Musings Report #50 12-15-13 What's Fake, What's Real?

You are receiving this email because you are one of the 400+ subscribers/major contributors to www.oftwominds.com.

For those who are new to the Musings reports: they are basically a glimpse into my notebook,the unfiltered swamp where I organize future themes, sort through the dozens of stories and links submitted by readers, refine my own research and start connecting dots which appear later in the blog or in my books. As always, I hope the Musings spark new appraisals and insights. Thank you for supporting the site and for inviting me into your circle of correspondents.

What's Fake, What's Real?

Longtime correspondent K.K. recently recommended the 1974 Orson Welles documentary F For Fake and I in turn recommend to you if you haven't seen it recently. As director Peter Bogdanovich observes in a brief introduction (available on the Criteron Collection DVD), the film is more a visual essay than a documentary per se, and knowing this ahead of time prepares you to let go of the conventions of the Ken Burns-type documentary that has come to dominate the genre.

If a forged painting is technically equal to an original, and is declared a "masterpiece" by experts, then is it inferior to the original? If so, what is value of expert opinion?

In a way, a film is a forgery of real life, as a movie is "like real life, only more so," i.e. consciously constructed to distill "real life" into coherent narratives (a beginning, middle and end) and conflicts that are resolved in the last act.

Welles is thus the ideal candidate for an exploration of fakery and illusion, as he understood how film (even documentary film) is itself illusion.

F for Fake questions the notion that "experts" are useful filters for aesthetic value, and I think that can be broadened into social and financial engineering, for example, ObamaCare, which is perhaps the penultimate example of "experts" and big-bucks lobbyists combining forces to craft a centralized "solution" that is itself the fruit of centralized State-crony capitalism.

The master art forger who plays a central role in F For Fake noted (self-servingly, but amusingly so) that his addition of a few fake Modigliani's into the world's collections did no damage to Modigliani (long since deceased) or the collectors, who benefited from the opportunity buy a Modigliani masterpiece.

How is the Federal Reserve's creation of money out of thin air not officially sanctioned forgery, a forgery we accept because we are like the collectors who are willing to buy forgeries as masterpieces, as long as they're good forgeries, rather than forego the joy of owning a masterpiece?

Just as the belief in the provenance of a masterpiece creates its value in the marketplace, so it is with money: if it is created by a central bank and ultimately backed by the State's right to tax its citizenry, we consider it legitimate, even though it is clearly a forgery of real value (i.e. gold, silver, land, cans of beans, machine tools, etc.).

And just as the value of a masterpiece is shattered by the loss of faith in its value, so it is with money: should the belief that creates the value fade, so to will the value of the money.

Any doubts about the value of the euro, yuan, yen or dollar are dismissed by the mainstream as the confused ravings of a lunatic fringe, because maintaining the faith in the provenance of paper money is essential to the power created by financial engineering. But it's worth recalling that this belief in value is just that, a belief.

Summary of the Blog This Past Week

Support Your Non-Mainstream Authors--Buy a Book/eBook

About That "Bull Market Til 2016" Call: Before You Buy the Dip, Check Out This Chart

A Modest Proposal to Radically Reduce the Nation's Bureaucracies

The Python That Ate Your Job

Why Our Consumer-Debt Dependent Economy Is Doomed

Why We're Stuck with a Bubble Economy

I think the dynamics of the bubble economy and debt-dependent consumer economy are terminal. If you read any entries this week, I suggest those two.

Best Thing That Happened To Me This Week

Cross-country skiing in Yosemite Valley. By pure good fortune, a blanket of snow fell the night after we arrived and provided perfect conditions for cross-country skiing. No one else seemed to have anticipated the snow, as we were the only three visitors with cross-country skis, and as a result we had the valley practically to ourselves.

Market Musings

Longtime correspondent B.C. recently shared his DeMark analysis of the stock market. The DeMark system (created by technician Tom DeMark) identifies key support levels in short-term and monthly charts. The key number is 1,698 on the S&P 500 (SPX)--a January close below 1,698 would greatly increase the probability (in the DeMark system) of ushering in a Bear market of the 1929/1974/2000/2008 variety, i.e. a decline of at least 34% or so.

The caveat is that all the computers in the NY Fed and big money-management firms have been programmed to recognize all the DeMark levels. It would take very heavyvolume to overcome an official (but well-cloaked) effort to keep the SPX from triggering a DeMark sell.

January and February promise to be key months in all markets--at least that's my gut feeling. Being in cash until the smoke clears is generally an excellent risk-management strategy in pivotal moments.

From Left Field

Casting A Fire Ant Colony With Molten Aluminum -- not fun for the fire ants, but the resulting art piece is fascinating....

This Is The Greatest Cycling Video Of All-Time -- OK, so the title is a reach. Let's just say the skills displayed by the riders are phenomenal.

Is Your Job About To Be Outsourced By A Computer (The Probability Is 47%)

Rich Don't Pay Most of the Taxes (They Pay All of Them); Reflections on the "Almost Rich" (Mish) I've read some angry responses from "Progressives" who object to the consequences, not the facts. It's not clear the analysis included Social Security & Medicare payroll taxes, which are highly regressive....

Art in the Age of Fatalism -- interesting if somewhat obtuse essay.

How Every Part of American Life Became a Police Matter -- Overcriminalization at Work

America’s Role as Consumer of Last Resort Goes Missing -- and there isn't any other populace with an appetite and credit to buy $1 trillion in imported stuff from elsewhere...

Famous Novelists on Symbolism in Their Work and Whether It Was Intentional -- of course it wasn't, unless the initials of their saintly protagonist are J.C.

Dust to Dust: a man-made Malthusian crisis (via Steve K.)
"scientists have made an unsettling discovery. Crop farming across the Prairies since the late 19th Century has caused a collapse of the soil microbia that holds the ecosystem together." File under unintended (and serious) consequences....

James Howells searches in the city dump for a hard drive with £4m-worth of bitcoins stored (via Steve K.) -- ouch....

Civilization at the Crossroads (via U. Doran) -- you can quibble with details, but this summary of the arc of history ably assembles source materials (books) that are unassailable. Financial engineering has limits, though this is of course verboten....

Materialism: a system that eats us from the inside out -- "Buying more stuff is associated with depression, anxiety and broken relationships. It is socially destructive and self-destructive." Wow, telling it like it is....

"Most people do not really want freedom, because freedom involves responsibility, and most people are frightened of responsibility." Sigmund Freud

Thanks for reading--

charles