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But this is my favourite piece of non-existent evidence for climate change. Not happening, no. Really not. All fake. Yep. Fer sure.
As you may know, we are working 10 acres in a generally sustainable design with an aim for self reliance and an ability to shut the gate for 12 months if necessary as a transitional stage.
Several people with whom I have talked about this have been surprised to hear that I give us less than a 20% chance of coming out the other side in one piece and that, further more, if we get it right, our grandchildren MIGHT have a half chance of living a reasonable life. The downside of that will be that they will be slave owners.
If we get it wrong, they will be the slaves. Its not a popular perspective, but I can’t see how it can be any different.
There is one missing data set from the St Louis Fed charts. The debt levels. Which way do you think they might go?
Yup. W hat Rapier said.
And so much for the repudiation of the Wall St/DC axis. Wall St will love Trump because he will put big business ahead of the little guy every time as his kids get cushy numbers with the MI Complex.
I’ve been thinking along these lines for a while now, but with a different slant that should sit reasonably well on this site.
I think one of the reasons Clinton is so hated is that, as “the most experienced candidate”, possibly ever, she has already been tainted by all that is necessary, absolutely necessary for the maintenance of the American empire.
Most previous presidents have been state governors or, occasionally, congressmen who could be seen as relatively innocent at the moment of swearing in and before they were confronted with the, often vile, facts of what it takes to maintain an empire.
Clinton has already been there, 8 years in the WH, Sec of State, Senator. She was in the operations room with Obama and the chiefs of staff the day they assassinated Bin Laden and no doubt she was there at other times as dreadful things were done to keep American hegemony alive. By now standing for POTUS she is essentially throwing in American faces the realities (including off-site mail servers) with which the upper echelons of the machine function.
Just as Colin Powell would bring to a candidacy the fact that he stood in the UN with his photos and maps and charts and flat-out lied to the whole world assembled about what he knew or did not know about Iraq, so Clinton brings the same kind of baggage and many Americans really, really don’t want to see it.
Yes, we should hold public office-holders to the highest standards, but, as Cheney said, the American way of life is not negotiable. Those two things are not compatible and in Clinton they are overtly joined and on display. By hating her they are, to a degree, trying to reject the truth about their way of life, it is to be regretted that the Republican party, rather than putting up a moderately plausible alternative produced a clown car of incompetents and a proto-demagogue as candidates. For reasons we may never know, they decided to go with the one person who exemplifies even more the contradictions of American life, a superficially successful entrepreneur who turns out to be massively corrupt, incompetent, sleazy and ignorant, another dose of cognitive dissonance representing the private sector.
It has come to a choice in which Americans have to reject one side or another of their much-vaunted civilisation and that fact alone is probably enough to make all of them hate both candidates and the parties they stand for. No wonder the electorate is so pissed off.
No. Hearing a political adviser saying he doesn’t really care is not refreshing, it is a very nasty sign of a system well into decay. At least if he said that he has no clue he would be more honest.
Its come down to a choice between someone who will try to hang on to the status quo until well past its breaking date, and someone who will deliberately cash the system in search of more advantage for himself. trump is already getting too many passes from critical thinking, don’t join the mob now.
I’m also amazed that you quote, approvingly someone who says that “the $9 trillion in debt added during the 7.5 years of the Obama administration has caused no detectable harm” This whole site is about the appalling damage that is being done by unrestrained debt.
And as for the suggestion that “We don’t really need to care whether the plan “pays for itself” in the short term, if it does indeed produce the accelerated growth promised”, haven’t you spent enough time convincing us that growth at all, never mind accelerated growth is not arithmetically possible? Anyone, and that includes all parties, offering “growth” of any kind is delusional, please don’t get carried away with the idea that swinging a big axe is preferable to chipping away; the tree is going to fall soon enough, those of us trying to follow your advice over the last dozen years will be grateful for the best chance to construct something that might survive the transition, we don’t need prompt suicidal stupidity being thrown into the mix.
Prof Locknload. My take is that negative interest rates are one of the mechanisms of deflation. Inflation is increasing the money supply above what is justifiable, deflation is reducing it to meet a shrinking economy.
The reason they want to be able to choose this method is that the alternative is to acknowledge that trillions in debt are not payable and will have to be written off, wrecking their nice little party.
One thing is certain, they cannot prevent deflation, that is already well under way, those who believed they were in control of the economy are being shown as delusional, basic arithmetic is taking over and there is nothing they can do about it except try to find new ways to make everyone else pay the bill.
Oh please, the collapse of US journalism is under way?
- Its rampant cheerleading for the illegal Bush war on Iraq,
- its unwillingness, if not its complicity with the right in not questioning the do-nothing hate-filled congress throughout the Obama years,
- its willingness to allow the whole birther idiocy and, to be fair,
- its refusal to question Obama’s own illegal use of drones and special forces in extrajudicial assassinations
doesn’t qualify as the 4th estate sliding merrily down the slippery slope? Good grief, what would it have taken?
Yes, it is now in full-blown political interference mode, but its not as if it didn’t give fair warning.
As a budding permie, I have to disagree with the prescription. Money works best when it is passing through the most hands; vital economies have high velocity.
What matters more is that the money remains within a smaller geographical area, having it drain too soon from the landscape is the problem, but unless it is acting as a facilitator of exchanges, it is not doing what it is needed for. We also think of water moving slowly through the landscape but in fact, the slower it moves, the more valuable transactions it can take part in on a micro scale.
I read some research about 15 years ago that suggested that dollars exchanged locally (for any arbitrary definition of local) were worth $5 against those that were exchanged externally. Even when the trade was net profitable for the trader, the community value of an external trade was 20% of a local trade.
One way would be local currencies, and adding a defined rate of devaluation to encourage recipients to pass it along as quickly as possible would both probably work, but any hint that it was invigorating a community from which corporate interests and bigger government were potentially excluded will always bring down the forces of reaction on local heads.
I was surprised not to see you fly into this as further evidence thgat even those you quote with approval, still don’t get inflation.
” inflation is just a symptom of underlying supply and demand and technological improvements, and thus shouldn’t be manipulated.”
You’re going to have to shout louder Illargi, they aren’t getting the message.
Seychelles, I know people keep hammering on about gold as a store of value etc etc. What I have never seen explained is how, on the Tuesday morning when the banks don’t open and will only process small transactions, how do I take my gold to the guy who fixed my car and settle the bill for $683.48?
Walk me through the process.
Joe, I would guess a tank turret mounting?
There’s an error of thinking in this, “The military contracting industry in America does create a lot of jobs, but in essence it also gives the benefits away free to its allies.”
The whole point of the said industry is to create products and services that are used once and destroyed in the process. If the nation is not at war, using up its materiel, the industry will not profit.
While it is no longer a great idea to get into an actual war, by exporting the resources to other countries, the essential flow of money to the MIC is continued without the risky business of getting someone’s kid blown to bits in a foreign place they can’t pronounce.
Take that flow away and the nation will be forced, by the MIC, into war. Breedlove is its prophet.
Of course Auckland house prices have to, and will, come down, if its only 50% it will be a miracle and in fact wont make any difference, if they come down even 20% they will wipe out most of the mortgagors anyway, taking the banks with them.
In any case, to imagine that the NZ government could stop the tide of illicit and illegitimate money sloshing around the planet from washing over us is delusional, we are far too tiny to make an iota of difference.
And, although I’m a Green voter, Ms Turei is blowing smoke up my ass with her “comprehensive plan using every comprehensive tool”, she can say “comprehensive” a dozen times and it will still not make such a plan. Now, if she switched to “draconian” at least she would be being honest; still blowing smoke but at least being straight about what it would take to budge house prices in NZ without crashing the market and the economy.
Exactly. It doesn’t because there is no pathway except to take on more debt and even that is now pretty much closed. There was an Aussie pollie a few years ago who actually suggested that to get out of the GFC, the Government should give all citizens a chunk of cash, the only stipulation was that it could not be saved or used to pay off debt, it had to be spent.
At least he understood that an economy functions when money is put in at the bottom because it flows to the top, regardless of what the tinkle-down idiots have held.
But the time for any of these actions to be in any way effective at steering the global economy away from the wall and the cliff is now past. Time to bend, lube and brace.
The problems I see with the UBI in collapse are as follows.
1. How is the value of the scrip defined/maintained/guaranteed? Collapse will, pretty much by definition, take down the centralised governance of the society that currently underpins the validity of the money. And don’t talk about blockchain, the telecoms networks needed to enable that will be gone..
2. In the collapse event there will be little trouble keeping the money internal because international trade will go down as well, however that will create massive reductions in resources that will still be vital, such as fuels to manage the movement of food so that urban populations don’t just invade the hinterland and destroy what remains of the productive capacity. By focusing on “income” we are still stuck with a financial model that says people will make the best decisions with their “own” resources, while there are other needs that they may disprefer to the cost of others in the community. ie, the market functions in a static or growing economy, but in a shrinking one, Jevon’s paradox has real teeth.
3. How will the actual producers be compensated for their productivity when the consumers will be required to, essentially, sit and wait for the goods to arrive, because every time someone moves they burn resources and the least movement will enable the greatest number to survive. But those who have to move, the food/fuel/pharmaceutical/fibre/clothing etc producers will want to be paid for the personal extra cost of that production.
4. But then what will they be able to do with that money? In a collapse there will be zero surplus resources for them to acquire to gain a benefit that recognises their extra effort to keep the community from going totally to hell.
Under BAU I can see some case for merging all social benefits into one, but under a collapse model I think your chances, even with the best will in the world, will be damned slim and probably a waste of resources that will be needed elsewhere.
Exactly Oxy. Take away the endowment and you have a very very different story. The endowment has now, largely, been taken away, so the story will change. Stockman is inside the bubble so, of course, he will not be able to see it. It was a great service that Guns Germs and Steel played for me, the world you live in arises from your resource base, no exceptions.
But Coppola is right as well as I guess you would agree. The people have been trapped between the debt and the “wealth”, the monkey with its hand in the jar will NOT let go, even at the risk of its life.
Hence my rule 1. for the last 30 years, No Debt.
Rule 2. See rule 1.
Diablo. Small point of science. As you say, the arctic ice floats. So it doesn’t matter whether it is in the form of ice or water, its mass is the same. What changes when it freezes is its volume/displacement, which is why it floats – same mass greater volume.
The same applies to the southern ocean in the other direction. The question is whether there would be more or less ice on the ground in Antarctica, and the answer appears to be, for the moment, about the same or possibly slightly more. The mass of the circumpolar sea will be, within a reasonable margin of error, the same and will apply no more force to the tectonics than before.
There WILL be a difference as sea level rises from more land ice melting – Greenland for example – because that will shift some of the load from the land to the sea. The effect of extra water in the sea will be minimal because it will, more or less, spread out over the whole ocean floor but removing a significant proportion of the ice from Greenland may very well have geological consequences.
Incidentally but related, Sweden/Norway used to be under 10km of ice in the last ice age and since the melt they have been very slowly rising, like a springboard relieved of its weight. I have friends near Märsta which, if my Swedish is right, means something like the place where the sea “Mär” stops “sta”, it used to be a Viking fishing port and is now several km inland.
So the apparent shift in weight on the poles will be mostly that, apparent, rather than real and I would guess unlikely to affect the rate of earthquakes. BTW, do you have a link to a graph of the incidence/scale of global earthquakes over the last 20-50 years to back up the assertion?
Apart from the loss of mass from Greenland, it might be interesting to explore the effects of sea encroachment as levels rise onto land which is now under air but will become under water. That too may have local geological effects, although I would guess only in places already subject to existing geological stresses, again, like NZ where I live.
Nassim. This is pretty much in line with the James Hansen paper from last year. If I understand correctly, his thesis is as follows.
1. Warmer conditions cause more glacial melting, at a rate that creates a lens of fresh water from the glaciers over the top of the salt water ocean.
2. The lens, being fresh, floats on and freezes at a higher temperature than salt water, creating more sea ice which also acts as an insulator for the warmer salt water which has less opportunity to release its energy to the air.
3. That results in warmer water still being applied to the undersides of floating glacier fields, melting them faster and, when rising sea level overtops the barriers on the shoreline, pouring warm water into the basins under land based glaciers, accelerating the whole process.
The next bit is the killer.
4. The greatly increased ice coverage of the Antarctic oceans will extract more heat from the air above them, creating an even steeper temperature gradient between the polar air and the still-warming tropical air.
5. The gradient is averaged out in the roaring 40’s which will become even more violent as the differential increases.
As a Kiwi who lives in the said 40’s, I am not looking forward to the storms with winds in the 300kph+ range.
The final piece of that particular puzzle is that, although the air around the Antarctic will still freeze the nuts off a tractor, it will still be much warmer than it has been and therefore carry more moisture which will precipitate out as snow on the upper reaches of the glaciers, providing plenty of new snow to sustain the process. For a very long time.October 17, 2013 at 6:45 pm in reply to: Nobel Winner Robert Shiller Demolishes UK's Help-To-Buy Scheme #9348
However, the other thing to consider is the distribution.
The overall figures might even look acceptable (they don’t) but when the top 0.1% owns 75% of everything and the bottom 50% have almost nothing, you have a recipe for revolution.
Or collapse.October 17, 2013 at 1:48 am in reply to: Nobel Winner Robert Shiller Demolishes UK's Help-To-Buy Scheme #9342
While I have been a fan of Robert Schiller, this critique doesn’t go far enough.
In the first place, since we reached peak employment in about 1999, the chances of having a job that pays enough to clear a mortgage in any acceptable time frame is increasingly slim, but at least having a house gives you a roof over your head while you meander through the foreclosure process.
On the other hand, if you are a renter, no job or not enough income means instant acquaintance with the streets.
But the real issue is that there are no “investments” left. An investment is inherently rent seeking and depends absolutely on enough other people being prepared to take on enough debt to keep the economy “growing” so that whatever it is you “invested” in will fetch more in real terms at some future time than it does now.
Without growth, ALL of those strategies and asset classes and whatever “investment” lingo you want to use are worthless and, if there is debt involved, as AE knows full well, have negative wealth effects.
From here on folks, we WORK for our meals and out clothes and our roof and we probably grow and make and build them ourselves out of whatever we can cobble together.
Investments are on their way to becoming quaint, almost mythological, blobs in the history book.October 8, 2013 at 6:09 am in reply to: Your Pension Is Under Attack From All Sides. Here’s 10. #9288
There is all this money being generated and almost none of it being released into the general economy, it is all stuck in the craws of the banks and financiers.
Inflation, as Ilargi and Stoneleigh keep trying to drum into everyone, is a monetary phenomenon caused by too much money chasing too few goods.
What we have is an ever falling real income and people ever more reluctant to buy anything because that would involve adding debt to an already overburdened budget.
You don’t cause inflation by printing umpty trillion dollars and putting it all into a vault and not letting anyone have any.
Can ANYONE of the inflationistas explain to me how all that money gets into circulation to cause the damned inflation? Its already all debt, and nobody wants any of it, so inflation ain’t gonna happen.
DEflation I can sign up to.
And when people wake up to the fact that their pension funds have already been destroyed, (more deflation) inflation wont be anywhere near. What we WILL have is structural rising prices as energy real costs rise, as the gyrating relative values of currencies cause first one commodity then another to price itself out of the export markets, then fail.
I live on an actual island, in NZ, a LOOONG way from everywhere. We will still have it VERY hard, for the rest of our lives. But at least we wont be invaded, nobody will be able to afford the energy to mount a force.March 18, 2013 at 12:28 pm in reply to: The Cyprus Deal is Already Under Threat (Of Course) #7167
There’s another possibility that fits with Occam’s razor. There is nothing else they can do. They are finally reaching the point where the alternatives to actually, directly stealing people’s savings is all there is left.
FB, you are an optimist. The size of government big enough to enforce such ideas over sufficiently long periods relies totally on the existing support systems for that government. Those supports will cease to exist, along with everything they hold up. In any case it would take years to sterilise enough people to make a difference. Apart from the armed resistance it would generate among the DNA driven, the scale and pace of the unfolding problem will defeat any such attempt.
We had a choice between early, effective action (including forced sterilisation if that’s what floats your boat) or messy, chaotic, uncontrolled natural forces working inside the tent.
We chose the second option 20 years ago, actually, we chose it when we collectively rejected The Limits to Growth. The only question now is when and how the late stages of the process will play out and how many of us will survive.
I admire davefairtex for being smart enough to make the most of the realities of the markets, I stay well away. But I do use them as a barometer of how much time I have to complete my own bridge to the future – whether, as an asthmatic and cholesterol carrying member of the species, I will personally make it is moot.
Every day I check the state of the markets and if they are rising or still bubbling along, I know I have a few more days at least to make progress. BTW, the trillions are not entering the economy, if they had we would have a very different, hyperinflationary situation. We haven’t because those trillions are locked into a small circuit among those with the power to trap and tap them. Its not a conspiracy, they are doing what they can just as I, on my 10 acres, am doing what I can.
I’m with Spiral on this. I have the huge benefit of being surrounded by loving, caring, active and deeply committed atheists so I am free of the extra burden that SI carries. But nevertheless, I wake in the small hours a couple of times a week to acknowledge the scale and depth of my anxiety and the predicament that is causing it. I too worry that I will not be up to what is coming, however well I may have “prepared” for it. But, whatever the process and the outcome, there is no room in my cognitive apparatus for the booming certainties driven by ancient existential angst. Like BK, I wish you well, but I also bid you farewell. This is a place for hard-eyed, grounded people able to stare into the abyss and overcome their gfear that it might stare back.
Exactly Ghung. The biggest problem I see with most people who have “solutions” to the problems we have is that they are stuck in the ideal. So many of their responses start with “what we need to do” and it usually requires that TPTB are somehow awol while the infrastructure remains intact for the next iteration to take over.
TAE has what I need, timely tracking of the evolving disaster plus good advice not on “what needs to happen” but on what IS happening and, above all, what I can do about it in my life.
I CAN pay down my debt, roll into cash and built up non-fiat resources so I do. Hopefully to be available to friends and family who can’t do that and to act as a resource for neighbours and friends as they try to make the transition. Its not complicated, but it IS hard. Not everyone can do it, but the reason I read TAE at all is that I realised 20 years ago that as soon as EVERYONE tries to do anything, however successful for a few, that thing fails.
Everything else is just hot air.
Fair point Ashvin. I was thinking more on the larger scale. The system is broken, IT is dying and we, its cells, can only do what we are programmed to do until the body of which we are a part finally releases us.
So to that extent, people are doing what they are programmed to do and, in the face of ever more difficult times, trying ever harder. Just as, when you have congestive heart failure, your liver will still try to function, even though the resources to do that are shrinking and sometimes get cut off. It will even try to scavenge resources that other organs might need.
Those of us who choose to cease behaving as we are programmed and do something else are a cancer, we are literally a threat to the system and we are treated accordingly. Think of the anger and rejection we cause as the body-politic trying to cleanse itself of a disease. The system has its homoeostasis and we are upsetting that balance so we have to go. It doesn’t matter whether our way might save the CELLS, we will destroy the BODY and the body is protecting itself.
We are liver cells that have decided to act as brain cells and we are being rejected by the system, but “the system” doesn’t act, only its agents. The mockery and vilification and aggression are the system tools of a polity in the same way as white blood cells etc are the actors in defending the body system against damage and invasion.
AS the constituents of an organism we will eventually change and be subsumed into some new form, just as a body is eaten by, and becomes the worm and the worm cast and then the tomato and then the bird that eats the seed that falls to the ground etc etc etc.
But we can’t become a tomato directly and, to use the words of a friend of mine, “the transition is a bitch”
I’ve also noticed that, as one who has moved to 10 acres in the country and is trying to fit that land as a self-reliant system for me and my family, that it is easy to get carried away with the project, to take great satisfaction in seeing milestones met and plans completed and system established and to forget for a moment 2 utterly fundamental points
1. Why we are doing this
2. Our success, or even our survival is not at all guaranteed.
I try to keep those two well in the background because, if I did not, I would be paralysed. So maybe what we observe in others is something similar; a way to fend off actual paralysis.
There is another phenomenon that fits this mindset. I recall reading about a couple of guys in Vietnam during the war. Their jeep had run over a mine and basically blown the bottom half of their bodies off.
One of their medics came rushing to their aid and realised the problem was well beyond his ability to deal with it and there was zero chance of getting them out of the wreckage before they died.
Both men were conscious and he was struck by their composure, their calm, every-day conversation until they passed out from loss of blood and died soon afterwards.
In another place I read a suggestion that the emotional and psychological condition of calm and peacefulness that surrounds many deaths, the feeling that we are going to something better, that we are about to meet long-lost loved ones etc is a survival mechanism that enables the dying not to attract predators with their screaming in fear and so endanger the whole community.
I wonder if something like this is part of why we are seeing so much apparent complacency. A preparation for death. Because when this thing comes down, there will be plenty of that. Perhaps, at some subconscious level, we do understand, but most of us accept the impossibility of fixing the predicament and are preparing to give up.
TheTrivium4TW post=4158 wrote: Hi rlm,
Let me share my understanding and you can determine if it resonates for you.
1. Coins are debt free money – so it isn’t true that governments don’t issue debt free money, they just don’t issue much of it relative to debt paper receipts (FRNs) and debt based bank credit.
I see it as the coins are issued by the state but the money that they represent is created as debt. The authority to issue is provided by the bond market which is a debt market. That, BTW is my argument against gold as a store of wealth/money. Like the internet, money is an agreement, not an external entity.
2. I believe Ilargi has answered your questioned. If I understand him correctly, he’s stated that we will go into a deflationary spike pit based on the dynamics that you currently understand. Interests rates will eventually collapse the bond market and then debt will become disassociated with money and all money will become debt free – which would easily allow for the mechanics of hyperinflation.
Although Nicole believes that the debt deflation will end the system itself, its a question of how far that deflation spike goes. The problem, in either case, will be how to get the money into circulation at all. My issue with the pathway question is what those mechanics are. The PTB have corralled all the money by closing the pathways by which it normally circulated. Unless they are dragged intro the street and shot or they permit the opening of the pathways again, it doesn’t matter whether the money is debt free or not, without circulation there is no monetary phenomenon. Again, while the debt may collapse the economy, it also has to be written off in some way, through bankruptcy or jubilee or repayment. While only one claim against an asset can eventually be satisfied, the question will also be, whose claim and how will that be negotiated? It may parallel musical chairs but its not. Possession is still 9 points of the law, possession with a gun may be more than that, especially if enough people opt for it. Especially if the police/military are themselves being dispossessed by the same system they are supposed to be enforcing on others.
When ALL of the money has been stolen under one system, it collapses entirely and we move to the physical force phase. At some point, enough people with nothing to lose decide to take down the system itself and then force becomes the currency.
3. This scenario IS NOT a mechanical scenario. There are human predators and they essentially run the financial system and have incredible influence on all major establishment organizations.
They use the monetary system in order to wage asymmetrical warfare on the citizenry that they hold in utter contempt.
Exactly. But then they “win”. Once they have sequestered all the wealth, real, financial, industrial, resource etc, they have nobody left to exploit. Since all wealth is currently expressed as money, and since there is an arbitrary, but unknowable, limit to the amount of financial concentration that is possible under any system (even the Egyptian kings had to feed the slaves till they died then feed someone who disposed of the bodies) we have no idea, until it happens, at what point the system itself collapses and we starve, freeze and die of curable illnesses.
Whatever else it is, inflation/deflation is a monetary phenomenon. When the velocity of money falls near to zero, all monetary phenomena cease to exist. We have no idea what that looks like in our global economy, but when the Romans left Britain, within a century, money disappeared as well. The economy, such as it was, became totally local and barter based. We have no idea what that might look like in the current situation, but note, the Romans were totally in control of the economy/polity until they weren’t. But they didn’t just go away, their empire collapsed and those in power were killed or dispersed. That is the end of empires. That will be the end of this one as well.
While the financial shenanigans are the key driver at the moment, the climate and energy issues are not going away and is driving its own part of the game so all of the system is at risk from multiple black swans, regardless of what those currently in power, but not control, may want.
So I’m with Nicole, I think the deflationary spike will be the entry way to the black hole of the current system. Scale will collapse and we will all be left dealing, and only dealing, with the neighbours.
They will orchestrate the scenario that will enrich themselves the most at the expense of everyone else. It really is that simple. We have debt based money because these predators set it up that way. They will not allow hyperinflation until it benefits themselves.
Completely agree. But every ecosystem has its limits and every species exploits that system to the maximum until it reaches those limits, then it collapses. The human species is doing that to its planet, just as yeast does in a vat of grape juice, and the money system. The winners take all. Then it stops for everyone.
4. The typical direct to hyperinflation response, which was posted on this thread, is that hyperinflation is a loss of confidence in the money… which is equivalent to claiming that hyperinflation is a “loss in confidence of the debt behind the money.”
Go ahead and try and “lose confidence” in your mortgage debt, your car loan debt and all your other debt… It’s absurd on its face.
True enough. Its not that we will lose confidence in our mortgages but that we will reach the point where repudiation, even debtor’s prison, will be our only option. As Nicole keeps saying, only one of the multiple claims on underlying wealth can be satisfuied, all the others are extinguished. Since all underlying wealth is expressed in money terms, there will be competition for the money by debt holders, and they will discount their debt to get the money, deflation. That’s why cash becomes king in a deflation.
5. The typical hyper narrative doesn’t ever seem to square that the money power behind JP Morgan both controls the money supply, and therefore hyper or deflation, and is giving out 30 year mortgages for 3.6%.
The only way to reconcile those two facts is… 1) they aren’t going to hyperinflate, 2) the money power behind JP Morgan, etc… will lose control of the money supply or 3) the money power behind JP Morgan are complete and utter morons on the brink of zeroing out their trillions in debt holdings and trillions in cash while bailing out the average debtor.
The depth of this kind of thought is exceptionally shallow. It doesn’t take into account WHO controls the money supply, WHAT their interests are and basic Economics 101 cost / benefit / self interest theory.
I doubt anyone controls the money supply right now. Some players are feeding it like fury to no avail while others are destroying money as fast as they can and a third lot are hoarding it and trying to keep the fraud going a bit longer (LIBOR scandal etc). But actual control will, pretty much by definition, break down as the end game gets into its work. For a generation they have been able to steal wealth by conning people into taking on debt but that is now pretty much over and those still taking it on are so delusional or cynical that every transaction carries its own coffin.
As Nicole says, though, humans are not rational creatures, we are rationalizing creatures – and a debt saturated society has rationalized their own bailout out just ahead of being gutted and filleted.
Again, completely agree. But gutting and filleting is a metaphor. What does that mean in practise and how far down the road of impoverishment can you push the current model before it breaks and what will that breakage look like. We are now talking about starvation, the end of medical care for large swathes of the population, homelessness on a grand scale while millions of homes remain empty etc etc etc. And sharply higher mortality rates from all causes except car smashes, airplane accidents, and obesity.
So how does that work itself out?
Gee thanks Ashvin. I have tried hard to follow but it is so full of self congratulation that its giving me nausea.
My issue is always that people like FOFOA refer to “the printer” and that they will somehow create money enough to substitute for the falling credibility of fiat currency at a rate sufficient to hold up the relative value of the debts etc.
But 2 problems present themselves.
The first is that money is no longer printed, in any form, by the state, it is printed by the banks in the form of debt and can only be circulated encumbered with interest.
I heard even today, someone on the BBC talking about the BoE cutting its rate to “encourage people to borrow and spend” as a way to get the country out of its recession.
That is not printing money for a start, but in any case nobody has the creditworthiness to borrow any more and those that do are already deleveraging as fast as the can, not releveraging.
The other point is that it is the banks who must print the money and who hold the debts. It is manifestly not in their interest to create the money that will dilute their assets. Wont happen.
FOFOA also talks about “stuff” becoming the currency when people get hungry, selling their iPad to a “government stooge” for example.
In what dystopian fantasy does that happen? Who are these stooges, why will they buy used iPads at any price from starving people? What will they do with said iPads then?
He talks about the ever increasing velocity of money in hyperinflation but that is only part of the process, the other is that, as the value collapses there needs to be someone, somewhere, authorised to print ever more zeroes on the money and, here’s the rub, get it into circulation.
In a world where the vast majority of money is electronic there is nothing on which to print the zeroes and no mechanism to put it into circulation. Unless, of course, legislation is passed to adjust the value of electronic accounts every hour in line with the falling value of the currency. But if that is so you can bet your ass that the banks will demand that the value of loans will be treated similarly, and they will get their way.
No path, no mechanism and dependent on “Government Stooges” buying iPads, black helicopters next. No Sale
Its an experiment that wont be permitted of course, again, why Steve Keen’s plan can’t happen either.
There was an interesting example a few years ago when an Australian pol wanted to make it a law that people did not save or pay down debt with their tax refunds but spent them somehow to goose the economy.
This would be prior to 2007 when I lived there and showed even then that TPTB knew what was coming and some, at least, however corruptly, were trying to get out of jail.
I’ve noticed another effect. I get about half way through reading a TAE or other similar post, even a news story such as the Barclay’s corruption and then I stop and get up and go do something practical towards the transition. It might be cut some more firewood, or bake some bread or clean up my garage or stand in my orchard and think about what needs pruning, what needs comfrey planting, where the compost should go etc.
I seem to have a built-in confirmatory bias alarm that says, OK, nothing actually new here, time to get to work.
The only thing that really exercises me these days is the hyperinflation talk because if that happens I have a plan that is spectacularly wrong and I need to get a handle on the signs that it will happen so i can adjust. Hence my plaintive cry for explanation
The question is how does all this “money” get into circulation to cause the inflation?
Yes, government can spend on various things but, as has been true in the last 25 years, most of that money gets captured by the top 1%. I can’t see how we can have inflation, let alone hyperinflation, unless the money circulates sufficiently widely to create more demand than there is supply.
Military spending is huge, but its benefits are limited to a few large corporations that capture the money and don’t pass it on via broad spectrum hiring and raises.
Medical spending is also huge but, again, the money flows from the government to the corporations with barely a pause in the pockets of the sick, if at all.
And what money DOES leak into the rest of the economy is being used, in significant measure in a futile attempt to pay down debt. Straight back to the bank where it sits on their books waiting for a loony, er borrower but otherwise extinguished.
As others have observed, the velocity of money is falling. I cannot see how that can result in hyperinflation.
In the old days a Government would build a highway, employ thousands of people, even on make work schemes to put money into circulation at the bottom of the heap and it would be used to buy shoes from the cobbler, who bought leather from the tannery which needed more hides from the farmer etc etc etc until finally it made its way home to the IRD and the banks. Not any more.
Those $$ that are used for consumption make a brief stop at a big box store and go offshore to China which can’t raise prices because the market is too soft so no inflation there.
In the late 80’s we had plenty of money flying around the system, far too many people had far too much and they bid up the price of everything; inflation. In the 00’s we had far too much money in the banking sector and it was used to buy, or hypothecate real estate and went straight back into the banks. No inflation, except in asset prices which have the “benefit” of being a build one/sell many times product and which (after they are built) have little impact on the rest of the economy.
Nobody has shown me HOW all this QE or its siblings can get into circulation, create massive and unmet demand that drives up prices through the roof. With falling employment, falling incomes, rising real costs for energy and food and deleveraging when possible, there is no “pathway” for the money being created to engender the hyperinflation that some call for.
I’m a deflationist, TAE team is as well, for good reasons.
But if we are wrong about inflation, HOW are we wrong?
I keep reading about hyperinflation and I keep asking the same question to which nobody, even here, has an answer.
Being TAE readers I assume we accept that inflation is a monetary phenomenon. It happens because there is too much money in circulation
But no government in the world (except maybe Zimbabwe) is printing and circulating money, they are all creating it as debt which has to have both a lender and a borrower.
But the borrowers are busy paying down debt and the lenders are only lending back to the government from which they received the $$ in the first place, hence sucking even more cash from the productive economy to pay the interest.
So my question is, how exactly is this hyperinflationary money supposed to get into circulation in enough quantity to produce the inflation, let alone the hyper version?
Banks will NOT permit governments to actually print and distribute money, which is why Steve Keen’s idea wont fly. ALL new money MUST be debt and debt has nowhere to go. They have created trillions in the last 5 years but there has been only deflation. Why? There is no pathway for the money to get into circulation. It is having no more effect than the makers of Monopoly printing more of their money. Since it never gets into circulation, but is stuck in the board game, it can’t change the real world.
The hyper people can’t seem to get that and either they are hallucinating or I am missing something very serious. But I have been asking this question for 5 years and NOBODY has even attempted to answer it. Please, Ashvin, Nicole, Illargi, someone, what the hell is the pathway?
One small quibble.. You say, “Then you wake up and realize the better part of your life has just been one pack of deceptions after another”.
I’m pretty sure that a lot of people have gone to their deaths at the hands of others without understanding what was being done to them. There have been people with half their face shot away in a trench in France who STILL did not understand what had been done to them.
The arrival of real, relentless pain is no guarantee of awakening, THAT takes the ability to, even for a moment, separate your experience from you self. After a couple of generations of being told what to think, we have arrived at this. https://www.youtube.com/watch?v=9jma-5dFThM
Do you imagine that these guys will ever wake up?
To be fair RE, every species loots its environment, using all of the available resources as fast as it can, then collapsing. Every single species, every single time.
The only question to be answered is whether the human species is smarter than yeast in a wine vat.
So far the answer is no and time has run out to find an alternative answer.
Blodget has his baggage. I wouldn’t trust his view at an time.
In any case, as shareholders and bondholders of these banks get wiped out or take a haircut, among them will be the pension funds that are already in the crap.
Those of us who have had the good fortune not to put too much of our money into such funds wont be a hell of a lot better off, but at least we’ll have a shorter fall from where we think we are to where we WILL all be.
There will be NO managed processed by which this is sorted out. Governments will not make the decisions in the end, nor will banks.
The decisions will be made by ordinary people refusing, or being unable, to pay their debts, buy stuff they don’t need or obey TPTB and when the prisons are full comes Bastille day.
In some cases, as in Greece or Portugal, they will retreat to family farms, islands and other holdings. In other cases, where those options don’t exist, they will suicide and/or revolt. Revolt as in burn buildings and start killing people.
At some point the police will stop enforcing the laws and join the people.
But don’t bet on any kumbayah outcome, hungry, sick and poor people with starving and sick kids will not sit around making good collective decisions.
Right now the ride is making us nauseous, some of us are throwing up. But out there in the storm there is a mountain that we are flying into.
The key is that most people see the problem as trying to replace the pistons while the engine is running when the “solution” is to shift perspective https://tinyurl.com/7en27ur
THEN the problem becomes one of public discourse that enables enough of us to hold the new perspective while negotiating the difficulties that will ensure. And THAT would require multiple leaders at all levels, each with the rhetorical and intellectual skills of a Churchill.
Dang, another Morton Fork. As in “stick a Morton Fork in it honey, I think its done”.