Overwhelmed Episcopalian

Today … why some of the smartest guys in finance are total morons. But first a report from the Rio Carnaval, where we spent last weekend.

A plumber would probably like it. A psychiatrist might say it is normal. And maybe a Roman Catholic could handle it. But there were too many quivering buttocks for an Episcopalian.

There must have been 10,000 of them – sweating … shaking … twerking … and vibrating – in the Sambadrome on Saturday night.

The costumes were as unrestrained, immodest and over-the-top as you might imagine. The idea seemed to be to attach as many sequins and feathers as possible. And almost everywhere, amid the gaud and glitz of the getup, were the shimmering cheeks.



Photo via unlike.net


Not Just Any Night Out …

As we made our way to the Sambadrome, we began to suspect that this was not going to be just like any other night out. Crowds filled the streets and sidewalks all over town. One young man was retching on the curb. A young woman had passed out; her friends were slapping her to try to get her back to consciousness. The heat? The alcohol? The excitement?

It could have been anything; several times during the evening we felt like swooning too. A little farther on, another man was being loaded onto a stretcher – ailment unknown. And on a back street outside the stadium, two women had gotten into a fight – cause likewise unknown.

We were in the elite section of the Sambadrome. Our fellow spectators looked a bit like the crowd you’d find at one of Baltimore’s slick eateries in Camden – young, professional, good-looking. The men looked as though they might be stockbrokers during the week. The women might have been models. Sleek, attractive… some trophies, many still competing.

Scarcely had we arrived when the music began. We missed the bombing of Dresden and the collapse of the World Trade Center. But we caught Carnaval! The decibel level must have been about the same.


decibel scaleVarious decibel levels: 140 dB is considered the pain threshold. The decibel scale is logarithmic. A change in power by a factor of 10 corresponds to a 10 dB change in its level – click to enlarge.


Pounding Drums … Pounding Heads

Waiters circulated with trays of drinks. They were determined to give you one, whether you wanted it or not. The idea seemed to be to increase the noise and inebriation level throughout the night. No one should wake the next day without thinking he had a good time the night before. He had the pounding head to prove it! The parade took a long time to reach us. And then… wowee! Each outfit was more fantastical than the one that preceded it. And that one had been more daring than its predecessor. One after the other they came – in groups of 50… 100… 1,000…

The music was so loud our eardrums almost burst. The drummers pounded out an unrelenting rhythm… sparing not a beat… nor granting a moment of quiet. And so it went on – hour after hour… from 9 p.m. until 6 a.m. By then, your editor was spent. He had had enough. His job is to watch, to look and to report to you. And besides, he can only take the sight of so many buttocks in a single night.


Election of the 2015 Samba queen and “King Momo”, who reigns over Rio for five days during Carnival.


No Limits

But let’s return to our beat: the world of finance. We’ll come back to the Sambadrome in a minute….

Readers are still puzzled – as we are – by how our modern monetary system works and what it means. But one reader managed to put his finger on it:


So let me see if I understand this!

First the feds removed any real-money restrictions on their spending by voiding the convertibility of dollars to gold AND now they have removed any free market restrictions on spending (and selling debt) through an insidious process of selling their debt to themselves.

They have shifted the paradigm without telling anyone. I guess their message is: If you can’t figure it out for yourself, that’s too bad?”


That’s right. There is no longer any limit on the amount of “money” the central bank can create or “lend” to the government. We put those key words in quotation marks to indicate that there’s something fishy about them; it would take volumes to understand what they really mean.

That is the problem. The system is so novel and so nuanced that nobody really knows what is going on. Probably least of all the people who claim they have it under control. Yes, it’s a funny old world. And among the funniest things about it is that, circa 2015, the smarter you are, the more likely it is that you are a total moron.

Martin Wolf, Paul Krugman, Joseph Stieglitz, Larry Summers – “brilliant” men, we are told, every one of them – don’t have a clue. They are victims of their own brainpower – confident that they can figure it out as they go along… and adjust monetary policy to the needs of the moment.

Is that the way it works, dear reader? Can you just make it up as you go along, reacting first to one event, then to another? We don’t think so. What happens is that one conceit leads to another. One reckless move requires another to rescue it. You are like Napoleon on his way to Moscow… Gideon Gono on his way to hyperinflation… or a wayward husband on his way to a noonday tryst.

The first indiscretion seemed pardonable. But then you are trapped. You would prefer that it were different. You’d like to back up. You’d like to take a different course. But it is too late. “Under the circumstances,” you do what you have to do. Finally, you find yourself in Hell.


high IQ morons-2A collection self-appointed “policy advisors”, all of whom are typical examples of today’s viciously statist pro-interventionist intellectuals, i.e., men who firmly believe in the fallacy of central economic planning. This mainly entails a combination of deficit spending and money printing, as well as taxing and regulating everything to death that as much as twitches (since capitalism is held to be “bad”). From left to right: Larry Summers, Martin Wolf, Thomas Piketty, Paul Krugman and Joseph Stiglitz. We’re not quite sure who the young man in the lower left-hand corner is, but he looks like a very promising addition to this circle of high IQ morons.


The Super Bowl of Samba

Back in the Sambadrome …

The costumes – with the brightest colors possible and the most elaborate getups that the faveleiros could imagine – sparkle as the marchers made their way down the street.

The samba clubs of Rio organize the parade. The first one we saw in action was the Inocentes. It included hundreds of dancers… dozens of drummers… and five enormous floats that must have taken many months of careful preparation.

Two of the floats had giant effigies of musicians playing the guitar. There must have been a story behind them. But we weren’t able to decipher it. All we could tell was that four groups of dancers – about 100 in each group – were meant to represent the four seasons. One float seemed to be oriented toward Christmas, with presents wrapped up in silver foil.

Where did this idea come from? Brazil has no snow. And its Christmas comes in midsummer, not in the colder season.

“This is like the Super Bowl for these samba clubs,” explained an informant.

“These clubs are mostly in poor neighborhoods. They save their money to get their costumes. They do much of the work themselves, preparing all year long to put on this spectacle.

“And they’re competing. Their performance is judged. And if they get a good score, they continue on to the finals.”

“Overdoing it” is not something that troubles the samba clubs of Rio. No costume is too outrageous. No one loses points for shaking his or her booty too vigorously… or for dancing too enthusiastically.

The costumes differ wildly in color and texture, theme and motif. But almost all share a common element. Behind the shimmering sun of sequins were two moons, shaking so violently we were afraid they might fly out of orbit.


2015 Carnival Queen Clara Cristina Paixao in action


303274-carnival2013 Queen of the Carnival, Evelyn Bastos, from Rio’s oldest Samba school Mangueira. She is reportedly “100% natural” – contrary to many of her silicon-reinforced rivals.

Photo credit: Antonio Scorza / AFP


The above article is taken from the Diary of a Rogue Economist originally written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.




Emigrate While You Can... Learn More




Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.


Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA


One Response to “Clever Morons …”

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • Do You Hear a Bell Ringing?
      Do You Hear a Bell Ringing? The sun shines brightest across the North American continent as we enter summer’s dog days.  Cold sweet lemonade is the refreshment of choice at ballparks and swimming holes alike.  Many people drink it after cutting the grass, or whenever else a respite from the heat and some thirst quenching satisfaction is needed.   Regardless of whether companies were able to “beat estimates” (which as often happens, were revised lower just before the...
  • Sovereign Bonds – Stretched to the Limit
    Anti-Vigilantes We dimly remember when Japanese government debt traded at a negative yield to maturity for the very first time. This happened at some point in the late 1990s or early 2000ds in secondary market trading (it was probably a shorter maturity than the 10-year JGB) and was considered quite a curiosity. If memory serves, it happened on just one brief occasion and it was widely held at the time that the absurd situation of a bond buyer accepting a certain loss if the bonds were...
  • The Motte and Baley Fallacy - Precious Metals Supply and Demand
      Spoofers vs. the Underlying Trend The price of gold fell seven bucks, but the price of silver was up $0.16. In other words, the gold-silver ratio did a little more reverting to that long-forgotten mean.   Launceston Castle in Cornwall, an example of a motte and baley fortification. The castle was built in 1067-1071 AD, either by the Count of Mortain (the half-brother of William the Conqueror) or Brian of Brittany. [PT] Photo credit: P. Vincent   Some story or...
  • Global Stock Markets: Danger Lies Directly Ahead
      A Global Pattern You are no doubt aware of the saying “sell in May and go away”. It is one of the best-known and oldest stock market truisms.   Mark Twain's famous saying about stock market speculation (the other one was “There are two times in a man's life when he should not speculate – when he cannot afford it, and when he can”).  From a seasonal perspective he was definitely right about September and October. [PT]   The saying is in fact justified...
  • Bond Yields in the Netherworld - Precious Metals Supply and Demand
      A Record Amount of Bonds with Negative Yields to Maturity Last week the price of gold went up $22, while the price of silver dropped ¢17. The big news last week was that the yield on all German government bond maturities is now negative. They are also all negative in Switzerland. And in Denmark, all maturities out to 20 years are negative. Interest rates are dropping rapidly in the US as well.   More than $14 trillion in bonds now trade at negative yields to maturity –...
  • Retail Holders Sell Their Gold - Precious Metals Supply and Demand
      A Myriad of Reasons to Buy Gold – But Small Holders are Selling Big moves occurred in the prices of the metals last week, with that of gold up $57 and silver $0.77. We have now reached a price of gold (if not silver) not seen since 2013, when it was on the way down. What is causing this sudden spike in price and renewed interest in gold?   A well-known depiction of investor emotions over a complete market cycle. Interestingly, it appears as though many retail gold holders...
  • Rising Stock Market Volatility – Another Warning Sign
      Bad Hair Days Are Back We recently discussed the many divergences between major US indexes, which led us to expect that a downturn in the stock market was close (see The Calm Before the Storm for details). Here is an update of the comparison chart we showed at the time:   The divergences between various indexes seem to be resolving as expected.   The next chart shows analogous divergences between the S&P 500 Index and two major foreign stock markets:   US...
  • Getting to a Special State of Ugly
    Suspicious Phrases There are certain phrases – like “trust me” or “I got this” – that should immediately provoke one’s suspicion.  When your slippery contractor tells you, “trust me, your kitchen renovation will be done before Christmas,” you should be wary.  There is no way it will be done before late spring.   USD-CNH (offshore yuan) exchange rate – the support/resistance level at 7 finally breaks amid escalating trade war rhetoric. [PT]   Or...
  • Interest Rate Watch and Bond Market Curiosities
    Things To Keep An Eye On Below is an overview of important US interest rates and yield curve spreads. In view of the sharp increase in stock market volatility, yields on government debt have continued to decline in a hurry. However, the flat to inverted yield curve has not yet begun to steep – which usually happens shortly before recessions and the associated bear markets begin.   2-year note yield, 3-month t-bill yield, 10-year note yield, 10-year/2-year yield spread,...
  • Bitcoin – From Greed to Fear
      A Noteworthy Sentiment Change Bitcoin and other cryptocurrencies have declined quite sharply in recent days. Here is an overnight snapshot of the daily chart:   Bitcoin corrects again...   It is difficult to gauge sentiment on BTC objectively, but there is a service that tries to do just that. According to its greed & fear barometer, the recent decline seems to have triggered quite a bit of apprehension:   The BTC sentiment measure of alternative.me has...
  • Writing on the Wall
    Not Adding Up One of the more disagreeable discrepancies of American life in the 21st century is the world according to Washington’s economic bureaus and the world as it actually is.  In short, things don’t add up.  What’s more, the propaganda is so far off the mark, it is downright insulting.   Coming down from the mountain with the latest data tablet... [PT]   The Bureau of Labor Statistics (BLS) reports an unemployment rate of just 3.7 percent.  The BLS also...

Support Acting Man

Austrian Theory and Investment


The Review Insider


Dog Blow

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts


Gold in USD:

[Most Recent Quotes from www.kitco.com]



Gold in EUR:

[Most Recent Quotes from www.kitco.com]



Silver in USD:

[Most Recent Quotes from www.kitco.com]



Platinum in USD:

[Most Recent Quotes from www.kitco.com]



USD - Index:

[Most Recent USD from www.kitco.com]


Mish Talk

Buy Silver Now!
Buy Gold Now!