Forget “Peak Oil” and “Peak Credit” … Are We On the Downslope of “Peak Intelligence”?


Washington’s Blog

Is Modern Life Making Us Dumber?

Scientists say that we have much smaller brains than our ancestors had 20,000 years ago … and we might have gotten stupider since agriculture became widespread.

Huffington Post reports that we’ve probably gotten dumber than even our Victorian ancestors:

A provocative new study suggests human intelligence is on the decline. In fact, it indicates that Westerners have lost 14 I.Q. points on average since the Victorian Era.


As for Dr. te Nijenhuis and colleagues, they analyzed the results of 14 intelligence studies conducted between 1884 to 2004, including one by Sir Francis Galton, an English anthropologist and a cousin of Charles Darwin. Each study gauged participants’ so-called visual reaction times — how long it took them to press a button in response to seeing a stimulus. Reaction time reflects a person’s mental processing speed, and so is considered an indication of general intelligence.


In the late 19th Century, visual reaction times averaged around 194 milliseconds, the analysis showed. In 2004 that time had grown to 275 milliseconds. Even though the machine gauging reaction time in the late 19th Century was less sophisticated than that used in recent years, Dr. te Nijenhuis told The Huffington Post that the old data is directly comparable to modern data.

Other research has suggested an apparent rise in I.Q. scores since the 1940s, a phenomenon known as the Flynn Effect. But Dr. te Nijenhuis suggested the Flynn Effect reflects the influence of environmental factors — such as better education, hygiene and nutrition — and may mask the true decline in genetically inherited intelligence in the Western world.

This new research was published in the April 13 issue of Intelligence.

The Daily Mail notes that we’ve gotten dumber since the 1950s:

Richard Lynn, a psychologist at the University of Ulster, calculated the decline in humans’ genetic potential.

He used data on average IQs around the world in 1950 and 2000 to discover that our collective intelligence has dropped by one IQ point.

Dr Lynn predicts that if this trend continues, we could lose another 1.3 IQ points by 2050.

There are several theories for why we are getting dumber, including the following:

(1) Toxic chemicals in the environment can reduce intelligence. Examples include flame retardant, lead (found in many lipsticks), certain pesticides (and see this and this),  fluoride (more) and radiation (radiation can reduce brain size, and “Many epidemiologic studies show that extremely low doses of radiation increase the incidence of  … diminished intelligence”).

Modern man is surrounded by toxic chemicals …

(2) Humans evolved to eat a lot of Omega 3s:

Wild game animals have much higher levels of essential Omega 3 fatty acids than domesticated animals. Indeed, leading nutritionists say that humans evolved to consume a lot of Omega 3 fatty acids in the wild game and fish which they ate (more), and that a low Omega 3 diet is a very new trend within the last 100 years or so.

In other words, while omega 3s have just now been discovered by modern science, we evolved to get a lot of omega 3s … and if we just eat a modern, fast food diet without getting enough omega 3s, it can cause all sorts of health problems.

So something just discovered by science can be a central fuel which our bodies evolved to use.

Omega 3s – in turn – boost intelligence and help prevent cognitive decline.

(3) Similarly, Science Daily notes:

Exposure to specific bacteria in the environment, already believed to have antidepressant qualities, could increase learning behavior, according to research presented at the 110th General Meeting of the American Society for Microbiology in San Diego.

Mycobacterium vaccae is a natural soil bacterium which people likely ingest or breath in when they spend time in nature,” says Dorothy Matthews of The Sage Colleges in Troy, New York, who conducted the research with her colleague Susan Jenks.


“We found that mice that were fed live M. vaccae navigated the maze twice as fast and with less demonstrated anxiety behaviors as control mice,” says Matthews.

In a second experiment the bacteria were removed from the diet of the experimental mice and they were retested. While the mice ran the maze slower than they did when they were ingesting the bacteria, on average they were still faster than the controls.

Obviously, we don’t get in as much soil as our ancestors did.

(In addition, some bacteria in our gut greatly influence brain function. Most native cultures ate fermented foods containing healthy bacteria.)

(4) Exercise boosts intelligence … and our ancestors got a lot more exercise than we do!

“Even our most highly trained athletes pale in comparison to” farmers  7,000 years ago.

(5) In addition, high levels of cortisol – the chemical released when one is under continuous, unrelenting stress – and poverty can physically impair the brain and people’s ability to learn.

Hunter-gatherers had more leisure time – and a more playful attitude – than we do today.

(6) [For this and the next theory, we quote from HuffPost.] Dr. Jan te Nijenhuis points to the fact that women of high intelligence tend to have fewer children than do women of lower intelligence. This negative association between I.Q. and fertility has been demonstrated time and again in research over the last century.

(7) “The reduction in human intelligence … would have begun at the time that genetic selection became more relaxed,” Dr. Gerald Crabtree, professor of pathology and developmental biology at Stanford University, told The Huffington Post in an email. “I projected this occurred as our ancestors began to live in more supportive high density societies (cities) and had access to a steady supply of food. Both of these might have resulted from the invention of agriculture, which occurred about 5,000 to 12,000 years ago.”

Postscript:  Relaxing activities like meditation and prayer have been shown to increase brain mass and connectivity in certain areas of the brain.  And sex makes you smarter and causes brain growth.

Washington’s Blog

It Begins: Council On Foreign Relations Proposes That “Central Banks Should Hand Consumers Cash Directly”

Zero Hedge

… A broad-based tax cut, for example, accommodated by a program of open-market purchases to alleviate any tendency for interest rates to increase, would almost certainly be an effective stimulant to consumption and hence to prices. Even if households decided not to increase consumption but instead re-balanced their portfolios by using their extra cash to acquire real and financial assets, the resulting increase in asset values would lower the cost of capital and improve the balance sheet positions of potential borrowers. A money-financed tax cut is essentially equivalent to Milton Friedman’s famous “helicopter drop” of money

      – Ben Bernanke, Deflation: Making Sure “It” Doesn’t Happen Here, November 21, 2002

A year ago, when it became abundantly clear that all of the Fed’s attempts to boost the economy have failed, leading instead to a record divergence between the “1%” who were benefiting from the Fed’s aritficial inflation of financial assets, and everyone else (a topic that would become one of the most discussed issues of 2014) and with no help coming from a hopelessly broken Congress (who can forget the infamous plea by a desperate Wall Street lobby-funding recipient “Get to work Mr. Chariman”), we wrote that “Bernanke’s Helicopter Is Warming Up.”

The reasoning was very simple: in a country (and world) drowning with debt, there are only two options to extinguish said debt: inflate it away or default. Anything else is kicking the can while making the problem even worse. Because while the Fed has been successful at recreating the world’s biggest asset bubble (in history), it has failed to stimulate broad, “benign” demand-pull inflation as the trickle down effects of its “wealth effect” have failed to materialize 6 years after the launch of the Fed’s unconventional monetary policies.

In other words, a world stuck in the last phase before complete Keynesian collapse, had no choice but to gamble “all in” with the last and only bluff it had left before admitting the economic system it had labored under, one which has borrowed so extensively from the future to fund the present that there is no future left, has failed.

The only question left was when would the trial balloons for such monetary paradrops start to emerge.

We now know the answer, and it is today.

Moments ago a stunning article appearing in the “Foreign Affaird” publication of the influential and policy-setting Council of Foreign Relations, titled “Print Less but Transfer More: Why Central Banks Should Give Money Directly to the People.” 

In it we read the now conventional admission of failure by Keynesians, who however, unwilling to actually admit they have been wrong, urge the even more conventional solution: do more of the same that has lead to the current financial cataclysm, only in this case the authors advocate no longer pretending that the traditional monetary channels work but to, literally, paradrop money. To wit:

To some extent, low inflation reflects intense competition in an increasingly globalized economy. But it also occurs when people and businesses are too hesitant to spend their money, which keeps unemployment high and wage growth low. In the eurozone, inflation has recently dropped perilously close to zero. And some countries, such as Portugal and Spain, may already be experiencing deflation. At best, the current policies are not working; at worst, they will lead to further instability and prolonged stagnation.


Governments must do better. Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly. In practice, this policy could take the form of giving central banks the ability to hand their countries’ tax-paying households a certain amount of money. The government could distribute cash equally to all households or, even better, aim for the bottom 80 percent of households in terms of income. Targeting those who earn the least would have two primary benefits. For one thing, lower-income households are more prone to consume, so they would provide a greater boost to spending. For another, the policy would offset rising income inequality.

A third, and most important outcome, would be the one we have forecast from the beginning of this ridiculous central bank experiment: “hyperinflation” (which is not simply runaway inflation as it is often incorrectly designated –  it is outright evisceration of the prevailing monetary system), which has been avoided for now, but which is inevitable in a world in which only the wholesale destruction of the fiat reserve currency is the one option left to inflate away the debt overhang.

So without further ado, here is the first official trial balloon – the article that one day soon will be seen as the canary in the paradropmine, and the piece that will finally get the rotor of Bernanke’s, now Yellen’s infamous helicopter finally spinning. Highlights ours:

Print Less but Transfer More: Why Central Banks Should Give Money Directly to the People

From Foreign Affairs, by Mark Blyth and Eric Lonergan

In the decades following World War II, Japan’s economy grew so quickly and for so long that experts came to describe it as nothing short of miraculous. During the country’s last big boom, between 1986 and 1991, its economy expanded by nearly $1 trillion. But then, in a story with clear parallels for today, Japan’s asset bubble burst, and its markets went into a deep dive. Government debt ballooned, and annual growth slowed to less than one percent. By 1998, the economy was shrinking.

That December, a Princeton economics professor named Ben Bernanke argued that central bankers could still turn the country around. Japan was essentially suffering from a deficiency of demand: interest rates were already low, but consumers were not buying, firms were not borrowing, and investors were not betting. It was a self-fulfilling prophesy: pessimism about the economy was preventing a recovery. Bernanke argued that the Bank of Japan needed to act more aggressively and suggested it consider an unconventional approach: give Japanese households cash directly. Consumers could use the new windfalls to spend their way out of the recession, driving up demand and raising prices.

As Bernanke made clear, the concept was not new: in the 1930s, the British economist John Maynard Keynes proposed burying bottles of bank notes in old coal mines; once unearthed (like gold), the cash would create new wealth and spur spending. The conservative economist Milton Friedman also saw the appeal of direct money transfers, which he likened to dropping cash out of a helicopter. Japan never tried using them, however, and the country’s economy has never fully recovered. Between 1993 and 2003, Japan’s annual growth rates averaged less than one percent.

Today, most economists agree that like Japan in the late 1990s, the global economy is suffering from insufficient spending, a problem that stems from a larger failure of governance. Central banks, including the U.S. Federal Reserve, have taken aggressive action, consistently lowering interest rates such that today they hover near zero. They have also pumped trillions of dollars’ worth of new money into the financial system. Yet such policies have only fed a damaging cycle of booms and busts, warping incentives and distorting asset prices, and now economic growth is stagnating while inequality gets worse. It’s well past time, then, for U.S. policymakers — as well as their counterparts in other developed countries — to consider a version of Friedman’s helicopter drops. In the short term, such cash transfers could jump-start the economy. Over the long term, they could reduce dependence on the banking system for growth and reverse the trend of rising inequality. The transfers wouldn’t cause damaging inflation, and few doubt that they would work. The only real question is why no government has tried them.


In theory, governments can boost spending in two ways: through fiscal policies (such as lowering taxes or increasing government spending) or through monetary policies (such as reducing interest rates or increasing the money supply). But over the past few decades, policymakers in many countries have come to rely almost exclusively on the latter. The shift has occurred for a number of reasons. Particularly in the United States, partisan divides over fiscal policy have grown too wide to bridge, as the left and the right have waged bitter fights over whether to increase government spending or cut tax rates. More generally, tax rebates and stimulus packages tend to face greater political hurdles than monetary policy shifts. Presidents and prime ministers need approval from their legislatures to pass a budget; that takes time, and the resulting tax breaks and government investments often benefit powerful constituencies rather than the economy as a whole. Many central banks, by contrast, are politically independent and can cut interest rates with a single conference call. Moreover, there is simply no real consensus about how to use taxes or spending to efficiently stimulate the economy.

Steady growth from the late 1980s to the early years of this century seemed to vindicate this emphasis on monetary policy. The approach presented major drawbacks, however. Unlike fiscal policy, which directly affects spending, monetary policy operates in an indirect fashion. Low interest rates reduce the cost of borrowing and drive up the prices of stocks, bonds, and homes. But stimulating the economy in this way is expensive and inefficient, and can create dangerous bubbles — in real estate, for example — and encourage companies and households to take on dangerous levels of debt.

That is precisely what happened during Alan Greenspan’s tenure as Fed chair, from 1997 to 2006: Washington relied too heavily on monetary policy to increase spending. Commentators often blame Greenspan for sowing the seeds of the 2008 financial crisis by keeping interest rates too low during the early years of this century. But Greenspan’s approach was merely a reaction to Congress’ unwillingness to use its fiscal tools. Moreover, Greenspan was completely honest about what he was doing. In testimony to Congress in 2002, he explained how Fed policy was affecting ordinary Americans:

“Particularly important in buoying spending [are] the very low levels of mortgage interest rates, which [encourage] households to purchase homes, refinance debt and lower debt service burdens, and extract equity from homes to finance expenditures. Fixed mortgage rates remain at historically low levels and thus should continue to fuel reasonably strong housing demand and, through equity extraction, to support consumer spending as well.”

Of course, Greenspan’s model crashed and burned spectacularly when the housing market imploded in 2008. Yet nothing has really changed since then. The United States merely patched its financial sector back together and resumed the same policies that created 30 years of financial bubbles. Consider what Bernanke, who came out of the academy to serve as Greenspan’s successor, did with his policy of “quantitative easing,” through which the Fed increased the money supply by purchasing billions of dollars’ worth of mortgage-backed securities and government bonds. Bernanke aimed to boost stock and bond prices in the same way that Greenspan had lifted home values. Their ends were ultimately the same: to increase consumer spending.

The overall effects of Bernanke’s policies have also been similar to those of Greenspan’s. Higher asset prices have encouraged a modest recovery in spending, but at great risk to the financial system and at a huge cost to taxpayers. Yet other governments have still followed Bernanke’s lead. Japan’s central bank, for example, has tried to use its own policy of quantitative easing to lift its stock market. So far, however, Tokyo’s efforts have failed to counteract the country’s chronic underconsumption. In the eurozone, the European Central Bank has attempted to increase incentives for spending by making its interest rates negative, charging commercial banks 0.1 percent to deposit cash. But there is little evidence that this policy has increased spending.

China is already struggling to cope with the consequences of similar policies, which it adopted in the wake of the 2008 financial crisis. To keep the country’s economy afloat, Beijing aggressively cut interest rates and gave banks the green light to hand out an unprecedented number of loans. The results were a dramatic rise in asset prices and substantial new borrowing by individuals and financial firms, which led to dangerous instability. Chinese policymakers are now trying to sustain overall spending while reducing debt and making prices more stable. Like other governments, Beijing seems short on ideas about just how to do this. It doesn’t want to keep loosening monetary policy. But it hasn’t yet found a different way forward.

The broader global economy, meanwhile, may have already entered a bond bubble and could soon witness a stock bubble. Housing markets around the world, from Tel Aviv to Toronto, have overheated. Many in the private sector don’t want to take out any more loans; they believe their debt levels are already too high. That’s especially bad news for central bankers: when households and businesses refuse to rapidly increase their borrowing, monetary policy can’t do much to increase their spending. Over the past 15 years, the world’s major central banks have expanded their balance sheets by around $6 trillion, primarily through quantitative easing and other so-called liquidity operations. Yet in much of the developed world, inflation has barely budged.

To some extent, low inflation reflects intense competition in an increasingly globalized economy. But it also occurs when people and businesses are too hesitant to spend their money, which keeps unemployment high and wage growth low. In the eurozone, inflation has recently dropped perilously close to zero. And some countries, such as Portugal and Spain, may already be experiencing deflation. At best, the current policies are not working; at worst, they will lead to further instability and prolonged stagnation.


Governments must do better. Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly. In practice, this policy could take the form of giving central banks the ability to hand their countries’ tax-paying households a certain amount of money. The government could distribute cash equally to all households or, even better, aim for the bottom 80 percent of households in terms of income. Targeting those who earn the least would have two primary benefits. For one thing, lower-income households are more prone to consume, so they would provide a greater boost to spending. For another, the policy would offset rising income inequality.

Such an approach would represent the first significant innovation in monetary policy since the inception of central banking, yet it would not be a radical departure from the status quo. Most citizens already trust their central banks to manipulate interest rates. And rate changes are just as redistributive as cash transfers. When interest rates go down, for example, those borrowing at adjustable rates end up benefiting, whereas those who save — and thus depend more on interest income — lose out.

Most economists agree that cash transfers from a central bank would stimulate demand. But policymakers nonetheless continue to resist the notion. In a 2012 speech, Mervyn King, then governor of the Bank of England, argued that transfers technically counted as fiscal policy, which falls outside the purview of central bankers, a view that his Japanese counterpart, Haruhiko Kuroda, echoed this past March. Such arguments, however, are merely semantic. Distinctions between monetary and fiscal policies are a function of what governments ask their central banks to do. In other words, cash transfers would become a tool of monetary policy as soon as the banks began using them.

Other critics warn that such helicopter drops could cause inflation. The transfers, however, would be a flexible tool. Central bankers could ramp them up whenever they saw fit and raise interest rates to offset any inflationary effects, although they probably wouldn’t have to do the latter: in recent years, low inflation rates have proved remarkably resilient, even following round after round of quantitative easing. Three trends explain why. First, technological innovation has driven down consumer prices and globalization has kept wages from rising. Second, the recurring financial panics of the past few decades have encouraged many lower-income economies to increase savings — in the form of currency reserves — as a form of insurance. That means they have been spending far less than they could, starving their economies of investments in such areas as infrastructure and defense, which would provide employment and drive up prices. Finally, throughout the developed world, increased life expectancies have led some private citizens to focus on saving for the longer term (think Japan). As a result, middle-aged adults and the elderly have started spending less on goods and services. These structural roots of today’s low inflation will only strengthen in the coming years, as global competition intensifies, fears of financial crises persist, and populations in Europe and the United States continue to age. If anything, policymakers should be more worried about deflation, which is already troubling the eurozone.

There is no need, then, for central banks to abandon their traditional focus on keeping demand high and inflation on target. Cash transfers stand a better chance of achieving those goals than do interest-rate shifts and quantitative easing, and at a much lower cost. Because they are more efficient, helicopter drops would require the banks to print much less money. By depositing the funds directly into millions of individual accounts — spurring spending immediately — central bankers wouldn’t need to print quantities of money equivalent to 20 percent of GDP.

The transfers’ overall impact would depend on their so-called fiscal multiplier, which measures how much GDP would rise for every $100 transferred. In the United States, the tax rebates provided by the Economic Stimulus Act of 2008, which amounted to roughly one percent of GDP, can serve as a useful guide: they are estimated to have had a multiplier of around 1.3. That means that an infusion of cash equivalent to two percent of GDP would likely grow the economy by about 2.6 percent. Transfers on that scale — less than five percent of GDP — would probably suffice to generate economic growth.


Using cash transfers, central banks could boost spending without assuming the risks of keeping interest rates low. But transfers would only marginally address growing income inequality, another major threat to economic growth over the long term. In the past three decades, the wages of the bottom 40 percent of earners in developed countries have stagnated, while the very top earners have seen their incomes soar. The Bank of England estimates that the richest five percent of British households now own 40 percent of the total wealth of the United Kingdom — a phenomenon now common across the developed world.

To reduce the gap between rich and poor, the French economist Thomas Piketty and others have proposed a global tax on wealth. But such a policy would be impractical. For one thing, the wealthy would probably use their political influence and financial resources to oppose the tax or avoid paying it. Around $29 trillion in offshore assets already lies beyond the reach of state treasuries, and the new tax would only add to that pile. In addition, the majority of the people who would likely have to pay — the top ten percent of earners — are not all that rich. Typically, the majority of households in the highest income tax brackets are upper-middle class, not superwealthy. Further burdening this group would be a hard sell politically and, as France’s recent budget problems demonstrate, would yield little financial benefit. Finally, taxes on capital would discourage private investment and innovation.

There is another way: instead of trying to drag down the top, governments could boost the bottom. Central banks could issue debt and use the proceeds to invest in a global equity index, a bundle of diverse investments with a value that rises and falls with the market, which they could hold in sovereign wealth funds. The Bank of England, the European Central Bank, and the Federal Reserve already own assets in excess of 20 percent of their countries’ GDPs, so there is no reason why they could not invest those assets in global equities on behalf of their citizens. After around 15 years, the funds could distribute their equity holdings to the lowest-earning 80 percent of taxpayers. The payments could be made to tax-exempt individual savings accounts, and governments could place simple constraints on how the capital could be used.

For example, beneficiaries could be required to retain the funds as savings or to use them to finance their education, pay off debts, start a business, or invest in a home. Such restrictions would encourage the recipients to think of the transfers as investments in the future rather than as lottery winnings. The goal, moreover, would be to increase wealth at the bottom end of the income distribution over the long run, which would do much to lower inequality.

Best of all, the system would be self-financing. Most governments can now issue debt at a real interest rate of close to zero. If they raised capital that way or liquidated the assets they currently possess, they could enjoy a five percent real rate of return — a conservative estimate, given historical returns and current valuations. Thanks to the effect of compound interest, the profits from these funds could amount to around a 100 percent capital gain after just 15 years. Say a government issued debt equivalent to 20 percent of GDP at a real interest rate of zero and then invested the capital in an index of global equities. After 15 years, it could repay the debt generated and also transfer the excess capital to households. This is not alchemy. It’s a policy that would make the so-called equity risk premium — the excess return that investors receive in exchange for putting their capital at risk — work for everyone.


As things currently stand, the prevailing monetary policies have gone almost completely unchallenged, with the exception of proposals by Keynesian economists such as Lawrence Summers and Paul Krugman, who have called for government-financed spending on infrastructure and research. Such investments, the reasoning goes, would create jobs while making the United States more competitive. And now seems like the perfect time to raise the funds to pay for such work: governments can borrow for ten years at real interest rates of close to zero.

The problem with these proposals is that infrastructure spending takes too long to revive an ailing economy. In the United Kingdom, for example, policymakers have taken years to reach an agreement on building the high-speed rail project known as HS2 and an equally long time to settle on a plan to add a third runway at London’s Heathrow Airport. Such large, long-term investments are needed. But they shouldn’t be rushed. Just ask Berliners about the unnecessary new airport that the German government is building for over $5 billion, and which is now some five years behind schedule. Governments should thus continue to invest in infrastructure and research, but when facing insufficient demand, they should tackle the spending problem quickly and directly.

If cash transfers represent such a sure thing, then why has no one tried them? The answer, in part, comes down to an accident of history: central banks were not designed to manage spending. The first central banks, many of which were founded in the late nineteenth century, were designed to carry out a few basic functions: issue currency, provide liquidity to the government bond market, and mitigate banking panics. They mainly engaged in so-called open-market operations — essentially, the purchase and sale of government bonds — which provided banks with liquidity and determined the rate of interest in money markets. Quantitative easing, the latest variant of that bond-buying function, proved capable of stabilizing money markets in 2009, but at too high a cost considering what little growth it achieved.

A second factor explaining the persistence of the old way of doing business involves central banks’ balance sheets. Conventional accounting treats money — bank notes and reserves — as a liability. So if one of these banks were to issue cash transfers in excess of its assets, it could technically have a negative net worth. Yet it makes no sense to worry about the solvency of central banks: after all, they can always print  more money.

The most powerful sources of resistance to cash transfers are political and ideological. In the United States, for example, the Fed is extremely resistant to legislative changes affecting monetary policy for fear of congressional actions that would limit its freedom of action in a future crisis (such as preventing it from bailing out foreign banks). Moreover, many American conservatives consider cash transfers to be socialist handouts. In Europe, which one might think would provide more fertile ground for such transfers, the German fear of inflation that led the European Central Bank to hike rates in 2011, in the middle of the greatest recession since the 1930s, suggests that ideological resistance can be found there, too.

Those who don’t like the idea of cash giveaways, however, should imagine that poor households received an unanticipated inheritance or tax rebate. An inheritance is a wealth transfer that has not been earned by the recipient, and its timing and amount lie outside the beneficiary’s control. Although the gift may come from a family member, in financial terms, it’s the same as a direct money transfer from the government. Poor people, of course, rarely have rich relatives and so rarely get inheritances — but under the plan being proposed here, they would, every time it looked as though their country was at risk of entering a recession.

Unless one subscribes to the view that recessions are either therapeutic or deserved, there is no reason governments should not try to end them if they can, and cash transfers are a uniquely effective way of doing so. For one thing, they would quickly increase spending, and central banks could implement them instantaneously, unlike infrastructure spending or changes to the tax code, which typically require legislation. And in contrast to interest-rate cuts, cash transfers would affect demand directly, without the side effects of distorting financial markets and asset prices. They would also would help address inequality — without skinning the rich.

Ideology aside, the main barriers to implementing this policy are surmountable. And the time is long past for this kind of innovation. Central banks are now trying to run twenty-first-century economies with a set of policy tools invented over a century ago. By relying too heavily on those tactics, they have ended up embracing policies with perverse consequences and poor payoffs. All it will take to change course is the courage, brains, and leadership to try something new.

Zero Hedge

Monsanto’s Worst Nightmare Coming True: The Rise of GMO Labeling

Natural Society
by Christina Sarich

gmo label field match 263x164 Monsanto’s Worst Nightmare Coming True: The Rise of GMO LabelingActivists against GMOs just might take down the biotech giants after all. GMO labeling could soon be a sweet reality.

Last week, Colorado broke a new record by bringing 16,950 signatures to a GMO labeling campaign for fall’s election, more than double the qualifying signatures needed to make sure that GMO labeling is on the ballot. This huge message to Monsanto accompanies a similar campaign in Oregon, all while the biotech industry awaits approval from the U.S. Department of Agriculture for more Agent Orange chemicals (2,4-D) to be used where glyphosate has failed.

Incredibly, the USDA is ignoring Americans as well as scientists who say that being carpet-bombed with 176 million pounds of toxic pesticides is not only unfathomable, but intolerable. No one wants these carcinogenic, birth-defect-causing toxins created by biotech companies and seed monopolizers anymore.

Finally, Monsanto has to fight GMO labeling fronts simultaneously in two different states. It is the company’s worst nightmare – come true. Surely, Monsanto was hoping people would give up and just back down as they continue to buy out Congress, the FDA, and even Supreme Court judges. But instead, it just fueled grassroots efforts all the more.

It is the best time, if ever, to stand up to Monsanto and Dow Chemical’s toxic products in the marketplace. You can speak out and join the fight. Oregon and California need your help, and so does the rest of the world fighting these GMO-pushers.

Dr. Bronner’s and Dr. Mercola are also getting behind the action with a 3 to 1 promise to match donations to fight Monsanto and GMO in the next week. You can use the link below to contribute.

Triple your impact before time runs out – we need to hear from you today!

Click Here to Donate

Despite Monsanto’s big pockets and constant threats – even threatening to sue the state of Vermont for instating a GMO labeling law, people are standing up. You don’t have to be an ‘expert,’ either. You can be a farmer that has watched your crops fail, or your animals suffer from eating GMO feed. You can be a concerned mom, or a citizen who simply wants to know what is in the food.

We all can gather together to make an urgent and unprecedented move against Monsanto. We’re gaining the much needed momentum we needed.

Already, Monsanto and their corporate front groups are panicking at the idea of having to face down active campaigns in TWO major states. The food movement is shaking their boots at what we have accomplished. Don’t’ give up yet!

Natural Society

Sunspot Trends Suggest Global Cooling Ahead

by Larry Bell

The cold winter of 2014 may be a precursor of things to come!


Some recent study results linking shifts in sunspot frequency and climate changes over thousands of years suggest that the past 18-year-long period of flat global temperatures may be a prelude to a much longer cooling cycle. 

sunspotsWhile causes behind these magnetic vacillations are uncertain, observable connections between solar and Earth climate patterns are clear. Reduced periods of sunspot activity correlate with cooler and very cold periods, with higher incidences producing opposite effects.

If a leading theory regarding why this occurs is correct, a weaker magnetic heliosphere surrounding our Solar System evidenced by low sunspot activity permits more cosmic rays from deep space to enter Earth’s protective magnetosphere and atmosphere. This increased flux of heavy electrons— or “muons” — striking the atmosphere produces increased cloud cover, in turn reflecting more solar radiation away from Earth and back to space. 

Since none of this has anything to do with human-caused atmospheric CO2 emissions, you can bet that the UN and its Intergovernmental Panel on Climate Change are very cool on the theory and its chilling political science implications. It follows that since both the Sun and climate began changing billions of years before the Industrial Revolution, neither conditions can be blamed on fossil-fueled smokestacks and SUVs. 

A notable IPCC critic is Dr. Fritz Vahrenholt, a former leader of Germany’s environmental movement who also headed the renewable energy division of the country’s second largest utility company. He recently co-authored a book with Dr. fritzSebastian Luning titled, The Cold Sun: Why the Climate Disaster Won’t Happen

Although the two don’t deny that CO2 has some warming influence, they believe the Sun plays a far greater role in the whole scheme of things.

Dr. Vahrenholt expects the world to get cooler in the future for three reasons: (1) we are or soon will be beginning on the downward flank of the Sun’s Gleissberg and Suess cycles; (2) solar activity during the next cycle may extend our current very weak one; and (3) ocean cycles will be in cooling phases over the next decades as well. 

A research team in Sweden which analyzed patterns of solar activity at the end of the last Ice Age around 20,000 – 10,000 years ago concluded that changes in solar activity and their influences on climate are nothing new, especially on a regional level. An analysis of trace elements in ice cores in Greenland and cave formations from China revealed that Sweden was then covered by a thick ice sheet that stretched all the way down to northern Germany. 

Water contained in those frozen ice caps resulted in sea levels which were more than 100 meters lower than at present.

Furthermore, the August 2014 study report’s co-author Dr. Raimund Muscheler, a lecturer in Quaternary Geology at Lund University, observes: “Reduced solar activity could lead to colder winters in Northern Europe. This is because the Sun’s UV radiation affects the atmospheric circulation. Interestingly, the same processes lead to warmer winters in Greenland, with greater snowfall and more storms.”

While the Sun was exceptionally active during the 20th century, many scientists believe that this condition is now coming to an end. Although the Royal Observatory of Belgium’s July average monthly sunspot count increased slightly for the sixth straight month despite a rare mid-month spotless day, solar Cycle 24 still remains to be the weakest in 100 years. 

It is predicted that increased counts may continue for a few more months before activity once again begins to fade. In fact, long-term indicators suggest that the next sunspot cycle will be much weaker than this one. If so, as with other extended periods of inactivity as occurred during Cycles 3, 4, and 5 which marked the beginning of a “Dalton Minimum,” we can expect the past 18 years of flat global temperatures to become significantly cooler.

Dr. Habibiullo Abdussamatov, head of the Russian Academy of Sciences Pulkovo Observatory in St. Petersburg and iceagedirector of the Russian segment of the International Space Station, predicts that we may soon witness the coming of a new Little Ice Age with a deep freeze lasting throughout this century. The last one, which began in the mid-16th century, killed millions in Europe. It mercifully ended soon after Washington’s troops suffered brutal winter temperatures at Valley Forge in 1777 and Napoleon’s bitterly cold 1812 retreat from Russia.

Whether present cooling continues or not, is there any reason at all to panic? No, and by the same token if, for any reason, global warming resumes as it probably will along with following intermittent cool-downs, let’s remember to be grateful for the good times we now have the great fortune to enjoy.


To Defeat the Islamic State

by Patrick J. Buchanan

The decisions that determined the fate of the great nations and empires that failed to survive the 20th century are well known.

For the Kaiser’s Germany, it was the “blank cheque” to Austria after Sarajevo. For Great Britain, the 1939 war guarantee to Poland. For the Third Reich, it was the June 1941 invasion of Russia. For the Empire of the Sun, the decision to attack Pearl Harbor.

And for the Soviet Empire, it was the invasion of Afghanistan.

As for the United States, historians may one day concur with the late Gen. Bill Odom. For the lone superpower to survive that century, the decision to invade and occupy Iraq was the most disastrous blunder in its history.

George W. Bush held out the promise of a peaceful Mesopotamian democracy as a magnet for all Arab nations. What we produced is a broken land awash in blood, a country severed by tribe and faith: a Kurdish north, Shia south and a Sunni west controlled by the savages of an “Islamic State” even al-Qaida hates and fears.

In Syria, where the United States has been aiding rebels to bring down Bashar Assad, that Islamic State now controls the northern and eastern half of the country. In Libya, where we delivered the air and missile strikes to smash Col. Gadhafi’s forces, Islamist fanatics have gained the upper hand in the civil war for control of that country.

In all three countries, the United States, which claimed to be battling dictatorship to bring democracy, helped to create the power vacuum these Islamists have moved to fill.

We are the enablers of the Islamic State.

How grave is the threat?

ISIS is a “direct threat to our homeland” says Rep. Peter King. “An existential threat” echoes Sen. Lindsey Graham, “I think of an American city in flames.”

The Islamic State “is beyond anything we’ve seen,” says Sec. Chuck Hagel, an “imminent threat to every interest we have.”

America is “in the most dangerous position we’ve ever been in,” says Sen. Jim Inhofe, “They’re crazy out there. And they are rapidly developing a method to blow up a major U.S. city.”

Undeniably, these are bloodthirsty religious fanatics who revel in beheadings and crucifixions and have exhibited battlefield bravery and skill.

But are 17,000 jihadi fighters in landlocked regions of Iraq and Syria really an imminent and mortal threat to an America with thousands of nuclear weapons and tens of thousands of missiles and bombs and the means to deliver them?

How grave is this crisis? Consider the correlation of forces.

Who are the vocal and visible friends and fighting allies of ISIS?

They are nonexistent.

The Turks, Saudis, Qataris and Kuwaitis who, stupidly, have been aiding ISIS in bringing down Bashar Assad and blowing a hole in the “Shia Crescent” of Tehran, Baghdad, Damascus and Hezbollah, have lately awakened to their idiocy and are cutting off aid to ISIS.

Moderate Sunnis detest ISIS for its barbarism and desecration of shrines. The Christians and Yazidis fear and loathe them. The Kurds, both the Syrian YPG and PKK, which broke open the exit route for the Yazidis from Mount Sinjar, and the peshmerga despise ISIS.

Lebanon’s army, Syria’s army, Hezbollah and Iran have been fighting ISIS with Russian assistance. Vladimir Putin himself warned us of the absurdity of our attacking Assad last year, arguing that we would be allying ourselves with the same terrorists who brought down the twin towers.

Was Putin not right?

Even al-Qaida and Hamas have repudiated ISIS.

We need no boots on the ground in Syria, for it is the presence of “Crusaders” on Islamic soil that is the principal recruiting tool of the jihadists.

What we need is diplomacy beyond the simple-minded, “Either you are with us or you are with the terrorists!” a diplomacy that invites old enemies into a coalition for a cause on which we all agree.

If Assad is willing to go in for the kill on ISIS, let us work out a truce and amnesty for the Free Syrian Army and call off that part of the rebellion, so Assad’s army can focus on killing ISIS.

George H. W. Bush made an ally of Hafez al-Assad in Desert Storm.

Why not make an ally of his son against ISIS?

We should next tell the Saudis, Qataris and Kuwaitis that any more aid to ISIS and they are on their own. We should inform the Turks that their continued membership in NATO is contingent upon sealing their border to ISIS volunteers and their assistance in eradicating the terrorist organization.

We should convey to Iran that an end to our cold war is possible if all attacks on the West stop and we work together to exterminate the Islamic State. Why would they not take the deal?

As for Abu Bakr al-Baghdadi, the self-proclaimed successor to Muhammad, my bet is that he closes out his brief career as caliph at an unscheduled meeting with Seal Team 6.

Ferguson-like Attack In Utah Escapes Media Notice; Race Bias Seen

Washington Times
By Valerie Richardson

On the surface, the cases appear nearly identical: Michael Brown and Dillon Taylor, two young, unarmed men with sketchy criminal pasts shot to death by police officers two days apart.

But while the world knows of the highly publicized situation involving 18-year-old Mr. Brown, whose Aug. 9 death in Ferguson, Missouri touched off violence, protests and an angry national debate, most people outside Utah have never heard of 20-year-old Mr. Taylor.

Critics say there’s a reason for the discrepancy in media coverage: race. Mr. Brown was black and the officer who shot him was white. Mr. Taylor wasn’t black — he’s been described as white and Hispanic — and the officer who shot him Aug. 11 outside a 7-Eleven in South Salt Lake wasn’t white.

The perceived double standard is fueling resentment and talk of double standards on conservative talk radio and social media, where the website Twitchy has compiled a list of Twitter comments asking why Mr. Brown’s death has been front-page news for weeks while Mr. Taylor’s was a footnote at best.

“Black cop kills unarmed white male #DillonTaylor in Utah,” says a Thursday post on Twitter by radio talk-show host Wayne Dupree, who is black. “#LiberalMedia can’t find [their] way to cover the story.”

Unarmed: Dillon Taylor, 20, who was shot and killed by a Salt Lake City police officer outside a convenience store. (Facebook)
Unarmed: Dillon Taylor, 20, who was shot and killed by a Salt Lake City police officer outside a convenience store. (Facebook)

A sarcastic Sunday tweet from Valerie said, “CNN Please! We need the name and home address of #DillonTaylor’s killer immediately. Why hasn’t he been arrested??!!!!!”

From Mark Andersen: “Black cop kills unarmed white male #DillonTaylor in Utah. Where is @TheRevAl, @msnbc and @CNN? Is @DOJgov there? Did @BarackObama speak?”

And this: “People need to be just as angry over #DillonTaylor murder by a blk officer in Utah. He wasn’t armed!” said NeeNee in a Friday post.

Critics of the disparity in coverage and outrage said that it is actually the Brown case that is the outlier: Statistics indicate that black-on-black crime is far more common than the case of a white-on-black crime. For homicide, for instance, the FBI in 2012 found that of the 2,648 black murder victims, some 2,412 were killed by fellow blacks and only 193 by whites. (Whites also were likely far more likely to be killed by fellow whites than by members of other races, according to the data.)

Talk-show host Rush Limbaugh blamed the discrepancy between the two cases on “the liberal world view” that portrays whites as oppressors and blacks as victims.

“[I]n the current climate in the United States, a black person can never be the oppressor, and a white person can never be a victim,” said Mr. Limbaugh on his national radio show last week.

Read More

As Argentina Peso Plummets To Record, BofA Warns Of Looming Economic Crisis

Zero Hedge

After spending time in Argentina, BofA’s Marcos Buscaglia is concerned… The perception of many locals is that the risks of an economic/currency crisis before year-end have increased significantly. This compares to a view they had before of a muddle-through till the 2015 presidential elections. Policy decision-making is ever more concentrated, and the administration has radicalized, but the severe economic downturn will change political incentives in 2015, in BofA’s view. With the official peso rate at record lows once again, the black-market Dolar-Blue tumbled to over 14/USD – a record low indicating dramatic devaluation ahead (which of course, sends ARS-denominated stocks surge to record highs).


Imagine the headlines on CNBC Argentina… think of the wealth effect…


as markets price in massive devaluation… 14.04 Black-market Peso…


A more recent snapshot of the “Dolar Blue” collapse:

Not pretty, and as BofA warns, Argentina: on a slippery slope?

We spent three days in Buenos Aires last week, meeting government officials, economists, political analysts, market participants, corporates and members of the opposition parties. Below are our main takeaways.

A presidential election that seems too far away

The most striking change compared with our previous visits is that now many of the locals we spoke to think it likely Argentina will undergo an economic/currency crisis before the transfer of power to a new administration in December 2015. Previously, the consensus seemed to be of a muddling through or a small contraction at the worst. In this sense, the presidential elections seem farther away now in economic terms.

What do we mean by economic/currency crisis? We expect the demand for pesos to fall and the demand for dollars to increase. The default will likely increase external restrictions as well as the fiscal deficit and monetary financing. This would mean higher inflation and pressure on the peso and on reserves. Deteriorating sentiment and a wider gap between the official and the parallel FX rates would dent investment, spending and hiring decisions even more. This will likely further hurt fiscal revenues, which will require more peso issuance, and so forth.

What would be the catalysts to trigger a downward fall? We think there are several potential negative news items in coming weeks, while the only potential positive – but surprising – news would be an unexpected remedy to the default.

The local media report a dispute between central bank (BCRA) President Fabrega and Finance Minister Kicillof. Fabrega’s resignation would spur demand for USD, in our view. In addition, unions are pushing for a reopening of wage negotiations. Wages are increasing slower than inflation, so a new round of wage hikes would not be surprising. It is reported a general strike will be called for this Thursday by dissident Peronists unions. In addition, events that cement the view that the absence from voluntary debt markets will be more protracted may destabilize demand for pesos.

In our view, the social situation seems precarious, and the many we spoke to did not rule out additional social conflicts toward year-end. December has been turbulent in recent years. In 2013, amid widespread electricity cuts and a police strike, there were lootings in many provinces. The social situation has not improved since then: employment has dropped and disposable income is probably falling at low double digits yoy at this point.

External conditions tightened

External conditions have not only tightened due to lower expected financing from abroad in coming months, but also because export prices have dropped sharply and because farmers are restricting grain exports. By our estimates, farmers exported about $520mn less in the four weeks after the default compared to before the default.


On top of this, grain exports are likely to drop next year. Since May/June, soybean, wheat and corn prices have dropped by 20%. At the current international prices and the current exchange rate, planting wheat and corn is not profitable in many areas, according to some locals we met. If there is no sufficient weakening of the peso in coming weeks, the harvest may contract in 2015 compared to in 2014. [ZH: Which would be devastating for Gartman's short Grains trade]

Central bank started moving, where will it end?

BCRA started allowing the peso to weaken, sending it from 8.28 to 8.40 per USD last week, not surprisingly during the first week in which it showed a decline in reserves. In a country where locals compare their ex-ante expected return from peso term deposits with the expected weakening of the peso, the move made clear that returns from term deposits were negative once measured in dollars. In sum, we think the small moves made by the BCRA increase the demand for USD rather than reduce it. This happened in December 2013/January 2014. As a result, pressure for a larger devaluation likely will increase after this move. We think that BCRA will resist a larger FX move as much as possible, but it may have difficulty avoiding a larger devaluation if reserves keep falling.

It takes only two to tango

Local political analysts characterize the current government’s decision process as highly centralized in Cristina Kirchner, with an increased access to her by Kicillof over other members of the administration. Moreover, they believe the government actions in the pari passu case should be understood in political rather than economic terms. According to this view, Cristina Kirchner does not have a candidate for the 2015 presidential elections, so they believe she is more concerned about her legacy than about the elections. Right or wrong, their view is that by fighting the holdouts, she thinks she gains more for her future political career than by giving up to holdouts.

Negotiations with holdouts in 2015 are still feasible

The many we we met expect the government will be able to pass the bill to implement local payment of Exchange Bonds (EB) and to offer a voluntary swap into local law. Most opposition members said they will not vote in favor of the bill, so the real question is whether the government can keep its rank and file united. Although there seem to be some cracks in the government coalition, the combination of electoral rules and fiscal distribution rules makes representatives dependent on the national government, so are unlikely to block this bill.

There is some disagreement among local economists and political analysts over whether the government will be ready to negotiate with holdouts in January once the Right Upon Future Offers (RUFO) clause expires. The RUFO is not the only impediment to negotiations. It seems local laws and the will to negotiate with all holdouts simultaneously – and not just with the plaintiffs of the pari passu case – also weigh on the government’s decisions. We are in the group that believes that the pressure from slumping activity will make the chances of some negotiations with holdouts more feasible in 2015, but these may take the form of a new offer to all holdouts rather than staying with the plaintiffs of the pari passu case.

Massa and Macri on the rise

Many locals believe that Argentina’s economic difficulties will be negative for Daniel Scioli’s chances of carrying the presidential elections. This is in stark contrast with our April 2014 visit amid the adjustments and negotiations with creditors, when Scioli was the favorite. Some recent polls show Mauricio Macri and Sergio Massa may have gained ground against Scioli.

Zero Hedge