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Max Keiser and Stacy Herbert

Max and Stacy give you all the financial news you need as the Global Insurrection Against Banker Occupation gathers pace. Occupy Wall Street, Crash JP Morgan, Buy Silver and DEFINITELY visit MaxKeiser.com!

In this episode of the Keiser Report Max and Stacy discuss the bizarre documents leaked to TheIntercept.com exposing an alleged financial plan to attack Qatar with weapons of mass financial destruction. In the second half Max continues his interview with

In this episode of the Keiser Report Max and Stacy discuss the bizarre documents leaked to TheIntercept.com exposing an alleged financial plan to attack Qatar with weapons of mass financial destruction. In the second half Max continues his interview with Max Blumenthal about #russiagate, #TheResistance, AIPAC and more.

Author: Max Keiser and Stacy Herbert
Posted: November 18, 2017, 7:49 pm
40 years ago, a grand experiment was embarked upon. One that promised US workers: Using new ‘defined contribution’ retirement savings vehicles such as IRAs and 401k,, they’d be better off when they reached retirement age. Which raises a simple but very important

40 years ago, a grand experiment was embarked upon. One that promised US workers: Using new ‘defined contribution’ retirement savings vehicles such as IRAs and 401k,, they’d be better off when they reached retirement age.

Which raises a simple but very important question: How have things worked out?

The answer? Not well at all for the vast majority of Americans, for whom “retirement” will remain a perpetual myth.
Author: Max Keiser and Stacy Herbert
Posted: November 18, 2017, 5:03 pm
It’s nice to see a volume spike on the bid side for a change: We have been saying for weeks now, and probably sound like a broken record, that sooner or later the open interest has to come down. There

It’s nice to see a volume spike on the bid side for a change:

We have been saying for weeks now, and probably sound like a broken record, that sooner or later the open interest has to come down. There are two ways it can come down, by a brute force paper dump and then the bullion banking cartel, also known as the commercials, step in and buy back all those contracts they sold short.

The other way is just to buy them back, which would drive the price up in a “short covering” event. We’ll have to see what happened to the level of open interest to start to see if the banks are covering their shorts.

The cartel has tried to smash all week, starting on Sunday night at 10:30 p.m. EST, but each time the dip has been bought:

And then the surge into the afternoon happened. We were reluctant to put out an article, because looking at the chart above, the last time gold hit $1290 – BAM! That was on Wednesday and it got knocked right back down.

Although the precious metals have held on to their gains into the close:

Gold and silver faded the move but started turning up again late in the afternoon.

Not helping the cartel is a US dollar that is breaking down:

 

We are not even going to post the inverse head-n-shoulders pattern because it’s a done deal. We are now at 93.666 on the chart.

A chart of the US Dollar/Japanese Yen shows similar breakdown, meaning that the yen is strengthening against the dollar.

So a combination of a weakening dollar, and strengthening yen and any short covering would be a step in understanding the rise on the day.

Because it had nothing to do with “fear”:

The VIX has actually fallen for two days in a row nad is now below 12 (though still above the 200-day moving average).

But back to the metals, individually.

Things are actually starting to shape up nicely on the silver weekly chart:

That’s a fairly respectable bullish candle, and it really highlights silver’s resilience. Silver has put in a second higher-low on the weekly. We are now back on the right track. A weekly close above $17.45 and we will have put in a second higher-high.

Gold is also looking decent on the weekly:

In the cartel’s ultimately futile attempt at holding gold back, it is nice to see that the volume is still very high. For a second week in a row the yellow metal is up with a respectable bullish candle. Again, all things considered.

Though we end the week with our chins up, there is the nastiness of the moving averages to deal with because the cartel is desperately trying to smash both gold and silver through to the downside.

But it wasn’t today. Both gold and silver, on their surge in price today, finished above the 50-day moving averages.

And it’s starting to look like things we want to see:

Shown on the GSR above, the number of ounces of silver it takes to buy one ounce of gold is now under the 200-day moving average.

Palladium may be reversing the down move over the last several days:

Palladium is up nicely on the year and all of the action on the chart is bullish. Those are nice, healthy pullbacks one wants to see which are the sign of a healthy bull market.

Platinum may be finally showing some signs of life:

On the daily, there is confirmation that we are on track is that there is now a bullish trend underway. Platinum has been under severe strain lately, but today the metal surged and gained more than the other three (up $17.60 or 1.88%).

Everybody is doubting this oil rally:

It stands to reason that the bulls would “climb a wall of worry”, because that is exactly what we did in early 2016 after gold & silver resumed their bull market super-cycle. What will it take before crude is declared in a new bull market? A close above $58 on the daily would certainly add another rung to the ladder.

Copper found support at the level we called “minor support” earlier in the week:

If copper can stay above the psychological support of $3, then this will be even further confirmation that the commodities bull market is under way.

A commodities bull market means inflation is about to run hot as the input costs of basically everything goes up.

The Ten Year Note yield is still in the 2.3% – 2.4% range it has been in for some time now:

With Fed Head Williams droppin’ the truth bombs that the Fed may begin a policy of negative interest rates, that yield would be going lower. It has been a common belief that they can’t raise yields gradually anyway. Sooner or later, the bond bubble is going to pop, and the Fed would be forced into a Paul Volcker style hike by the markets.

The Fed and the ESF can control the markets for some time, but not forever.

The Nasdaq didn’t make a new record high today after pulling it off yesterday:

But today’s chart of the day goes to Bitcoin:

After the drop to $5,500 last weekend, the ascent has been near vertical.

Consider this: If Bitcoin is in a bubble (which many feel it is), when it pops, all the Bitcoin holders will yet again need to find a place to go (if they can get out in time) and since none of them like sovereign fiat, we could see a panic rush into gold and silver like no other.

Stack accordingly…

– Half Dollar

SilverDoctors.com has been on the leading edge of Gold News and Silver News Since 2011. Each month, more than 250,000 investors visit SilverDoctors.com to gain insights on Precious Metals News as well as to stay up-to-date on World News impacting the metals markets.

Author: Max Keiser and Stacy Herbert
Posted: November 18, 2017, 4:52 pm
We’ve all heard that the problem with the web is fake news, i.e. unsubstantiated or erroneous content that’s designed to mislead or sow confusion. The problem isn’t just fake news–it’s the homogenization of the web, that is, the elimination or marginalization of independent

We’ve all heard that the problem with the web is fake news, i.e. unsubstantiated or erroneous content that’s designed to mislead or sow confusion.

The problem isn’t just fake news–it’s the homogenization of the web, that is, the elimination or marginalization of independent voices of skepticism and dissent.

There are four drivers of this homogenization:

1. The suppression of dissent under the guise of ridding the web of propaganda and fake news–in other words, dissent is labeled fake news as a cover for silencing critics and skeptics.

2. The sharp decline of advertising revenues flowing to web publishers, both major outlets and small independent publishers like Of Two Minds.

3. The majority of advert revenues now flow into the coffers of the quasi-monopolies Facebook and Google.

4. Publishers are increasingly dependent on these quasi-monopolies for readers and visibility: any publisher who runs afoul of Facebook and Google and is sent to Digital Siberia effectively vanishes.

The reason why publishers’ advert incomes are plummeting are four-fold:

1. Most of the advert revenues in the digital market are being skimmed by Facebook and Google, as the chart below illustrates.

2. Ad blockers have become ubiquitous.

3. Few people click on the display ads that are the standard in desktop web publishing; in other words, these ads simply don’t work very well, and much of the revenue being generated is click-fraud, i.e. bots not real people clicking on adverts because they’re interested in the product/service. As a result, advertisers are pulling away from these type of ads as they search for advert models that aren’t so vulnerable to click-fraud.

4. The web is increasingly shifting to mobile, which has fewer advert spots due to the small size of the display. In addition, major third-party advert services such as Google Adsense place restrictions on the number and size of ads being displayed on publishers’ sites.

The systemic erosion of advert revenues for everyone other than FB and Google is evident everywhere: for example, BuzzFeed Set to Miss Revenue Target, Signaling Turbulence in Media Prospects for a 2018 initial public offering by the high-profile publisher now appear remote.

Digital publisher BuzzFeed is on track to miss its revenue target this year by a significant amount, the latest sign that troubles in the online-ad business are making it tough for new-media upstarts to live up to lofty expectations.

As a result of these two dynamics–the censorship of dissenting views under the excuse of limiting fake news, and the erosion of advert income–independent publishers are losing ground. While those posting on Facebook and other social media sites have little expectation of monetizing their content, many web publishers made enough income off adverts or affiliated income (from YouTube channels, for example) to justify the enormous time and effort they expended keeping their channel/site going.

As advert income has dwindled, there are only two other revenue models available to publishers: a subscription service or Patreon, i.e. the direct financial support of users/readers/viewers. Major publishers are struggling to build a subscription base large enough to fund their operations, a task made more difficult by the expectation that all content is free or should be free.

Patreon has been a boon for thousands of independent writers, journalists, cartoonists, filmmakers and other creators of content. The Patreon model (as I understand it, and yes I have a Patreon campaign) is not based on content that’s behind a paywall available to subscribers only, but on providing incentives in the form of content or other rewards to those who choose to contribute.

The Patreon model only works if enough users/readers/viewers step up to support content creators they value. I think the success of Patreon suggests that many people are willing to support the content creators they value. But like all voluntary revenue models, there’s the free-rider issue: people who may have the income to pay a bit for content choose not to, and in essence free-ride on those few who do contribute/pay for content.

Some people have advanced the model of micropayments as the solution to the problem of compensating content creators fairly. While this model has some obvious benefits–pennies charged for access to content might add up to a living for content creators if their audience was large enough–it would still be a voluntary system, and thus it would have the same free-rider issue as every other voluntary payment-for-content idea.

Posting “free” content on social media ends up driving advert revenues to the social media and search monopolies, leaving nothing for the content creators. There is only so much serious content that can be created for free.

If what we’re left with is “free” content (i.e. the creator gets no income for creating and posting content), Facebook, Google and click-bait link farms of sensationalist headlines, we’ll end up with a thoroughly homogenized web of “approved content” underwritten by lobbyists, the entertainment industry and elitist foundations/think tanks, and little in the way of real dissent or diversity of independent analysis.

In other words, we’ll be left with officially generated and sanctioned fake news and “approved” dissent: unemployment is at record lows, inflation is near zero, the “recovery” is alive and well, Russia is the enemy and any suggestion to the contrary is propaganda that must be eradicated as fake news, etc.

Simply put, the web is becoming Orwellian. There’s plenty of approved “diversity of opinion,” but dissent is being sidelined to the fringes as a risk to the perfection of managed content.

 

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Author: Max Keiser and Stacy Herbert
Posted: November 18, 2017, 4:43 pm
In this episode of the Keiser Report, Max and Stacy discuss ‘the international oligarchy’ exposed by the ‘Paradise Papers.’ In the second half, Max interviews Max Blumenthal about the business of #Russiagate.

In this episode of the Keiser Report, Max and Stacy discuss ‘the international oligarchy’ exposed by the ‘Paradise Papers.’ In the second half, Max interviews Max Blumenthal about the business of #Russiagate.

Author: Max Keiser and Stacy Herbert
Posted: November 17, 2017, 1:08 pm
– Is the New Fed Chief Jeremy Powell a “Swamp Critter Extraordinaire”? – Trump surrounding himself with elites disconnected from everyday society – Realities of America’s difficulties not recognised by US power makers – Powell will likely continue to protect Wall Street over Main Street

– Is the New Fed Chief Jeremy Powell a “Swamp Critter Extraordinaire”?
– Trump surrounding himself with elites disconnected from everyday society
– Realities of America’s difficulties not recognised by US power makers
– Powell will likely continue to protect Wall Street over Main Street
– Savers should diversify to protect themselves from Fed’s ponzi policies

Just like many of his other campaign promises, Trump isn’t doing a great job of draining the swamp. His nominee for Fed Chair is Jerome Powell.

Powell is a ‘swamp critter extraordinaire’ so declared by Bill Bonner last week. We’re inclined to agree. Name-calling is poor sportsmanship when it comes to politics, but hey, Trump started it.

When Trump traveled around the United States campaigning for the most privileged position in the country he lashed out at the seemingly abstract promise to ‘Drain the Swamp’ at every opportunity. He used it to criticise anything he didn’t like about the status-quo.

He made the ‘swamp critters’ the fall-guys for every hardship Americans were facing. In many ways he was right.

Yet as has been the case throughout the last eleven months, Trump hasn’t done a great job of turning rhetoric into reality.

He has continued to fill the swamp rather than drain it. Spending by lobbyists has reached levels unseen since 2012. Secretaries are flying in private government jets and Trump uses Republican Party money to fund his own legal expenses.

This is nothing compared to the senior appointments he has made. Trump has taken ‘swamp critters’ and placed them in positions of such power and influence one wonders what his supporters make of it all.

Hypocrisy was a word heard frequently during the Obama Presidency. Obama was great with words and preached peace while practicing war. Trump’s hypocrisy is on a whole new level.

Powell is just his latest appointment. With an estimated fortune of $55 million the likely new Fed Chair  has spent his career in Washington flip-flopping between roles in both regulation and industry. He is now set to take the wheel at a job whose sole role is to steer the US economy. Indeed, some more imperially minded Americans see the job as being to steer the global economy.

Click here to read full story on GoldCore.com.

 

Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

Essential Guide To Storing Gold In Singapore

Essential Guide to Tax Free Gold Sovereigns (UK)

Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

Author: Max Keiser and Stacy Herbert
Posted: November 17, 2017, 12:45 pm
Bitcoin, the original electronic peer-to-peer digital currency system, was created in 2009. Along with it came blockchain technology, which fintech firms have since started using for purposes outside of simply mining more currency, or rivaling bank payment systems. While bitcoin

Cryptocurrency-For-Trading

Bitcoin, the original electronic peer-to-peer digital currency system, was created in 2009. Along with it came blockchain technology, which fintech firms have since started using for purposes outside of simply mining more currency, or rivaling bank payment systems. While bitcoin remains by far the best known and most valuable cryptocurrency, some have started to express doubts about its future. Even as its price-per-coin soars, many see signs that point to bitcoin losing its popularity. One of the biggest catalysts of this notion is the number of new and more widely applicable uses that innovators have found for both blockchain and new alternative coins.

Bitcoin is in Retrograde

Bitcoin is a cryptocurrency with a strong presence in the global market and the fintech industry. Though it continues to rise in value, this digital coin is not keeping up with other newer assets on the market. It appears bitcoin is losing its touch with the trading community. Whether as a currency itself or as part of an ETF or other index, bitcoin may have a challenging time keeping up.

Today, almost any firm can have its own initial token sale (ITS) to raise money for a service that will incorporate these alternative coins down the road. This move lets companies garner investments in their idea without having to cede creative control, and it creates better engagement with their new platforms. These tokens derive value both from how popular they are (like bitcoin), but also have a more unique value proposition (use in a service).

Additionally, the very system on which bitcoin relies has far outstripped the usefulness of bitcoin itself. Banks, online exchanges, eCommerce websites, and countless other firms are beginning to use blockchain to create new services in existing industries, hoping to disrupt the status quo. Finally, Bitcoin may quickly be reaching overvalued territory. Though the coin’s value has consistently seen upward momentum, the current price point just might be too high for some people. This can cripple its popularity because of the way it’s denoted in the public. Advertising the price of a single bitcoin makes it sound much too expensive to the average retail investor, and deters investment in fractions of the coin that drive much of volume.

New Assets on the Rise

As more online trading companies and exchanges go with blockchain technology, clients have a more varied and comprehensive list of assets with new lucrative additions. This isn’t yet a problem, but could spell big trouble for bitcoin down the road. As new coins and tokens offer unique capabilities, bitcoin remains mostly one-dimensional in uses. Ethereum, for example, revolutionized blockchain with its implementation of smart contracts.

Newly-created cryptocurrencies are not hard to come by, and smart companies are increasingly choosing to mint their own digital coins rather than use existing ones. Naga Group AG, for example, is a digital asset trading innovator that has recently launched an exchange around their NGC token, where clients can trade currencies (fiat or crypto), commodities, stocks, indices and other virtual assets. The Naga platform makes all investable assets accessible to those with Naga Coin in a single comprehensive interface. This new cryptocurrency solution is the latest addition to the Naga’s trading ecosystem, which already includes SwipeStox, a platform for social investing across more than 700 assets. Other fintech companies are also looking towards blockchain to make assets more reachable to a wider audience, but Naga has a significant head start due to the infrastructure they’ve already built, and their stunning market achievements.

The team is already responsible for successful fintech products that serve hundreds of thousands of traders daily, and have a wildly successful IPO under their belts. Driven by industry experience and a stellar product, the company’s initial public offering was the Frankfurt Stock Exchange’s most successful in over 15 years.

Alongside industry experience with compliance and customer service, another unique component of Naga’s value proposition is the ability for game developers to list their in-game items on the exchange. This special API, called Switex, unlocks the true market demand for virtual property by itself, and as an investment vehicle as well. With 500% performance on their stock since being listed, Naga is looking to take their upcoming initial token sale to a new level and capitalize on their momentum.

ETFs (Exchange Traded Funds) consisting of groups of classic digitized assets such as commodities are also available on blockchain. Creative fund managers can develop algorithms for autonomously managed indices of real or crypto-assets. Platforms like Naga provide firm infrastructure and liquidity for such investment instruments, which could be integral in reducing the volatility of cryptocurrency.

Why Choose New Assets Over Bitcoin?

Despite Bitcoin’s popularity, the digital coin has run into some serious issues, most of which have to do with cybersecurity. First, Bitcoin wallets have been hacked before, with more than 2,600 cyber-attacks taking place before January 2016 alone. While blockchain technology is considered a more secure system to store data, it is not bulletproof just yet, and increasing popularity makes it a bigger target.

Second, new wallets can become vulnerable if old passwords are appropriated from backups. There exist exploits that drain old and new wallets both, instead of just emptying the old wallet into the new one. For users to avoid this situation, they must create a new account and a new address, to which the purchased bitcoins would be sent from the old wallet. This roundabout, bootstrapped way of using bitcoin has a long way to go before being able to support a real economy.

Though Bitcoin is considered untraceable because it is not connected to a bank account or credit card, this statement is not entirely true. A hacker can track the transactions history of the digital coin, which would allow him to connect identities to addresses. Once he manages to do that, he may be able to find whatever financial information is necessary through other databases.

Bitcoin and Its Competition

Bitcoin is a popular choice among crypto traders, but its rivals might be able to overthrow it sooner than some realize. Nowadays, anyone who has access to the internet can have his or her own coin, a fact supported by the sheer number of companies that now have their own digital coins. Furthermore, bitcoin is being pushed aside due to the widening variety of new assets that are now available online to. Some have even called Bitcoin a bubble that is just waiting to implode on itself. Regardless, unless the original cryptocurrency can finally find a way to justify its high valuation, it may soon be left in the lurch by its more useful and affordable competitors.

Author: Max Keiser and Stacy Herbert
Posted: November 16, 2017, 9:41 pm
It’s been widely noted that the U.S. film industry ably functions as a pro-global hegemony propaganda machine: even when the plot features evil rogue elements at work in a global-hegemony agency (Pentagon, CIA, NSA, etc.), the competence of the agency is

It’s been widely noted that the U.S. film industry ably functions as a pro-global hegemony propaganda machine: even when the plot features evil rogue elements at work in a global-hegemony agency (Pentagon, CIA, NSA, etc.), the competence of the agency is never in doubt, nor is the agency’s ability to rid itself of the evil rogue element.

Evil conspiracies are revealed and the Good Guys/Gals win.

This depiction of official competence and the moral righteousness of patriotic employees is not surprising; these agencies have long “cooperated” with Hollywood on many levels.

More troubling is the recent film-industry depiction of our dependence on superheroes and their superpowers to set things right. The benign view is that Hollywood is always seeking new billion-dollar source materials for multi-film franchises, and comic book heroes are tailor-made for franchises: not only can multiple films be made about individual superheroes, but the potential for mix-and-match combinations of superheroes is practically endless.

The less benign view is that the popularity of superhero movies reflects a deep insecurity and worrisome desire for fantasy saviors, as if mere mortals can no longer save themselves with their pitiful real-world powers.

Psychoanalyzing the zeitgeist of films has long been a popular parlor game: much has been written about the popularity of monster films (often featuring nuclear radiation as the trigger of the mayhem) in 1950s Japan, and the meaning of the American Noir films in the 1950s.

Correspondent C.D. recently submitted an interpretation of Hollywood’s superhero movies: is our collective fascination with superheroes reflecting a sense that we no longer have the power to save ourselves?

“One of the things I’ve been thinking about lately is the idea of TPTB (the Powers That Be) using entertainment, specifically movies, to keep the masses from rising up. Have you noticed how many modern movies use the archetype of the hero, but place that hero in opposition to some type of system (e.g. the Empire in Star Wars), or we have superheros. In both instances, there is a type of cathartic release for the audience’s frustrations with the current system. When the evil empire is defeated in the movie, people get an emotional release and they feel less motivated to deal with the real world empire.

When a superhero takes care of the problem, the audience is lulled into the pattern of thinking that someone else will take care of things. Also, often these superhero movies present the average Joe/Jane and the authorities as incompetents who need saving, which reinforces a feeling of helplessness to take on big powers. I’m sure others have come up with this type of analysis and I may be repeating what they have said, but it’s worth further consideration.”

Thank you, C.D. I don’t think it’s much of a stretch to say that many people sense their power within the system is extremely limited, as is their power to radically transform their own situation.

As for cheering for the ragtag rebels resisting the Empire–how many people feel divested from America, that is, they sense their “ownership” in the Empire’s wealth and power is near-zero? How many feel disempowered and disenfranchised?

It’s not much of a leap from social, political and financial divestiture to feeling that it takes superpowers to change one’s circumstances or save the system from disorder and destruction.

Are we incapable of saving ourselves from a self-destructive status quo owned and operated by the few at the expense of the many? If we felt empowered in daily life, would we be so enamored of superheroes constantly saving our world from destruction? If we felt the system still had the wherewithal to restore itself, would we need so many superheroes?

Or maybe it’s all just good clean (highly profitable) fun, or a sci-fi/fantasy updating of Greek Mythology. Still, that practically every other movie is another installment of the superhero franchise seems to beg for a look beneath the surface appeal of these escapist extravaganzas.

 

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Author: Max Keiser and Stacy Herbert
Posted: November 16, 2017, 5:14 pm
– Deepening Crisis In Hyper-inflationary Venezuela and Zimbabwe – Real inflation in Zimbabwe is 313 percent annually and 112 percent on a monthly basis – Venezuela’s new 100,000-bolivar note is worth less oday thehan USD 2.50 – Maduro announces plans

– Deepening Crisis In Hyper-inflationary Venezuela and Zimbabwe
– Real inflation in Zimbabwe is 313 percent annually and 112 percent on a monthly basis
– Venezuela’s new 100,000-bolivar note is worth less oday thehan USD 2.50
– Maduro announces plans to eliminate all physical cash
– Gold rises in response to ongoing crises

A military coup-de-grace in Zimbabwe and a bankrupt Venezuela. Both countries have extreme hyperinflation, citizens are starving and basic medical treatment is near impossible to find. These are the real world problems 47.5 million people are currently facing.

Presidents Robert Mugabe and Nicolas Maduro both deny the crises in their respective countries. For Maduro it is the media propagating false truths. In Zimbabwe the response to hyperinflation has been to declare it illegal.

Both countries are in the media spotlight after a significant week that has left one man powerless and another scrambling to restore faith in his bankrupt country.

Each country’s mess is thanks to mismanagement of resources and the central banking system. Citizens have had their rights almost decimated as the cash in the bank is worth increasingly less and fewer people are receiving income. Basic goods and services are near impossible to come by, with little sign of let-up.

The hyperinflation and economic situations in both the Latin American and south African country are a reminder of the damage caused by governments. Both Maduro and Mugabe have acted under the premise of serving the electorate. Citizens as a result have only suffered and seen their wealth diminish on a daily basis.

Both countries may seem a million miles away from the West in terms of political situation and cultures. However there is a strong lesson to be learnt. Savers should learn the need to protect their earnings and wealth from the manipulative decisions of governments and destructive monetary policies.

Click here to read full story on GoldCore.com.

 

Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

Essential Guide To Storing Gold In Singapore

Essential Guide to Tax Free Gold Sovereigns (UK)

Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

Author: Max Keiser and Stacy Herbert
Posted: November 16, 2017, 12:35 pm
One of the enduring mysteries in conventional economics (along with why wages for the bottom 95% have stagnated) is the recent decline in productivity gains (see chart). Since gains in productivity are the ultimate source of higher wages, these issues are

One of the enduring mysteries in conventional economics (along with why wages for the bottom 95% have stagnated) is the recent decline in productivity gains (see chart). Since gains in productivity are the ultimate source of higher wages, these issues are related. Simply put, advances in productivity are core to widespread prosperity.

But that’s only half the problem–productivity gains have flowed to the top of the income-wealth pyramid as financialization and cartels have replaced real-world wealth creation as the source of wealth-income.

Longtime correspondent Zeus Y. recently identified one cause of declining productivity and the narrowing of financial gains in the top: the quasi-cartels that dominate our economy profit by introducing and maintaining inefficiencies, not eliminating them. This runs counter to the accepted wisdom in classical free-market capitalism that generating efficiencies increases profits.

Here is Zeus’s explanation of this perverse dynamic:

“With Big Data and Big Profit dominating the products, services, and platforms of everything from iOS operating updates to delivery of healthcare, let’s make the plain-as-day argument: PROFIT and EXTRACTION MEANS PRODUCING INEFFICIENCIES, NOT ELIMINATING THEM.

They make their money by creating inefficiencies, bottlenecks, and gatekeepings that they can profit from. Every middleman function they can stick in their system is a potential profit source for them.

This was especially apparent to me in all the bugs I have experienced with Apple upgrades on my phone. I have to take the time to fix their screw-ups, which are designed to aggregate my data and usage to profit them. You see this with the manipulation of Facebook, creating a very black and white world that motivates and manipulates people to a froth with filters and algorithms that reinforce their biases.

This is not free and democratic access, but inefficient and narrow manipulation, cutting down on alternatives, possibilities, and better ways to think and do. What would a more efficient and democratic system look like, one where access, freedom, and, yes, real efficiencies (especially democratic and community efficiencies) would predominate?”

Thank you, Zeus. As Marx observed 150 years ago, the most profitable arrangement is monopoly, or failing that, a cartel that controls a specific market. Thus it is no surprise that Google, Facebook and Amazon are attempting to become quasi-monopolies in their respective spaces, just as Standard Oil gained a near-monopoly on the oil market in the early 20th century.

Corporations no longer seek a coercive old-style monopoly that violates anti-trust laws; today they eliminate competition by scaling up to dominate a sector. I covered this in Are Facebook and Google the New Colonial Powers?(September 18, 2017).

Once a corporation achieves dominance, it can impose profitable inefficiencies (for example, healthcare and higher education), force customers to perform labor that was once done by companies as part of their service (self-checkout, endless software updates), and profit from customer data with little fear of blowback: now that you need us, we can extract maximum profit from you without fear of regulation or competition.

Once customers are dependent (or addicted, in the case of opioids, mobile telephony, Facebook, etc.), then corporations can impose all sorts of burdens on their customers and demand annual ransom, a.k.a. software licensing and/or update fees.

Consider Microsoft’s dominance in operating systems and Office. Microsoft can sell buggy, insecure software, and require constant purchases of “upgraded” software that has lower functionality than the product it replaces.

The same dynamic is in play with Apple and Android OS in the mobile space. I was recently forced to upgrade my perfectly functional iPhone 4 because some apps only work now in the latest iOS. Meanwhile, Windows 10 is demanding I upgrade my BIOS so my laptop can accept the latest Win10 update. Needless to say, Microsoft offers zero assistance beyond the nag-box.

Needless but highly profitable forced-upgrades are the bread and butter of the tech industry. If we actually valued efficiency and productivity, our system would encourage durability, efficiency and reducing waste. Alas, all three of these worthy traits drastically reduce profits, so instead our maximizing profits by any means available system incentivizes planned obsolescence, inefficiencies controlled by cartels and endless waste of goods, services, customer time and resources.

The immense profitability of inefficiencies controlled by monopolies, quasi-monopolies and cartels is a key reason productivity has faltered and gains flow only to the top. There are other models for distributing software and services, for example, open-source software. There are other models of ownership, for example community ownership of resources and enterprises. But given the financial and political dominance of cartels, these options have been neutered or marginalized. 

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Author: Max Keiser and Stacy Herbert
Posted: November 15, 2017, 6:00 pm

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