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Empire of Lies III: Ministry of Propaganda   (November 2, 2007)


You may have read that the U.S. once had a War Department. Scary, huh? But it's all OK now, because we don't have wars any more. We only have Police Actions, Overseas Deployments and Operation Defend Freedom. We do have a Defense Department, because we have to Defend Freedom when necessary. And when we Defend Freedom, we prefer to do so in somebody's else's country. So invading is Defense.

Welcome to the Ministry of Propaganda. Of course you won't find any sign proclaiming a building in Washington D.C. the Ministry of Propaganda, but the ministry exists in a decentralized fashion, reaching into every fiber of the government and the private sector.

Like the Devil, the MOP's most successful propaganda campaign is the one denying its own existence.



OK, you skeptics who actually believe your government tells the truth: take a look at this chart of how many of the "new jobs" reported each month by the BLS are figments of their imagination, created out of thin air by their bogus "birth-death model." (Thanks to The Big Picture blog for the chart and a detailed explanation of the birth-death model which I heartily recommend.)



Here is astute contributor Roger's comment:

Did you see the employment (+166K) jobs for October? Happy days are here again!

Statistically created jobs were ONLY 103K. So they may have found evidence that 63K bona fide jobs were created. And construction and financial services jobs grew, even with massive layoffs and firings in mortgage finance jobs.

Happy days are here again! Maybe I can get one of those statistically created jobs so I can get paid but not actually have to work!

/sarcasm off (My first job was shoveling this crap. Some things never change)

the BLS report
These completely bogus jobs reports are proof that propaganda is being willfully generated and passed off as "the truth." How would the stock market respond were "reality" presented instead of the Big Lie, i.e. 60,000 jobs were created, 90,000 less than required by population growth? Do you reckon the markets would be soaring on that report?

I have drawn inspiration today from two frequent contributors, Harun I. and Riley T. Here is Harun's commentary:

The Propaganda Ministry has waged a successful campaign. It has convinced people that apathy is concern, liabilities are assets, inflation doesn’t exist, debt is money and growth, peace is war, terror will be ended by war, and any news is good for stocks. The Prop Min has gotten people to accept that the only way to support soldiers is to keep them in harms way and to suggest otherwise is unpatriotic.

Apparently people also believe that recessions are evil, destruction of purchasing power creates a strong currency, discouraged workers are not unemployed, and that people in this country illegally are entitled to the rights and privileges of legal citizens. All but a few believe the Fed is both omnipotent and omniscient, and craven morons have Ph.D’s or Nobel Prizes so they must be smart and capable of governing effectively.

Now the Prop Min is working on getting us to accept that worthless assets are worth what ever mythical value assumed so long as the assets are never subjected to price discovery in an open market.

How do fundamentals have meaning in an environment where reality and truth have little or no value? How does one prosper and protect that prosperity?

Welcome to the world of the market technician.
And here is Riley's wry take:

This is your lucky day. Being the most powerful, I just appointed you The Prime Minister of the United States of America. I am also a financial genius and your economic advisor. How lucky for you.

The second day in office you call a meeting and ask me if the government has been lying to the public and if so why?

I respond, yes, oh great PM we are telling big lies. The reason is that all the paper in the world, money, stocks, bonds. etc., everything that represents a claim on an asset is really only worth about ten cents on the dollar.

If the Americans and other people of the world realized that they were broke, their pensions, homes, savings everything except their debts were worth nothing, the crap would hit the fan. This is a really big fan.

So, now you know the truth; what are you going to tell the public?

I was hoping we could collect a few more pay checks before we get impaled in the public square.
Here is frequent contributor Fastwater on phony statistics and the massively destructive insanity/euphoria they induce:

Another item that caught my attention was the BIG GDP number out today. That was odd. Could it be that the next leg down in the market is going to be chased by all 'good' news?

One thing's clear. The real concern of the FED is deflation, as in credit deflation. The inflation numbers are so out of touch as to have no meaning. But they really fear a credit collapse. With real inflation numbers, GDP growth has been negative forever. Myself? I still think we're going to see an implosion in credit markets. Maybe Market Ticker is right about capital flight. There's alot of bad debt. Still, you never know what the central bankers have up their sleeve. Where's the next bubble?

I mean, I can still remember how people perceived the dotcom runup. I didn't talk to alot of people about it at the time. I just cashed in my few 401k MOT shares after a triple. People were trying to tell me there was no end in sight. I knew better. The few people I talked to were doing really silly things, like this real estate bubble. Perceptions are skewed, just like in dotcom days. They couldn't stop buying! Then, they couldn't sell! It's the monkey with the hand in the trap around the nut. He can't let go of that nut! There's always another nut.
Astute contributor Ralph Y. submitted this W.H. Auden excerpt which perfectly captures the context which enables the Ministry of Propaganda to flourish:

Faces along the bar
Cling to their average day;
The lights must never go out,
The music must always play;
Lest we know where we are:
Lost in a haunted wood -
Children afraid of the dark
Who have never been happy or good.

(W.H. Auden)
Thank you, Harun, Riley, Fasterwater and Ralph for your thought-provoking contributions.

So how can we detect the subtle tentacles of the MOP? Easy: when it's all just a little too perfect or a little too pat. For instance:

1. When houses in your neightborhood are selling for 25% less than a year ago, but the headlines say housing prices are only down 4%.

2. When the stores are half-empty but GDP is rising at the fastest clip in years.

3. When the Fed says "core inflation" is 1.8% (i.e. near zero) when everything you buy is 10% - 20% more than just a few months ago.

4. When a veteran of the U.S. military runs for office, and suddenly his/her DoD file goes missing just as he/she is "swift-boated" i.e. smeared as a coward, liar, etc.

5. When a liar/thief runs for office, evidence substantiating his/her half-truths is either ignored or discredited.

6. When disturbing news is buried, i.e. only covered in the international media or buried deep in Bloomberg or page C-19 (near the obits)

7. When Big Lies are headlines ("Inflation Low") and skeptical views are placed in the last paragraph, i.e. the one no one will read--but the media can claim to have "covered the story."

As reported here October 31, NYSE Eliminates Trading Curbs Dating Back to 1987 (Bloomberg). Hmm. Why would the NYSE do this? And why was so little made of such a critical piece of financial news?

I submit that various Players are setting the stock market up for a sharp, breath-taking fall. Why? It's all just a tad too tidy: the Fed lowers interest rates, the GDP is booming, the credit crunch has disappeared from the headlines, as has the war in Iraq (oops, I mean Operation Defend Freedom). Every time short-sellers (those betting the market will fall) seem to have the upper hand, the market rallies huge, causing the shorts to cover (buy stocks).

Now the market has no curbs or collars to protect it from large, spine-tingling drops. Have markets become less volatile recently? No, they've become more volatile. Who would benefit from the erasing of such curbs? Players who've built huge short positions by selling into the recent set of ever-higher "rallies." Who will be shocked and surprised when the stock market suddenly plummets 1,000 points in a day? Not the Players; they'll be laughing at how stupid the people are, believing the shills and hacks spouting their mindless cheerleading on the Fox and CNBC propaganda outlets.

And what will the Ministry of Propaganda be pushing the day after that 1,000 point drop? Buy on the dips. Of course. This is the greatest buying oportunity of a generation.

Allow me to translate: we just made millions bringing the market down. Now we're going to make millions taking it back up. And when you truly believe the "buy on the dips" propaganda, we'll take it down again, with such speed and force you won't have a chance to sell out.


Thank you, Dwight M., ($50) for your second generous donation to this humble site. I am greatly honored by your support and readership. All contributors are listed below in acknowledgement of my gratitude.


For more on this subject and a wide array of other topics, please visit my weblog.

                                                           


copyright © 2007 Charles Hugh Smith. All rights reserved in all media.

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