ERGODIC (almost erotic)
Here's the bottom line: markets cannot be "managed" over any "intermediate term" (certainly not 10 years and probably not even a year). What "management" the FED achieves is through paying off big market players to "work" with the FED to keep markets appearing "stable." They don't do this for free. "Ergodic" and "non-ergodic" are terms from math-physics-engineering. An ergodic system has random things happening, but it has the tamest, most-manageable behavior—a toilet-trained poodle who (dogs are people; cats are superhuman) sits on your lap and behaves very predictably (e.g. wants a tummy-scratch), goes to the door when nature calls. The worst non-ergodic systems will behave like a poodle for some, unpredictable length of time, but then turn rabid—fangs bared and pooping on you, until it transforms back to poodle. Math-physics-engineer types describe, statistically, several different classes of behaviors. Markets aren't anywhere near ergodic, and can't be "conducted" like Bob Woodward's "maestro" Greenspan nonsense, which sold the biggest load of journalistic MaGoo-glasses on record.
I pick on Jeffries because he's always saying "we Democrats deliver" vote-buying entitlements, Obamaphones, etc, until the debt burden will skyrocket prices, and he'll start delivering tents for families under the freeway. Cheerleaders Klobuchar and Walz are the same. McConnell and Grassley are, at best, marginally better, but their fingerprints are on everything over the last 50 years.
Markets (the worst non-ergodic systems) get stuck in "modes" (and jump unpredictably from a mode to some new mode: basically up-down manias (panics); sideways drifting), and they make "market participants" find an elevated window out of which to jump. In contrast with smooth, ergodic systems (independent gas molecules in a box, for physics types), markets work by mob psychology where people don't act independently (gas molecules have attraction forces between them, so water vapor condenses to water—a different state/mode, which is non-ergodic and a different model). Also, individuals make their own rules and break them (everyone does to some degree), unlike same-gas molecules that all follow the same physical rules.
The FED gets away with its "management" (for periods of time) by paying big banks to buy and sell US debt ("bonds," "notes") against the NY FED's "open market operations." From the NY FED website, "Primary dealers are trading counterparties of the New York Fed in its implementation of monetary policy. They are also expected to make markets for the New York Fed on behalf of its official accountholders as needed, and to bid on a pro-rata basis in all Treasury auctions at REASONABLY competitive prices." "Reasonably" is the huge loophole word that lawyers live for because it lets the judge-lawyer mob do whatever it wants and get away with it. The "REASONABLY" connection between the lawyer-monopoly-mob and the banks (including the FED) is why I never stop coming back to the lawyers.
An important Minnesota side note in this "rambling screed" involves the lawyers' favorite word REASONABLY because the MN legislature has now (negating the 1st Amendment) criminalized deep fakes "so realistic that a REASONABLE person would believe" them, done to influence an election, within 90 days of the election." I'm pretty sure that my thoroughly-realistic "deep fake" of Amy Klobuchar with Graucho-glasses (who's the deepest fake all on her own—you could see that one coming a mile away) was published outside the 90-day window. But in Hennepin County courts, where Amy is pals with all the judges, they could "do their own counting" of days, same as they do with budgets.
These are the "market participants" who are the "small circle of FED friends" "counterparties," and THEY DON'T DO THIS FOR FREE. There has to be something BIG in it for them.
ASL Capital Markets Inc.
Bank of Montreal, Chicago Branch
Bank of Nova Scotia, New York Agency
BNP Paribas Securities Corp.
Barclays Capital Inc.
BofA Securities, Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman Sachs & Co. LLC
HSBC Securities (USA) Inc.
Jefferies LLC
J.P. Morgan Securities LLC
Mizuho Securities USA LLC
Morgan Stanley & Co. LLC
NatWest Markets Securities Inc.
Nomura Securities International, Inc.
RBC Capital Markets, LLC
Santander US Capital Markets LLC
Societe Generale, New York Branch
TD Securities (USA) LLC
UBS Securities LLC.
Wells Fargo Securities, LLC
I'll let you read on your own about the 2008 Bear Stearns collapse, because there were criminal charges filed and acquittals, and I don't need any more headaches in my life because I write something that puts a bee in some bonnet. And the details of Bear Stearns' collapse itself are less important than:
JPM’s acquisition of Bear Stearns was initially arranged for just $2 per share. Minutes of the board meeting discussing the sale revealed that initially, JPM had considered $4 per share but lowered its bid, blaming the government, stating “The Fed and the Treasury Department would not support a transaction where Bear Stearns’ equity holders received ANY significant consideration because of the ‘moral hazard’ of the federal government using taxpayer money to ‘bailout’ Bear Stearns’ stockholders.” [BUT IT APPEARS THEY DID BAIL OUT THE DEBT HOLDERS WHO LENT INTO "THE SCHEME"]
Then Fed Chairman Ben Bernanke said the decision was the toughest of the financial crisis. [Tuff luck, Dummy, you signed-up to follow "moral hazard" Greenspan who put the pedal to the bailout metal on 10/15/98; this was bound to happen.]
“Given the exceptional pressures on the global economy and financial system, the damage caused by a default by Bear Stearns could have been severe and extremely difficult to contain,” Bernanke told the Senate Banking Committee.
In other words, Bear Stearns received a lifeline because it was “too big to fail.” Its fallout would have been a systemic risk to the financial system.
The origin of the bailout "systemic risk" is the judge-lawyer protection racket of judges bailing out judges who bailout lawyers collecting lawyer-fees. This mob is the pinnacle of white-collar crime, and all others who have some financial "edge" (shenanigans) in mind, hire lawyers to "legitimize" their plan by getting plugged into the judge-lawyer mob as a buffer, if not a stay-out-of-jail-free card. The whole disastrous mess starts with the royal class of lawyers—a "separate segment of society"—as JD Vance and Tucker Carlson readily agreed.
Here were two "committed conservatives" readily agreeing, without any hesitation, that the US has a royal class, a "separate segment of society." Nothing more to say, except Get Rid Of The Fokken Lawyer monopoly, an obviously UnConstitutional royal class, with GROTFL legislation.
This ends my "short, bottom-line statement." (yup) So now, back to my true "rambling screed" ......
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This note is about "ergodicity" and the Federal Reserve's manipulation of markets, which I'm highly confident will result in capital controls—wage and price controls—as we had in the early 70s, which is socialism or communism or whatever "ism" the polysci-types want to call it: the dollar is not your money (it's a Federal Reserve Note), so no, you can't spend it as you please; you must comply with govt capital restrictions/controls. The bottom line is that any market (the stock and bond markets) can be controlled (like a poodle) for some period of time. But markets will suddenly turn into a rabid dog. The FED cannot control markets without enormous net-injections of money, over time (to control their rabid-dog behavior), the vast majority of the injected-money goes to banks whose associated funds also plug-in to the market directions manipulated by the money-flow. Banks are not good-deed-doers. There's risk in being a "primary dealer" (see list above). They wouldn't do it if there weren't significant money in it for them.
Ergodicity, which in rough terms means a system that has a uniform distribution of energy (or power) where energy isn't concentrated in any one component, is basically analogous to a system with a true rule of law, where there is no concentration of power, which inevitably corrupts. There's independence among the parts of an "ergodic" court system. If you appeal the decision of a trial-court judge, you get an independent review. In US courts, which belong to the ABA lawyer-monopoly-mob which owns our former country, you encounter a protection racket where appeal-judges protect (automatically "affirm" without comment) a trial-judge decision, in order to protect lawyers whose principal concern is with lawyer fees. This non-independence of components with concentrated power is, obviously, non-ergodic. Like true, free markets (non-ergodic) that will suddenly switch gears and leave you without any money, US courts work on the whim of judges. If you don't pay into the Dues Process lawyer-mob—i.e. you don't have a lawyer—your chances of winning are slim to none, even though the law is perfectly clear that you are to get equal treatment. Congress could fix this in a week, but Congress is stuffed with lawyers who won't bite the monopolistic-hand that transformed their worthless undergrad degrees into a relative gold mine.
I'll say one final thing about Minnesota courts: Cleary, the chief MN appeals court judge, wrote a 1 1/2 page decision on my emergency appeal of Kevin the Hennepin Menace Burke's preposterous "time machine" decision. Of course Cleary hanged himself, as I easily showed in my objections. But over 99% of appeals court judges would have just written: "petition DENIED." That Cleary (and whoever the two other appellate panelists were) wrote an actual opinion is a significant ray of hope for Minnesota courts. Because Cleary put on-record his flatly-wrong opinion about Burke's absurd rig-job for his Minneapolis lawyer-pals, I can point to (and quote) Cleary's decision and show its part in the protection racket that was the root cause of George Floyd's death and "affirms" every other significant problem in Minnesota. The courts are where people are supposed to be able to go to get a "fair adjudication" of problems. When they are a protection racket—which they are in the US—everything goes in the dumper.
A NON-ergodic system gets "stuck," like a car stuck in a gear. But when it jumps to another gear, it's a totally-different animal with completely-different behavior. (Maybe this sounds like someone you know.) By contrast, an ergodic system functions smoothly with smooth access to all available gears and engine RPMs. (This is not a perfect "ergodic" analogy; the energy of the gear-RPM combination also figures-in, but the non-ergodic concept of "getting stuck" in a mode and then jumping to another mode fits well with the stuck gear analogy.) Markets—human behavior—are non-ergodic. We get pissed off, slam the door, and there's no going back, really. We're stuck with what we've done (or maybe the escape is a good thing). "The stock market" (or the group of several US stock markets)—driven by human behavior—is non-ergodic.
Next, you must remember this: a piss is just a piss — unless it’s a “nature pee” (as my daughter giggles riotously) or a lawyer or economist is involved, in which cases you’ll get pissed-on bad. Bottom line: there is no “rule of law,” and we don't have free markets. Courts are rigged, and the US stock and bond markets are "managed," manipulated, rigged. These are the parallel scams that keep (govt & financial) power concentrated in the DC-NY nucleus. EVERY CONGRESS-LAWYER IS PART OF THIS SCAM BECAUSE HE/SHE BELONGS TO THE LAWYER-MONOPOLY. The big geographic center of the US is left out of The connection with non-ergodicity is that economists (Greenspan and other so-called "maestro" influential/powerful economists will get lucky with some predictions, but their track records over most any significant time period will be mediocre at best. The only economists with any govt-granted monopoly at their control are FED-heads. The biggest—and maybe only—abuse of FED power was Greenspan's 10/15/98 surprise rate-cut. So, while economists, by and large, live in their out-of-touch world of models detached from reality, they don't have specific power to use corruptly—certainly not regularly. The one exception may well be Yellen, but I don't know enough yet about what she's doing at Treasury.
Recapping (which I frequently do to keep the parallel monopolies in view), two govt-granted monopolies, in a supposedly “free” country, control the US: the ABA lawyer-monopoly-mob (the monopoly controlling access to the courts) began the destruction of any semblance of an actual rule of law with the 1983 Feldman BOTCH rule. The Greenspan Federal Reserve’s money-printing-monopoly destroyed any semblance of “free markets” on 10/15/98 with Greenspan’s surprise rate cut in the last hour of stock trading.
This little (and as always, longer than I intended) discussion focuses on the FED. The FED is based on a system that is mathematically corrupt (wrong) and will inevitably fail (we’ll have capital controls—wage and price controls—again). I doubt there’s much, if any, actual quid pro quo (tit for tat; pay to play) corruption among rank and file FED employees—nothing like the rampant corruption of judges handing cases to their pals—like Kevin the Hennepin Menace Burke, who was the canary in the Minneapolis corrupt-court coal mine in the months before George Floyd. FED Chairs collecting speaking fees aren't like judges who hand a great many cases to their preferred party. FED employees have no specific "inside info" that anyone would pay for.
To repeat this crucial fact, any semblance of free markets ended with Greenspan’s 10/15/98 surprise rate cut in the last hour of stock trading. That spontaneous intervention was inexcusable. (FED intervention at the market open, the week after 911, had some justification.) Greenspan's last-hour panic at a hard-down market close had none. Greenspan made clear that stocks cannot go down under actual free-market forces. The dotcom bubble followed in a year, not surprisingly.
What Greenspan and the other egomaniacal FED-heads who succeeded him don't understand (or if they do, then they deliberately put the US — our former country now fully-owned by lawyers and bankers — on the fast-track to destruction) is that markets that have any realistic amount of freedom (ours do but a hard-communist system doesn’t; I think we will again have capital controls, which are "close enough for communist-government work") cannot be successfully manipulated ("managed," the euphemism) because they are “non-ergodic,” a math-physics-engineering term. I'll restate this without all my parenthetical insertions: free markets get stuck in manias, panics, ruts. Foolish FED-heads think they are heroes when the govt numbers show "success" at times: that markets have behaved like poodles. They don't understand that a non-ergodic system will change very quickly into an unmanageable wild dog.
Non-ergodic means a system gets stuck—markets “get stuck”—in a mindset. “Fear and greed” are the mindsets the financial news people like to use. But there’s also, for example, the “pissed consumer” mindset where a person won’t have anything to do with a company (or the stock market) — not at any price or on any terms whatsoever. “That company and its owners can eat Σh⍳τ and die,” in the mindset of the consumer. Musk recently stated the same thing about Galvanic Newsom’s electroplated hair and laws, and is Moving Out, along with Anthony and Mama Leone.
A non-ergodic system is a sealed room with no heating or cooling, where one part of the room is comfy, and another part is hot as blazes or as cold as Oberlin, Ohio in January 1978 (rivaled Vostok station’s -128F record). If air molecules in a real sealed-room (ergodic) somehow—by some astronomically-improbable occurrence—got in that imbalanced state, they would, over time (very quickly, actually), mix together and get back to an average temp that doesn't fluctuate much at all. This is intuitive, right? You get it.
The math works and is the basis of thermodynamics, statistical mechanics, then the “ultraviolet catastrophe” and quantum, which we learned in wonderful Mr. Palmieri’s Physics 112, where we physics types would ‘splain stuff to each other and to our teachers, and ask and answer questions. We made sure that we understood and could explain stuff because this is what we wanted to do from the time we were kids in our pretend blinkenlight, mad-science la-bor-i-tories with our assistant, Igor.
Lawyers and economists are the opposite of physics-types' simple, clear explanations that are quite accurate without getting into the thick of the technicals. Lawyers especially inflate simple things to make them sound complicated and mysterious, so they can charge more money and try to make others feel stupid. This is why the US is in the dumper. I've also had more than my fill of idiot judges handing cases to their lawyer-pals.
The FED’s “job” (though I’m not sure where the job description is) is to get actual, non-ergodic consumers and businesses to spend, invest, expand, hire so there isn’t a “recession” (by whatever squirrely definition they use), so the economy doesn’t crash but has a “soft landing.” This is theoretical nonsense, just like the image of the strengthening economy climbing to cruising altitude, etc.
The reality is that the post-Volker FED has been a patsy to politics—the banks, in particular, which means NY, the biggest beneficiary of FED “open market actions” because the “money center” (i.e. biggest) banks enable the FED’s open-market operations. They don’t do this for free, but at least as importantly, their many side-operations do extremely well from this relationship. Needless to say, NY does extremely well from this relationship. How do Minnesota and the rest of the US geo-center States do? Let’s just say, “not nearly so well.”
Volker squeezed the banks and economy with 18% interest rates. He did the "unexpected,” to say the least. Greenspan and the rest have been patsies par excellence.
The financial news people like to say “the FED is pushing on a string,” meaning businesses and consumers won’t take the bait for what the FED believes are “low” interest rates. This comes from the patsy FED having made the economy into a spoiled child: rates aren’t low enough for them. EZ Alan Greenspan kicked-off this disaster, and the rest of the FED-heads have kept it going...until a lot of regular families will be in tents, with skyhigh prices as well. Then, capital controls—socialism, communism, whatever name the polysci and econ majors want to give it while they do their homework in a bar. makeamericageekyagain@gmail.com