Either Reverse All the Perverse Incentives or the System Will Implode

I hope it’s not a great shock to discover all the incentives in our status quo are perverse: those who rig the financial system while creating zero real value, jobs, goods or services reap all the big profits; those who take near-zero responsibility for their own health are subsidized by those who take responsibility for their own health; those who try to start enterprises and hire workers are saddled with endless regulations, junk fees and taxes while those who game the system to get welfare (household or corporate) skim the cream for doing nothing for their community or for the nation.

Systems in which all the incentives are perverse implode under their own weight. Those who struggle to pay the mounting costs of Imperial Over-Reach, crony-capitalism and all the skimmers and scammers eventually go bankrupt or quit in disgust, while the army of state dependents and cronies explodes higher.

It has taken decades for the incentives to become so perverse, so we no longer notice the perversity or the pathological consequences.

High-frequency traders and financiers with the ready ear of well-paid political lackeys, stooges, toadies and sycophants run never-lose skimming operations and pay lower tax rates than self-employed and small business owners.

Corporations have increased their share prices not by earning more money by producing more goods and services but by borrowing cheap money from the Federal Reserve and buying back outstanding shares.

Corporations pay less tax if they move production overseas and keep their profits in other countries.

If I wreck one vehicle after another due to reckless irresponsibility, what happens to my insurance premiums? They skyrocket, of course, reflecting the higher risks that result from my behavior and poor choices. Nobody thinks safe drivers should subsidize irresponsible drivers.

But if I wreck my health by recklessly pursuing risky behaviors, I pay the same as people who are careful “drivers” of their health. What sort of incentives does this system generate?

If I want to buy an over-priced home, the system is loaded with incentives to encourage that potentially poor financial decision. But if I want to launch a small enterprise, the incentives are all perverse: steep upfront fees, taxes from the first dollar, and in many cases, fees and taxes on revenues, regardless of whether I am making a profit or losing my shirt.

Corporate profits have soared as financialization and rigging the system have paid much higher returns than risking capital in new goods and services.

The incentives for home ownership have turned the bottom 90% into debt-serfs in servitude to banks while the top 5% own income-producing assets and businesses.

Larded with the most perverse incentives possible, the U.S. healthcare system in the final stages of maximum costs, just before it implodes:

It’s not hard to design positive incentives. For example:

1. Make preventative care essentially free to everyone ($5 co-pay) but weight the risks and costs created by irresponsible behaviors that ruin health. Reward those who take responsibility for their health by reducing the premiums they pay.

2. Tax all profits on securities held less than a day at 95%. Raise corporate taxes generated by financial activities to 50%, and lower the corporate tax rate on profits earned from producing domestic goods and services to zero.

3. Lower the tax for the first $25,000 earned by small enterprises to zero. Limit total government fees to 5% of revenues for all businesses up to $10 million in annual revenues.

4. Phase out the mortgage interest deduction. Limit mortgage interest deductions to the first $100,000 of mortgage debt.

5. Eliminate the personal income tax (and the need to file a return) for every household with income of $100,000 or less.

6. Automatically sunset every government regulation. Make city, county, state and federal governments renew every regulation every few years via a majority vote or it vanishes from the law books.

7. Make every politician wear a NASCAR-style jacket plastered with the names and logos of their corporate, union and financier contributors. The California Initiative to make this a reality is seeking signatures of registered California voters. Since politicians are owned, let’s make the ownership transparent.

8. Treat drug abuse and addiction as medical conditions rather than crimes.

9. Eliminate the Federal Reserve and its free-money for financiers perverse incentives for debt-serfdom and financial plundering.

10. Eliminate all student loans and debts. Make colleges compete for students on a cash-only basis.

As you no doubt noticed, every perverse incentive is the cash cow for a vested interest or cartel. That’s why the perverse incentives will endure until the system implodes under their pathological weight.

My new book is #3 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, $8.95 print edition)For more, please visit the book’s website.

Tagged with:

$20 Silver This Week?

If you own gold and silver coins or miners, I’ll be short and sweet, with 2 words.
GIFFEN GOOD… Read more ›

Tagged with: , , ,

[KR909] Keiser Report: ‘I’m from Goldman Sachs, and I’m here to help’

We discuss the nine most terrifying words in the English language: “I’m from Goldman Sachs, and I’m here to help.” They explore why it is that Goldman Sachs Bank USA is so eager to attract small-time depositors. In the second half, Max continues his interview with Jim Rickards about his new book, The New Case for Gold. They look at the SDR (the IMF’s Special Drawing Rights) and why it is that China is accumulating them.

Venezuela Resorts To Changing Time Itself To Survive Socialism As Food Shortages and Power Outages Worsen


When heavily socialist countries collapse, and they always do, it is always interesting to watch what they do near the end. Read more ›

Trump Leads Clinton 41% to 39% in Latest Rasmussen Survey

Screen Shot 2016-05-02 at 10.37.27 AM

Liberty Blitzkrieg readers won’t be the least bit surprised that Donald Trump continues to gain ground against Hillary Clinton in general election polling…

Read the rest here.

Tagged with: , , , , ,

Jon Matonis on meeting Satoshi

Here is Jon Matonis on meeting Satoshi Nakamoto.

I am Satoshi. Am I?

I am Satoshi. Am I?

An interesting chain of events as Matonis notes that it is Craig Steven Wright who first contacted him about bitcoin in 2010. And, in early 2011 perhaps late 2010, it was Matonis who reached out to us at Keiser Report to discuss. It was because of this that we were the first television news programme in the world to cover bitcoin for many years before the likes of our competitor, CNBC, first mentioned it.

May Day Silver Massacre 5 Years Later- This Year We Bathe in the Blood of the Shorts!

5 years ago today, the white metal was on a 5 month tear, which saw silver skyrocket from $18/oz to $49.73.  
Moments after Globex trading opened that Sunday evening however, the banksters unleashed a paper MASSACRE in silver of unprecedented proportions…

Silver was sent down the proverbial mine-shaft, plunging an epic $6 (13%) in under 10 ticks. 



If you’re like us, the moment was like the JFK assassination or 9/11.  You remember where you where, what you were doing, what things smelled like, and the ghastly, stomach wrenching horror as you clicked re-fresh repeatedly on the Kitco charts, unable to believe your eyes.  

Over the next several days, investors BTFD in major fashion, and brought silver within reaching distance of $50 again, but the psychological damange had been done- silver was no longer a shooting star to the upside, and the algos flipped from BTFD to STFRallies. 

Gold wouldn’t begin its trip down the elevator shaft for several more months (the weekend S&P downgraded the US marked the top for gold), but it was all over for silver’s move.

The selling began, and gold and silver endured 5 brutal years of relentless bankster smashes. 

Analysts and pundits called for bottoms repeatedly.  Silver guru David Morgan infamously stated silver would not trade below $30.  It did…and even half of that number didn’t stop the plunge. 

The Doc even stuck his neck out in December of 2013, stating that he believed the bottom would be made within the next 10 trading days, with gold trading in the $1200’s and silver with a $17 handle. Read more ›

Tagged with: ,

Fund Manager Has A Sore Neck From Looking Up at the Metals: “Something’s Changed!”

up2With Gold, Silver, & the Miners Continuing to Break Out to the Upside, PM Fund Manager Dave Kranzler Joined the Show, Discussing:

Tagged with: , , , , , ,

[TaM-508] Truth About Markets – 30 April 2016

We talk BHS, Hillsborough, NuitDebout and more.

[KR908] Keiser Report: ‘Making America Great Again’ Quest

We discuss the quest to ‘Make America Great Again’ as only two AAA rated companies are left standing and trade deals which are loaded with ‘all risk, no benefit’ threaten to annihilate the last vestiges of dignity, hope and greatness remaining. In the second half Max interviews Jim Rickards about his new book, The New Case for Gold. They destroy the old arguments against holding gold and look at the latest action in the gold market and what it portends for the future world order.

Why networks in US constantly interview Trump (there’s a contract clause tying ratings to bonuses).

MAD MAX KEISER – Behind the Scenes at London Real