Bernanke And Draghi Are Not Trying To Save Our Economies

 

Home Forums The Automatic Earth Forum Bernanke And Draghi Are Not Trying To Save Our Economies

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  • #5732

    Professorlocknload
    Participant

    The thread that keeps on giving! Love it!

    Do we really believe Stoneleigh and Ilargi possess the clairvoyant powers to be able to draw a timeline with which we may all front run every twist and turn of this whirlwind, and sail off into the sunset rich? Do Draghi and Bernanke really have this tornado under their confident control? If so, why did they let it get this far?

    Having run a business, and other assorted gauntlets of life, I have come to accept that crisis knows no script. And successful reaction to crisis depends pretty much on ones ability to improvise, and some luck. In the trades, we call it being able to think on ones feet). Which then depends upon ones critical thinking skill set, and maybe a rabbits foot.

    Stoneleigh and Ilargi most definitely excel in the former department.(Maybe they carry a shamrock, I don’t know?) Mike Shedlock is another analytical thinker, as well. What they have been, and are offering here is a big heads up. A storm was spotted by them first on the horizon, and is now making landfall. Like any storm, it not only makes unpredictable swings in direction and intensity, but can actually feed on itself. These things are processes, not events, and develop a life of their own. These perceptive thinkers are the notice to mariners. All ships must handle the storm in their own way, under their own individual circumstances.

    As others here have noted; that the “Authorities” will serve their own best interests as this otherwise unpredictable chain of events unfolds, is a given. We must simply out maneuver them. Though they radiate an illusion of deity, they put on their pants one leg at a time, like us. The difference is we can travel light, they must drag with them the entire bureaucratic entourage.

    A little gold, a few hand tools, shelter, multiple skills, a little cash, fishing gear, some camaraderie with the like minded, keeping a clear mind, oh, and about that rabbits foot;).

    But….NO FEAR!

    #5734

    Stoneleigh said…
    “I have no reason whatsoever to change my view of reality. Nothing I said hinges on the specifics of timing.”

    Viscount, this is a rinse and repeat exercise that I don’t feel like participating in anymore. What sets us apart is that you believe in crystal balls and tea leaves, and we do not. When I read the quote above, I’m left wondering what part of it you don’t understand. We are very aware of the fact that timing a crash is difficult, bordering on impossible. Moreover, the S&P is not our main focus, not even close. Not only do you believe in crystal balls, you also feel like gambling. That is something we would never encourage. And that has been clear around here for a very long time.

    I’m sorry to see that you still understand so little of the deflationary process that you ask questions such as does it last 1-2 years or 10-20? I’ll refrain from asking where Nicole said deflation would be over in 1-2 years, that would just lead to more misinterpreted quotes on your part. The deflating of the by far largest credit bubble in history will take a long time, that’s not rocket science. And you still use 1-2 years as an option ….

    What’s much more important, though, is that it will devastate economic processes as we have come to know them to such an extent that we will have trouble recognizing the world we live in. From that point of view, you might as well say the deleveraging, if you include its effects in the definition, will take many decades to draw to a close. It took 60 years for the South Sea Bubble to give birth to the French revolution.

    You say that if the deflation takes 20 years, you start buying hard goods in 15 years. By all means, be my guest. But bear in mind there will be no hard goods to buy in 15 years, or almost none, and the ones that are will cost you all the gold you have squirreled and then some. You’ll also, if you manage that against he odds, have missed 15 years in which to try and learn how to use the tools.

    All these things I just said have been said on TAE a hundred times. We haven’t changed the core of what we would like the world to hear, and we won’t. What I’ve also said umpteen times, as you undoubtedly know from digging into TAE files, is that we have underestimated something; not the power of the central banks to prop up banks and markets, as I see suggested in this thread a few times, but the complacency, gullibility and lack of working neurons of the people who are being stripped bare and led into misery by voluntarily handing over what little of their wealth remains to do the propping up.

    And if you want to focus on the S&P, I’m sure you understand that, if I can summarize the events into one example, it is at 1460 now because the Greek population will be forced to work 6 days a week 13 hours a day. To keep it at levels like these, that 78-hour workweek will soon come to an economy near you. This fish is being gutted quite thoroughly with a blunt knife, and those who think they can beat the zombie markets are fools. I don’t write for fools.

    As for your list of Nicole’s quotes: I’d say she’s been pretty much dead on: at the instances where she pointed out threats, more zombie money was thrown at the system, which simply proves the threats were perceived by the system as real.

    Nicole refuses to talk to you anymore, because you’ve “misinterpreted” (see, I’m being nice) her words so many times she’s had enough. There are not many people who get her that far, she’s always willing to talk to anyone and everyone. Maybe you should learn something from that.

    #5735

    Viscount St. Albans
    Participant

    Thank you for taking the time to clarify your view on the length of deflation. Your position is somewhat more clear to me.

    That being said:

    2 statements have been made 100s of times by TAE previously:

    1) short-term US Treasuries should probably be safe for the next couple of years

    2) Deflation will continue until the bond markets are fractured, at which point, the market-imposed restrictions on actual money printing would no longer exist.

    Therefore, If (as Stoneleigh as previously said countless times) short term US Treasuries are safe for a couple (i.e. 2) years or so, then that IMPLIES (in my mind) a 2-year (or so) time frame of intense deflation before fracturing of the US bond market and the lifting of restrictions on printing.

    I emphasize the word implies, because I’ve always noted vagueness at this point in previous explanations. Maybe I’m alone in that. But I’ve read you folks closely, and I’ve never seen this issue clarified.

    Now you, above, just argued for a different outcome (i.e. a longer term of deflationary unwind).

    To use your exact language:
    “The deflating of the by far largest credit bubble in history will take a long time, that’s not rocket science. And you still use 1-2 years as an option ….”.

    So do you think US Treasuries are therefore safe for longer than 2 years? If no, then why not? That core piece of practical reader advice, and the associated explanation, is missing from your statement above. If deflation (or deleveraging as you mention above) is likely to last signficantly longer than 1-2 years, then why wouldn’t holding US Treasuries be safe for longer time horizons than 2 years?

    It comes down to an issue of how long you expect core bond markets to last (2 years or 20 years). This has nothing to do with gambling and everything to do with capital preservation.

    I assume (and I emphasize ASSUME).
    that you’re saying…..Deflation (deleveraging) will last a long time (longer than 1-2 years) and the economic damage will be so significant that there’s likely not going to be much stuff left to buy after a few years due to lack of new production. (the initial material glut caused by an initial sharp fall in demand will have, at that point, been burned away by conflict or gradual use).

    That’s fine, and I get that. If I’m assuming your explanation correctly. But that’s different than saying US Treasuries are only safe for a couple of years or so.
    ——————————————————
    Here’s an easy way to resolve the confusion:
    If US Treasuries are only safe for another couple of years, then why is that?
    Is it because:
    #1) The US bond market is likely broken and money printing has begun by that point
    OR,
    #2) because there won’t be much stuff left to buy at that point, after all the economic/societal damage is done, so holding liquid Treasuries would no longer be a prudent store of value.

    #5736

    Professorlocknload
    Participant

    Perhaps of interest;

    On the “safety” of short treasuries;

    They are as safe as the full faith and credit of the Federal Reserve Bank. In observing Bernanke’s and Draghi’s tweaking and twisting of accepted truths, while squirming in their chairs, quivering lower lips, broken nervous speech, as they embark on unprecedented and radical policy maneuvers, are we inclined to hold our faith in highest esteem for these apparatchiks? They are, after all, sovereign debt instruments, incarnate. For a short answer, might want to google “Russian Bond Market Collapse”

    What they don’t want to hear? Right here;

    “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
    — Ludwig von Mises

    IMHO, they are presently attempting to mix, mish-mash, and otherwise shuffle those astute words into scrambled scrabble letters in every possible way of avoiding their truth.

    On stocks (S&P 500)?
    “Remember that the stock markets are manic depressive.” Warren Buffet

    Capital preservation?

    I like to reset my “Investor Persona” every so often, by stepping away from the LCD, taking a walk on the beach where I am humbled by the vastness and power of the Mighty Pacific, while reflecting on the fact that I came into this bittersweet existence with nothing, and will be someday departing with same-same. Or;

    “There will be two dates on your tombstone…your date of birth and your date of death. The only thing that really matters is that dash in between” Unknown

    On predictable outcome?

    Give me each play in advance of a Superbowl Game, and the score at the end of each quarter, and I will cover all your expenses on a trip with me to the sports book in Las Vegas!

    How long, or bad could it be?

    Hop a flight to New Delhi, and catch a ride out to Bhagwanpura (Says a friend, a Mr. Patel, as I haven’t been there, but his elucidation is sufficient, for I have experienced other similar environments in South East Asia.) But, smiles most likely could be found there, if one looked closely.

    I guess what I’m suggesting here is, listen to every opinion offered, then insert each into your perception “software” and process, scrutinize, and test the whole, to establish the acceptable outcome upon which you are willing to take action, not forgetting to change your mind as the facts change.

    Example perception testing thoughts;

    “I might buy green backs, then one morning they are replaced by orange backs, at 2:1.”

    “I might buy bonds, then some unlikely event (black Swan?) takes place, shattering confidence.”

    “I might buy gold, then India and China go over the edge, flooding the market with it.”

    “I might buy a “doomstead” only to find it in the eminent domain path of a go fast rail to nowhere.”

    “I could load up on firearms with the perception anarchy is around the corner, only to find my state has rendered them illegal, I don’t turn mine in and end up charged with a felony, riding out the crisis in the safety of a jail cell”

    I could go on, but the answer to these dualistic examples is somewhere in the “grey areas” between. So, until our own “Nirvana,” may we stop, one day at a time, to smell the roses.

    FAQ. OK, Mr. Knowitall, how do we protect ourselves?

    Answer. Are you using a lantern to search for fire?

    #5740

    davefairtex
    Participant

    Ilargi said –

    … we have underestimated something; not the power of the central banks to prop up banks and markets, as I see suggested in this thread a few times, but the complacency, gullibility and lack of working neurons of the people who are being stripped bare and led into misery by voluntarily handing over what little of their wealth remains to do the propping up.

    As someone who suggested this very thing in this thread…I’ll respond.

    It kind of sounds like you are blaming the victim a little bit. And also, is it an important distinction to make whether it is actual central bank power or gullible victims as long as the outcome is the same? Of course the 22,000 people who work for the Fed don’t have the actual power (the stuff devolving from the barrel of Mao’s gun); their power resides in the faith given to them by everyone else. But faith IS power. Thats why the system is still in place today.

    In addition, this outcome should not be a surprise. Japan as a society displayed this very same sheep-like effect for the past 20 years. And yet we imagined that the west is different – that people everywhere here would simply tear down the current system because the Fed hands a few trillion to the banks?

    I get the sense you are upset. But at whom? At yourself for not seeing this possible outcome clearly, or at the participants for not behaving as you think they should?

    It reminds me a bit of a trader who would scream at the screen when the trade did not go the way he expected it to. It was the market’s fault, you see – it didn’t cooperate with the trader’s view on how things should have gone. Of course, the market is big and apparently immune to yelling, so this strategy did not lend itself to trading success. (That was me, by the way so I can empathize with where you seem to be coming from)

    Having an unchanging and diamond-hard conviction about how and when things in the trading world (or the real world) must play out causes all sorts of trouble when the real world doesn’t cooperate.

    In retrospect, its easy to see why things have played out this way. Very few of the participants wants the current system to fail. They all have a stake – large or small – in it its continued existence. So the vast bulk of them are willing to allow the people in charge wide latitude to keep things going. After all, its been in place for 100 years and that’s longer than anyone here has been alive.

    To paraphrase Keynes, “When my understanding of the situation changes, I change my mind. What do you do, sir?”

    So now that you have new, and clear evidence that the victims aren’t going to rip things apart as readily as you once thought, and that for some reason the system (for whatever reason) is more resilient than you had expected, how has that changed your view of timelines, outcomes, and likelihoods?

    #5741

    bluebird
    Participant

    Ilargi said “we have underestimated something; not the power of the central banks to prop up banks and markets, as I see suggested in this thread a few times, but the complacency, gullibility and lack of working neurons of the people who are being stripped bare and led into misery by voluntarily handing over what little of their wealth remains to do the propping up.”

    What I keep discovering, is that people today believe this current lifestyle is normal. They love to buy, buy, spend, spend, take on even more debt, etc. Somewhere they have lost their critical thinking skills. And no one that I know wants to take responsibility and be accountable for their actions and their decisions. It is always somebody else’s fault when things do not go the way they want.

    For the 4+ years that I have been reading TAE, I keep trying to step back and become less dependent on the global system. But it is almost impossible because nobody else wants to form a smaller community. Everyone seems to want to grow and expand.

    The more I read, it appears that when the music stops, there will be no chairs and we will all flounder until we die. Few people want to voluntarily change, until they have to. And when forced to change, it could be too late to learn basic life-skills.

    Edit: When the system does collapse, those of us who have connected the dots and heeded the warnings to prepare, we can try to guide others. It won’t be easy.

    #5742

    Professorlocknload
    Participant

    Money=time=life spent? Different folks have different sets of “values.” As a Voluntaryist, I value Liberty and Freedom to Associate above all other aspects of my adventures on this dirtball, as it spins through time and space. The rest is, ahh, immaterial…er, material? That suggested, may I also recommend one of the most interesting, and simple, little tomes I have ever “consumed.” Thankfully, enough years ago to assist in changing my course a couple of degrees away from the swamp. It can be picked up used for under five bucks or so. What are you out?

    https://www.amazon.com/Your-Money-Life-Transforming-Relationship/dp/0140286780

    Surprised it’s still in print. Then again, maybe it’s time has come around again?

    Wow, a Latte’ costs more of my life, that the time it takes to drink it 😉

    ps Get it through the sidebar there, and throw Stoneleigh and Ilargi a bone for all they do here.

    #5743

    jal
    Participant

    What will survive, are not the individuals but the message.
    You should be asking,
    “Will the surviving individuals get the message and act appropriately to maximize their chances of survival?
    Have we, who are survivors, of past calamities been taught the messages from the past and acted appropriately to maximize our chances of survival?”

    Let’s do a little math to illustrate the probability of having surviving descendants.
    Let’s use the past for our calculations.
    What is the historical probability of your children surviving?
    A generation is 20 years.
    There is a doubling of population every 20 years.
    Since you are here, then that means that there were 2 people involved in your birth. That’s a doubling.
    Your parents also had 2 parents as well. that’s another doubling. You can do the remaining doubling for as many years as you want to go back.
    Lets do 10 doubling, ( 200 years).
    2, 4, 8, 16, 32, 64, 128, 256, 512, 1,024
    Soon, reality will show that it is impossible to keep the doubling because the existing population in the past was less then at present. You are lucky to be alive.
    That is the critical fact, the historical probability of surviving.
    Here is doubling calculation for 200,000 years to illustrate the probability of surviving.

    https://en.wikipedia.org/wiki/Mitochondrial_Eve
    Mitochondrial Eve is estimated to have lived around 200,000 years ago,[2] most likely in East Africa,[3] when Homo sapiens sapiens (anatomically modern humans) were developing as a population distinct from other human sub-species.
    Mitochondrial Eve is named after mitochondria and the Biblical Eve.[16] The reference to Eve may lead to the misconception that she was the only living female of her time, even though she co-existed with other females. However, all of her other female contemporaries failed to produce a direct unbroken female line to the present day.
    The current concept places between 1,500 and 16,000 effectively interbreeding individuals.
    That would mean that the probability of survival could be 1:16,000

    Here is another calculation.

    The total surface area of the earth 510,072,000 km2, 148,940,000 km2 ,land (29.2 %),361,132,000 km2 water (70.8 %)
    361,132,000 km2 water (70.8 %) If we allowed every man, woman and child a square km and filled all the land masses with people the earth would hold no more than 148,940,000 persons. Remember that not all square km of land can support a human.

    https://en.wikipedia.org/wiki/World_population
    The world population is the sum total of all living humans on Earth. As of today, it is estimated to number 7.041 billion by the United States Census Bureau (USCB).[1] The USCB estimates that the world population exceeded 7 billion on March 12, 2012.[2] According to a separate estimate by the United Nations Population Fund, it reached this milestone on October 31, 2011.[3][4][5]

    That would mean that the probability of survival could be 148,940,000: 7.041 billion.
    If you want to include the total surface area of the earth, 510,072,000 km2, and count one km per person then the probability of survival would be 510,072,000:7.041 billion.

    You are not relevant. The message is the only thing that is relevant.

    #5744

    bluebird
    Participant

    @jal – In a similar frame of mind, it occurred to me that we pay to bury dead people nowadays in nice maintained cemeteries. How far back does this custom go? Throughout history, there have always been small plots of land to bury loved ones, but when did people start paying for this service? And after a couple hundred years being dead, does the current generation care, other than perhaps genealogists.

    #5745

    Jack
    Member

    Everyone like to gang up on Ilargi for his prediction of the gold price.
    So far the gold bugs are winning but the game isn’t over until its over.
    I still believe that a number will be played on those holding gold.

    There is something else to look at here.

    Just like when you have home price high people are happy that they have something that’s worth a lot of money and they spend like nuts.
    Same thing is happening with gold.
    Those who have gold are on a wild spending spree.
    That is good for the economy.

    #5748

    Synchro
    Member

    Jack post=5442 wrote: Everyone like to gang up on Ilargi for his prediction of the gold price.
    So far the gold bugs are winning but the game isn’t over until its over.
    I still believe that a number will be played on those holding gold.

    There is something else to look at here.

    Just like when you have home price high people are happy that they have something that’s worth a lot of money and they spend like nuts.
    Same thing is happening with gold.
    Those who have gold are on a wild spending spree.
    That is good for the economy.

    Well, I hardly know where to begin on this one . . .

    “Everyone like to gang up on Ilargi for his prediction of the gold price.”

    Hmmm, what??

    Who is calling out Illargi about anything to do with the price of gold? Where are you getting that from? I don’t believe Illargi has predicted the track of the gold price at any time in recent memory. If he did, I’m very sorry I missed it.

    “So far the gold bugs are winning but the game isn’t over until its over.
    I still believe that a number will be played on those holding gold.”

    Winning??? Winning what, exactly? What Game are you referring to?
    A “number will be played”. What number? 47 Red? 12 Black? What Roulette Wheel are you onto?

    “Those who have gold are on a wild spending spree.
    That is good for the economy.”

    Most people I know that hold gold, are NOT spending money wildly. They are, in fact, not spending money much at all. And, if so, how is this GOOD for the economy? What economy are you referring to?

    It appears to me that you have forsaken your doctor’s advice about taking your medications, and that you need to pick up your prescription at your nearest pharmacy and take them immediately.

    #5749

    Synchro
    Member

    jal post=5440 wrote:
    Have we, who are survivors, of past calamities been taught the messages from the past and acted appropriately to maximize our chances of survival?”

    The answer simply is . . . . no.

    Charles Darwin introduced the idea of the Survival of the Fittest.

    Your analysis reduces everything to a mathematical set of probabilities.

    Maths do not replicate the conundrum very well at all.

    Your maths assume equal probabilities to every human that is born and potentially replicates. That is an incorrect presumption.

    Some humans are born with a higher probability of reproductive success than others. And they will reproduce at a much higher rate than others.

    Some humans are born deficient and will not reproduce at all. That portion of humans are a significant percentage of those that exist.

    Your rote maths ignore those basic concepts and are therefore suspect.

    #5753

    Jack
    Member

    The number for doing the tango or football hustle.
    Something thats going to knock them out of their feet.
    You have prominent people saying buy gold and others are saying it is a gamble.

    #5755

    jal
    Participant

    @ Synchro

    Your rote maths ignore those basic concepts and are therefore suspect.

    No. I do not ignore the details of the concepts.
    It would take a book, or many books, to get into the details and the conclusions would still follow the trend.
    The conclusion will still be the same.

    As an individual, dig into the subject, it will give you a greater chance of having surviving offsprings.

    You are lucky to have been born.
    Your offsprings will have to have more luck than your forefathers.
    The odds are worst than the casino. The longer you play the greater the odds favor the casino.

    You are not relevant. The message is the only thing that is relevant.

    #5758

    davefairtex
    Participant

    jal –

    You are not relevant. The message is the only thing that is relevant.

    I am relevant to me.

    Good luck convincing me otherwise. 🙂

    #5759

    jal
    Participant

    :cheer:

    😆

    You know what I meant.

    Mitochondrial Eve left a message, she didn’t leave her name.

    #5767

    Nassim
    Participant

    we pay to bury dead people

    This reminded me that during the Victorian era, millions of corpses of India’s poor were imported to the UK – by the shipload – for use as fertilizer.

    #5770

    bluebird
    Participant

    @nassim – Perhaps that is when the custom began, to ensure that our loved ones are treated with dignity and respect. Cemetery burials is a fascinating, but morbid topic for additional research.
    https://en.wikipedia.org/wiki/Cemetery

    #5776

    p01
    Participant

    Nassim post=5464 wrote: we pay to bury dead people

    This reminded me that during the Victorian era, millions of corpses of India’s poor were imported to the UK – by the shipload – for use as fertilizer.

    Considering that agriculture isn’t going anywhere anytime soon, because everybody wants civilization to last in one form or another, I smell great opportunities in this venue. Smart money must be pouring in… :whistle: past the graveyard…

    #6407

    p01
    Participant

    Well, that didn’t take long:
    Human Bodies For Fertilizer?
    My imagination leaps forward to a time when enlightenment finally comes to the human race.

    My imagination doesn’t leaps forward, because it’s been tried before, with great success, in meatspace not in imagination, by the shipload.

    Ain’t Homo Magister grand? Say it ain’t so!:
    Book of the Damned

    Although, first we must figure out how to run the Industrial Civilization on something else instead of debt (running it on disposable slaves is really the only other option), because this is the “Enlightenment” du jour.

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