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skipbreakfast post=5491 wrote:
Deflationists see a limit on the ability of a government to manipulate a market. Historically, manipulation has NEVER worked indefinitely.
No, nothing works indefinitely.
But, 22 years = 1 generation.
It could work for longer than your or my lifetimes.
Or your children’s or my children’s lifetimes.
As the famous saying goes:
“The markets can remain irrational,
much longer than you can remain solvent.”But, then again, we’re not supposed to talk about timing here, right?
davefairtex post=5478 wrote:
From what I can tell, the biggest differentiator in the TAE vs Martenson perspective boils down to the Fed + Treasury’s ability to monetize & deficit-spend.
So far, Martenson sees few real impediments to Fed monetizing Treasury deficit spending. I know for sure TAE does not agree with this.
My take is that Martenson has it pretty well nailed.
What actual impediments are there to Fed monetizing, from here to eternity?
There are those who believe that the all-powerful Bond Vigilantes and the “Bond Markets” will rise up and put a stop to the central bankers’ shenanigans. Well, I’ve got news for those who believe that . . . . ain’t gonna happen.
It’s been some time now since the Men In Black came to pay a visit on the so-called Bond Vigilantes, flashed their eyeballs with the little pen, and told them to crawl back into their holes and stay there. And that’s where they’ve been.
As for the “Bond Markets”, the central bankers have played them like Itzhak Perlman plays a Stradivarius. The bond markets crap their pants every time Bernanke, Draghi, or Shirakawa hits the cntl-P button. The Bank of Japan has been diddling the bond markets for 22 years since the 1990 implosion, and there is no reason to believe that central bankers worldwide haven’t read that playbook.
True markets don’t exist anymore anyway. They are manipulated and massaged every day and in every way by Wall Street and the central bankers themselves.
That which is being manipulated has lost its ability to enforce discipline on anything whatsoever. And so the central bankers will remain unchecked for the foreseeable future.
“Give me control of a nation’s money and I care not who makes it’s laws”
— Mayer Amschel Bauer Rothschild, 1863
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.
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.
davefairtex post=5420 wrote: Viscount –
How long can this go on? As you have pointed out, a good deal longer than TAE expected.
It brings to mind Keyne’s quote: “Markets can remain irrational a lot longer than you and I can remain solvent.”
In an interview on CNBC this morning, Ray Dalio (Founder/CEO of Bridgewater Associates, and one of 2012 Time magazine’s 100 most influential people in the world) had this memorable quote:
“Southern Europe faces a 10-15 year managed depression.”
I believe that is a succinct analysis of not just Southern Europe, but of what is happening in the entire industrialized world. Japan started it 20 years ago, and the rest have just drifted into it during the last 5 years. It is exactly what Bernanke, Draghi, and the rest of the central bankers KNOW they are doing — Managed Depression.
How long can they manage it . . . . well, that would be the $64,000. question, would it not? Most interestingly is that they have managed it this long.
Five years ago I read Kunstler’s The Long Emergency, shortly after it was first published. After my first reading, I placed the emphasis on the title word Emergency. After I read it the second time, I placed the emphasis on the title word Long.
John Micheal Greer (the Archdruid Report) has also stipulated many times that this devolution is going to be a grinding, drawn-out process. Yes, there will be stair-step drops along the way, but it is not going to be like plunging off a cliff, but more like bouncing off one boulder to another down a steep slope.
The good news is that this gives us all a bit more time to acquire our homesteads and prepare our families for what lies ahead.
Viscount St. Albans post=5417 wrote: TAE:
Do you think deflation lasts another 2 years or another 20 years?This is a crucial question for all of us that follow you, Illargi.
We would like either you or Stoneleigh to step up to the plate and address this. It is critical for many of us who listen to you both, as to how we plan to move ahead.
Please.
This is all a very enlightened discussion with some great points being made, and intelligent contributions all around.
Personally, I would be quite interested in further extrapolation of the timeline possibilities. It would be great if Illargi/Stoneleigh could flesh out several likely sequences of events, with the logical triggers, for different scenarios. (If this happens, then the following timeline plays out; if that happens, then the alternative timeline likely occurs; etc., etc.)
One thing that skews the thinking of most of us, is that we tend to be American-centric. It’s important to realize that there are major regions today (think India/SE Asia regarding gold, and China regarding silver) which have thousands of years of history using precious metals currencies during extended periods of economic turmoil. These regions may likely experience the looming economic debacle quite differently from how Americans will.
My feelings regarding the inflation/deflation debate are that there will be many examples in which both will be occurring simultaneously, both within a given region, as well as across several different regions, as well as between differing commodities, products, and services. I’m not married to the belief that for any period of time, or any locale, it’s got to be either one or the other.
In effect, there may likely be some various and sundry monster economic hybrids that arise, and which in all likelihood, there exist historical examples to be found that can illustrate this.
ilargi post=5393 wrote: My point is, that if you are saving your money for an uncertain future, why would TAE suggest you keep those savings in cash, which is continuously declining in purchasing power, when you can keep it in gold, which is not?
Because in a deflation, cash is definitely king, and gold is definitely not.
Hold cash at your own risk and peril.
Cash will expire worthless after its Best By date. Why?
All fiat currencies fail after a rather limited lifespan.
According to a study of 775 fiat currencies by DollarDaze.org, there is no historical precedence for a fiat currency that has succeeded in holding its value. Twenty percent failed through hyperinflation, 21% were destroyed by war, 12% destroyed by independence, 24% were monetarily reformed, and 23% are still in circulation approaching one of the other outcomes.
— https://georgewashington2.blogspot.com/2011/08/average-life-expectancy-for-fiat.html
In a global economic catastrophe, the Euro, the Yen, the Pound, the Renmibi, and yes, even the almighty US Dollar will become as worthless as all of their failed predecessors.
Gold has retained its value over time:
In one of the earliest recorded financial transactions, in Babylon during the reign of Hammurabi, a clay tablet stipulated the price in gold for an order of bread — the equivalent of 500 loaves for an ounce of gold.
Today, 6000 years later an ounce of gold will still buy you — 500 loaves of bread. I’m wondering how much bread the US dollar will buy you in 6 years, much less 6000.
Trivium4TW said:
TAE isn’t about making short term trades.
And I am not about short term trades either. Far from it.
My point is — protect your ongoing savings by protecting your purchasing power as much as possible.
If you have eliminated your debt (or never acquired any in the first place) then you should be saving money regularly.
However, the value of the US dollar is undergoing continuous, ongoing decline.In 1971, the US went off the gold standard. Today, according to government CPI data (which is skewed to understate real world values), it takes about 5700 dollars to purchase what 1000 dollars did in 1971.
The US Dollar has declined in purchasing power by about 83% in the last 40-some years, and your dollar is today worth 17% of what it was worth back then.In 1971, just before taking the US off the gold standard, the official gold exchange rate was $42./oz.
Today, it is $1774./oz., or 4220% of what it was back then.My point is, that if you are saving your money for an uncertain future, why would TAE suggest you keep those savings in cash, which is continuously declining in purchasing power, when you can keep it in gold, which is not?
Illargi said
“A really deep recession, the one we say is coming means that most people who hold gold will be forced to sell it, to pay off debt, buy essentials etc. It means you would need to be rich, $1 million bare minimum, to sit on your gold for 10-15-20 years without having to touch it. After that, gold will hold its long time value again. But not in the meantime.”
So, I’m not sure what you mean by not in the meantime.
I believe you have been saying that it is preferable to hold cash, rather than gold, for some time now. I’m thinking that that is not a good decision based on history.
Nicole said this, in her Lifeboat article, posted Nov. 30, 2008.
2) Holding cash and cash equivalents (i.e. short term treasuries) is vital as purchasing power will be in short supply. Cash is king in a deflation.
And in the same post, she also said the following:
Metals will hold their value over the long term as they have for thousands of years, but you may have to sit on them for a very long time, so don’t by them with money you might need access to over the next few years.
So, I’m not sure what you mean by a very long time. On December 1, 2008 (the closest trading date to Nov. 30, 2008), gold closed at $778./oz.
Gold closed today (9/19/2012) at $1774./oz.On the other hand, according to the US government CPI-U index, from 2008 to now, inflation has reduced the purchasing power of the US dollar by 8%. (And that is using US Government statistics for inflation, which are notoriously skewed low compared to the real world.)
So, if I had $1000. on December 1, 2008, and simply kept it in cash, it would have $920. in purchasing power today.
However, if I had taken that $1000., and purchased gold instead, I would have $2280. in purchasing power today. Based on the fact that most people would rather have $2280. than $920., Illargi, would you be willing to reconsider your advice from nearly 4 years ago?
