Sunday, August 17, 2025

The "Iron Law of Oligarchy" and the Delusion of Democracy | Neema Parvini

One of the primary issues with democracy is the "Iron Law of Oligarchy," as described by Robert Michels. Although democracy promises equality and freedom, an elite class inevitably holds power. Whether Professor Peabody, Sally Strawberry, or Pedro Orange is in office, an elite class persists. Even when one elite group is replaced by another, such as a shift from peas to strawberries, the system remains fundamentally unchanged. 
 
 Chuan Jianguo (特朗同志), Comrade Build the Nation, a.k.a. 
MAGA Traitor (MAGA 叛徒) and Genocide Don (种族灭绝唐). 
 
Michels' "Iron Law of Oligarchy" argues that the egalitarianism democracy promises is an illusion. Elites always emerge; even if the masses overthrow one, they soon create another. James Burnham, in "The Machiavellians," expands on this, asserting that any realistic political analysis must accept elites' inevitable dominance. This elite dominance reflects the Pareto principle, suggesting a natural 80/20 split between elites and society. 
» The oligarchy is a layer separated from the people. Sustained by privilege, wealth, speculation, and control of bureaucracy, it lacks a vital bond with the community. The elite directs the people's energy toward a common goal, takes risks alongside them, while the oligarchy does not. The oligarchy lives off the people's resources, manipulates them to maintain its position, and shields itself from any demand for responsibility it always avoids. Thus, the notion that the big fish eats the small one is unjust and mistaken, because the elite is the principle of life for a people, while the oligarchy is the principle of their decay. «

Plato ("The Republic," Book VI) and Aristotle ("Politics," Book IV) warned against direct majority rule, fearing tyranny of the majority and mob rule. In his "Discourses on Livy," Niccolò Machiavelli shared this view, citing the Gracchi brothers, Tiberius and Gaius, in 2nd-century BC Rome. Their land reforms to redistribute wealth from the aristocracy to the poor led to bloodshed and civil war. Machiavelli argued that the Gracchi erred in assuming the poor were less self-interested than the wealthy. By seeking the masses' approval, they fueled hatred between plebeians and the Senate, ultimately destroying the Roman Republic.
 

 
 Gaetano Mosca and Vilfredo Pareto:
The Intractable Problem of Democracy.
 
» The heirs began to degenerate from their ancestors, and, abandoning virtuous deeds, thought that princes had nothing to do but surpass others in luxury, lasciviousness, and every other kind of pleasure. Thus, the prince, becoming hated, and fearing because of this hatred, turned to tyranny, and many of those who helped establish it became its enemies.
These, conspiring together, brought about its ruin. And so the cycle continues. «
Discourses on Livy, Book I, Chapter 2, Niccolò Machiavelli, 1531

Machiavelli described a cyclical pattern where democracy transitions to tyranny. A wise and just ruler, the "prince," leads initially, but his successor often indulges in luxury, resulting in tyranny. An aristocratic class overthrows this tyranny, establishing a new government, but these aristocrats also become corrupt, ushering in anarchy and renewed tyranny. Machiavelli proposed a mixed government—a republic—where monarchy, aristocracy, and democracy are institutionally represented. This form is more stable and enduring than pure democracies or oligarchies, as exemplified by the Spartan Republic, which lasted 800 years compared to shorter cycles elsewhere.

 

 
» A hundred men acting uniformly in concert, with a common understanding, will triumph
over a thousand men who are not in accord and can therefore be dealt with one by one. «
Gaetano Mosca, 1896.

Despite this mixed government, challenges persist. In the 18th century, David Hume identified factionalism as a major democratic flaw. He argued that people naturally form factions based on personal interests, often undermining the common good. Even trivial differences, as seen in ancient Greek factions or recent civil wars, can spark factionalism. Modern democracies still face factions driven by religion, politics, or personal rivalries.
 
» The more the Devil has, the more he wants to have. «
 
James Madison, in his "Federalist Paper No. 10," addressed factions, proposing two solutions: removing their causes or controlling their effects. Eliminating causes requires abolishing liberty, which is impractical and undesirable. Controlling effects is more feasible. Madison argued that large republics dilute factional harm through diverse interests, making domination by one faction harder and offering voters more choices, thus reducing corrupt candidates' influence. However, Madison's vision did not anticipate political parties, now central to modern politics, nor the impact of communication tools like radio, television, and the internet, which amplify factional organization and influence.
 
» Oligarchy always rests upon force and fraud. «
George Orwell, 1946.
 
Mancur Olson, in "The Logic of Collective Action," identified another issue: large groups with shared interests struggle to organize due to high costs, while smaller, organized special interest groups effectively influence policy, even against the majority's interests. These groups often secure their goals, disregarding the public’s benefit. 
 
»
Sovereign is he who decides on the exception. «
Political Theology, Carl Schmitt, 1922.
 
For example, candidates Sunny Strawberry and Lucy Lemon, running for office, receive offers from special interest groups like the Peas, Aubergines, and Pears, seeking government funding or tax breaks. To win, Sunny might pledge favors to these groups, even if the broader population gains nothing. If she refuses, the groups may support Lucy, who offers similar deals. This system ensures special interest groups dominate policy, leaving the general population underrepresented.
 
» You great star! What would your happiness be had you not those for whom you shine! «
Thus Spoke Zarathustra, Friedrich Nietzsche, 1883.
 
The general public, lacking special interests, struggles to organize and advocate for their agenda. Consequently, their needs are often overlooked in favor of well-resourced lobbies. Madison's republic and modern democracies face significant challenges. Representatives often prioritize electoral success over the common good, and their policies may fail without consequence. These systemic issues pose serious problems for modern democracies, and while solutions are elusive, recognizing and addressing these flaws is crucial.
 
 
See also:
(Zur Soziologie des Parteiwesens in der modernen Demokratie) 
 
了解你的敌人
Know your Enemies.

Thursday, August 14, 2025

Putin-Trump Meeting to Be Followed by Market Panic Cycle | Martin Armstrong

The Putin-Trump meeting on Friday, August 15th, in Alaska preludes Martin Armstrong's forecasted Panic Cycle.  

 The Dow Jones Industrial Average Weekly Timing Array of August 4, 2025, 
highlights a Panic Cycle during the week of August 18-22.
 
Aggregate: Combines all models for key date insights.
Empirical: Fixed-frequency Transverse analysis, unique to each market.
Long Term: Fixed-frequency Transverse analysis, three times longer than Empirical.
Trading Cycle: Fixed-wavelength Transverse analysis, separating highs and lows; yellow bars show convergence, subject to Destructive Interference.
Directional Change: Marks decisive market moves, not necessarily highs or lows.
Panic Cycle: Targets abrupt moves, often outside reversals or capitulations, not guaranteed highs or lows.
Volatility: Indicate changes in volatility trend, not direction or specific highs/lows.
 

The Panic Cycle becomes active during the week of August 18-22 and, according to Armstrong Economics, will be a period of extreme volatility that often triggers outside reversals of weekly, daily, and session ranges, projecting forceful directional moves.
 

Wednesday, August 13, 2025

Buffett Indicator Hits All-Time High with Market Cap-to-GDP Ratio at 212.1%

As of August 12, 2025, the Warren Buffett Indicator has surged past 212%, marking its highest level on record.

 US market cap twice US GDP.
 
 
US debt hits $37T — surpasses entire $31T US GDP, 
matches combined GDP of China, Germany, Japan, India & UK.
 
The Buffett Indicator, or Market Cap-to-GDP ratio, rose to prominence as a long-term stock valuation metric following Warren Buffett’s 2001 'Fortune' interview, where he called it "probably the best single measure of where valuations stand at any given moment." 

The 2000 dot-com bust and the 2007 crash may seem mild by comparison.
 
The ratio compares US public market cap to GDP using the Wilshire 5000 Index, covering nearly the entire stock market.
 

Tuesday, August 12, 2025

Hurst Cycles Update for S&P 500, NASDAQ, Gold & Bitcoin | David Hickson

S&P 500: Phased with an 18-month (or larger) trough in early April, 80-day trough mid-June (debated position due to fundamentals), 40-day trough mid-July, and recent subtle troughs suggesting a distorted 20-week cycle influenced by bullish longer cycles. Alternative analysis considers 20-week trough possibly formed on August 1st, but preferred view is it's ahead.
 
S&P 500 (daily bars) and Composite Model (dashed orange line).
 
Long-term cycles in the S&P 500 
(weekly bars, chart from December 2024): As of August 2025, the 
S&P is in the bullish 9-month (or 40-week) cycle phase of the third and final 18-month cycle within 
the current 54-month cycle, which is expected to bottom around December 2026.
 
Watch price interaction with 20-day FLD: support indicates 20-week trough has formed; crossing below suggests trough ahead. Bullish trend distorts cycles upward, with early trough possible within whiskers (mid-August range). Preferred: 20-week trough late August/early September, after a potential short bounce and decline. If trough formed early, expect upside to FLD-generated targets; composite model shows possible downturn soon.
 
 54-month cycle and its subdivisions:
18-month, 40-week, and 20-week cycles.
 
 
Projection of the current 18-month cycle in the S&P 500.
 
9-month cycle projection for the S&P 500 during 
the bullish phase of the current 18-month cycle.
 

NASDAQ: Similar to S&P 500, with 18-month trough April 7th, 80-day trough slightly late (77 days, mid-June), 40-day trough August 1st (39 days, running long). Cycles averaging longer wavelengths; good match to price troughs.
 
NASDAQ (daily bars) and Composite Model (dashed orange line).

Long-term cycles in the NASDAQ (weekly bars, chart from December 2024).
 
Monitor shorter cycles for shortening (e.g., 20-day at 13 days, 40-day at 28 days) as indicator of trend change. Bullish trend may push peaks higher/later. 20-week trough ahead (end August/early September), with potential bounce to lower/higher peak, then decline. Composite model suggests lower peak but bullishness could override; cycles likely continue long unless shorter ones shorten.
 
NASDAQ - Detrended Seasonality.

Gold: Sideways in wedge, testing $3,450 peak multiple times; synchronized peaks expected. Dual trough/peak analyses both valid: 40-week trough mid-May, 80-day trough July 30th (post-update), good FLD interactions (66.7% rating).

Gold (daily bars) and Composite Model (dashed orange line).
 
 Long-term cycles in Gold (weekly bars, chart from December 2024).
 
Trapped wedge suggests breakout imminent; combine trough/peak for composite. Higher peak at 20-week cycle (end August/early September), then potential upside continuation. Composite (dual) shows upward move post-20-day trough; expect FLD support.
 
Gold - Detrended Seasonality.

Bitcoin: 40-week trough mid-April, 80-day trough late June (clear), 40-day trough late (August 1st, expanded shorter cycles). Pure rhythms; similar to stocks, with bullish distortion.

Bitcoin (daily bars) and Composite Model (dashed orange line).
 
  Long-term cycles in Bitcoin (weekly bars, chart from December 2024).
 
Watch 20-day FLD: support indicates early 20-week trough; cross below confirms ahead. Excessive bullishness (possible larger trough in April) pushes amplitudes higher. 20-week trough ahead (end August/early September), after bounce to potentially higher peak despite model showing lower. Cycles running long; amplitude least reliable, but wavelengths suggest decline post-peak.
 
 
Bitcoin - Detrended Seasonality.
Historically, Bitcoin performs best in Q4. October averages around +22%, 
and November even +46% over the past 12 years.
 

Monday, August 11, 2025

Ethereum Hurst Cycle Analysis: Turning Points for 2025-2026 | Branimir Vojcic

The chart below represents a dual Hurst cycle analysis of troughs and peaks in the 4-hour chart for Ethereum (ETHUSD). The orange line is the cycles composite, based on current estimates of periods, phases, and amplitudes.

Ethereum (4-hour bars) and Cycle Composite (orange line).
 
Next 40-week cycle peak (expected) late August or early September 2025.
Next 40-week cycle trough late 2025 or early 2026.
Next 18-month cycle peak in May 2026.
Next 18-month cycle trough September or October 2026.
Ethereum's bullish outlook from 2025 to 2028 predicts significant gains relative to Bitcoin.

Do not correlate price with the amplitudes of the cycle composite. Instead, use peaks and troughs as estimates of price turning points. 

 
 
Ethereum's 2016–2024 returns show Q1–Q2 strength (+20% avg monthly, May +36.48%, 55.56% positive), summer dips (Jun -5.84%, Sep -7.24%, 44.44% positive), and Q4 gains (+7.4% avg, 55–77% positive). Volatility: abs avg 20–30%, medians 4–5%.


Expectations for Remainder 2025 (Sep–Dec) and Q1-Q2 2026: Sep likely dips (-7.24%, 44% positive); Oct–Dec rebounds (+6–8%, 55–77% positive), possibly amplified by year-end sentiment. 2025 YTD momentum (+43.57% May, +41.22% Jul, +24.11% Aug) may soften Sep, but volatility (13–19% abs avg) warrants caution. Q1 2026 (Jan–Mar) rally (+17% avg, 66–78% positive); Q2 (Apr–Jun) strength Apr–May (+29% avg, 56–67% positive) then Jun dip (-5.84%, 44% positive), with ~+20% monthly early-year upside but high vol (20–30% abs avg).
 

Sunday, August 10, 2025

Money Creation—Banking’s Best-Kept Secret | Richard A. Werner

In an era when gold was money, people believed it was essential for transactions. But carrying gold was perilous—dangerous even today in cities like London, let alone in the 15th-17th centuries amid bandits on lawless roads. So, people sought safe storage. Professions handling gold, like goldsmiths crafting jewelry for kings, aristocrats, and the wealthy, had secure vaults and private guards. Naturally, individuals deposited their gold with these goldsmiths for safekeeping.
 
» We don't need to lend actual gold. «
"The Moneychanger and His Wife", painted by Quinten Matsijs, 1514.
 
To prove ownership, depositors received receipts—crucial evidence in case the goldsmith died and his son denied the claim. Goldsmiths charged a fee for this service, which seemed fair. Now, imagine we’re neighbors in Hampshire. I’m buying a plot of land from you, and we agree on a price in gold. My gold’s stored with a goldsmith in London. “I’ll go fetch it,” I say. You reply, “What’ll you do with it? You’ll risk your life fetching it, and then I’ll have to risk mine carrying it back.” We pause, then realize, “We might as well leave it there, and I’ll give you my deposit receipt.” Thus, these receipts for deposited gold evolved into Europe's first paper money—gold certificates, transferable and convenient.
 
Goldsmiths soon noticed that depositors rarely withdrew their gold; it stayed put, which was handy. This led to secrecy-shrouded practices. People knew goldsmiths held gold reserves, so they approached them for loans when in need. But until about 350 years ago, lending at interest was illegal in most European countries, forbidden by Christian doctrine and Biblical prohibitions against usury. A goldsmith might whisper, "Maybe I can lend, but keep it secret because I'll charge interest." The borrower agrees: "I'll pay, and we'll keep it secret." Goldsmiths began lending out portions of the deposited gold—especially standardized bullion—while swearing everyone to secrecy to evade arrest for illegal interest.
Shylock in The Merchant of Venice, Act IV, Scene I, by William Shakespeare, 1596.
 
As guilds do, goldsmiths convened to discuss trade secrets: “How do we handle lending too much gold? We need to work together—if one runs short, the others help, or else the whole scheme unravels, and we all get arrested for interest altogether.” One innovative goldsmith proposed, "I've got an idea—we don't need to lend actual gold. The next guy who comes begging every Monday—I've turned him down before. But now I'll lend to him to show you."
 
»
 All banks have always created money out of nothing. 
That's the secret of banking. «
 
The borrower arrives, pleading. The goldsmith says, “Today I’ll lend. Standard contract: small print, interest, your daughters sold into slavery if not repaid.” “Fine,” the borrower consents. “One more thing: 300 grams of gold. Sign here, I sign, and I lend it—but you must deposit it with me immediately.” The borrower protests, “I need the gold.” “You get the deposit receipt,” replies the goldsmith. “Yes, that’s all I need.” With the loan contract signed, the goldsmith records it as an asset on his balance sheet. He hands over the 300 grams of gold momentarily—now you see it, now you don’t—and it’s redeposited. The borrower leaves with a receipt for a new deposit.
 
» 
Banking has not been very well understood: legally, a "deposit"
is a loan to the bank, now owned by the bank, not the depositor. «
 
Double-entry accounting, invented for banking to obscure such maneuvers, made it appear legitimate: “All correct; the borrower deposited.” But it is fraudulent—the borrower enters with no gold and leaves with a document claiming a deposit, without increasing the goldsmith’s actual reserves. This is the essence of modern banking: fractional reserve lending and money creation out of thin air, born from these historical practices.
 
Reference:
 
» Today, due to the institutionalisation of interest and the advent of digital money, roughly 97 percent of modern money comes into existence as interest-bearing debt—i.e., it “comes into being only when someone promises to pay back even more of it.” «
Yusuf Jha, 2013.
 
See also: