Socialism is the economics of the hunter-gatherer cultures.

The FED pretends to but does not actually control interest rates on the down side. It absolutely can raise interest rates but on the downside it runs out of control as FED rates approach zero. That is why Federal Reserve chairman Ben Bernanke said yesterday that the central bank will be prepared to tighten monetary policy only when the outlook for the economy “has improved sufficiently.” If the economy does not improve when rates are zero that means hyperinflation is at hand. Hyperinflation is caused when the government must run a continuous stimulation package to keep out of an economic depression. A continuous stimulation package inevitably fails especially when it is given to the indigent hunters and gatherers rather than reducing taxes on the people who have a work ethic and need a motive for working. The work ethic fails when others democratically vote to steal the fruits of labor.

The Wall Street Journal had a picture yesterday of a crowd of blacks getting Obama stimulation checks and practically tearing down the doors trying to get their free money. Obama has concluded that the best way to stimulate the economy is to give it to people on welfare and people whom Barney Franks gave mortgages to who do not have regular jobs or skills and cannot afford mortgages. Obama and Barney Franks do not think that requiring people to work is fair in America, the second richest country in the world. Barney Franks and Obama believe that everyone in America who wants to own a home should be able to have one whether they can afford to or not.

But even with the FED rate as low as it can go, interest rates are rising because what Obama and Barney think and do does not work and never has worked anywhere in the world. You cannot make a nation wealthy by taking money from working people and give it to people who culturally do not believe in a work ethic. The oldest culture of humans is the culture of the "hunter gatherer." It is as old as man himself and it is a culture that believes nature provides everything and people just have to know where to go to pick the free fruit. That was what the people in the WSJ photo were doing, picking the fruit ($checks) Obama and Barney were distributing. Sometimes hunter-gatherers have to lie a little and say they are disabled and cannot work, sometimes they get a loan and open a bank account with it so they can pretend it is their savings to prove they can afford mortgage payments, and sometimes good old Obama and Barney just hand them money which comes from American workers who actually do work and do not scam and mug other Americans. Taking from workers and giving it to "hunter-gatherers" did not work anywhere it has been tried. In general, hunters-gatherers are socialists who believe the majority has the democratic right to rob from any stupid minority group that has a stupid work ethic. The work ethic evolved when tribes gave up the hunt and began farming. Most recently they tried hunter-gatherer socialism in Africa in several countries including Rwanda and they started by looting and killing the white farmers. Now there is starvation wherever there is hunter-gatherer socialism. Now the African Muslims rape, rob and murder the Christians.

Socialism only looks civilized when everyone looks and behaves identically. In Sweden everyone on welfare looks the same and everyone likes the free stuff and everyone is satisfied giving out Nobel prizes because the Swedish themselves have contributed relatively little to world science, economics and culture. Socialists love to give things away, not their things but certainly rich people's money.

California raised yields and scaled back its bond sale to $4.1 billion this week because money is losing value as California flirts with hunter-gatherer socialism. Monkeys stealing from other monkeys is the democracy practiced in the jungle. Today it is politically correct to call it socialism. California social welfare is causing the surge in fixed-rate municipal issuance that drove benchmark rates higher by the fastest rate in four months.

Yesterday the TARP Oversight Panel criticized administration's mortgage-modification program. Basically it is a failure and only postpones the inevitable. The real problem was Senator Barney Frank and the Senate Banking Commission that gave mortgages to hunter-gatherers who had no capacity to pay back debts.

Market forces October 9

American government is declining with wholesale democrat-socialist corruption of American economics and foreign policy and now the tyrannical attacks on the free speech of financial and political dissidents. We have growing world chaos similar to what preceded WWII. The Obama administration is seemingly creating the second Great Depression before our eyes and setting America up for another Pearl Harbor type sneak attack by terrorists.

Still this is no time to hide money under the bed or in bonds, the money market, or treasuries. Rising inflation will initially crush bonds and devalue currency. The time to go into bonds and money markets is when inflation peaks and the FED is still raising rates. That may not even start to happen in the next year and the peak inflation rate could be as late as ten years away. We continue to invest in sector stocks that are down but rotating back into favor and then take profits on their short run-ups that sometimes only last a week before they tumble again. It is better to take 8% every month than 20% over a year. While this year is an exception, 10% a year is on average about the best buy-and-hold can achieve.

Asian markets were generally up again last night; China surged 4.7%, Hong Kong up 0.0%, India down -1.2%, Japan up 1.9%, and Taiwan up 0.9%.

European markets are down in a range from -0.5% to -0.8% this morning about half way through their day.

US pre-market futures are down today by about -0.2% to -0.4% at 9:00 AM EST after a flat Thursday buying opportunity.

Advances in science and the 2010 election will be necessary to pull America out of this administration's corrupting socialist quick sand. The polls say that Americans find incumbent Republicans, Democrats, and Independents equally culpable for the chaos on capital hill. Americans want to throw them all out and have term limits to end Senator Rangel's type of institutionalized arrogant corruption.