Forum Replies Created
I’m trying not to wrap this all in a blanket of Neoclassical economic thinking (mostly out of fear that Steve Keen might jump out from the shadows and whack me over the head with a copy of Debunking Economics!), but my mind drifts to the ‘totem’ of the Supply and Demand curve, where money velocity represents the Demand side of the equation (but only in terms of money being a medium of exchange).
Without giving it any deep thought, it would seem to me that the ‘price’ of money falls when Supply is increased (i.e. massive credit expansion or outright money printing), but also when the Demand for money as a medium of exchange falls (i.e. when money starts to be hoarded as a store of value).
Reversely, the ‘price’ of money seems to increase when Supply is decreased (i.e. debt defaults or outright destruction of money) or when the Demand for money as a medium of exchange increases (i.e. when goods and/or services becomes more desirable than holding onto money as a store of value).
If any of that makes any sense then I wonder what happens when the desire/confidence to spend more and thus increase the velocity of money occurs but the money supply is insufficient to compensate? It makes me think of a saying Nicole seems to be fond of – Demand isn’t what you want but what you can afford.
Back to Neoclassical economic thinking (*looks over his shoulder for Steve Keen*), it would seem what Charles is suggesting is true based on the accepted mathematical calculation for the Velocity of Money, Vt = nT/M, where Vt = the velocity of money for all transactions, nT = the nominal value for all transactions, and M = money supply.
By that I mean that nT could be staying constant (even though I’m sure you would be right in arguing that it is declining) while M is increasing, resulting in a lower velocity of money. In a purely Neoclassical economic / mathematical sense, Charles is correct that Fed policies (which have themselves increased or at least permitted the increase of the money supply) have effectively crashed the velocity of money.
Not sure how long this video will be available online…
Good luck hearing anyone say anything like what O’Colmain is saying in the mainstream news media.
Didn’t care so much for the second video.
His numbers don’t seem realistic – just another extrapolation of what we see today going on forever into the future, ignoring any possibility of trend change. Long before 2100, I’m sure Mother Nature will take care of everything… in her horrible, horrible fashion of ushering in war, pestilence and disease.
Sad, but that’s the way things go I suppose.
“What do a culture of bacteria in a Petri dish and Humankind have in common? That both die off in a sea of their own waste.”
@ V. Arnold,
I don’t really see where bluebird suggests that societies evolved from barter. I do see him suggesting that barter may be the only form of exchange once he has no money and no access to credit (i.e. post-collapse), which seems very plausible.
I haven’t read Debt: The First 5,000 Years yet (though I’ll definitely put it on the ‘to read’ list), but I would assume debt in any form is only ever realistic when some degree of trust exists. Post-collapse, I could see a lot of people unwilling to trust others…
Read your comment and found myself thinking about where I live (Toronto, Canada) and how I witness all the Indians, Filipinos, Central/South Americans, etc. that we import to do all the “slave” work, calling them residents instead of citizens. They are kind of invisible too, and while that irks me to some degree I still respect the concept of a citizen versus a resident, as one is far more temporal while the other should (arguably) have a much greater investment in the future of their city/state/country/etc (and thus it makes sense that not everyone can or should vote).
Martin Armstrong had a post on his blog which gave me a much better understanding and appreciation for Athenian democracy, but unfortunately I can’t track it down. Guess I’ll share this one instead, as it’s sort of along the same lines:
Episode 1661 was horrible.
Jack suggest he’s trying to explain how Nicole came to her view and how she’ll change it – what it is in fact is a mea culpa for what Jack believes to justify the things he’s likely doing (e.g. taking on a mortgage to buy a house) that don’t necessarily fit into the roadmap Nicole has given (which, from listening to Jack, you can tell he agrees with in his heart… and I suppose this is his way of dealing with that cognitive dissonance).
The comment I left on his blog, which has already met with claims I suffer from perception bias…
Episode 1660 was my first exposure to your work here at TheSurvivalPodcast and I generally found it enjoyable. 1661 leaves a bit of a sour taste in my mouth.
While it was styled to be an explanation on how Nicole justifies her views (and how she will inevitably change them), sadly it seems to truly be more of a justification of why YOU continue to believe what you believe – i.e. it will be bad, but it won’t be as bad as Nicole has suggested it will be nor as quickly as she suggested as we (as a species) will find ways to extend/pretend to avoid collapse.
John Michael Greer (of the Archdruid Report, mentioned by others in the comment section) writes quite a bit about this phenomenon as a matter of “modern religion” – people who belong to the Cult of Science whom believe that a way will be found to solve our problems before they become acute. In your case it would seem (to me anyway, based on podcasts 1660 & 1661) that you recognize things cannot stay they way they are, but feel they will not be as bad as Nicole has suggested due to some form of adaptation we will undertake as a species.
I cannot agree with this point of view, and the arguments you put forward in 1661 were weak ones at best.
Yes, The Powers That Be (“Elite”) will likely do everything they can to extend/pretend to avoid collapse (assuming their interests remain aligned – please consider that, eventually, the Elite will gladly eat each other to maintain their status, regardless of how much havoc it causes for us the “little people”), but it is not without cost. Energy prices will continue to rise, environmental degradation will continue (which I should point out I don’t really care about as much as you might suggest I would, considering I place myself in the Peak Oil camp), and economic collapse will continue along the fringes and eat its way inward to the core. When it collapses, nobody can say, but Nicole is absolutely correct in suggesting it’s baked into the cake.
I highly recommend you familiarize yourself with Jevons Paradox (if you are not already familiar with it) and consider that no matter how efficient we make our machines/devices in terms of energy consumption, they always CONSUME energy and our demand for that energy grows. Unless our energy sources increase (which they are not), nothing we invent will stop the inevitable – an outcome where there is no longer enough energy remaining to power our modern-day society as it currently exists.
Furthermore, I would ask you increase your understanding of Peak Oil. At the 23 – 24 minute mark of the podcast you suggest there are 100+ years of natural gas remaining, but that time frame is likely constructed on the idea that other energy sources are still in play. If natural gas was all we had, it would be consumed a heck of a lot more quickly given today’s levels of energy demand.
You also mention around that point the idea that we always find news ways of getting more oil out of the ground and that “angers” peak oil’ers. What you fail to mention/recognize is the rising cost curve and where it intersects with the peak oil curve – i.e. these technologies we are implementing, combined with the fact we’re picked the “low hanging fruit” easy oil sources, means that at some point in the future the cost of extracting the oil (not only in terms of dollars but in terms of invested energy) will exceed the value of what we pull out of the ground. When we get to the point that it’s costing us 2, 3, 4, 5+ barrels of oil to extract one out of the ground the game will likely be up, regardless of how much we allow energy companies to inflate their debt levels or how much fiat the government prints to try to justify continued oil extraction.
Around the 34 minute mark, you talk about a gold backed / gold basis money system… I recommend you read Martin Armstrong and understand the shortcoming of ANY commodity being used as money. I won’t re-explain it here, but Martin does a good job of explaining what money truly is and how it ALWAYS will be corrupted by the government of the day. It is inevitable that any money supply will be compromised, whether fiat or not, as the problem lies with those who make the rules not the money itself.
Around the 36 minute mark you make some serious assumptions – that the asset you overpaid for (i.e. a home / farm / etc.) will continue to be able to be productive during a downturn. There are no guarantees of this, and in fact there are clear examples in history of the opposite occurring – look up references to milk producers pouring out their milk on the ground to maintain milk prices during the Great Depression.
Further, you go on to suggest the government CAN’T possibly evict everyone from their homes – this would seem to be a fairly close minded / biased view and is somewhat hypocritical after you spent over 20 minutes explaining how intelligent people like Nicole are wrong because they can’t see how the system would change/adapt. I’d love to understand why you are so confident that the system would NEVER find a way to evict so many people from their homes, or at the very least confiscate those assets – at pennies on the dollar – that people overpaid for just a few years prior. If you really stop and think about it, it actually sounds like a PERFECT plan if one were part of the banking cartel or a member of government – getting people to overpay for something they couldn’t afford in the first place, and then taking it away from them later at severely reduced prices. This is the way people will lose their liberty – by making selfish choices to have the things they want now rather than making due with simply meeting their needs.
Back to Nicole – she has one of the most well though out and comprehensive understanding of what the future holds. She constantly points out that nobody knows exactly when things will collapse, but that it is unavoidable that they will collapse and we should be responsible enough to act accordingly by making good decisions now (i.e. if you know smoking is going to give you lung cancer, shouldn’t you stop smoking as soon as possible and not be so irresponsible as to say “oh, I’ll quit next week – my lungs can handle one more week of smoking”).
If a person wants to gamble at the casino and try to play this game as long as possible (e.g. taking on debt, spending money on education or capital that they refuse to see will be unproductive in just a few years during a major financial collapse, assume new or old money systems can be re-introduced to stabilize the economy and prevent the worst from occurring), they should recognize the risks they’re undertaking in doing so.
Sorry if your listeners are scared by what Nicole has to say, but if they’re sitting on mortgages they probably SHOULD be worried (though Nicole would likely frown at my attempt to encourage fear) – the game (of musical chairs) could come to an end very suddenly, and those people will learn the down side of using debt as leverage very quickly. Better they get out of debt now and start doing whatever they can to improve their standing by gaining control of their means to their survival if they want to avoid a debt servitude based future.
That should have been:
– Greer, “Green Wizardry”
Appreciated this podcast a lot!
It helped me out in the following ways:
– explained why 9/11 isn’t an acceptable topic here at TAE (though I see climate change discussion floating around far more often, and feel I should point out that it’s not discouraged nearly as much as 9/11 talk despite being just as illogical an argument as 9/11 is);
– gave me food for thought on when to employ one’s capital in terms of home buying and/or buying a future business / means of survival – members of my family have been, as of late, clamouring to get back into the housing market after renting for the last 4 years and if I can get them to listen to this podcast perhaps they’ll consider just what it is they’d be buying back into;
– gave me sense of validation when references to literary material I’ve read (or perhaps considered reading – I think I read Woodard’s “American Nations: A History of the Eleven Rival Regional Cultures of North America” as opposed to Garreau’s “The Nine Nations of North America”) were mentioned;
– made me smile hearing two people from very different walks of life come together to discuss things I’m very passionate about myself – I too must be a “systems thinker”, though I can’t say I’ve met many (if any, save for Nicole when I was fortunate enough to hear her speak at a transition town meeting in 2011, which committed me to my descent down this crazy deflationary rabbit hole!) people who think like I do about these topics, so I can appreciate the elation someone like Nicole must experience when she talks with someone who “gets it”.
Jumping back to the 3rd point, is there anywhere on TAE where literature that helped Nicole / Raul form their views is listed? If not, it would be a nice addition… even better would be if there were some way to post comments on the material so people who have read it (or are considering reading it) could raise questions or provide comments.
Some of the works I’ve read over the past few years that I’d recommend (and am curious to see if any other TAE’ers have also read / appreciate) include:
– Strauss/Howe, “The Fourth Turning”
– Woodward, “American Nations: A History of the Eleven Rival Regional Cultures of North America”
– Orlov, “The Five Stages of Collapse”
– Greer, “The Long Descent”
– Green, “Green Wizardry”
– Chancellor, “Devil Take the Hindmost: A History of Financial Speculation”
– Hemenway, “Gaia’s Garden”
– Bane, “The Permaculture Handbook”
– Stein, “When Technology Fails”
Guess I’ll stop there…
New article from Gail Tverberg:
Some hope that police will cease their militarization:
Check out “Devil Take the Hindmost: a History of Financial Speculation” by Edward Chancellor. The book covers many of the financial bubbles dating back to the Roman Empire (e.g. Tulipomania, South Sea, 1920’s stock markets); if I remember correctly, the time it takes for the “bust” to play out is about as long as it took for the “boom” to reach its peak.
We’ve arguably been blowing a massive debt bubble since the late 70’s or early 80’s, so I figure we’ve got about 20 – 30 years of deflation/depression to look forward to. Even were a war to be started, I doubt it would happen so quickly that we wouldn’t have to endure at least a few years of hard times prior to wartime industry ramping up (which given our increasing constraints on commodities and cheap energy, one has to wonder how inflationary that would be in the face of trillions of dollars of debt defaults).
I don’t think we’ll see many people wishing the had bought gold once the collapse arrives. Gold, like most commodities, still has a long way to fall in terms of price. And I think most people will be wishing they had learned a trade or learned to farm, had made sure they had access to food/water/energy, had established resilient and like-minded communities, and had taken better care of their health. I don’t see gold helping very much in any of these areas at a time when nobody has anything of real value (i.e. food/water/energy) that they would trade for gold, and those who could afford to buy it off you would not likely pay fair market value (instead, squeezing it out of you as cheaply as possible when you are desperate).
As Nicole said, gold will likely hold its value. And having a small amount of it as a hedge or for some emergency may be a good idea. But people who are completely unprepared and think that gold will be some sort of panacea during a collapse are likely in for a surprise.
“there is always a Ceasar with a tax man with his hand out”
This assumes there is enough energy / coordination / trust to have a “taxman” in place collecting for the government. As Nicole has pointed out several times before, the trust horizon looks to be collapsing and Federal / State / Provincial governments may find themselves constrained in the near future.
However, you’re probably correct that for some period of time governments will use whatever influence they have to extort as much tax revenue out of land owners and the general citizenry as they can. The only way I can see avoiding that is to own land in undesirable locations and/or where taxation is low and to minimize one’s footprint on said land (i.e. a million dollar home might not be the best investment).
“NO 9/11 AT THE AUTOMATIC EARTH!”
Why is that again? I didn’t think TAE was a place where I had to censor myself as long as I am polite and open-minded to everyone’s comments/ideas and don’t promote hatred or violence…
“Truther’s are wack jobs and conspiracy paranoids.”
And sleeping Sheep are ignorant. I’m not taking either side of the debate, but dismissing a whole group of individuals and their argument because you think they are wack jobs / conspiracy paranoids seems awfully dismissive of you.
“Conspiracy theories” can end up being “conspiracy facts”.
I love how many people constantly argue how gold will never lose its value, how it will preserve wealth, how it will help on the other side of crisis, blah blah blah… those who get all defensive and emphatically state how valuable gold would seem to be either obtuse or gold bugs.
The things I take away from this article and Nicole’s previous comments on gold is that it’s unlikely you’ll be able to benefit from it regardless of how valuable it is (as it might be 20 years before you could safely trade it for something – that’s a LONG time away when volatility and uncertainty for the future are exploding), and that investing in gold before investing in your own resiliency is pointless as you won’t be able to hold onto your gold if you don’t have a strong/sustainable foundation in place.
I’d love to know how many people who are “stacking” gold and silver actually have a large paid-for property with access to water, decent soil, natural energy sources like wood/wind/water (not fancy-pants PV systems that will likely fail long before their 20+ year ‘guaranteed’ lifespans), valuable skills to produce things or provide services of actual value to anyone, a strong tie to a community of like-minded individuals, hard goods for working & living off the land, etc.
Even ‘prepper’ style solutions like freeze-dried foods and ridiculous weapons caches may end up being a better investment than gold in the short term; freeze-dried food can be eaten, and weapons can at least be used for hunting.
So please, do everyone a favour and stop trying to make arguments for how valuable you think gold is. It’s not a question of gold’s value, but the circumstances in which you can capitalize on said value. And I think Nicole has made very strong points that few of us “average people” will be in a position to do so.
“…it completely torpedoes their world view of their government, the media, and everything else they’ve been led to trust. some crimes are so enormous they exceed the ability of governments to prosecute, particularly since the government is complicit in the crime…”
People get the government they deserve?
“Now, there’s one thing you might have noticed I don’t complain about: politicians. Everybody complains about politicians. Everybody says they suck. Well, where do people think these politicians come from? They don’t fall out of the sky. They don’t pass through a membrane from another reality. They come from American parents and American families, American homes, American schools, American churches, American businesses and American universities, and they are elected by American citizens. This is the best we can do folks. This is what we have to offer. It’s what our system produces: Garbage in, garbage out. If you have selfish, ignorant citizens, you’re going to get selfish, ignorant leaders. Term limits ain’t going to do any good; you’re just going to end up with a brand new bunch of selfish, ignorant Americans. So, maybe, maybe, maybe, it’s not the politicians who suck. Maybe something else sucks around here… like, the public. Yeah, the public sucks.”
Stumbled across this quaint little documentary today on YouTube…
I think it was released back in 2007.
Funny how they touch on all the dead-end energy sources that have been debunked here at TAE and on other websites/blogs, and sad to see how little has changed (things have gotten worse?) since 2007…
“…why not just pay everyone $100k a year, whether they work or not? it’s all just computer money anyway. that would be like QE for the people instead of for the banks…”
Uh, it’s nothing like QE for the people at all. QE monitized debt, buying junk/toxic assets to increase liquidity within the banking system. Simply paying everyone $100k/yr doesn’t monetize any underlying collateral, it just increases the cost of labour which in turn will drive up prices.
As far as everyone consuming to their heart’s content, unless you’re being sarcastic I suggest you read more of the articles here at TAE and better understand the concept of resource/systems limits.
Provide your source on your definition of “base money”.
I haven’t been able to find anything that describes it the way you do – in fact, the definitions I’ve come across make it sound exactly like a combination of “credit money” and “physical money”, despite your suggestion otherwise.
DEFINITION of ‘Monetary Base’
The total amount of a currency that is either circulated in the hands of the public or in the commercial bank deposits held in the central bank’s reserves. This measure of the money supply typically only includes the most liquid currencies.
Also known as the “money base”.
Read more: Monetary Base Definition | Investopedia https://www.investopedia.com/terms/m/monetarybase.asp#ixzz3lCVvHtot
Just an aside, but pretending/appearing to “do something” is completely different from actually doing something to solve a problem / mitigate a predicament.
In the case of the Great Depression, the only thing that really helped do anything was the onset of one of the worst acts of human violence/inhumanity the world has ever witnessed – WW2. This was followed by decades of careless extraction and gluttonous consumption of the world’s highest concentrated liquid fuel source, which now looks to be on the verge of depletion (at least at affordable prices anyway).
It would probably be our best interest to remember those two points when thinking about how/if we’ll ever get out of the deflationary future we’ve built for ourselves.
Considered many of those things over the past 5+ years of frequenting TAE as well as other inflationary/deflationary intellectual ghettos. During that time I’ve come see the same sad/weak arguments dragged out by inflationists over and over. To respond to each of your points:
1) Absolutely agree; but if you took at look at what Prof. LnL has been pushing in his commentary over the last several months (years?) it’s not an acceptance of deflation prior to hyperinflation, it is a (dangerous) argument that any deflationary impacts can be ignored in favour of focusing solely on the hyperinflationary future we face.
As Nicole as aptly put it so many times, it’s like running a relay race and if you don’t overcome the various hurdles as you encounter them, you won’t be situated to deal with the next hurdle when it arrives.
Personally, as a hedge against a hyperinflationary future I look to modest solutions such as physical gold/silver and objects/things that will hold their value if/when the monetary system collapses, but the vast majority of my time/effort/concern/resources are focused on the first hurdle coming our way – crushing deflation.
2) “As any student of monetary history knows…” – you fancy yourself as that, do you? Then perhaps every student of monetary history should educate themselves on the difference of credit vs. physical money, and recognize that no actual money has been “printed” at all. Credit has been extended to monetize financial instruments and toxic assets, nothing more. Someone, somewhere, is still on the hook for those over-valued assets and when price discovery occurs, vast amounts of ethereal wealth with be vaporized.
The analogy that has been throw around several times that always amused me is that when the tide goes out we’ll see who’s been swimming naked.
3) The “printing” hasn’t happened despite your insistence to the contrary. And the typical argument of a person who does not comprehend the magnitude of the problem and the dynamics of potential solutions (see Nicole’s writings on viable solution space) is one of “the people will demand the government do something!”. This sort of argument is, at best, misguided and at worst, infantile.
To illustrate the point I’ll use the exact same argument for a host of far greater predicaments – e.g. the implosion of the Sun, a large space object colliding with Earth to cause an Extinction Level Event (ELE), or catastrophic climate change… take your pick. I’m pretty sure we all know that the people could clamour all they want for the government to “do something”, but that doesn’t necessarily mean anything can or will be done whatsoever. I’d like to assume any rational-minded adult would accept this as truth, yet unfortunately I see this argument cropping up again and again – it’s a scary indicator of how misinformed people are to believe the governments of the world are so omnipotent that they can do anything to stop these sorts of things (e.g. financial, climatological, interstellar disasters) from occurring.
Furthermore, the political viability of our future options has no real bearing on what will happen. From my short time on this planet I have witnessed politicians lie and kick the can down the road as much as possible – not necessarily because they are bad people but because it is the only viable way to stay elected in our democratic failure-of-a-society. Eventually some group of politicians are going to be unlucky and get stuck with a can they can no longer kick, and at that point all hell will break loose.
4) If you care to, please elaborate on this point as I’m not entirely clear what you are suggesting, thanks.
5) No disagreement here that velocity of money could increase rapidly, but I think the onus is on (hyper)inflationists to provide the context in which that would happen and to explain how the counter-balancing effect of the total collapse of outstanding credit would not have a hugely deflationary impact on the system despite increasing velocity of money.
The bottom line is that before runaway inflation can occur, a great deal of the debt within the system has to be purged. Even if for some crazy reason the governments of the world started printing (physical!) money en mass, it would still have a deflationary effect in the short term when people who gained access to that increased amount of physical cash in the system would repudiate their debts (i.e. destroying the “assets” of Rentiers who live off the interest generated off those so-called assets).
And while I don’t want to put words in your mouth, what it sounds like to me is that you’re concerned we could see massive price increases in the things we need to survive (food, water, shelter. etc.) and are mistaking that for inflation. If that is the case I don’t have much to offer you in terms of a panacea for the future (the truth is that it’s far worse that it seems as rising prices mean nothing in comparison to collapsing purchasing power), but I do suggest you revisit the definition of inflation/deflation that is generally accepted here at TAE as price changes, regardless of how volatile they are or for what assets/commodities they impact, do not qualify for inflationary/deflationary events (and please don’t get into “price inflation/deflation”… ugh).
Lastly, I am “one of you” so to speak in that I absolutely see inflationary (perhaps hyperinflationary) pressures in the future. But not the near future. Not even in the mid-term future. My rant against Prof. LnL is because I’ve grown weary at seeing his continued attempts to disregard any argument that deflation is staring us in the face and should be our primary concern at this time. To continue to focus on (hyper)inflation at the expense of what must be done now to address deflationary collapse would seem to me to be both irresponsible and dangerous.
That’s a garbage article written by a shameless gold / money management service promoter – a quick glance at the commentary section suggests even the worst of the moronic sub-human gold stacking trolls of ZeroHedge recognize that fact.
The author seems to have no comprehension of the difference between money & credit, or how a collapse of the credit supply would have horrible liquidity ramifications for financial markets and global trade (which anyone who’s eyes were open in 2008 would have realized was the case and would happen again if the same policies were pursued – which they have been since then). The author also seems to need to resort to ad hominem attacks on anyone who argues deflation is the clear & present danger rather than providing any factual information or cohesive argument as to why their views may be wrong.
As for you Prof. – I can’t imagine you are so obtuse that you cannot comprehend the position of TAE / Nicole Foss by now; it’s not one that suggests hyper-inflation is unavoidable, rather, it is one that suggests deflation is what we’re about to face and individuals should avoid putting themselves under additional financial/economic stress by using what little liquidity they have on solutions to a hyper-inflationary future that may be decades away.
Seriously. take a break from being the hyper-inflationary town crier. Get some new material – preferably an argument for how a hyper-inflationary collapse would actually transpire that has at least half of the lucidity the deflationary articles written by Nicole possess. Don’t just throw crap at the wall and hope it will stick, as it’s getting quite tiresome.
If that’s too much to ask, then just go troll in the dregs of the ZH dungeon and feel better about yourself until the hyper-inflationary Rapture arrives instead.August 19, 2015 at 6:20 pm in reply to: The Boundaries and Future of Solution Space – Part 5 #23309
Hi Nicole. I think I’ve asked a few times but never really got a response – curious if you’ve permanently relocated to New Zealand or if it is only temporary? I think when you first announced your decision to visit Atamai it was only temporary, but perhaps things have changed…
If the move is permanent, I’d like to know how that change was received/accepted by your family? Perhaps that’s too personal a question, but I’ve tried to sell the idea to my family of getting out of Canada with what little money we have and relocating to somewhere a bit more isolated a few times with little success. Looks like we’ll be stuck in Ontario for the Long Descent…
Looking forward to the full posting of this great article you’ve put together BTW.
Not sure if this has already been posted somewhere, but it’s a worth a read:
Thanks so much for the response!
I can appreciate your point of view, and to some degree share it. The only reason I’m thinking Mr. Armstrong might be onto something (and don’t get me wrong – I’m no fan of gambling at the equities casino!) is I think sometimes we’ve all made miscalculations on how quickly/rapidly things would deteriorate.
Perhaps when the credit crisis starts to unfold, many “smart money” (or “big money”?) investors won’t instantly seek the safest havens for their wealth, but will be lured by the potential for short-term profits in the US equity markets as the rest of the world implodes.
Mr. Armstrong also points out that a credit crisis in other parts of the world may wake investors up to just how “safe” government debt really is (or more corretly, isn’t), and perhaps investors will shun even short-term treasuries in favour of the equity markets out of fear of government confiscation / repayment chicanery.
Anyways, things should be getting very interesting soon. Thanks again for your insight – should you be writing more articles in the future, perhaps you would consider doing a longer piece in greater detail on the possibility of a “phase transition” away from credit/debt into the US equity markets and why you think it is unlikely.
Very glad to see you back here – you’ve been missed.
Great article, but I keep thinking about some of the ideas I’ve been picking up over at Martin Armstrong’s website… most notably, the idea of a “phase transition” where (US) markets should crash from their overvalued peaks but skyrocket higher due to capital fleeing everywhere else to seek safety in the US dollar and US equities.
Just curious if TAE has considered this type of event occurring prior to the big (financial) crash we’ve been waiting for?
Thanks for referencing Armstrong’s works. Considering his and this blog are two of the primary sources I look to for what’s going on in the world these days, it’s nice to see at least one of the authors examining what the other is saying and incorporating (or pointing out flaws) into their own work.
Also, we never hear from or about Nicole these days… but I saw this I my thoughts went out to her:
Hopefully she’s doing okay out there?
An update on or an article from Nicole would be a welcome treat.
“We are all terrorists now” – yep, that was the third one I watched last night. Sent it off to some of my Canadian friends; hopefully they’ll get a laugh, but also wake up a little to what’s going on around here.
Sorry, but had to share this piece of brilliance…
GBVApril 8, 2015 at 11:22 am in reply to: Russia’s Central Bank Governor Is Way Smarter Than Ours #20391
“But, if you do not know history; how could you know the thing staring back at you?”
I once thought I had a pretty decent understanding of history. Then saw stuff like this:
It’s not to suggest Germany did not commit atrocities during (and leading up to) WWII, but it was a staunch reminder that victors write the history books, and that uncomfortable or inconvenient facts are sometimes edited out of our collective memories.
As far as understanding the Russian mindset, I suspect many of today’s Russians aren’t that far a cry from today’s Western cultures: raised on books full of lies & half-truths to glorify the sacrifices of the Allies during the war while demonizing the Axis powers (though when it comes to ignorance, I’m sure North Americans – being so far from the battlefields of Europe and the Pacific – take the cake in terms of ignorance).
Given their proximity to the most tragic wars the world has ever known, one would think European and Eastern European nations would know that the path they’re currently walking down leads to all-out war. Unfortunately, humanity has demonstrated time and time again that we simply cannot learn from the past, and look to be doomed to repeat the same mistakes every human generation or so (80 – 100 years).
C’est la vie.
Assuming your comment is in relation to something I posted in another thread, but not entirely sure what you’re implying – I certainly wasn’t implying two wrongs make a right.
What I was simply suggesting is that, as an enlightened group of individuals at this blog who seem to try to tear through the bullshit we’re constantly fed by “the powers that be”, we may want to also question some of the history we’ve been fed over the years and see if any of stinks as much as the spin we’re being fed on a daily basis today.
Not suggesting the exploitation of Greece and the EU periphery by German and Brussels based banks isn’t dirty pool; just that the idea of the Greeks being owed anything by the Germans after all these years is, at the very least, unproductive given the situation Europe currently finds itself in (and at the most, completely ridiculous). Also, I was under the impression that this blog (which I’ve been following since 2009/10) wasn’t about suggesting who owes who what, but instead pointing out the exploitation of the people by political/economic cliques through ponzi-finance and what should be done now to avoid further exploitation (as well as big-picture ideas on energy, sustainability, economy and realpolitik).
Interestingly enough, if we are talking blame about who slighted the Greeks, I find it interesting that the UK traded away the futures of Romania and Bulgaria for the future of Greece (though it would seem all these places didn’t have the brightest of futures under any imperialist/exploitative regime): https://en.wikipedia.org/wiki/Percentages_agreement
Lastly, I came across this speech and found it fascinating:
Unfortunately, someone yells out “the Jews!” midway through the speech – and perhaps that’s who Hitler was actually referring to. But were someone from today’s age, with no understanding of who Adolf Hitler is nor what happened during WWII, to hear this speech I think they’d think he was talking about the people at the top of the financial food chain, the heads of central banks around the world, and perhaps the heads of governments who are supposed to be defending our rights and freedoms.
In short, one might think he wasn’t rallying against a specific ethnic and/or religious group, but a group of international power players… a “1%” if you will… who exploit everyone around the world for their own benefit, yet belong nowhere. And when you consider that 53 – 58 nations declared war on Germany between 1933 (https://www.radioislam.org/islam/english/jewishp/germany/express.jpg) and 1945, as well as the upstart manner in which Germany refused to play by the rules of international financiers, perhaps it is a more realistic reason as to why the world’s most devastating conflict took place – a nation that rises up against the interests of the international power players cannot (and could not) be allowed to survive (modern-day Iraq and Libya seem to suggest this is the case).
Sorry if I seem to be going off the beaten path here… but I think there are a lot of questions that need to be asked about the period between 1910 – 1950 and how the history books were written by the victors. The Automatic Earth seems like an intelligent and enlightened enough place to have that discussion; if we’re questioning all the bogus financial and political spin that we’re fed every day by financiers and heads of government, I don’t see why we wouldn’t also question the history they’ve written over the last 80+ years.
“It’s just that their government after 70 years is still skirting its obligations towards the victims.”
Yikes. That statement reeks of entitlement.
I wonder what obligations North Americans have to the Native Peoples? Or to enslaved African Americans who were brought here to work on plantations as slaves? Or Asian immigrants who were coerced into high-risk / low-pay labour in mines & railways. Or nowadays, where everywhere in Toronto I see Filipinos working at McDonalds, Tim Hortons and other menial jobs for minimum wage so we here in the near-heart of Empire can enjoy the middle-class standard of living we think we deserve (i.e. whereby a “lower class” – Filipinos, other immigrants, the poor – do all of the work we find otherwise undesirable).
Again, it’s not that I’m arguing atrocities weren’t committed during WWII, but I think it’s lubricious to suggest we can ever determine what is “owed” to the victims beyond immediate remuneration/restitution that is within reason. Further, I think that statement goes completely against what I’ve come to learn here on the Automatic Earth – that unrealistic promises (i.e. pension plans, high asset values, and in this case – long-term reparations?) will not be honoured, and that there are huge consequences to trying to hold a people to paying something that is due when either a) it is unreasonable to expect them to pay or b) they cannot afford to pay it.
Again, while I’m not suggesting Nazi Germany is innocent in the role it played during WWII, but I do strongly believe that it’s the victors who write the history books – those who suggest otherwise are foolish at best. I found this an enlightening look as some of the otherwise unreported pieces of WWII that one does not get to read about in most history text books or hear from their teachers in school: https://thegreateststorynevertold.tv/
Speaking of WWII:
Not saying you’re wrong to suggest atrocities were committed during the period of WWII, but this documentary got me wondering if Germany (and Germans) take way more flak than they deserve for that unfortunate period of history.
On the plus side, watching an Albert Bartlett interview the other day, I was happy to hear him suggest that we simply do not have enough petroleum left on the planet to re-fight WWII. The down side of that, however, may be that instead of shipping boatloads full of people across the world to fight wars, perhaps everyone will just fight with each other.
Hello, civil unrest.
“It didn’t work out at the village, so I’m moving on. There’s no means for me to make a living at the top of the south island, and no support at the village in the absence of employment possibilities. Access to basic facilities got progressively curtailed until there was essentially nothing left.”
Hmm… hoping you could expound on this statement Nicole?
It sounded as if things were going well at Atamai, and this is the first I’ve heard about it not really working out. Particularly curious if you think this unworkable situation was unique to Atamai, or something all ecovilliages face as a potential problem for those individuals looking to escape their big-city, wage-serf style of living?
Also, have you left Canadian soil for good, or is this still just a long-term trip?
If you’re meeting up with Nicole, perhaps you two can discuss Martin Armstrong’s post from today re: stock market crashes (or lack thereof):
“Here is the Dow in dollars and Swiss francs currently. There is no indication that we are looking at a major high where the Dow will collapse. If we make a high with the ECM, sure there will be a correction. But is this the end of the bull market? We have a lot more problems the other side of 2015.75 than traditional fundamental anysis [sic] can ever hope to even guess … All of these scenarios are just opinion. They have a common base expectation that a Great Depression can play out only in one way – the stock market must crash. They totally fail to grasp the issue at hand. We are in a Sovereign Debt Crisis – not some speculative bubble in stocks. This crowd has this scenario stuck in their mind and no matter what evidence you show them, they remain fixed in their expectations … They constantly preach the crash as soon as interest rates rise. They have never bothered to verify anything in their theories. The stock market rallied from 1927 into 1929 and interest rates doubled. They still preach the standard plain vanilla that if interest rates rise stocks must fall. They are just hopeless lost in their mind of fixed one-dimensional relationships.”
While I doubt Mr. Armstrong is speaking about TAE’s narrative specifically, I do think TAE heavily favours a potential stock market crash in the foreseeable future. And while I still respect the concept of “better to be 6 months too soon than 6 minutes too late” in terms of protecting my capital, I would appreciate a robust discussion / analysis of Armstrong vs. TAE’s views on stock and bond market collapses and how they will play out.
Yes, sometimes I’m a bit hard on old Gartho, but that’s probably because it irks me to see someone who’s such a skilled writer and who obviously has the trust / adoration of so many of my fellow Canadians using it to his own benefit to push financial services when he could (should?) be helping them become more a) aware of what is really going on and b) more self-sustainable (at least that’s what I feel the Automatic Earth offers that GreaterFool does not).
And while it’s good of him to talk deflation, I doubt many of the blog dogs (even the more astute ones) understand what deflation truly is – that is to say, deflation is not just falling prices (which is just a symptom, like a cough is to a cold) but a monetary event in which money within the system contracts. When considered in the sense that these deflationary pressures are both massive and global, the potential outcome is far worse than most likely imagine (i.e. not your typical business cycle downturn, or localized “recession”, that Garth tends to describe when he talks worse-case scenario).
As far as which primers to read – of course, read them all! 🙂
Haha… but yes, I recognize it’s a lot of material to consume, so I might recommend just reading this one first:
That should at least summarize the “big picture” view espoused by the writers here at the Automatic Earth. You can then pick and choose which which sub-topics you find interesting to explore in greater detail as you find the time / interest.
I think when I was new to this site I gobbled up all the financially-focused primers first, then social psychology articles, then energy and finally the environmental & community / society articles last, given my interests. But it probably wasn’t until I had read a few articles from each area that I really started seeing how the “big picture” came together, creating a system which has driven our precarious debt growth / resource extraction / overconsumption and how it could quickly reverse itself.
Also, if you get to the point you feel you need to do something to prepare for deflation, I think this is a great starting place:
Welly welly welly well!
I have to admit Bill, didn’t think any of the “blog dogs” would make their way over from the Church of Garth to TAE – but happy to see you made it! 🙂
Round these parts I go by Variabe81, but over at Greater Fool I was dubbed “Tony from Calgary” (to protect my identity i suppose?) when I wrote to Garth back in 2010 (after reading a report on Canadian housing by the Centre for Alternative Policy which woke me up to the reality of the Canadian housing market) about concerns I had over the housing market and my Baby Boomer parents’ then-huge mortgage.
In Gath’s defence, he gave great advice on the housing market and debt which helped steer me in the right direction, allowing me to offer guidance to the folks on how to extract themselves from a debt-based life in a mature/informed way.
But over the last few years he’s sadden me with constant attacks/discrediting of blogs like The Automatic Earth with espouse sustainability/long-term thinking over 7% diversified portfolio returns & profit at all cost. It’s as if he saves you on one hand by waking you up to the risks of housing, only to push you into a ponzi stock market with the other (no doubt because Garth is shilling for a living and making his daily bread off advising individuals on how to invest). But I guess I’m naive to expect an ex-politician and editor of a newspaper to ACTUALLY care about peoples’ futures as opposed to just prentending to care (the previous being easier and more profitable).
Anyways, I ramble too much (though it is permitted here, as opposed to over at the GreaterFool) and have yet to answer your questions about TAE. So without further ado…
This is a place where the discussions (and they are discussions; not one-sided preaching where dissenters are mocked) generally focus on the two biggest issues facing us as a species and as individuals: energy and finance/economics. Other topics certainly pepper the conversations such as social psychology, geopolitics, “real politik”, environmentalism, climate change, etc. Basically, TAE tries to provide the biggest “big picture” view, and takes a system analysis approach as not to look at each topic independently, but at how they integrate and impact each other. And I wouldn’t suggest this blog has a Canadian or american perspective – more of a international/global perspective – though most of the people who frequent this blog and comment on it seem to be westerners or those who have some ties to western culture.
Ilargi seems to be carrying the weight of the blog with his writing these days, and many of those articles tend to be “status updates” of what is happening in the world on a daily basis as well as explanations as to why things may be unfolding the way they are. From my point of view, Ilargi can come across (for better or worse, though always appreciated) as someone who is frustrated/tired with a world that seems to make less and less sense every day, pleading for some one to make sense before it is too late. It’s certainly a feeling I can relate to…
Then there is Stoneleigh (Nicole Foss). Unfortunately we don’t see much written from Stoneleigh these days as she’s currently on a bit of a sabbatical to New Zealand, but she is an excellent writer in her own regard – perhaps her writing has less of the passion/emotion captured in Ilargi’s writings, but her works are more akin to a research paper which clearly communicates the key points and makes them easy for the reader to understand. Many times that I found myself in heated discussions with colleagues/peers on topics such as finance, energy, environment, etc., my mind would drift back to Stoneleigh’s writings, giving me the intellectual ammunition I required to make my points clearly and concisely.
There is a link somewhere to the TAE primers, and I think they are incredibly informative to anyone who is trying to better understand deflation and how it will affect us all. If anyone else could post that link for Bill, it would be appreciated.
Welcome again Bill – glad you made it to the party, as something tells me 2015 is going to be very interesting.
Okay, I’ll bite.
Where do you recommending “getting out” to?
The housing market was supposed to crash before the CDN banks admitted they’re insolvent. Guess it’s almost time to pull all my money out of the banks and start digging some holes in the woods… 🙁
“And there goes the financial collapse caused by low oil prices. …Right after the one caused by high oil prices.”
Takes me back to my Quality Improvement / TQM days… reminds me of upper and lower control limits for processes/systems, and all that jazz. I’m thinking the economy is like any other system – when you start moving out of your control limits, all sorts of crazy stuff starts happening.
While I’m certainly not prepared for collapse, I’m not sure I can handle another 3-5 years of whatever it is we’re living through now. Just hoping house prices collapse again before all the banks become insolvent – really need to buy that doomsday homestead soon.
Is another US bank bailout in the wind?
Possibly, according to Martin Armstrong.
I did not come to ask you to stay all night
Or to find out if you’ve seen the light
I did not come to make a fuss or pick a fight
I just want you to tell me if you think you can
Baby, can you dig your man?
Dig him, baby
Baby, can you dig your man?