The Definition of 'Insanity Cubed': Opinion

VANCOUVER, Canada (Bullions Bull Canada) -- Definition of insanity: Performing the same act again and again, but expecting a different result.

Obviously this is a colloquial "definition" of insanity. However, at the very least, it is an unequivocal demonstration of abject stupidity. Choosing to repeat failure is utterly indefensible behavior.

What do we see with our politicians, bankers, economists, and media talking-heads? Bludgeon your way through all of the obfuscation; and we see that most of our economic problems are derived directly from two, failed policies: excessive money-printing and excessive debt.

Yet what are the only two "solutions" for these problems being proposed by Western governments (and their apologists in the corporate media) today? Even more-extreme money-printing, and even more-extreme debt-creation. Putting out the fire with gasoline. Insanity.

Has anyone actually paid attention to any of the so-called sovereign "bail-outs" that have occurred over the past five years? In every instance, it has involved lending vast sums of money to hopelessly insolvent governments.

Supposed I owe $10,000, but require a "bail out" because I can't service this debt; and my rescuer lends me another $5,000. Please explain to me how I've been "bailed out" when I now owe $15,000? Obviously, if I couldn't make payments on my debt when I owed $10,000; it's mathematically impossible to do so when I now owe $15,000.

I haven't been "bailed out." Instead, my bankruptcy has been temporarily delayed, but at the cost of a much larger bankruptcy down the road. This is precisely the opposite manner in which this is handled in the private sector.

In the private sector (unless you're a Too Big To Fail bank), insolvency is resolved as quickly as possible -- with either a genuine "restructuring" (i.e., less debt rather than more) or a formal bankruptcy proceeding. It is universally understood that this is always the process that minimizes economic losses (and the misallocation of resources).

But this is only the foundation for our insanity. On top of this initial layer of insanity; we have multiplied this quest for self-destruction with (arguably) even greater insanities.

What is the only, possible valid reason for repeating a strategy that has already failed repeatedly? We conclude that "the plan" itself was valid, but the execution of that plan was faulty. In which case, the only sane course of action is to get different people (hopefully better) to attempt to execute the plan.

What do we see instead? Employing the same Cast of Clowns who have already failed repeatedly to remain in charge of executing "the plan" -- expecting that this time the Clowns will perform admirably. Employing the same Cast of Clowns to repeat a failed strategy that is universally understood to be the precise opposite of what they should be doing.

Alternate definition of insanity: Expecting the same people who screwed things up originally to "fix" their mistakes ... by continuing to make the same mistakes.

In mathematical terms, we are now at "insanity squared": repeating a failed plan, with the same group of failures put in charge of repeating the failure. But it gets much worse than this still -- as is always the case with any multiplication function.

Let me introduce you to the exponential curve.

Readers are generally familiar with "linear" functions (or charts): These are mathematical progressions where the rate of change remains relatively constant. Conversely, only those with a background in mathematics are generally conversant with exponential functions.

This is a mathematical function that doesn't merely accelerate over time, but where the rate of acceleration itself continues to accelerate. Exponential curves are the mathematical representation of the concept of "unsustainability." Put more bluntly, all exponential curves end in disaster, and there can never be an exception to this.

Examples will quickly illustrate this point. In the animal kingdom, when any animal population begins an exponential decline, it is 100% certain that it will become an "endangered species" in the near future. From that point (and despite our best efforts) it is nearly 100% certain that the species will become completely extinct.

Lest anyone suffer from the delusion that only downward-pointing exponential curves lead to disaster, what happens on the rare occasions when animal populations experience an exponential growth? Massive over-population. Rapid destruction of the entire food supply. Followed by mass-starvation.

Want an example of an exponential curve in the world of human commerce? Can anyone say "bubble"? Bubbles generally feature two exponential trends: Exponential increase in prices and exponential increase in the level of ownership of that asset. Can anyone provide an example of a bubble that ended well?

Now let's have a look at two more exponential trends:

The first chart shows the exponential increase in the U.S. money supply; the second chart shows the exponential increase in debt.

An exponential increase in the money-supply must result in hyperinflation. An exponential increase in the level of debt must result in bankruptcy. Period. Put into even more stark terms, policies that have already proven to have failed can now be conclusively shown to be plainly suicidal.

Readers will note that the exponential curve in the second chart is less-extreme than the first. There is only one reason for this: Since 2008, U.S. interest rates have been fraudulently maintained at 0%. With the U.S. sitting with the largest debt in the history of the world, and on a clear/obvious/mathematical road to bankruptcy; the chart above is proof that these interest rates are fraudulent.

Had U.S. interest rates been normalized during this time, the U.S. government would have spent trillions of dollars more on interest payments alone -- and the second chart would be as insanely steep as the first.

Another Alternate definition of insanity: Engaging in behavior that is knowingly self-destructive, yet refusing to acknowledge that such behavior is suicidal.

We are now at "insanity cubed."

  1. Repeating a failed strategy again and again.
  2. Employing the same failures to continue repeating that failure.
  3. Continuing to repeat the same Cycle of Failure even after we have conclusive, mathematical proof that this is now economic suicide.
In our original definition of "insanity," it was conceded that this could be interpreted as (mere) stupidity, instead. Likewise, instead of concluding that our political leaders, bankers, economists, and media talking-heads represent the most-deranged group of Lunatics in history, there is another conclusion consistent with the facts.

Massive, endemic corruption. With money-printing stretched to the brink of hyperinflation, with debt-creation taking us all to the brink of bankruptcy, what are we now being told by our politicians?

Bail-outs are out. "Bail-ins" are in. With nothing left to be plundered in our public treasuries, the intentional insolvency created-and-increased by the politicians is now their pretext for stealing (paper) assets directly from the private accounts of individuals...except for the very wealthy. As we have seen with the Cyprus Steal; the Oligarchs receive timely "warnings" well before any plundering takes place -- so their wealth can be shifted to safety.

Our leaders are either a collective group of deranged lunatics, or a collective group of (bought-and-paid-for) traitors; I'll leave it to you to decide.

At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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