Two Kinds Of Identity Politics

We often hear the term "identity politics" bandied about as a negative thing.  Certainly, the flavor we have seen in recent years, sometimes called by the nebulous catchall terms "woke" on the left and "based" on the right, has proven to be quite toxic.  At best, it tends to be a distraction from other issues.  Even Bernie Sanders has, years ago, criticized it, and rightly so, and predictably caught very much flak for that.  And both of the two corporate duopoly parties in the USA are guilty of their own brands of toxic identity politics, as their versions of "left" and "right" are really both two wings of the same bird.

But did you know that there are TWO kinds of identity politics?  According to Jonathan Haidt and Greg Lukianoff, the two flavors are 1) "common humanity identity politics", and 2) "common enemy identity politics".  And they are exactly what they sound like. The latter is the toxic and low-vibration kind we have seen in recent years, while the former is essentially what propelled the Civil Rights Movement, most notably Dr. Martin Luther King, Jr., along with some other mass movements.  That is, the former is the high road, while the latter is the low road.

Truly, there is really only one race:  the HUMAN race.  And we must never forget that, for we forget our common humanity at our own peril. 

Contrary to common enemy identity politics, life is NOT a zero-sum game.  Or at least, it certainly does not HAVE to be.  It is NOT inherently or automatically necessary for someone to lose for another person to win.  A positive-sum, win-win, mutually-beneficial world is certainly possible, and it even happens now to some extent in some cases.  But following such a virulent toxic ideology only guarantees that we all fall into a net NEGATIVE-sum game where we ALL lose to one degree or other, in a self-fulfilling prophecy.  Much like how Buckminster Fuller once noted that war and scarcity are really NOT inevitable in themselves, but rather a result of a self-fulfilling prophecy when men believe they are inevitable. 

As the band Seether once put it more poetically, "nothing grows in the desert when you covet the drought". Probably the best analogy there is for that.

Choose the common humanity version.  It will never let you down when done properly.  Because the only real common enemies in politics are oligarchy, tyranny, and ochlocracy.  That is, the three "bad forms of government" per Aristotle, the latter of which is "mob rule" or "tyranny of the majority", merely the other side of the very same evil coin as oligarchy and tyranny of the minority.  All three of which, interestingly enough, are effectively promoted by the toxic, common enemy version of identity politics.  And Big Tech of course enables and literally profits from it all.  Currently, there are really only two sides:  oligarchy versus humanity.  All the rest of politics is a mere sideshow.  We must not let wokeness, hate, tribalism, and all of their attendant infighting distract us from that.  In other words, choose humanity. 

How To Defuse The QUADRILLION Dollar Derivatives Bubble (Part Deux)

Last year we discussed the QUADRILLION dollar derivatives bubble and the risks that come with it.  Well, guess what?  That bubble is still there, just WAITING to pop, and thus drag down the rest of the economy with it as well due to is massive size and interconnectedness.  And it has only grown dramatically since the last major financial crisis and Great Recession in 2007-2009.  

Ellen Brown recently wrote another excellent article about what to do about it.  She notes how this dangerous derivatives bubble was no accident, but came into being via deliberate deregulation that specially privileged derivatives.  Repealing the Glass-Steagall Act in 1999 was only the start.  In 2000, the Commodity Futures Modernization Act (CFMA) not only removed derivatives from any sort of federal oversight, but it also declared them be legally enforceable, a privilege that NO other bets have ever historically enjoyed.  (Let's face it, derivatives are literally nothing more than glorified bets.)  Then in 2005, the Bankruptcy Act gave derivatives extra special "safe harbor" protections as well.  And after the Great Financial Crisis, a crisis in large part caused by wanton derivatives speculation, what law was passed to pretend to tame this out of control casino? You guessed it:  the Dodd-Frank Act of 2010, a band-aid which only further entrenched the fundamental derivatives problem that was left to fester. 

That is, fully legalized and unregulated gambling with other people's money on a truly gargantuan scale by the ultra-rich, using very questionable and opaque financial instruments, all backed by special privilege and protection of the law, is still very much a thing, alas.  And like any casino, the house (the oligarchy) always wins.  Privatize the profits, socialize the losses.  Heads, they win, tails, We the People lose.

Talk about moral hazard! 

Clearly, repealing Gramm-Leach-Bliley (the 1999 law that repealed Glass-Steagall, thus reinstating the latter), repealing the CFMA especially, repealing the "safe harbor" protections in the Bankruptcy Act, and repealing Dodd-Frank should be the absolute highest priorities to defuse this massive ticking time bomb.  No doubt about that.  That is, we must regulate derivatives at LEAST as stringently as they were in the 20th century, if not more so.  Additionally, a modest financial transactions tax (say, 0.1% on all transactions) would also be a good idea as well.  The latter can alternatively be achieved by raising and expanding the current SEC Fee to include ALL financial instruments equally, including derivatives.

We should also jettison the largely inaccurate term "hedge fund" from our collective vocabulary as well.  They should really be called "speculation funds", since that is what they really are in practice.

Oh, and to the FERAL Reserve:  CUT INTEREST RATES YESTERDAY!  And stop Quantitative Tightening yesterday as well.  It is really playing with fire in the worst way right now.  KNOCK IT OFF.

The aforementioned items would be enough to defuse it in the near term, while the following items would be to clean up the damage and/or prevent it from happening again in the future:

• Ban the practice of "quote stuffing" and other practices of deliberate market manipulation.
• Ban stock buybacks by corporations.
• Going forward, ban any and all types of new and exotic derivatives that are not completely transparent.  Opaque derivatives based on sketchy underlying fundamentals should be considered fraud, plain and simple. 
• Absolutely NO more bailouts OR "bail-ins" of the banks ever again, period (but of course depositors should still be made whole per the FDIC, with no apologies to any ultra-purist libertarians or paleoconservatives).
• Implement "Quantitative Easing For (We The) People" (that is, with direct payments to individuals, not banks) as needed.
• Phase out the practice of "fractional reserve banking" by very gradually raising the reserve ratio requirement until it reaches 100%.
• Fully nationalize the largely privately-owned FERAL Reserve to make it truly FEDERAL for once.  And established state and local public banks as well, like North Dakota currently has.
• And last but not least, all banks that are "too big to fail" are really too big to exist, and should thus be either forcibly broken up, taxed heavily, or nationalized as public utilities.  YESTERDAY!

In the meantime, we all need to brace ourselves for a possible financial crisis and recession in the future.  It is highly unlikely that Congress will act in time, as they are largely bought and paid for by Wall Street and the big banks (who also largely own the FERAL Reserve as well).  But don't fall for the idea that we should withdraw all of our money now, as that would literally be a self-fulfilling prophecy (causing a bank run).  The FDIC guarantees the first $250,000 per depositor per bank, so unless you have more than that (and didn't put it in multiple banks like you should have), it does not make sense to do so.

So what are we waiting for?

Last Chance To Avoid Recession

Inflation is now effectively beaten.  Not only has it cooled significantly, but now the specter of deflation has recently been raised, and has already been seen in the prices of durable goods falling a bit recently.  Oil is also down as well, which has of course led to a recent drop in gasoline prices.  And this is in spite of the ongoing conflict in the Middle East, which otherwise would have raised oil prices, ceteris paribus, due to the resulting geopolitical instability and uncertainty. 

Deflation may sound like a good thing, especially after such a high inflationary episode, but if it persists, it can turn into a downward economic spiral that is far worse than inflation (think the Great Depression, or Japan's three decades of rolling deflation from the early 1990s until very recently).  It also amplifies the sting of debt, and with debt of all kinds at such stratospheric levels today, America needs that like a hole in the head.  Once such a spiral begins and sets in, it is very, very difficult to extricate from.  Not even QE can seem to end it (though giving such "helicopter money" directly to We the People might work). And deflation is, at best, very difficult to control.

So the FERAL Reserve really needs to cut interest significantly, and pause QT, yesterday, before they create a problem that is practically impossible to dislodge. And if that doesn't work, prepare to not only restart QE, but also implement "QE for the people" as well. say you weren't warned.

In other words, this is the LAST CHANCE to avoid recession or worse.  And there is always a lag of at least two quarters, so if they wait until the recession begins before they begin cutting rates, it would be too late, and would be like "pushing on a string".

That said, looks like the Fed decided to stop hiking interest rates, and signaled at least three interest rate cuts in 2024.  So now is the best time to put your money in a CD account to lock in the current rates.  But who knows when they will cut rates?