Max Keiser: Prof. Fekete, Gold and Austrians

This is an enlightening, if somewhat arcane, look at the role of precious metals in the world money system and provides some insight into “Austrian School” economic philosophy. It’s unusual for Max to hold a guest over for two episodes. You will see why.

Max talks to renowned mathematician and monetary scientist Professor Antal Fekete about the gold basis – cash versus the nearest futures contract and why the cash price for gold never being reported is by design. They also discuss gold repatriation from Germany as a trial balloon, to see how much demand there is for cash gold and how it is that permanent backwardation means internal bleeding in the monetary system. Part 2 discusses elimination of silver as money, an event that saw value and liquidity wiped out, and they compare the two giants of Austrian School of Economics – Carl Menger and Ludwig von Mises – with the biggest difference being that Menger did not believe in the quantity theory of money.

The Missing Recovery

Officially, since June 2009 the US economy has been undergoing an economic recovery from the December 2007 recession. But where is this recovery? I cannot find it, and neither can millions of unemployed Americans.

The recovery exists only in the official measure of real GDP, which is deflated by an understated measure of inflation, and in the U.3 measure of the unemployment rate, which is declining because it does not count discouraged job seekers who have given up looking for a job.

No other data series indicates an economic recovery. Neither real retail sales nor housing starts, consumer confidence, payroll employment, or average weekly earnings indicate economic recovery.

Neither does the Federal Reserve’s monetary policy. The Fed’s expansive monetary policy of bond purchases to maintain negative real interest rates continues 3.5 years into the recovery. Of course, the reason for the Fed’s negative interest rates is not to boost the economy but to boost asset values on the books of “banks too big to fail.”

The low interest rates raise the prices of the mortgage-backed derivatives and other debt-related assets on the banks’ balance sheets at the expense of interest income for retirees on their savings accounts, money market funds, and Treasury bonds.

Despite recovery’s absence and the lack of job opportunities for Americans, Republicans in Congress are sponsoring bills to enlarge the number of foreigners that corporations can bring in on work visas. The large corporations claim that they cannot find enough skilled Americans. This is one of the most transparent of the constant stream of lies that we are told.

Foreign hires are not additions to the work force, but replacements. The corporations force their American employees to train the foreigners, and then the American employees are discharged. Obviously, if skilled employees were in short supply, they would not be laid off. Moreover, if the skills were in short supply, salaries would be bid up, not down, and the 36% of those who graduated in 2011 with a doctorate degree in engineering would not have been left unemployed. The National Science Foundation’s report, “Doctorate Recipients From U.S. Universities,” says that only 64% of the Ph.D. engineering graduates found a pay check.

As I have reported on numerous occasions for many years, neither the payroll jobs statistics nor the Bureau of Labor Statistics’ job projections show job opportunities for university graduates. But this doesn’t stop Congress from helping US corporations get rid of their American employees in exchange for campaign donations.

There was a time not that long ago when US corporations accepted that they had obligations to their employees, customers, suppliers, the communities in which they were located, and to their shareholders. Today they only acknowledge obligations to shareholders. Everyone else has been thrown to the wolves in order to maximize profits and, thereby, shareholders’ capital gains and executive bonuses.

By focusing on the bottom line at all costs, corporations are destroying the US consumer market. Offshoring jobs reduces labor costs and raises profits, but it also reduces domestic consumer income, thus reducing the domestic market for the corporation’s products. For awhile the reduction in consumer income can be filled by the expansion of consumer debt, but when consumers reach their debt limit sales cannot continue to rise. The consequence of jobs offshoring is the ruination of the domestic consumer market. …

Circumcision: Long Term Consequences of Violence Against Children

… People suffering from the personality trait disorder alexithymia have difficulty identifying and expressing their feelings. They daydream less, and confuse emotions with body sensations, such as physical pain. They tend to lack imagination and intuition. This translates into not being able to imagine what others are feeling, leading to an inability to respond to others’ needs. People with severe alexithymia are so removed from their feelings that they view themselves as being robots or automatons. If acquired at an early age, this might limit access to language and interfere with the socialization process that begins early in life. Moderate to high alexithymia can interfere with personal relationships and hinder therapy. A number of studies have shown an alexithymia prevalence for adults at less than ten percent (Fukunishi, Berger, Wogan, & Kuboki, 1999), while one study revealed that 28 percent of men were alexithymic (Posse & Hallstrom, 2001). Alexithymia is not classified as a mental disorder in the DSM-IV.

Neonatal trauma has been associated with alexithymia, dissociation, aggressive behavior, and suicide; and alexithymia has been associated with life expectancy, being male, dissociation, aggressive behavior, childhood, and sexual abuse; thus creating a plausible connection between early trauma and alexithymia. Knowing if alexithymia might be acquired from early traumas such as circumcision could be valuable for a number of reasons. It would (a) help to explain why some groups of men have alexithymia levels higher than women; (b) lead to a better understanding of normal alexithymia levels for men; (c) provide alexithymic men with new insights into their behavior; (d) assist parents deliberating about circumcision for their son; (e) provide new information in what role early trauma has on the development of children. …

It has long been observed that some children raised in violent, abusive, or neglectful settings grow up to express violence, anger, depression, or to be engaged in drug use, alcoholism, or criminal activity. The thinking has been that children copy what they see and hear. When anti-social behavior is the norm and when it is reinforced by adults in the environment, children repeat it. During the past 15 years, scientific and clinical research has begun to document that more is at work. Anatomical and functional alterations occur in the brains of children who are exposed to adverse events.1 Research has also shed light on the less obvious link between childhood abuse and lifetime physical and mental health outcomes.2,3 This article reviews some of the research showing the neurobiological, neuroanatomical, and physiological effects of early life stressors and how they might relate to ongoing medical problems later in life. …

New technologies such as functional MRI, PET, and MRI/T2 relaxometry (T2-RT) have enabled scientists to identify the chemical and structural differences between the central nervous systems of abused and nonabused individuals.6,7 This research shows that many health problems—including panic disorder/post-traumatic stress disorder, chronic fatigue syndrome, fibromyalgia, depression, some auto-immune disorders, suicidal tendencies, abnormal fear responses, preterm labor, chronic pain syndromes, and ovarian dysfunction—can be understood, in some cases, as manifestations of childhood maltreatment.8-13

The health problems associated with these changes in the brain are significant. According to Anda et al., atrophy of the hippocampus, amygdala, and prefrontal cortex, and the subsequent dysfunction is related to anxiety, panic, depressed affect, hallucinations, and substance abuse. Increased locus coeruleus and norepinephrine activity have been related to tobacco use, alcoholism, illicit drug use, and injectable drug use. Defects in the amygdala and related deficits in oxytocin result in sexual aggression, sexual dissatisfaction, perpetration of intimate partner violence, and impaired pair bonding.4

In humans, interpersonal romantic attraction and the subsequent development of monogamous pair-bonds is substantially predicted by influential impressions formed during first encounters. The prosocial neuropeptide oxytocin (OXT) has been identified as a key facilitator of both interpersonal attraction and the formation of parental attachment. However, whether OXT contributes to the maintenance of monogamous bonds after they have been formed is unclear. In this randomized placebo-controlled trial, we provide the first behavioral evidence that the intranasal administration of OXT stimulates men in a monogamous relationship, but not single ones, to keep a much greater distance (∼10–15 cm) between themselves and an attractive woman during a first encounter. This avoidance of close personal proximity occurred in the physical presence of female but not male experimenters and was independent of gaze direction and whether the female experimenter or the subject was moving. We further confirmed this unexpected finding using a photograph-based approach/avoidance task that showed again that OXT only stimulated men in a monogamous relationship to approach pictures of attractive women more slowly. Importantly, these changes cannot be attributed to OXT altering the attitude of monogamous men toward attractive women or their judgments of and arousal by pictures of them. Together, our results suggest that where OXT release is stimulated during a monogamous relationship, it may additionally promote its maintenance by making men avoid signaling romantic interest to other women through close-approach behavior during social encounters. In this way, OXT may help to promote fidelity within monogamous human relationships.

Circumcision Permanently Alters the Brain

Two of my physics professors at Queen’s University (Dr. Stewart & Dr. McKee) were the original developers of Positron Emission Tomography (PET) for medical applications. They and a number of other Queen’s physicists also worked on improving the accuracy of functional magnetic resonance imaging (fMRI) for observing metabolic activity within the human body.

As a graduate student working in the Dept. of Epidemiology, I was approached by a group of nurses who were attempting to organize a protest against male infant circumcision in Kingston General Hospital. They said that their observations indicated that babies undergoing the procedure were subjected to significant and inhumane levels of pain that subsequently adversely affected their behaviors. They said that they needed some scientific support for their position. It was my idea to use fMRI and/or PET scanning to directly observe the effects of circumcision on the infant brain.

The operator of the MRI machine in the hospital was a friend of mine, and he agreed to allow us to use the machine for research after normal operational hours. We also found a nurse who was under intense pressure by her husband to have her newborn son circumcised, and she was willing to have her son to be the subject of the study. Her goal was to provide scientific information that would eventually be used to ban male infant circumcision. Since no permission of the ethics committee was required to perform any routine male infant circumcision, we did not feel it was necessary to seek any permission to carry out this study.

We tightly strapped an infant to a traditional plastic “circumstraint” using Velcro restraints. We also completely immobilized the infant’s head using standard surgical tape. The entire apparatus was then introduced into the MRI chamber. Since no metal objects could be used because of the high magnetic fields, the doctor who performed the surgery used a plastic bell with a sterilized obsidian bade to cut the foreskin. No anesthetic was used.

The baby was kept in the machine for several minutes to generate baseline data of the normal metabolic activity in the brain. This was used to compare to the data gathered during and after the surgery. Analysis of the MRI data indicated that the surgery subjected the infant to significant trauma. The greatest changes occurred in the limbic system concentrating in the amygdala and in the frontal and temporal lobes.

A neurologist who saw the results postulated that the data indicated that circumcision affected most intensely the portions of the victim’s brain associated with reasoning, perception and emotions. Follow up tests on the infant one day, one week and one month after the surgery indicated that the child’s brain never returned to its baseline configuration. In other words, the evidence generated by this research indicated that the brain of the circumcised infant was permanently changed by the surgery.

Our problems began when we attempted to publish our findings in the open medical literature. All of the participants in the research including myself were called before the hospital discipline committee and were severely reprimanded. We were told that while male circumcision was legal under all circumstances in Canada, any attempt to study the adverse effects of circumcision was strictly prohibited by the ethical regulations. Not only could we not publish the results of our research, but we also had to destroy all of our results. If we refused to comply, we were all threatened with immediate dismissal and legal action.

I would encourage anyone with access to fMRI and /or PET scanning machines to repeat our research as described above, confirm our results, and then publish the results in the open literature.

Paul D. Tinari, Ph.D.
Pacific Institute for Advanced Study