Cartel will happily take your "free market" solution and apply it right to their bottom line with a hearty thank you.  Example: "no more lawsuits" => bigger profits => "thank you" from the cartel, with zero reduction in costs.

I claim that any libertarian "free market" solution is utterly doomed to failure because the marketplace no longer exists.

Which brings me to the larger point.  In libertarian wonderland (tm), how do you stop cartels from forming?  From my read of history, the natural evolution of every single free market ends with one or two large players in charge.  The nature of companies is to work to dominate their market segment (free market in action), and the logical end point of maximizing profit (free market again) says that competition must be eliminated.

Profit maximization inexorably leads to M&A, which results in a small number of players, who all then collude to set prices, eliminating competition.  Prisoner's dilemma says that cooperation is best, but its tough to get a large number of players on board.  It's child's play when you only have two or three big providers.

So while I like theory, I'm an even bigger fan of history and observation.  Observation says, every market that starts out in a state of reasonable competition always ends up with monopoly.

The reason communism failed was because it didn't address a critical bit of human nature.  Same thing here. 

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 742
Wonderlands Abound
davefairtex wrote:

Well, entirely missing from your analysis is the cartel-like nature of the current healthcare system.  In a libertarian wonderland (tm), presumably the cost of generic drugs would be driven down to cost of manufacture.  How then is the Epi-Pen priced at $600?

In our current wonderland (tm), we have people paying $600 for an Epi-pen. Why should they care when their overpriced healthcare insurance is picking up the majority of the tab? I remember that Sand_Puppy posted a link on how to make one's own for considerably less. If I needed such a device and I didn't have insurance, you can bet your bippy that I'd take notes. As long as people want to spend their own money on a $600 (or $6,000,000) Epi-pen, it makes no difference to me. Force me to contribute to the system that tolerates (and subsidizes) abuses like this ... and the Libertarian in me has a problem.

Sometimes half a solution is worse than no solution. It is akin to a doctor trusting a calorically enhanced person to actually diet to reduce weight and subsequently help to relieve the health problems ailing the person. If the person cuts saturated fats but increases consumption of carbohydrates, will it solve the issue? Will the doctor get blamed for the patient's impaired follow through? Our current wonderland (tm) would likely allow lawyers to sue doctors for such bad judgment. [Slimy lawyer questioning doctor: What made you think my client was capable of following such a strict diet? Now my client's self esteem has been shattered and you should pay him $100 gazillion for pain and suffering.]

davefairtex wrote:

Your theory may say one thing about how to fix the system, but I can point to a system actually in place that provides a 50% savings that's operating today.

All right, Dave. Point away. Which system do you think has got it right (tm)? What do they do that the US doesn't do? How do they impose limits to keep the populace from burdening the system? What do they pay for an Epi-pen? Finally, will that system work in the US? I'll jump the gun here and also ask, "why not?"

While you're at it, try to find out what the percentage of the population are lawyers? My gut tells me lawyers are much more costly to the healthcare system than patient obesity. The US has the highest per capita number of lawyers. http://www.answers.com/Q/What_country_in_the_world_has_most_lawyers_per_capita

Grover

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4676
opinion detection

I know I've suggested this before; it might be fun to construct an AI that was able to assign an "opinion rating" to a particular piece of writing.

I'd need to have generic examples of what an "opinion phrase" looked like, as well as a "fact phrase".  Hopefully I could get it to generalize from there.

Might be even more interesting to chart this over time.

Matt Holbert's picture
Matt Holbert
Status: Bronze Member (Offline)
Joined: Oct 3 2008
Posts: 65
Thanks for the clarification...but my question wasn't answered..

The article seems to contradict most of the points that were made by The Saker here in a recent interview and on his website in the past. While I can appreciate "work ethic" -- although I do have an issue with "professional underpinnings" as they are the source of most of our problems -- I am curious about the timing of the recommended post so soon after The Saker interview...

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4676
wonderland

First thing: legal costs to healthcare do not dominate.  They are annoying, sure, and should be fixed, but ultimately they aren't the low hanging fruit.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3048809/

Second, while you and I can make our epi-pens, we shouldn't have to.  Free market should have done that for us.  Between cost of $6 and price of $600, there should be a literal army of companies rushing in there to sell cheaper products.  But because of the cartel nature of the marketplace, there isn't any such competition.

Its IP abuse and regulatory abuse - but the kind of regulations that "free market" corporations love, because it lets them keep their monopoly position intact.

Dave's Law of Markets: all initially free markets eventually end up owned and operated by a cartel - by hook, or by crook.

Kind of like, "mess expands to fit available space", "no good deed goes unpunished", and so on.

Its just how things work - its inner nature - nature of the beast, etc.

As for an example healthcare system - I'd point you at Thailand.  Bet you thought I'd pick a socialist wonderland, right?  No.  Thailand has a national healthcare system that covers 99.5% of the population, and the total cost: 4.3% of GDP.

https://en.wikipedia.org/wiki/Health_in_Thailand

I get the distinct sense they have "death panels" - example: country hospitals don't have surgeons.  You need someone with a knife?  You get referred to the regional hospital 3 hours away.  And if you want a baby delivered, you get a midwife/nurse rather than a big group of people.

The government hospitals are supplemented by a very good set of private hospitals who provide actual price lists to their customers (try getting that in the US) and good reliable service with very little waiting.  Thailand is actually a destination for medical tourism.  I'd recommend it if you have elective surgery and don't want to pay a zillion dollars for the procedure in the US.  Even basic things get attended to quickly.

So, in sum, Thailand has universal (seemingly basic) coverage for less than 25% the share of GDP we pay here, and affordable private hospital care for those who can afford to pay.

Is there waste?  Oh sure.  People do go to the hospital and stay overnight for very basic things.  "I have a cough.  Time to go stay overnight at the hospital."  Crazy attitude - there is definitely waste.  But again, I point you at 4.3% of GDP.  Whatever waste there is by the common folk - it's basically a blip compared to the obscene profits the cartels are skimming from people and the system in the US.  That's what the numbers say anyway.

Sometimes in order to avoid paying the pennies to stop the public from stealing, we end up paying stacks of C-notes to the cartels to keep the "free market" in place.

Thailand really is a free market, with the government providing the basic level of care through its own healthcare system, and the private sector providing care on top of that.  I dunno how much epi-pens cost, but other basic drugs are $1/pill in Thailand when same drug costs $50/pill in the US.

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 742
Which Straw Broke The Camel's Back?

I suppose I see the cabal you are describing as part of the same system. They've captured the politicians with campaign contributions and expect to be rewarded generously with regulatory driven monopolies. These companies do the drug development and testing (expensive) and deserve some level of protection to encourage further development. After all, if I patent a device, I get a level of legal rights from the government. The question is how much is fair and reasonable?

I've talked with MDs at social functions about getting sued. That's why they carry malpractice insurance. It's also why they practice "defensive medicine." If a patient has certain symptoms and a drug claims to alleviate those symptoms, all a doctor has to do is check for contraindicators, document it, and they're done - with no worries of being sued. If the patient can't afford the $500 prescription, the doctor may have more work to do, but thanks to patient insurance, those aren't usual.

It is part and parcel of the same system. Each part uses their own strategies to maintain their piece of the pie. As long as people can keep paying for the services using insurance, every group is more worried about limiting copays than the actual costs. The actual costs get passed to the consumers via higher insurance premiums next year. We all bitch about it, but what can be done?

Enter Thailand. I bet you won't find too many cabal protection schemes over there; otherwise, that $1 pill would cost much more. Frankly, I'd rather have their healthcare system than ours. Then again, I don't take any expensive miracle drugs that TV commercials urge me to ask my doctor about. In a few years, those same drugs will be featured by class-action lawyers fishing for clients.

The whole thing disgusts me. Grover

reflector's picture
reflector
Status: Gold Member (Offline)
Joined: Aug 20 2011
Posts: 264
not quite, dave.
davefairtex wrote:

I have my biases too.  Some would call me a shill for the banking establishment for even suggesting that an expandable money supply might not be the devil's tool after all. 

...

i wouldn't call you a shill, dave, but it seems to me that you tend to be a bit of an apologist for the ongoing crime spree that is america's financial system.

surely you are aware that vast wealth is being siphoned from the rest of us by the financial elites - when the fed gets to make decisions about the expanding "money" supply, or interest rates, and their crony friends front-run fed announcements.

and the bankrupting of pension funds and retirees by the suppression of interest rates, while the big banks collect tens of billions$ in handouts for parking "excess reserves", which is the phony "money" created by QE, by that same "expandable money supply".

if you are in favor of "an expandable money supply", then by all means, you should have the freedom to use that system, all the more power to you.

but what is a real problem, is the use of violence in support of bad ideas, ideas that people will not accept voluntarily - and that's what government is, essentially.

how does that government violence to suppress competing ideas manifest?

i'll give a few examples from recent history:

  • the arrest of bernard von nothaus, creator of the liberty dollar and the theft by the feds of his gold and silver: https://en.wikipedia.org/wiki/Bernard_von_NotHaus
  • harassment, wrongful imprisonment, and theft of funds from e-gold founders
  • coercion against goldmoney.com to prevent transfers between accounts
  • the destruction of libya and deaths of 100,000+ people after kaddafi had the audacity to support a gold-backed pan-african currency, with NATO transforming north africa's most prosperous nation into a smoking crater: http://www.anonews.co/hillary-gaddafi-email/

if "an expandable money supply" system run by some elite oligarchs is such a great idea, it should be able to freely compete against other ideas and win on its own merits, it should not require a system of violence up to and including mass-murder in support of it.

in fact, that the current failing system needs to be propped up in this way, i take it as evidence of a failed, dying paradigm.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4676
guns don't kill people

Nor does an elastic money system.

Your arguments against elastic money reminds me of gun control people arguing against gun ownership.  Its all pretty shrill, and it focuses on murders and whatnot - much like your arguments against what I said presupposes I'm for things such as mass murder.

I've said in the past a number of times - almost too often to count - that alongside the elastic money system (which should only be used during a serious downturn - buying good quality corporate debt to provide liquidity during a collapse) we should have tax-free buying and selling of gold and silver, so normal people can hedge against over-use of the elastic money.  There needs to be a check and a balance.

I believe that elastic money is a lot like a firearm.  You can use it to kill a whole bunch of people "just because", or you can use it to defend your family from attack.  Its just a tool.  Used responsibly, it arguably makes things safer, rather than more dangerous.  The trick is how to make sure it's used safely.  I'd say the gold/silver escape hatch would do that nicely.

Alternatively, if the only money was gold and silver, and we had a depression, money scarcity would kill millions.  Not because the products can't be made, and not because the labor wasn't available, but simply from the scarcity of money in circulation.

Its really no different from having a local currency.  I think those are fine too.  Sure, the bankers want to keep the monopoly to themselves, but I'm not a banker, I'm a system designer, so I like local money.

I also think lending should be heavily regulated.  It can't be left to the free market of corporate/elite interest, since that is our currency they are printing up every time they make a loan.  That's a "commons", and the public has every right to regulate how our "commons" should be treated.

Even if banking was chopped back to where it was in the late 70s under Glass-Stegall (which I support), I'd still want strict guidelines on lending.  If you print money, you follow the rules or we take your banking license away.

And if it all goes nuts, theres the gold/silver escape hatch.

Ultimately, I'm looking ahead to the next great depression.  If a massive deflation hits, you will not be happy with the result if the only money the nation has is gold & silver.  Assuming you're focused on the system as a whole, and not just your own personal situation, of course.

FWIW, I'm in line with Steve Keen on all this, more or less.  Not sure how it can come about, mind you, but if you put me in charge of designing the system, it would NOT be a static money system, simply because of that system's horrible performance during depression.  Nor would it be the system we have today, of course.  Its something in the middle.

I know "the middle" isn't popular these days, but that's where I am.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4676
straws

I don't know which straw broke the camel's back.  Not with any of it, or all of it.  How did FDA become a monopoly-enforcement arm of the drug companies?  I don't know.  How did banking come to run Washington?  I don't know that either.  Defense/industrial/perpetual war?  9/11 & security theater?  Patriot act?  Is there a linkage to peak US conventional oil in 1973?  Peak debt today?  I don't know.

Perhaps - my old boss used to ask the rhetorical question: "how does a schedule slip?"

Answer: one day at a time.  [From "Mythical Man Month!"]

Bottom line: there is no easy fix for healthcare as long as we keep the cartels in place.  All Reps and Dems do are pick different groups of corporate winners.  "Free market" solutions advocated by Reps (while keeping the monopoly-retention regs firmly in place, naturally) just funnel more money to the corporate masters.  Dems are no better.  The funny thing is, the emergence of corporate masters is an entirely predictable phenomenon...as long as you believe in Dave's Rule of Markets: logical end point of any free market system is a small group of large corporate overlords.

I'm not sure - do the free marketeers notice this phenomenon?  I didn't, when I was a free marketeer.  Once I did notice, I stopped being a free marketeer.  "World is more complex than I thought."

Meanwhile, there really are examples elsewhere in the world where people aren't harvested nearly so badly.  Travel outside the US is required, as is an open mind.   It would be cheaper to literally give healthcare to everyone vs. the system we have in place today.  Its probably half the cost, actually.

Most of the progressives come at this from the viewpoint that "healthcare is a right."  Not me.  I come at it from the viewpoint that its a vastly cheaper alternative to what we have today.  Vastly, vastly cheaper.  And if degrowth is what's to come - we should probably be more focused on cheaper.

While there is usually an unlimited demand for free stuff - I suspect people aren't really excited at running up big medical bills; there is a limited about of "value" you can get from scamming the system by going to the doctor once a week.

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 742
Healthcare And Banks

Dave,

I've vacillated between wanting to respond or just letting your comments pass. I agree that the cabal has used money to influence congressoids to allow them to profit (immensely) at others' misery. As long as the political system is powered by money, we're going to get one form or another of these cabals. You are only one person and so am I. Our voices get lost in the political cacophony. The allowable political reality is a conglomeration of beliefs, demands, expectations, and mostly wants. When a person sells a vote for a perceived kickback, they perpetuate the problem. As much as we'd like to, we can't do anything about it.

If you look at the insurance model from a balance sheet perspective, insurance companies need to balance income (premiums, investments, etc.) with outgoes (benefits, employee wages, profits, market risk, etc.) My belief is that insurance works best for infrequent but catastrophic events. Life insurance is the best example I can think of right now. There is a small chance that a young parent could be killed and the results would be catastrophic for the family. Insurance companies can then sell a product fairly cheaply and assume the risk. As long as the actuarial risk has been modeled properly, both parties benefit. Someone who smokes is at a greater risk and logically pays higher premiums. Competition between providers keeps premiums affordable (unless a group of companies form a cabal and collude to keep premiums inflated.)

Health care insurance doesn't fit that ideal model. It would if it were only for rare and catastrophic illnesses. It has morphed into a be-all for every malady. As a result of it being used for everything from sniffles to cancer, insurance companies have to raise premiums to cover their costs. As premiums increase, folks use it more in order to get their money's worth. The more they use, the higher premiums need to be to cover all the costs. I see a cost push spiral happening.

Add in the collusion between drug companies and congressoids while lawyers keep looking for deep pocketed doctors to sue ... and we have a self reinforcing daisy chain of spiraling costs. Then, there are all the societal factors to consider: Americans (on average) have horrible diets, are extremely fat, really lazy, and have an unjustified superiority complex. Add in the fact that many of the prescribed pills have side effects that may require medical attention, (but fortunately, there are cabal manufactured pills for those side effects. Repeat process.) Just making health care free won't solve any of those problems (other than keeping premiums from going up.) What economic theory says that lowering the price automatically reduces demand?

-----------------------------------------

On to the need for a central bank. I agree with you that there have been recessions/depressions while we were on a gold standard. The Great Depression isn't one of them. When the Federal Reserve was created, they set up a hybrid system where people could take their paper money into a bank and exchange it for specie. Bankers knew that most folks would want the convenience of transacting with paper instead of gold and proposed (a very conservative) 40% backing of paper by gold. The inverse of 0.40 is 2.5. That means that we had the potential for having 2.5 times as much money as there was gold to back it.

As long as times were good and people had confidence in the system, they preferred to use paper for their transactions. Gresham's Law (bad money chases out good money) kicks in when confidence vaporizes. When confidence is low, people would prefer specie over paper. Unfortunately, there was only approximately 40% as much specie as there were paper claims for it. The first to panic were able to convert to specie. The laggards were left holding a paper bag of empty promises. <sarc> That's sure to inspire confidence in the system. </sarc>

Without the confidence that the future would be good enough to pay back borrowed money and earn enough from the leverage, there wasn't any reason to borrow. The system simply collapsed back from an unsustainable level of economic activity known as the roaring twenties. Aren't all recessions/depressions preceded by similar extended periods of irrational exuberance? If so, a specie based money system should theoretically prevent that from occurring. That is, if the bankers didn't engage in their own personal fractional reserve system by lending out more money than deposits would allow. Perhaps the blame for recessions/depressions in a specie system should be placed on the bankers who abused their position of trust rather than specie. My solution is regular audits and to hang the bankers (and auditors) who have abused their position of trust. Word will quickly spread!

I'm not sure how a system that you propose would work. Would our money be debt based? What would keep banks from loaning too much money into existence? What would trigger the CB to begin operations? Wouldn't that in and of itself cause people to lose confidence? What would prevent this system from becoming as corrupted as the current system?

I suspect that our current system is too far gone to save. There's no way to accurately predict what lies on the other side of collapse; however, it surely will be less complex than our current system. We're just tilting at windmills to think we can fix it. The pragmatic solution would be to determine what is the best alternative to pursue so as to minimize the impact on oneself and loved ones.

Grover

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4676
assumptions

Grover-

Add in the collusion between drug companies and congressoids while lawyers keep looking for deep pocketed doctors to sue ... and we have a self reinforcing daisy chain of spiraling costs. Then, there are all the societal factors to consider: Americans (on average) have horrible diets, are extremely fat, really lazy, and have an unjustified superiority complex. Add in the fact that many of the prescribed pills have side effects that may require medical attention, (but fortunately, there are cabal manufactured pills for those side effects. Repeat process.) Just making health care free won't solve any of those problems (other than keeping premiums from going up.) What economic theory says that lowering the price automatically reduces demand?

You're guessing (and so am I) as to what the primary drivers of costs are.

You assume its lawsuits, and fat people, with a little dollup of manufactured demand for drug companies.  Certainly if that's true, making healthcare free won't help (except of course for getting rid of the lawsuits - can't sue the government for malpractice).

Me, I assume its drug companies using their paid-for congress-weasels to establish through regulation cartel pricing structures - that are then charged to insurance companies, which then must raise premiums.  I have specific examples where cheap drugs were somehow, magically turned into expensive drugs - but only here in the US.  These drugs are factors of 50 more expensive than the identical drugs found in other countries.  What's more, its illegal to import the cheaper (but identical) versions from overseas for "safety" reasons.  This is excess, undeserved profit, guaranteed by regulation passed by paid-for congress-weasels.

What's more, drug companies, hospitals, and insurance companies all win if costs steadily increase.  Drug companies charge more for the same products = they win.  Hospital margins explode through non-transparent pricing structures = they win.  And insurance companies receive a 20% margin on a 3.2 trillion dollar industry, instead of a 20% margin on a 1.4 trillion dollar industry = they win.  As long as costs rise in a steady, predicable 10% per year, everyone wins.

Sure there are fat people, sure there are lawsuits, and we all need to be responsible for our own health as much as possible.  But your worldview (blame the evil little guy) reminds me of the outsized emphasis that "the system" placed on "moral hazard" during 2008.  Bailing out individual homeowners?  System screams MORAL HAZARD!!  Bailing out the banks and keeping the idiot-gambler-managements in place?  Necessary to save the system.  Too Big To Jail.  Avoid martial law.  Fed drops in trillions to save the banking system.

And as it turns out, if you HAD bailed out the little guy, it would have actually been cheaper.

Same thing here.

Is it an accident that the "popular gestalt" (provided helpfully by the media) always ends up saying that - if only we got rid of lawsuits and people stopped being fat, all the problems would go away?  You are all over the 9/11 situation, yet you don't question this?  Cui bono from this viewpoint?  The industry.  Of course.  Follow the money.  Yet you want to still blame fat people?  That's like blaming the people inside the towers for 9/11.

If its just fat people + lawsuits, how do you explain albendazole at $50/pill, and epi-pens at $600/pair - with no ability for competitors from elsewhere to fix the problem through competition?

Go to other countries.  See how their system works.  In places where there is actual competition (from a government-provided basic care system), prices are dramatically lower than in the US.

Again, people don't get excited at the thought of getting a free appendectomy.  They don't break their arms every week just to get a cast put on for free in the ER.  "Wow, I'm going to get a cavity filled every week, because its free free free!"  Unlike with food stamps, or SSI, there isn't "unlimited demand" for free medical care (minus the class-2 drugs).

If government provides free basic healthcare, and disallowed lawsuits for the government healthcare, overall costs to the nation would drop by 50%.  The private hospitals would have competition, suddenly, and they'd be forced to provide better service (and transparent pricing) for their offerings.  No lines, good service, reasonable "list prices" for services that allows you to comparison-shop - these are all things I've personally experienced in other countries which have government healthcare, with private hospitals operating side by side.

Fat people are a problem, surely, as is defensive care & lawsuits.   But its just not the low hanging fruit.  80/20 rule.  Think "9/11" and question where your assumptions come from, and who benefits if you end up thinking this way.

Last point.  Maybe its not an accident everyone is so fat and need more expensive healthcare as a result.  Cui bono?  You're all over 9/11, but the fat people situation just happened all by itself?

As far as the argument "we can't do anything about it anyway", I find that to be bogus.  I can see the future I'd like to create.  Its clear in my mind.  I'd prefer to do that than languish in the "we're all doomed because we can't change anything" mindset.  Doesn't mean I will let myself get fat and wait around for such a future to arrive, but without having a vision of where you want things to go, I believe it is less likely change will come to pass.

First the thought, then the action.

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 742
Blindly Viewing Elephants

Dave,

We're a lot closer than you think on this. We're both describing the spiral of interconnected actors and how unseemly profits magically appear to each level. That's what makes it so heinous! Even the dupes who have to pay for health insurance (that increases every year) feel like they're skinning a fat hog. They do this by utilizing more health care than they are paying to receive. That's why insurance costs go up so much each year. If the Epi-pen only cost $60, the average user would have to consume many more to feel that they were "getting a deal."

I tried to say that congessoids are in bed with the drug manufacturers, but somehow that point was lost on you. Frankly, we differ a bit here because I don't want congress to set any prices. Show me when any government has had enough foresight to actually set good prices. The market can do it better. I'd prefer that congress gets out of the way completely instead of picking winners.

Unfortunately, the system that created this mess won't be able to uncreate this mess. You are relying on congress to walk away from the money spigot and actually force the drug companies to deal honestly. I predict that pigs will fly before that happens.

I, on the other hand, want people to be responsible for their actions. (I expect pigs to fly before people willingly accept that to happen, too.)  Actually, when the Age of Less hits us, all the parts of complexity in our society will slowly disappear. There won't be any drug companies, congressoids, or health insurance worth supporting. As a result, people will be forced to be responsible for their own health.

If you get your way, the drug business won't be as lucrative. Without the huge monetary incentives, drug companies won't look for pioneering drugs because it won't be worth the effort. If I get my way, folks won't be able to rely on others to pay for their drugs. As a result, they won't be able to afford to pay $600 for an Epi-pen and will look for alternatives that may not be as convenient but sure save the pocketbook. Drug companies will have to lower the price to compete with home remedies. Their profit will disappear and they won't look for pioneering drugs because it won't be worth the effort.

If either of us gets our way, there won't be as many new drugs hitting the market. If this were addressed decades ago, many of the current wonder drugs (with side effects that require prescriptions for other wonder drugs (not cavity fillings) ...) wouldn't exist. NOBODY would be the wiser. NOBODY!

If I could legally buy the health insurance that worked for me, it would be catastrophic insurance with a huge deductible, very large copays, and a limit to what the insurance company would be required to pay. Because I'm accepting a large amount of the risk, my premiums would be considerably reduced. Unfortunately, the congressoids (in collusion with the sick maintenance industry) have limited my choices and make what I'd like to have for insurance - illegal.

As a result of all the current laws, I have to subsidize others' insurance. If I have to pay for someone's choices, shouldn't I have a say in their choices? After all, their addiction to sugar, alcohol, unprotected sex, etc. costs me more. Let the insurance companies charge more for any identified risk. Should smokers pay a health premium? Should young teenage boys pay more for auto insurance? Should women in childbearing years pay more for maternity insurance? Should fat people pay more for weight related maladies? If it were that way, I really wouldn't care what others do. Let the fatsos slurp their diet coke while waddling to the store shelf that contains cases of Twinkies. If that is them pursuing their happiness, who am I to judge? Then again, why should I have to subsidize it?

Grover

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments