NOTE: The images and media in this video are presented under fair use for educational purposes, all rights reserved by the original owners.
This wont be part of the Cost of Care Series, simply because it would make the title too long. It is in a similar vein though, probably some repeat material as I didn't bother to read why I already posted. Here is the Transcript:
(Pic: O'Rourke quote) In the previous video we talked about how the United States doesn't have a free market in Healthcare, and alluded to why the prices are so high. I spoke mostly about Medicare and Medicaid and mentioned that over half of all healthcare dollars are actually managed and spent directly by the government. (Pic: Tea party) When people compare our system to a "socialized" system, what they are forgetting is that our system is greater than 50% socialized already.
(Graph: Healthcare Vs GDP) Here is a graph of healthcare expenditures as a percentage of GDP. In 2011, >18% of the total productivity of the United States was devoted to healthcare. In pure dollar terms, the numbers are even more dramatic, even adjusted for inflation. The United States government alone spends more per capita than any other government in the world on healthcare, and that only covers medicare and medicaid patients. (Graph: Per Capita Vs Others) With public and private insurers combined, we spend more per-capita than any other country, and our per-capita spending is 50% higher than the runner-up. We now have an idea of the scope.
(Graph: Obesity Rate)There are many other contributing factors for the rise in medical care. People are demanding more care due to poor lifestyle choice. The obesity rate is now at 40%. In addition, people have more disposable income than they used to have, and the quality of healthcare as well as availability is better. It makes sense that they would want to spend it on something to help their quality of life and to attempt to live longer.
(Graph: Tort Costs) In addition, the cost of dealing with medical malpractice have risen dramatically. Though these costs are still only a small part, there's also the matter of increased spending on tests due to doctors being more and more worried about getting sued, which is extremely difficult to quantify. (Graph: Trial Lawyer Donations) Making things worse, trial lawyers donate more money to congressional elections than the entire healthcare industry, making reform in this area impossible.
(Pic: Colonoscopy) People are also demanding more and more preventative medicine, which costs far more than it saves. In addition, the demand for elective procedures is rising as they become safer and doctors start recommending them more. (Pic: Cialis ad) That's not to mention the demand for expensive new prescription drugs both by doctors and patients which often provide little benefit over cheaper existing medications, or are for conditions that are not medically vital. This is, of course, perfectly fine, however in other industries consumption usually rises as prices fall, often corresponding with less share of personal income being spent on the product.
(Graph: Meat Consumption)For instance, You can see from this graph that people have been eating more meat over time. (Graph: Disposable income Vs Food) However over time, people have been spending less of their disposable income on food. (Graph: What Work buys) In fact, take a look at this graph which shows how many hours of work the average American would have to put in to earn common consumer goods. (Pic: black) Why is it that healthcare doesn't follow this trend? Quality may be rising, but costs are rising even faster.
(Pic: black)In this video, I'll talk about a problem that bares even greater responsibility than the the elephants in the room run by Uncle Sam and all the aforementioned factors. This is something totally ignored by politicians but most economists say it is central or even the most important reason costs are rising.
(Pic: Third Party Payer big) Of course I'm talking about 3rd party payer, and why government is to blame for the astronomical cost of medical care.
Third party payer refers to the practice of health insurance companies taking your money and using it to pay your medical bills for you. Insurance is supposed to pay for things that are unlikely to happen. Health insurance by contrast, has come to mean reimbursement for just about anything health related. On the face of it, this doesn't really make sense. Here's John Stossel's take on 3rd Party Payer
(Pic: 3rd party payer cartoon1)No one would want to purchase car insurance that pays for regular maintenance on your car like oil changes and new tires. This adds a large transaction cost to everything bought and paid for using the service, but that's only a small part of it. Clearly your insurance premiums would never add up to more than you could hope to get reimbursed for. (Pic: Car Fire)Any insurance company that reimbursed more than uncollected would go out of business. You would have to slice your tires every day on the way home from work and buy the best tires in the store to replace them just to get your moneys worth. Unfortunately, people treat health insurance differently than other insurance, but there is a reason for this.
(Pic: Cartoon: 3rd party payer2) As ridiculous as it is to have a middleman on common things that everyone buys like regular checkups and screening tests, there's an even bigger problem. Since you're paying a flat fee for all the services and drugs you could ever want, there's no incentive to shop around or to use them in moderation. This allows incredibly inefficient institutions to exist in spite of their high prices, as well as inflated prices on drugs, hospital stays, and doctor visits. Here is Nobel Prize winning economist, Milton Friedman, on the subject.
(Pic: Middleman cartoon)It's clear that health insurance is a great thing to have in case of serious injury or illness, or a chronic or terminal disease that is expensive to treat, but having a middleman setting up an "all you can spend" health buffet is not something that makes economic sense. As with common practices that don't make economic sense, the origins of this are squarely rooted in government policy.
(Pic: Tax Seq1)For decades, taxes have been rising on the wages of employed Americans. The average personal income tax rate on median family income was(Pic: Tax Seq2) 7.4% in 1955 and had (Pic: Tax Seq3)risen to 12.2% by 2010. On top of that, you add in Social Security and medicare taxes, which were at (Pic: Tax Seq4) 4% in 1955, and had risen to (Pic: Tax Seq5) 13.3% by 2010. It should be noted also that the maximum taxable income of Social Security and Medicare taxes is rising as well.
I only point out these taxes to make one observation: The total average American family's wages have increased in taxation from roughly (Pic: Tax Seq6) 11% in 1955 to (Pic: Tax Seq7)25% today, (Pic: Tax Seq8) and that's just on the federal level. At the same time, compensation by employers in the form of healthcare has been (Pic: Tax Seq9) totally untaxed. Again: 11% taxes in 1955, 25% today, and all the while employer-provided health insurance has been taxed at zero. The results of this tax policy are as one might expect, but before we get into that, how about a little history?
(Pic: FDR Cartoon) Employer provided health insurance is said to have arisen because of the wage and price controls of WWII. Employers wanted to pay their employees more but FDR's misguided war-time technocrats were trying to micromanage the economy. Therefore, their only option was to find other ways of reimbursement besides wages. Health insurance as a form of reimbursement was taxed much less than other wages until 1954 when all remaining taxes on the practice were removed. It was only natural therefore that employers and employees follow the incentives right into this arrangement. (Graph: Rise of Insurance 1940-60) Between 1940 an 1960, the number of insured went up 7 fold.
By 1965, a little less than 75% of the population had some form of health insurance, and that number was rising rapidly. (Pic: 1960's Insurance) However, even with this rapid rise in the insured, it was rare that anyone be insured for care not involving surgery or hospitalization. For patients seeking treatment in an outpatient doctor's office or wanting a yearly checkup, it was traditional to pay out of pocket. Medicare Part B, passed in 1965, helped changed this trend, but the economic reasons for the insurance companies to adopt this are obvious.
(Pic: HealthCareDollarsAt Work)Because of these government policies, health insurance has changed from actual insurance to a way for employers and employees to subvert the tax code. This leads to modern "insurance" covering much more than insurance ever should. Regular checkups, preventative medicine, elective procedures, and chronic medications are all covered by the majority of todays plans.
(Graph: Rise of 3rd party payer) Now let's take a look at the rise of 3rd party payer and the fall of patients directly paying for their own medical care. In 1960, roughly 47% of all dollars spent on health care were paid out of pocket, by 2008, that number was down to 12%. The rest is paid for by government and private insurance companies.
(Graph: Healthcare Vs GDP) Take a look at the graph of Healthcare Vs GDP once again. These costs are rising far too astronomically to be accounted for by other factors. There is something fundamentally wrong with the incentive structure of this industry. Also, it seems to be inexplicably immune to recession, unlike other industries. This is the typical pattern of government intervention. Given that these things are true, what do you think the effect of Obama's 2010 healthcare reform will be?
(pic: black) Essentially, the Patient Protection and Affordable Care Act of 2010 AKA Obamacare will force the market to increase coverage and therefore will increase costs. It's said by some economists that there's a critical mass for healthcare spending. If that's true, we're certainly moving in that direction a lot faster.
(Pic: serenity) The good news is, there's a simple and elegant solution to solve this issue in an orderly and decisive way. Government could start to once again tax employer-provided health insurance. Alternatively and in my opinion, preferably, the government could (Pic: abolish IRS) abolish the income tax altogether. This would eliminate the incentive for employer provided healthcare, and over time the practice would be eliminated. As that is happening, people will realize that high deductible insurance is actually much cheaper. Removal of other government intervention could further lower costs, like state insurance regulations that reduce competition. (Pic:Medicare Monster) It would also be beneficial to eliminate Medicare's "discriminatory pricing" policy whereby if a doctor sees someone for free or less than they charge medicare in his/her office, they can be subject to a raid by the federal government as well as fines and imprisonment. Essentially, the further government gets away from healthcare, the more affordable and accessible it will become.
(Graph: Government Spending Vs 3pp) Unfortunately the largest 3rd party payer is government. Though prices will come down dramatically if government stops manipulating the private sector via the tax code, (Pic: Old Lady Sequence) the problem of government being such a large payer will likely still remain. Obviously raising co-pays and instituting a deductible into Medicare and Medicaid would help, but these solutions are so politically impossible it gives one a headache to even contemplate. In fact, Americans are so addicted to Medicare that even the accusation of mentioning cuts in medicare is considered a devastating attack in political campaigns. With elderly voters flocking to the candidate who promises to continue this unsustainable system, it will likely be the sacred cow of the US government for years to come, even with our impending fiscal issues.
(Chart: Negative Income Tax) I would also like to mention at this time Milton Friedman's elegant solution to the problem of entitlement spending: Instead of offering food stamps and healthcare, Friedman and most other economists suggest a "negative income tax" whereby the government just writes an impoverished individual a check for an amount to bring their income up to an acceptable level. They could then use the money at their discretion, and make decisions that are best for them, rather than what the government deems appropriate.
(Pic:MLK sequence) Under a truly free market system, customers would purchase health insurance like they do life insurance: When they are very young, for their whole lives, and at very low premiums. Just like with Life Insurance, they could keep their plans when they switched jobs, moved from State to state, or developed a chronic or debilitating disease. Perhaps insurance could be purchased even before birth. It sounds far fetched, but with a high deductible plan and the prices of healthcare actually coming down instead of rising, this is not only feasible, but likely.
So in case the policy decisions of raising income taxes for the upper brackets and printing money to give away to large corporations (especially banks) were too subtle for you to understand the point, Geithner spells it out in this congressional hearing.
He's basically acknowledging that a tax on people making over 250k is going to directly impact small businesses. He acknowledges small businesses create the majority of jobs but continues to assert that we need the money to "stimulate the economy." He is saying that if the government shrinks, the Keynesian perpetual motion machine will break down and all the worthless government employees we pay for will have to find new jobs.
I'm glad someone in the administration is willing to admit they hate small business in favor of huge government and big corporations. At the same time, it's highly depressing he can openly admit it like this with basic impunity. (119,985)
S&P: Sounds good, here's a bunch of political donations, plus a bunch of our former employees/friends inundate your bureaucracy already; they'll be happy too.
Uncle Sam: You do realize what'll happen to our relationship if you cut our credit rating to reflect the fact that we're printing money and using it to raise demand for our own bonds, right?
S&P: I wouldn't think of it, honey. Here, have AAA even though inflation is already greater than the interest rate!
Uncle Sam: Hey, it'd make us happy if the economic numbers went up. In addition, a bunch of quasi-government institutions like Freddie/Fannie, and the Federal reserve could use a better ROI. Also, we're planning to print/spend/borrow at the highest rate ever. We still cool?
S&P: Of course, baby! You know you're the only one for me! Keep your AAA and we'll play along with the housing bubble you're trying to start! You know I'll always support you!
Uncle Sam: So now things are getting ridiculous. We've increased the money supply 8 fold and our deficit is growing at over 10% per year. Plus the GDP fell and those home-loan institutions are going belly-up. We can still count on you though, right?
S&P: Babe I think we need to talk about some things, I think my credibility as a ratings agency is a little shot at the moment, you might want to tone it down
Uncle Sam: Sure, Okay, get right on that
Uncle Sam: OOPS, my bad.
S&P: Jesus Christ! How the hell did you spend and print that much?! I don't even.... Okay. We've officially lost ALL credibility. We need to show we can halfway attempt to maybe sometimes recognize a bad deal when we see one. We'll keep you at AAA but we'll put the innocuous "With maybe the slightest bit of concern that maybe we'll have to not give the best rating ever" moniker on top.
Uncle Sam: YOU CHEATING BITCH! HOW DARE YOU DO THIS TO ME! (81,034)
The law, signed last week by President Obama, exempts the SEC from disclosing records or information derived from "surveillance, risk assessments, or other regulatory and oversight activities." Given that the SEC is a regulatory body, the provision covers almost every action by the agency, lawyers say. Congress and federal agencies can request information, but the public cannot.
Now that Greenspan is no longer working for the government, he's once again turned into a capitalist.
In a rant he recently wrote for the WSJ, he said “The United States, and most of the rest of the developed world, is in need of a tectonic shift in fiscal policy ... Incremental change will not be adequate.”
He went on to say that “Perceptions of a large U.S. borrowing capacity are misleading,” and current long-term bond yields are masking America’s debt problem. “Long-term rate increases can emerge with unexpected suddenness,” such as the 4 percentage point surge over four months in 1979-80.
“The federal government is currently saddled with commitments for the next three decades that it will be unable to meet in real terms,” Greenspan said. “[The] very severity of the pending crisis and growing analogies to Greece set the stage for a serious response.”
He also says that yields on U.S. Treasuries have decreased in recent months (demand has increased) because of the European debt crisis--a situation that is likely only temporary. This is of course directly contradicting Bernanke's latest tirade against the Gold Rally in which he suggested that the low yields on US Treasuries in recent months were a sign of long-term stability (a pack of lies Latewire immediately called out).
10-year Treasury notes yielded 3.20 percent as of 12:11 p.m. in Tokyo on June 17th, down from the year’s high of 4.01 percent in April and compared with as high as 5.32 percent in June 2007, before the recession began. Yields continue to be low “despite the surge in federal debt to the public during the past 18 months to $8.6 trillion from $5.5 trillion". Greenspan says this shift in demand from European into American Bonds is “temporary.”
“Our economy cannot afford a major mistake in underestimating the corrosive momentum of this fiscal crisis,” Greenspan said. “Our policy focus must therefore err significantly on the side of restraint.”
I couldn't have said it better myself. Can you please tell your former underlings that?
I'm ill as hell today. Still managed to finish it though!
Rough Transcript: Remember the movie back to the future 2? The villain uses a time machine to go back 30 years and change the timeline.
In the alternate timeline, the good guys are either dead or subjugated by the villain, who is so powerful he can essentially do whatever he wants.
The people of the alternate timeline are oblivious to how they ended up in that mess and just assume it's the way things are meant to be.
This is kind of the same thing we see with government stimulus. Essentially, our future could go one of two ways: with stimulus, or without. When stimulus is applied, the result is that people are in worse shape, and don't recognize what they've lost by government altering the timeline.
Let me first say that I'm talking mostly in terms of fiscal stimulus here, like the TARP, Obama's $700b stimulus, and the upcoming $15B jobs bill. However, many of the things I'm about to say could be applied to monetary stimulus as well.
Let's pretend first that you're an investor in 2008 after the stocks, housing, and other asset prices have fallen dramatically. Things are uncertain, and you want to be very careful in reinvesting your money. You're going to choose businesses that look like they have a healthy outlook. You're going to research, and you're going to pick your next investment solely based on the profit it will yield.
Government, on the other hand, does the opposite: Stimulus projects are chosen not based on what will be the biggest wealth producer in the future, but by a myriad of other factors including: - Who paid what in campaign contributions - Is the business located in my district where it will employ my constituents - What the most influential lobbyists are saying - What the politician is currently invested in*
*I bet you didn't know that it's actually legal for politicians or their friends to invest in a business they know will benefit from an upcoming piece of legislation. They can therefore use your tax dollars to bolster a stock and enrich themselves.
A lot of economists reply to this and say: "So what? It doesn't matter what the money is spent on. As long as the money is being spent, it will create jobs and help the crisis." This is what the Keynesians call boosting "aggregate demand."
The problem with this is two fold 1) Jobs are not about babysitting people or generally killing their time and handing them a paycheck, they're about creating wealth. 2) The money comes from somewhere, and invariably is shunting money away from legitimate long-term investments
Let's talk about jobs. Like I said, jobs are about creating wealth. I'm going to use a quick example of how wealth is created, so you can understand how it is our standard of living rises.
Say I save up and buy an empty plot of land and some saplings for $1,000 dollars. I spend another $1,000 on labor and grow the trees for lumber. I sell the rights to the trees to a lumber company for $5,000. Did you see that? I just created $3,000 of wealth. It doesn't end there, either. The lumber company cuts the trees down and processes them into planks and blocks at a cost of $1,000 in labor, $1,000 in machinery costs, and resells all that wood for $10,000. They have just created a net of $3,000. The company they sold the wood to makes furniture in a factory at a cost of $2,000 for the labor, $1,000 for the machinery, and resells the pieces for $20,000. Another $7,000 is created.
The laborers and capital investors of this scenario added $13,000 in value. That value is reintroduced into the economy either through consumption or yet even more capital investment. Using my profits from my tree farm, I can now choose to spend another $2,000 and double the size of my business. Then I could put the other $1,000 in the bank and they might loan that money out to someone else who might start their own businesses.
When government ties up labor for its own purposes, that labor never creates as much wealth as it would in the private sector. This can be due to the laziness of government contractors or employees, but it's also due to the fact that the investor chooses projects based on yield whereas the government does not. Essentially, government money is primarily either paying people to work less productively or paying people not to work at all.
Therefore, the biggest problem with government spending is not the taxes, it's actually the loss of the fruits of the labor we would've gotten in the alternate scenario where government was smaller and employed fewer people.
Now let's talk about the money. 100% of these stimulus packages have essentially been lumped into the national debt. People know that debt is simply deferred taxation--that we're syphoning off our children's future in exchange for a better standard of living today. What you probably didn't count on is that even in the present, large deficits have repercussions.
The national debt is composed of bonds. Bonds can be bought by anyone, and in fact despite what you may have heard, most US bonds are held domestically by Americans and American institutions. The biggest foreign bondholder is Japan, followed by China.
The question that you need to ask is: where is the money for the bonds coming from? People invest in US treasury bonds because they're perceived as a secure investment. In fact, until recently, most investors wouldn't even fathom a future where US Bonds wouldn't be the most secure investment out there.
In spite of the ballooning debt, people are still buying these bonds. The question is, as an investor, if in an alternate timeline, the government weren't issuing bonds, where would your money be?
Unless these people are inclined to keep their money under their mattress, their money would either be in other, carefully-chosen investments or in a bank. What does a bank do with deposit money? It also carefully invests.
So basically, by issuing government bonds, the government ensures that those monies are not put into the wealth-producing private sector, but instead into the wealth-draining public sector.
Not only that, but there's the obvious problem with having to pay back those bondholders in the future, which is paradoxically better for the economy than the stimulus the debt was used to fund. (852,249)
Dr Roe has explained the dire state of the economy so fluently that I've been putting off publishing anything on the subject. But since we're getting near th' end zone in our collective run for a doomsday touchdown, I might as well just drop a note to explain why it is that some of the most educated economists and business experts in th' US made decisions that are, on their face, bound to destroy the value of the US dollar.
Currency values, even those of modern fiat currency, are pretty simple. They're really controlled by just two fundamental factors. The first, confidence in the government which issues the currency, is important because money that's not backed by a hard asset (like, say, gold, or lima beans) is only backed by the solvency and integrity of the government itself. If the issuing government is not going to be around or if it's going to default on its obligations, its currency isn't worth much. The second basic thing is the same factor that controls the price of all commodities - scarcity.
Scarcity means, simply, that the less of a commodity there is, the higher its price will be. And likewise, the more of that commodity there is, the cheaper it will be. This is a basic and immutable fact of commodity trading.
The government-chartered private bank that controls our money, the Federal Reserve, explicitly told us some time ago that it would print "as much [money] as necessary" during the current crisis. Current estimates are that it has printed, that is, created out of thin air, over three trillion dollars since 2008.
IMPORTANT : THE INTRODUCTION OF MORE SUPPLY OF A COMMODITY RESULTS IN ONLY ONE THING : THE DECREASE OF PRICE
This is basic high school econ stuff. You don't need a degree in econ or finance to know this stuff. So, when econ whiz kids Ben Bernanke and Henry Paulson cooked up this scheme, they knew that printing dollars willy-nilly could have no other effect than the dilution of the dollar's value due to oversupply. That's what we call '%^&*ing massive inflation.' [Incidentally, they also would have known that eroded international confidence in the dollar would cause our big creditors -- like, say, China -- to get skittish about buying our debt, further depressing the currency]. So, knowing this and being employed by th' government -- that is, by taxpayers -- to save and not damn our economic posterior, why did they do it?
To quote Stimpy, the answer's simple, really. Just like Mark Hart made a killing betting against the housing market and Greek debt [ http://bit.ly/cIaFyO ], Bernanke and buddies are going to make a killing because they've bet against the dollar they swore to protect. That's right. I'm saying that the treasonous slaves Ben Bernanke, Timothy Geithner, Henry Paulson, and all their pals made bets against the value of the dollar and then intentionally torpedoed it with their insane monetary policy and general bailout $%#&ery. I'm not kidding. When the jig is finally up and all that extra supply coupled with a tanking economy makes your Benjamins worth less than Zig-Zags, the bald buggerers will make a quick stop at the bookmakers', pick up the vast sums of cash they've made on the bet against your future, and take their NetJets to Aruba where they will sip pina coladas whilst your neighborhood burns.
This is not like your standard conspiracy hypothesis because it is very likely to be true. Use your %^&*ing head. These people aren't stupid. They know exactly what they're doing. And what they're doing is placing bets against US currency while making decisions that they know cannot other but adversely affect it.
Got cash? Get rid of it. Sooner rather than later, you'll be better off with a wallet full of 'Bazooka Joe' comics. At least those smell good. (176,404)
For the first time in 25 years the Social Security program paid out more money then it took in. However unlike the 80s bailout, the demographic shift will increase the number of recipients for the foreseeable future.
It would have been a lot simpler to fix the system years ago, when we could have used Social Security's cash surpluses to buy non-Treasury securities, such as government-backed mortgage bonds or high-grade corporates that would have helped cover future cash shortfalls. Now it's too late.
Even though an economic recovery might produce some small, fleeting cash surpluses, Social Security's days of being flush are over.
To be sure -- three of the most dangerous words in journalism -- the current Social Security cash deficits aren't all that big, given that Social Security is a $700 billion program this year, and that the government expects to borrow about $1.5 trillion in fiscal 2010 to cover its other obligations, about the same as it borrowed in fiscal 2009.
But this year's Social Security cash shortfall is a watershed event. Until this year, Social Security was a problem for the future. Now it's a problem for the present.
Like a freight train, we've heard the and seen the train coming a long way off. We did nothing to get out of the way, now it's time to feel the impact. (63,475)
"The scope of the controversy changed when the new science of economics entered the scene. Political parties which passionately rejected all the practical conclusions to which the results of economic thought inevitably lead, but were unable to raise any tenable objections against their truth and correctness, shifted the argument to the fields of epistemology and methodology. They proclaimed the experimental methods of the natural sciences to be the only adequate mode of research, and induction from sensory experience the only legitimate mode of scientific reasoning. They behaved as if they had never heard about the logical problems involved in induction. Everything that was neither experimentation nor induction was in their eyes metaphysics, a term that they employed as synonymous with nonsense." - Von Mises, Theory and History (145,158)
It would seem that now Obama can stop blaming poor people for the housing bubble collapsing. There is not now nor has there ever been a "Sub-prime Mortgage Crisis." It was an "ARM Mortgage Crisis."
New data suggests that adjustable rate mortgages are foreclosing for both prime and sub-prime at the same rate.
Naturally it spun a better tale to say that the deadbeats who were too poor or too drug-addled or too jailed to be recipients of the "prime" moniker were the bastards responsible for our recession. Unfortunately for us, the problem is not that simple/ridiculous.
It wasn't just that "poor people got drunk," it's that "everyone got drunk" at the same time.
Not only does this point to the devastatingly largeness of the bubble but it also begs the question even more: How did this problem get so big? What fundamental factor do all these people, neighborhoods, banks, and interest rates all have in common?
The state has the power to levy taxes on it's citizens for reason it wants. This means that the state is entitled to whatever portion of wealth it deems necessary; ergo the population is allowed to retain it's wealth by whim of the state. The people have no right to wealth but we may be allowed the privilege to accumulate until such time as the state deems it necessary to appropriate our fortunes.
What system is it when the fruits of labor do not belong to the laborer? (62,657)
There's a thundering hailstorm in Phoenix today, sending drops of frozen hate clattering across the skylight and beating the life out of weak trees. On the outskirts of my peripheral vision, I caught a glimpse of something white and jagged -- the future.
Life as a human right now is akin to having woken up inside the chute of a woodchipper. We may not even recall how we got inside the woodchipper in the first place. The one thing that is clear : the inevitability of the blades.
A feeling like saws chewing into my neck. The sounds of weeping just outside my door. And a cold light knife into my pupil reminds me : This is a world divorced from hope.
When facing a suffocated reality of nonexistent future, what do you do? Here are some options :
1) Lie down and wait quietly for the ice weasels to come. 2) Cry until you're too tired to cry any longer, then die. 3) Fight until death. 4) Put on heavy metal records and rock out for as long as possible.
Now, I don't know which of these sounds most attractive, or which you, the reader, may already be doing. I choose option #4. Here's why :
* Metal music is brain floss. * Metal music improves blood flow to the face. * Metal music is not a norm. * Metal music has no sympathy for your suffering. * Metal music remembers when you were only an animal. * Metal music hasn't heard about your regrets, but it can drench them in molten @#$%^& * Metal music will survive long after the Universe is toast. * Metal music recognizes your true form and can restore it if lost. * Metal music connects you with that aspect of youself that you forgot about. * Metal music is truth erupting from a sea of lies.
There's no future. But with metal music, the present can be made to rock. In these bleak and doomed days, everybody looks for help. Some go to shrinks, some watch TV, and some try in futility to numb the pain with drugs. Well, you all are welcome to your 'cheese' heroin, 'lean,' and amphetamines. I'm an Earache man myself. (77,562)
I normally shy away from talking about monetary policy. To me it's self-explanatory that falling/rising prices are either caused naturally and innocuously by the market or forced up/down by the government's intentional/unintentional detrimental manipulation of the market.
To me, that's where the subject ends. Obviously, most economists these days have a different view. Modern economic theory states that prices fall during recessions and thinks therefore falling prices cause recessions. It's akin to saying people with the flu have fever, therefore the fever must cause the flu. Fever can cause its own problems, but your body does it for a reason.
The "exit strategy" talk is spawned by the economic enigma I call the "Chinese Finger Trap". Essentially, the Fed is printing tons of money to stimulate the economy as it's both fun and entertaining (similar to sticking your fingers in the finger trap). However, if they keep doing that, eventually life's going to really suck (due to inflation, speculation on inflation, and all manner of evil). Therefore, at some point, they have to take their fingers out.
The problem is, of course, the deeper they get themselves into the trap, the harder it is to pull out without doing some damage. In the event Bernanke stops printing money, those pitiful, beleaguered financial institutions will have no source of funds for their poor investments, demand (and therefore prices) for those investments will fall, and the balance sheets for these companies will look like Bernanke's afterbirth.
The "Exit Strategy" is a myth--that somehow there's a way out of the trap other than tearing your own fingers off. Of course the metaphor ends there, as the toy is fairly harmless, this game is not.
This video specifically attacks the myth and pretty well beats this dead horse until tender and delicious. It's also a meager 25 minutes long, which is pretty amazing considering it totally eviscerates modern pop-econ.
I recently completed Bob Murphy's Politically Incorrect Guide to The New Deal. Subsequently, I found out that the advocates for monetary intervention (eg Krugman, Bernanke, and yes, Milton Friedman) have twisted history and that I had been unwittingly duped by it. They would have you believe that The Fed did essentially nothing to correct the massive monetary contraction at the beginning of the Great Depression. In fact, the Fed of 1929 and the 1930's expanded the money supply more than any American central bank ever (until Greenspan/Bernanke). Krugman, Bernanke, and Friedman basically either deny this or pretend like the actions of the Fed at the time were "too little, too late." The facts, however, speak for themselves.
(excuse this boring personal note) I was extremely lucky to be taught economics by a monetarist. My economics textbook subtly jabbed at Keynesianism throughout the book, and compartmentalized Keynes and his balderdash in a single chapter called "Chapter 11--John Maynard Keynes" (I'm almost positive that was on purpose). At the time, I would chat with my friends, some of whom had taken Econ101 taught by a Keynesian. My Friends were always talking about Aggregate Demand and Animal Spirits. I thought that maybe I'd missed that lecture and always wondered what the heck they were talking about. I later rediscovered economics and chuckled my way though a rundown of Keynes' theories and fallacious supporting arguments.
Unfortunately, monetarism was also wrong in many ways. While being unabashedly free-market in most things, I followed what I was taught for a long time and balked at the idea that the Fed could do any wrong. I was a huge fan of Alan Greenspan and even posted a couple favorable articles on this site about him. I now see these essays as akin to the innocent inhabitants of Russian gulags, convinced that "Uncle Stalin" was unaware of their predicament, sneaking letters out of the camp to him for help, apparently thinking that he loved the people so much he would close the camp immediately if he only knew (when, of course, it was he and his goons that built the gulags put them there in the first place). It was actually a lecture by Tom Woods (an Austrian Economist) I watched in 2008 that floored me and ended up changing my mind.
Nowadays, looking at the world of economics through this new lens, it's actually a lot scarier to think that not even Friedman was truly laissez faire. The only well-known anti-Fed advocate seems to be Ron Paul. Obviously this movement is gaining steam. However, the Federal Reserve is now more powerful than the US Government, and with basically the entire economics profession vying to keep it that way, it seems like it's really going to take something big to even introduce the concept of sound money back into the public mind-set. (136,260)
Dr. Thomas E Woods covers a random bunch of topics in this fascinating talk.
Why child labor isn't so bad Why the monocle-wearing robber-barons were American Heroes Why the Native Americans were the scourge of the environment... until they adopted capitalism Why poverty is not the fault of low-paying employers Why the government can't create, but can only destroy Why even the poor are getting richer Why the Wild West was actually fairly mundane
The storm is coming. You've heard it on the radio; seen it on the TV show. The Latewire has been humming warnings for a long time. A dull echo catches you by the ear -- what's that? That's the sound of hope retreating. It flees because it's impossible to prepare for this kind of storm, even when it's known to be on the way.
Total dissolution of the contemporary lifestyle is about to happen. We're about to be plunged into an era of base servitude and complete debasement. We've managed to use our preference for self-enslavement to facilitate a future of real enslavement -- think "Spartacus" without the good soundtrack and with more degrading "oysters vs snails" problems.
The people who facilitated the collapse did so because the knew that their actions had made it more likely, and that if they bet against our survival, they could win big and move to Tahiti while we get introduced to a new life of total abjection.
While you're waiting, think about how much information about yourself you choose to advertise or give away. It's always used to further demolish your autonomy.
Even though it's far too late to do anything to prevent utter catastrophe, there are steps we can take in a last-ditch effort to survive and stay human: Learn new skills pronto. Trust no interface. Stop the hemorrhaging of your information. (74,537)
So, how do you feel about trading goods and services in-kind? How do you feel about hand puppets? How do you feel about rap?
This video will help you answer all these questions. My presentation from Ignite Phoenix 5 : "Use What You Got To Get What You Want."
Rap text :
When I say "Sales Tax" you say "Auuugh!" Sales tax! [Auuugh!] Sales tax! [Auuugh!] When I say "Community," you say "Exchange!" Community! [Exchange!] Community! [Exchange!] Now clap with me... one, two, three, hit it!
Sales tax as a tax is regressive That means to the poor, it's oppressive Money has problems, that's what we say For local commerce, there's a better way! What is it that we propose to do? Let's trade things of real value!
Don't you know we're trading Hard hats for driveway surfaces Web pages for legal services Copywriting for photography Food for books, aiyyo, it's better than money!
Aiyyo I got some carrots! Yo I got some plums! Let's trade together So we both can have some!
Awwww yeah, that's the way that we do Trading goods and services in kind is not for fools! Hahahar! We got it made -- While I got a chance now, let me make this trade!
We're trading in kind, we hope you don't mind now Skills plus goods -- more value than money, hey all right! We get to better know each other When we trade in-kind with one another
Informal or organized, this trade is fly! Don't forget to file your 1099! Community exchange, it rocks the spot Use what you got to get what you want!
Care and maintenance of your soil and ecosystem Now that you've started rocking down to Urban Agronomy Avenue, it's time to take it higher with some maintenance basics. - Ground cover : dying plants and so-called 'cover crops' function as 'living mulch' to protect your soil from excess solar damage, discourage weeds, and keep moisture in the ground. - 'Cover crops' as they're traditionally known are nitrogen-fixing plants that are aggressive and will kick out grass from your garden. Classic species are brassica, clover, and the delightfully-named 'hairy vetch.' Cover crops can be cut down and added back to the soil for a soil nutrient boost. Take care : cover crops will kick out not only noisome Bermuda grass, but a lot of other species as well.
Cycling the addition of compost and amendments : - You need inputs to get output. Plants use up the food you give them, so for best results, follow a regular schedule of 'feeding' the ground mulch, compost, and other amendments every season. Look at the nitrogen cycle diagram to see how the whole soil fertility thing happens :
If a plant looks sickly, feed it with compost. As the seasons pass and you keep up the soil-maintenance schedule, the problem of soil nutrient deficiency will decrease and your soil will stabilize.
Soil deficiencies and their signs : - Purpling of leaf edges = phosphate deficiency - Red + yellow leaves = potash deficiency - Yellow at leaf center : nitrogen deficiency - Red leaf tips : magnesium deficiency - Spotted leaves : disease, not deficiency - Striped leaves : nutrient deficiency, could be several nutrient culprits - Curled leaves : drought, not deficiency - Crazy and messed-up looking : chemical toxicity (remedy with compost tea or so-called "effective microorganisms")
Pests : - Serious pest problems are a sign of an unbalanced ecosystem (such as that seen in monocropping arrangements). Most pests, such as cutworms that chomp on leaves, can be controlled by companion planting and by controlled bird activity (such as letting chickens into the garden for a short while each day -- but be aware that birds like to eat what's growing as much as they like bugs). Below are a few common pests and things you can do to control them : - Cutworms : they're repelled by molasses - Ants : they're repelled by cinnamon, or lure them away with sugar bait - Burrowing pests like groundhogs : bury hardware cloth / wire mesh 24 inches deep around the perimeter of your growing area.
The danger of over and under-watering : take care! Under-watering results in drought, while over-watering leads to fruit splitting and mushy crops. Use your head and read the watering instructions for the crop at hand to avoid these pitfalls.
Pollination : - Pollination is required for food production, and low pollination = low yield. There aren't enough bees to go around these days, so do your best to attract and retain a healthy population of mason / wood bees, which are good native pollinators and don't sting (see the article on bees and their housing at ?k=urban.farming#234 ). Wasps should be dissuaded; if they're really causing problems, a solution of one part bleach in nine parts water will harm them a whole lot. Likewise, honeybees can be kind of a drag with their stinging habit, and if a killer bee queen takes over your honey bee hive it's nightmare city. So, encourage mason bees (with a bee block), butterfiles (with bright red flowers), and hummingbirds (with flowers and a feeder).
Excess carbonaceous material in soil (like dry organic matter) will cause nitrogen leaching as the nitrogen moves into the carbon material in order to break it down and decompose it. [see the article on composting for more detail on how this works : compost#230 ] This is one of the reasons why you want to be sure that compost is fully broken down before you put it into your soil.
Frost can be a problem in winter, even in arid climates. Cover your crops with a light sheet or cloth at night when there's a danger of frost. You can also bury jugs of water underground to store solar heat collected during the daytime.
Protect against sun excess by having good shade structures in place for both summer and winter solar patterns.
When planning, building, and evolving your urban agriculture setup, aim to have each item and plant serve more than one purpose - this is called "stacking function." For example, if you grow grapes over the mesh roof of your chicken coop, they'll keep the chickens cool as well as providing you and the birds with tasty grapes. - Use observation and incremental experimentation to learn how the system works and the most efficient ways to harness it; plan for the next season with the things you learn and look at the "big picture." Write everything down so that you can study what's happened. - An old but useful cliche here is : "The problem is the solution." That is, don't try to fight against natural processes -- instead, harness and work with them. - Things are going to die and crops will fail. Learn from your mistakes, and don't take failure too hard.
Notes : On beans : pintos, etc grow well in summer, but green beans need cooler weather. Bats eat flying pest bugs, give them a bat house.
The bulk of this information is taken from Heather Welch's lecture series "Designing a Vegetable Garden," presented November 2008 courtesy of the Phoenix Permaculture Guild. (179,961)
Many sites are landscaped with rock and pavement. This creates what is known as the "heat island problem" -- that is, the rocks and paved elements absorb and hold solar heat, raising the temperature of the site, permitting little vegetation or evaporation. Another common landscape approach, xeriscaping, attempts to simulate a natural desert environment by using no deep-rooted plants, but only things like cactus and succulents. The problem with this approach is that it leads to erosion and a soil that is heavily leached and will not retain water; this is not conducive to growing food.
In contrast, permaculture-style landscaping that features a variety of rooted plants and water-managing features raises the water table and, though it requires more water input, may actually conserve water in the long run by cooling the site and creating more in-site moisture recycling (whereas xeriscaping creates a hotter, more arid environment by retaining little water). Plants cool a site, while rocks heat it up. So what's a person with rock on their site to do?
Don't remove the rock -- it's expensive and laborious to do so, and recall that 'using what's on hand' is a guiding permaculture principle. So, instead of removing the rock, redistribute it. Rock's heat-retaining characteristic is directly proportional to its surface area. Therefore, we want to arrange the rock in a way that minimizes the surface area and yet is useful.
The best way to do this is to use the rock on hand to create narrow, deep pathways around your planting areas such that the planting area will be sunken relative to to paths. This will help conserve your precious water -- the water will drain over and through the rock paths and be collected in the sunken beds. Sunken-bed agriculture has long been favored in desert Africa and other arid climates as a key water-management strategy. Repeat : sunken beds and raised paths are the best approach for growing food, especially in hot and arid climates. Raised beds will fry the roots of your crops when the sun beats on them.
Sidebar : the horror of Bermuda grass
Bermuda grass is a 'marginal' or 'fringe' plant -- it exists when land has begun to fail due to erosion and desiccation. It's an especially hardy species that is highly invasive, and is very difficult to control in an edibles-growing setup.
The 'conventional' approach to removing Bermuda grass is to use an herbicide, but smart people know that herbicides are poison and don't use them near their food crops. Instead, use the 'brute force' method : obtain a sod-cutter, "bobcat," or strong shovel (for the Calvinist) and remove the offending grass before planting. Attempt to scrape it off the top of your site. Due to its omnipresence and hardiness, it will continually stage comebacks, but this step will give you a head-start on it. If you're serious about keeping this hardy grass out of your planting beds, don't include removed Bermuda in your regular compost, as some of its seeds may survive the 140-degree temperature and come back to haunt your garden.
One tactic that has proved successful for keeping Bermuda grass at bay is the introduction of red clover, another 'marginal' species that is likewise invasive but has two advantages over Bermuda grass : 1) it attracts bees, which are vital for pollination of your crops, and 2) it smells better than Bermuda grass.
The 'Pre-Landscaped' problem
Many sites will already be landscaped with trees, shrubs, etc, before you arrive. This can be seen as an obstacle to your planting design, but the smart urban agronomist will incorporate existing green features into their plan. Rather than remove existing trees, remember that bees like trees and you need bees. Therefore, introduce gourds, grapes, and other hardy vines to grow up on and around the pre-existing features (including rocks of all sizes). This will create a photosynthesizing, water-producing heat barrier that requires little watering (because these thrive in dry conditions) is excellent at counteracting the effects of the urban "heat island."
Achieving microbial balance
Healthy plants are abetted by numerous symbiotic worms, insects, microbes and fungi living in the soil. Each type of helper organism lives in a certain "trophic level" -- that is, stratum -- of the soil. Microorganisms often move through fungal networks around plant roots to enhance crops' nutrient uptake. Helpful organisms come in several classes : - Bacteria - Fungi - Nematodes - Protozoa - Arthropods - Annileds - Birds and animals are also in symbiosis wit your crop, but we'll treat them elsewhere in this series.
Soil trophic levels are an important consideration in urban agriculture. It's important to work with the organisms in each level, rather than against them, to maximize yield and minimize the amount of work you have to do. The first rule of working with these trophic-level-dwellers is : 'don't upend, displace, and massacre them with a rototiller.'
To dig or not to dig?
Tilling displaces the organisms in each tropic level, disturbing them and causing them to die quickly. A few inches means a lot to microbes and tiny animals. The "no-till revolution" currently under way in urban agriculture allows the trophic levels to remain healthy and undisturbed by specifying that rather than digging and tilling. it's better to layer mulch and compost on top of existing levels to allow the natural action of symbiotic-critter level adjustment as these new mulch and compost layers are watered in and self-percolate.
The "traditional" method of bed preparation, "double-digging," is wherein soil is dug up from one end of the bed and moved to another end. This is disastrous for microbe and fungal colonies and, even worse, is very hard work.
The new method : "Lasagna gardening"
I wish that "Lasagna gardening" was a way to grow lasagnas, but alas, it's only a slang term for building up soil in a layered fashion and avoiding disturbance of the native soil's trophic levels. Here's how to do it :
1) Spray / soak the site liberally with compost tea or "effective microorganisms" to bacterially control pre-existing environmental toxiins 2)Put a layer of black-and-white (only) newspaper over the selected bed site. This is nontoxic and will discourage pre-existing weeds from erupting in your planting beds. (note : stay at least 3 inches away from trees ) 3) Layer equal thicknesses of mulch and compost on top of each other. Ideally, you want an ultimate planting depth that is equal to your root size; this is roughly the same as the height of the above-ground plant greens (hence the old saying "as above, as below"). This may seem daunting and silly, but after the first couple of seasons, the new material will be integrated with the original soil and the landscape will even out. 4) add new layers of mulch and compost after each harvest to continue enriching the site soil.
Kelp meal is a phosphorous-containing soil amendment that many have found to be beneficial to this process. However, those who live in landlocked areas may object to adding sea-based additives to their soil.
Coming soon : Part III
This information principally drawn from the lecture series "Designing a Vegetable Garden" as presented by Heather Welch in late 2008 courtesy of the Phoenix Permaculture Guild. (115,521)