Maybe you are already au fait with the deep flaws in our financial system, or maybe you are like I was ten years ago, too bored to read “economics”–knowing it was all human vagaries and surrounded with jargon. If your eyes glaze at the thought of bonds, yields, debt and GOFO’s–bear with me, I understand. But history books will be written about this year. No one can afford to be not interested in the science of money.
Economics is known as The Dismal Science, and the reason it’s dismal is the same reason that official climate science is — too many dollars at stake. (If we can treat psychology scientifically, why not economics too?)
Those who want to falsely alarm us benefit from confounding issues, confusing statements, argument from authority and bureaucratese
But the unscientific nature of some subjects is no accident. Clear thinking, transparency, and rigorous logic benefit the majority, just as jargon, elitism, gatekeepers and censorship do not. Those who want to falsely alarm us benefit from confounding issues, confusing statements, argument from authority and bureaucratese, and so too do the people who control our money — central bankers, the banking aristocracy, and some politicians. (Though instead of a false alarm, they want false calm…)
Not coincidentally there’s a big overlap between skeptics of Government-backed-science, and skeptics of Government-backed-money. Back in Dec 2007 in Bali, 5 out of 12 skeptics there were fluent on our financial systems flaws*. I’ve touched on financial and monetary angles before in Climate Money, Carbon credits: another corrupt currency, Manufacturing Money, and problems with fiat currencies. But there have been several seismic stories breaking in the global world of banking that are boiling through the ethernets, that haven’t made it to the mainstream press (or scientific blog-land). I have to share them.
It’s no coincidence that corruption in money and corruption in science are simultaneous.
Watching the news recently, I got a sense of foreboding, and it’s not about carbon or climate. It’s about the financial wreck that is unfolding. You may not know it, but for years David and I have been watching the economy closely, as skeptics do, knowing full well that the big numbers don’t add up and waiting for the inevitable. It’s no coincidence that corruption in money and corruption in science are simultaneous. One feeds the other.
Last month as the news reported fatal riots and fires burning in the streets of Greece, I listened to the explanations (which didn’t make sense) of Wall St’s lightning smash and recovery. The pat explanations about a “fat finger” didn’t wash (and not with others either). Something enormous occurred on Thursday in early May on Wall St (a 9% fall in less than 10 minutes, which bankrupted many small traders), and if it was one monster mistake, the authorities would know who and how, and that sale would be obvious. But it was a spread of companies that were hit, and the vague guesses as explanations only make it more sinister. It gives away how fragile our trading system is. There’s a virus in our financial network. But things are different to August 2008, back then only a few people were spooked. Now, nearly everyone is. Now, the scene is ripe for an earthquake.
Before I wrote about climate science I was writing about the markets.
Just to add some background, we’ve been invested in gold and gold related stocks for ten years. We watched money supply figures and “inflation” statistics and saw the gaping discrepancy. I was writing about gold and the coming financial storm in 2008 for news outlets like The Mining Chronicle before Lehman Bros fell, I was buying and selling gold contracts on the Comex futures exchange for a while too.
This is some explanation for regular readers who might wonder “why” non climate stories will begin to appear. The blog is here to expose deceitful reasoning and poor communication and how they are used against us. In the sense that truth is stranger than fiction, I’ve been lucky enough to come across some extraordinary tales.
This is also a primer for people who think that the economics jargon is not worth the effort. Wait til you hear what’s been going on.
Carbon is the second largest scam in history.
* Both Climate Skeptics and Monetary Skeptics in Bali (if you are curious): Archibald, Balle, Monckton, David and I.
My second college degree was in Economics. Class sizes were very small. There were very few career jobs. Today it is an arm of the Political Science department. Most of what economists write from what I read has only a liberal political agenda. Their forecasts are even worse than the “PRetend Climate Scientists” come up with. Economists are known to not have enough personality to become accountants.
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The climatism of current climatic alarmists isn’t a matter of climatology at all. As a matter of fact, it is the very economy and political science what is relevant to study it. The mock up pseudo-science has been contrived for the only reason to enthrone asymmetric relations in society. The asymmetry of market lords with monopoly privileges sweeping potential competitors without necessity to beat them in clash of cost effectiveness and innovations. The asymmetry of affiliations made of both the client cartels of privileged corporations as well as their political patrons ruling public service corporations in the system called corporativism. The recent history knows a lot of corporativism forms either the fascism in the recent Europe or the BAASism in the Arab Word, banana republics in the Latin America etc. Most of wars in the recent history were fought against the corporativism including the WW2, which was actually a citizen war of the Western Civilization, in which the corporativism and the liberalism were the war sides. The economic theory of ordo-liberalism tells us the battle is never over as these who capture asymmetric position at the market are naturally prone for privilege seeking to grab and expand the asymmetry as a concession.
If one considered the alarmist views in which they seek CO2 curbing but reject nuclear energy (the best way for the curbing) he could thing they are wacko, whose goals are inconsistent, but using the economic theory you can find their real goals, which are pretty consistent unlike to the pseudo-climatology pretences. The climatic alarmism should be taught at lessons of economy as a monopolistic strategy and at lessons of politic science as a strategy for anti-liberal corporativistic plots.
40
Ditto Henry. My observations too !
The leftist economic socialism of govt.takeovers and wealth distribution by any corrupt manipulated means and an encroaching power and social engineering control mentality is par for the course with this radical Rudd and Greens agenda. How do they get away with the nonsense of declaring the stuff of life, CO2 / carbon a pollutant ? It is mind blowing ! Both, peas in a pod, Ken Henry and Ross Garnaut ( eco nomists ) are the principal drivers of the fraud of alarmism CC hoax AGW and the destruction of our economy, driving our Nation off the cliff. They are the elite enlightened gurus that KRudd defers to and follows and they will have a lot to answer for in the current destruction of Australia.
Everything is politics today and always has been, it is to do with the fundamental axioms and worldview that people adopt. People choose a framework ( or adopt a ready made one from the leftist propaganda education system ) and then interpret everything to fit into that paradigm . They will hold on to their worldview for dear life ! It has been fully integrated into their identity and reason for living. They view themselves as morally superior really believing their hubris of saving the planet. That is why even otherwise sensible people ( my husbands’ Civil Engineering collegues ) will not admit they have been duped by the fake science / scientism of catastrophic CC / man made GW. Bruce Walker’s current article at American Thinker ( Homo Politicus ) is revelant to this topic as is anything that Thomas Sowell writes re the Anointed Vision.
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At the Moonbattery website there is ample confirmation of my comment about the overwhelming leftist education system ;
June 5, 2010
College Reading Lists: Drenched in Moonbattery
Posted by The MaryHunter at 12:30 PM | Comments (2)
In an effort to enlighten and inform incoming freshmen, it is becoming more fashionable for colleges and universities to assign summer reading for new students. The logic is that, when they launch into classes in the fall, the kids will have a common experience about which they can pontificate with each other — and the more multicultural and progressive, the better. In 2002, UNC Chapel Hill built a freshman first-year program around a book on the Qur’an and earned much scorn. The trend hasn’t improved much, either.
These books reflect some of the trends found in [the report] “Beach Books” about the genres of choice. Books about multiculturalism, immigration or racism were the most prevalent (60 colleges), followed by environmental issues (36 colleges), the Islamic world (27 colleges), New Age or spiritual books (25 colleges), and issues related to the Holocaust or genocide (25 colleges). Only 6 colleges assigned classics. The study also looked for other patterns in the selections, and reported that 46 of the choices have a film version, 29 are about Africa, 9 are related to Hurricane Katrina and 5 are about dysfunctional families.
The report cites several issues with the selections. “We found the preponderance of reading assignments promotes liberal social causes and liberal sensibilities. Of the 180 books, 126 (70 percent) either explicitly promote a liberal political agenda or advance a liberal interpretation of events. By contrast, the study identifies only three books (less than 2 percent) that promote a conservative sensibility and none that promote conservative political causes.”
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Do you remember Andrew Denton’s rather odd series Money Or The Gun? One very clever episode had him as a 1930s gumshoe hired to track down the facts behind the financial system – it must have screened in 1988 or 1989. He interviewed a gent called Ted Wheelwright – Wheelwright’s view in a nutshell was that the whole business of bank lending had become a game of pass the parcel. Lending was once tied to the national gold reserves but with the deregulation of the banking system banks were now in essence creating new dollars out of thin air.
This was just after the stockmarket crash of 87, which in Melbourne was followed by a couple of years of total insanity on the housing market. Prices went into the stratosphere and came down hard. Wheelwright seemed to have his finger on the pulse of economics but if we can’t learn the lessons of the late 1980s what hope would there be that we’d listen to one lone voice?
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Both bubbles: climate alarm and the economy, about to burst!
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At the end of the day money has no intrinsic value – like gold you cannot eat it. What does have intrinsic value is food and and to an extent relationships and shelter (depending where you live). We must protect our food security and yet this is the thing that in recent years gets worse and worse with grain supplies down to new lows. With the sun still being quiet and the potential for looming cold, crop failure and market collapses it is not a good scenario and most of the population is at risk. My advice – find some good productive land away from major population centres, with water (springs etc) and start securing your own supply of food etc
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Just a quick post – if anyone wants to understand the basis of liberal economics (in the American sense) then study Keynes – especially http://www.keynesatharvard.org
Keynes was never an economist and his polemic is essentially a political philosophy, that of the Fabians, a rather nebulous collection of intellectuals.Another reference is here http://www.womensgroup.org/Books-Summaries/FABIAN-FREEWAY.htm
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Jo
There have been hints in the odd aside from Ban Ki Moon, Henry Kissinger, Jacque Chirac & others that the agenda behind CAGW may be more about ” real Global Government” than saving us from the physical effects of man’s combustion of carbon fuels.
It is hard to be too keen on the concept of a global system. I find the thought of bunch of un-elected bureaucrats behind a “Global Parliament” of any sort to be the worst perceivable nightmare.
However, if a Cap & Trade system gets up then, Carbon Credits will by default become a true global exchange currency. Further it & the laws governing it would have to be administered by a global forum.
Given the arguments already raised about justice & social equality for developing nations, a powerful global body would have to adjudicate & enforce the “contribution rates”. ( & therefore exchange rates?)
Given the history of the institutions & identities driving the CAGW campaign, it is impossible to perceive any global system of government could be benign & benevolent. Further, history has many examples where the frailties of human character lead to manipulations of markets & the various forms of political & financial corruption. It would be really hard to imagine the various member countries of a “global government” would not be subject manipulation by the more powerful members, institutions & individuals.
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Hey Jo,
Glad to see the site will be spreading its wings and covering more than just science (not that there’s anything wrong with just doing science). I am a huge fan of libertarian economists like Mike Munger, Don Boudreux, Walter Williams and John R Lott and it would be nice to have an Aussie equivelant to help regular folks cut through all the waffle.
I agree with Andrew Bolt, this country desperately needs its own Fox News. I am not a conservative, more quasi-libertarian, but it would be nice to have a counter spin to the ABC (if you had your own program Jo what would it be called? The Jo Show? Ready, Steady, Jo? If it were a breakfast program we could call it Wake Me Up Before You Jo Jo :p ).
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If you want a sobering economic view try out John Mauldin… I came across him lecturing at the Singularity University web site:
http://www.youtube.com/watch?v=4mn4ujPLKvA
For more recent updates see his regular postings at InvestorsInsight.com:
http://www.investorsinsight.com/blogs/Default.aspx?GroupID=32
The brilliance of John’s presentations is that he cuts through the fluff to the basic theory that really matters. Often as not the most basic economic identity equation can adequately explain the economic situation of the day. Anyone selling you outcomes from complex computer models is trying to hide something… sound familiar?
Since his lecture (first link) things have unraveled a lot more quickly than expected. Latest news is that Hungary is in trouble, and Spain is about to hit the wall. The Euro zone is in deeper trouble than most of the media is reporting. That is bad enough, but the question is how long the US can keep going the way it is. Much US consumption is leveraged off their mortgages and many US citizens have run out of equity in their homes.
I won’t ramble … enjoy (if you can LOL) the links. Yes economics is the dismal science.
PS> Economics is called the dismal science because of an early model created by a chap called Malthus. Them models are evil I tells ya…
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Louis Hissink @ 8:
But Keynes had the best quotes… I printed out one of my favourites and taped it in a colleague’s cube
We are certainly in an irrational world right now 🙂
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Interesting parellel but very true. I would like to say we in the western world have capitalism, but instead we have this freaky “We can’t have a recession because I won’t get re-elected Capitalism”. So instead of capitalism being about efficiency, it became about greed. I don’t think we would have had these monstrous companies that were “too big to fail” if the Dot com bust was allowed to follow it’s course, for example.
The result has and will be that the recessions (or worse, hope note) will simply have a worse and worse impact the longer it was delayed. And no, printing money won’t help the situation.
Similar to you Jo, I saw this one coming early 2007. I am beginning to conclude that the sorts or people who somehow believe raising taxes on primary industry won’t hit them in their pockets are the same people who are gullible enough to believe their super company telling them to put more in and don’t worry, things will be better in the long term if you stay in high risk investments -even when the root causes remain and none of the risks have been mitigated.
It is the same problem with AGW, if the politicians had left it to it’s own devices, things will balance out one way or another. But oh no, Komrade Rudd and co want to create more Govt departments and stephen conroy wants to be able to give his mates a high paying job (i.e. head up NBN).
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Twawki @#7
Money indeed has no intrinsic value but its function is to allow market activity. It exists because of the prior existence of private property, and it is only private property which can be traded and exchanged for goods and services. Private property means that what you produce is yours to dispose of as you see fit.
The Keynesian goal is to debase money in order to diminish private property rights. Jo can go into this into greater detail than I could given my location and intermittent satellite connection, but AGW is part of a grander plan that Rudd et al are up to the necks in. It’s why Rudd wants a seat in the UN, to join his Fabian mates to run the world in the manner he has been running Australia.
The very fact that politicians think a country needs to be governed is admission of the absence of a free market.
The long term goal is a world government controlled by an elite (the Fabians) under the umbrella of state capitalism (see Quadrant online, I think)or Facsism.
The only unknown is the Green Party, and how much influence they could have after the coming election. That many voters are drifting to the Greens instead of the Coalition (and the Greens are simply the Communists write sustainably) and if this is so, and the majority prefer a socialist system, then so be it.
Perhaps they need to experience that system first hand in order to subsequently reject it.
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Q: Whay does Kevin Rudd need two Facebook pages?
A: HE needs one for each of his two faces
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Hey Louis – yep understand the need for money and am not against it – I just think if things hit the wall and many people have been talking about a second crash much worse than the last WFC then what most people are going to try and resolve is how to eat. Supermarkets have 2 weeks supply of food at most, world grain supplies at record lows, a cooling climate will reduce food production. When food runs out what do people do? I don’t think our current government would know how to resolve it and wonder whether they would want to. We have planted our gardens with all manner of things but very little we can eat.
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And agree with you on the world government/fabians etc but one of the things they believe is the world is overpopulated and needs to be reduced to 500 million (from 8 billion plus). I think that they know we are in for a cold time they are just making sure we are not prepared for it and in doing so they will cause the most damage they can.
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I trusted the Qld government a few years ago when they endorsed the Qld Magnesium share float. Did me dough- they’re worth about 1c now. And I bet some Mums and Dads are still waiting for Telstra to come good…..
When the government, banks, insurance giants, CSIRO, BOM, guarantee something… run a mile.
Ken
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Good discourse over at WUWT between Willis Eschenbach, Richard S. Courteney, Geoff Sherrington & others. Subject is measurement of CO2.
http://wattsupwiththat.com/2010/06/04/under-the-volcano-over-the-volcano/
No acrimony, just difference of opinion. What the hell are peons like me to think? Oh, I know, don’t pay for stuff if you’re unsure.
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Is this the next big scare?
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Jo: If you are capable of writing about economics as clearly as you have been able to write about Climate Change, go for it and I will continue to visit your blog regularly.
But inevitably the usual pantheon of conspiracy theorists will also be attracted to your writings. Everyone has his/her theory about what is wrong with the world. Contributors to this blog are largely ‘free-marketeers’ opposed to ‘big gummint’ and many see nefarious Marxist subterfuges when, I believe, few rarely exist. My theory? The collapse of the western education system and sheer incompetence of our elected leaders.
Just to blame the ‘left-wing bias’ of universities may be half way there, but don’t forget that one of the purposes of time spent at university is to develop critical thinking. This so often meant examining existing failed theories and then being clever and providing a solution. This inevitably leads to a feeling of superiority and ‘we know better than hoi polloi’, i.e. left-wing group think.
Couple that with the truism I met so often in the applied science world, ‘those who can – do, those who can’t – teach’ and that many second raters charged with teaching the young fail in what surely is their main task.
The net result is widespread incompetence. Vide the CAGW fiasco. There are very few ‘climate scientists’ who could be regarded as first rate. The UEA cadre is the prime example. What they did in academe did not matter. Once their work became important to ‘the outside’, it has been proved sadly wanting.
The incompetence cancer has spread to politics. Who is really capable of leading organisations as large as whole states? Ms Keneally (or Mr O’Farrell) in NSW? Mr Rudd (or Mr Abbott) for the Oz nation? Dare I question Mr Obama for the USA? Or Ban Ki-Moon for the UN? Such individuals presumably have the self-assurance that they can do the job, when the task at the scales of the modern world is beyond anyone’s capacity.
And when it comes to the world’s financial system? Nah, definitely not possible. We are in trouble indeed.
Meanwhile, we sit back and recognise the leaders faults and mistakes and complain. Could we do it, given the opportunity? Maybe I should rephrase that axiom, ‘Those who can – do, those who can’t – become politicians’.
Now that thought is really depressing. Someone cheer me up with a bit of levity, please!!
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Clark and Dawe on the European economy is hilarious
http://www.abc.net.au/7.30/content/2010/s2905304.htm
(For overseas readers Clarke and Dawe are comedians – Dawe is always the interviewer and John Clarke plays various interviewees.) They perform every Thursday night on the ABC.
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Someone cheer me up with a bit of levity, please!!
Bryn, I accept the challenge!
The Man With The Golden Jaw.
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Climate Change Alarmism – Economics – Politics – Advertising – Public Relations.
All the same to me – they are all steeped in and dripping with propaganda – something I have been fighting for over four decades now.
I am not sure where this came from, and it obviously looses something in translation, but it sums it up nicely, as does Adolf Balik: #2
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Gregoryno6
That astronomical news has been around for a little while now.
This is the Crab Nebula in Taurus (just below Orion) about 6,000 ly distant.
http://hubblesite.org/gallery/album/nebula/pr2005037a/
It blew up about 5,000 years BC and became visible on earth early July 1054. It was visible for two weeks in broad daylight and remained naked-eye visible in the night sky for about 15 months.
As the latest determined distance of Betelgeuse is around 600 ly there should be a good night time show as long as the sun is not too close at the time. It is quite possible that it could affect the weather and I’ve got no doubt that some scientific rent-seekers would try to capitalize on it.
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Mark, thanks for that. I just happened across the Betelguese story yesterday. It sounded like a potential moneyspinner for someone who could put the right angle on the story.
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Thanks janama (Clark and Dawe) and Gregoryno6 (Man with the Golden Jaw). Just what I needed.
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Louis Hissink:
Alas Louis, money has two functions: it’s original purpose, which as you say, is as a universal medium of exchange – for which it has performed admirably; and as a way to “keep score” – a purpose for which it was never designed and which it is quite poor at.
As long as these two distict functions are allowed to be combined into the one device – a state of affairs that will be very difficult, if not impossible to rectify – we shall continue down the same path history shows us: bust, hardship, austerity and eventually regulation to ensure it “never happens again” -> slow steady growth and increasing wealth -> deregulation (because “we have learnt our lesson” and it won’t happen again, trust us) -> boom -> the rich offloading over-valued assets to masses -> back to bust – start all over again.
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Gregoryno6: #26
And apart from the facts (which we all know are suspect) Betelgeuse was the home of Ford Prefect; Arthur Dents travelling companion in The Hitchhikers Guide to the Galaxy, a film of the television series of the book of the radio series of the same name.
Known as h2h2 to the cognoscenti, the guide explains the meaning of Life, the Universe, and Everything.
In my opinion, it is just as authoritative as the ClimateScience website (are we still allowed to mention that here?)
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My #29
I don’t know. You read it twice, as written, and as previewed, and mistakes still get through …
To the cognoscenti, it is known as h2g2, and not wot I rote.
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Rereke I was wondering why Betelgeuse sounded familiar. All I could think of was that Michael Keaton movie Beetlejuice.
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One of the best commentators I have found is Jim Willie and he writes at http://www.goldenjackass.com/main5.html
There are others but this guy seems to constantly hit the nail on the head.
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Twawki at Post 7. The price of the various grains is quite low for the farmer. They are told that due to carryone stocks prices are low. They went down the other day.
Are the Cockie’s being lied to?
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I well remember talking to a fellow between lectures in the early eighties about economic conditions. His reply was : “Money is a fraud on the masses”
His job ? : Managing the Private Finance statistical collection at the ABS.
True story. I kid you not.
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Jo,
I look forward to your economic thoughts.
But they better be peer-reviewed.
Not sure how gold will go in “normal” debt deflation, but I don’t think there will be anything normal happening for a quite few years.
The PTB have really over-reached this time.
Interesting to see that the G20 today says stimulus should be withdrawal. Meanwhile our Kev wants to press on with his stimulus plans, regardless.
Gregoryno6 @ 23 : Wonderful !
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Yikes my tags were wiped.
The peer-reviewed bit was meant to be mock-serious.
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Keith, here’s one of my own efforts, just whipped up:
Is nothing sacred?
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Economics is called the dismal science because economists opposed slavery, and a world without slavery would be dismal.
Financial problems are not fundamentally about anything obscure economically, anyway. If governments guarantee third-party debts, which they are only able to cover by printing money, most of the rest follows. The interesting economics only comes in when you look at the effects on business of high tax and rapid inflation.
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Jo:
I admire and agree with your analysis of AGW but think that your comments on economics are incomplete. Perhaps you will say more and complete the picture. TWAWKI touched on an immportant point: “money has no intrinsic value”. Money allows commerce and trade. Its use requires confidence that it can be traded for something needed or wanted. All of finance is based on confidence and when what is being sold is imaginary or far removed from tangible assets, the financial system is vulnerable to collapse. If one tries to define “wealth”, the only definition that works is “possession or control of that which is wanted (by someother party or person). This means that wealth can be as diverse as food or water (basic to survival) and a Picassso painting (wanted, but not edible). Thus all of finance and economics is based on an inverted pyramid of confidence. Such a pyramid is inherently unstable. Governments or whoever is in charge of the money supply have a responsibility to behave responsibly and often they do not. The U.S., U.K. and promoters of carbon trading are among the culprits.
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Twawki..
You’re absolutely right. Looking at the Australian Currency Act 1965 (still current), sections 9, 11, 16 and 22, particularly section 16(1)(c). You’ll find that a coin of between 50c and $10 ($2 coin is our largest), can only be used to pay a debt of 10x its own amount ($20). Since we’re no longer a gold-backed currency, and can’t trade in gold for general expenses, coin is all we have, as the Currency Act 1965 doesn’t mention notes.
In fact, section 115 of the Commonwealth Constitution states:
“The States shall not coin nor make anything but gold and silver as payment of debt.”
These are all still valid Commonwealth laws. We’re forced to pay our expenses because we’ve forgotten or were ignorant of these laws. Now for the question: How can you legally pay a tax on CO2 over $20..?
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The problem is economists..
My Uncle who was a senior Economist, got his PHD with my dad’s Math’s tutoring, a high school senior. THat is a true story, about the same time as most economic theory wwas being developed.
I studied Econometrics in a math degree. One would think that to do econometrics, in a math degree one would need economics base subjects.
No we did a self study short course, in what we needed for econometrics, we sat an exam, not open text it, was maths pass or elect another subject.
We never heard or read about the economic philosophers, to this day people say Keynes or Popper and I dont know who they were.
Supply and demand and step functions some stochastics, is about it, using a standard normal model if we get the data.
wanted humor you got it.
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or Hayek.
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I have to say I’m a little disappointed by some of the views expressed in this forum. Seeing the same people who openly ridicule believers of CAGW for want of clear evidence, then proceed to shrill about CWEM(Catastrophic Western Economic Meltdown), without demonstrating any empirical basis whatsoever, is disheartening to say the least. Western economies are trending well within ‘historical variation’ yet, apparently, it’s all about to come tumbling down.
You might call me a CWEM sceptic!
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Waffle:
“Historical variation” includes economic collapse, cf tulip-craze, south-sea bubble and sovereign defaults. The current evidence is government and personal debt plus projected “remedial action” (or lack thereof). What more evidence do you want?
Morley
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Morley Sutter: #39
Nicely put.
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Yes Jo go for it. I found the link to John Maudlin ( Bulldust #11 ) very worthwhile. I have recently set up a SMSF which has not gained much but not lost either. We were with a leading super fund that was losing us $5000 a day! Having studied the possible avenues of investment at this moment there is gold. Not a good time because the price is high, I wish I had started 10 years ago like Jo. Recently we put 25% into unallocated gold and silver at the Perth mint. Another thought is maybe we could have an economic computer model like a GCM. Err building virtual economic worlds is probably what caused GFC 01, when will GFC 02 come along maybe soon! Steve Keen is worth reading
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Nice article on black swans this morning on Bloomberg:
http://www.bloomberg.com/apps/news?pid=20601039&sid=a96x3aqwqF2M
I think its more like cricket – 20/20 is faster and more prone to strange and violent outcomes (and match fixing!). In financial markets its dark pools, HST and software avatars. Maybe we need a video 3rd umpire for the ASX…?
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I suggest everyone reads the Road to Serfdom by Freidrich Hayek on the insidious nature of socialism (Greens).
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When I studied economics, which involved econometrics, I was rather taken by the notion of ‘assumptions’ used by all the lecturers to come up with answers which suited the argument. One particular model, we were required to prove that one could borrow 100% of the value of the enterprise or asset without any problems. However to get there, we were allowed to assume away all the fundamental problems that beset us every day. One of the most outrageous assumptions was ‘the perfect world’ where all information is known immediately as opposed to ‘real life’ where pretty well everything is unknown or at least unknown until some future date. I did solve the problem and come out with the correct result to pass with flying colours, but decided that in real life, I never would borrow the 100% to prove a point.
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Through those historical variations we did not see a radical change in our way of life. Even the great depression only lasted ten years and was not a fraction as devastating as the significant wars of the 20th century.
I’ve been following the numbers for years and it tells me two things will happen.
1. The US dollar will no longer be a monetary standard.
2. The US and Eurozone will be forced to bring down, or reduce significantly, its trade barriers.
No doubt we will see a squeeze for several years as certain economies correct themselves. The real question is: where are you going to park your money? I’d be looking towards agricultural commodities and holdings. Think, the basics of life(which may or may not come into short supply).
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Neil Fisher @28
” “keep score” – a purpose for which it was never designed and which it is quite poor at.”
Keeping score? I don’t understand – would you elaborate please, (and if I am slow to respond its because of the satellite internet connection I have to suffer out where I am); I should add I follow the Austrian School of economics.
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As I was home today for the WA public holiday, I did a bit of channel surfing in the late morning and stumbled upon some daytime women’s programme where the panel, with Denise Drysdale and a bunch of unknowns. Today’s show was themed “going green” or something like that, with an air of “kumbaya” huddling around eco-everything.
Nick Rowley was their guest, pushing his Emissions Trading Scam ideas, gently criticising the government’s backflip, saying that “Jokenhagen” failed because it was too hard at the international level, because it was too hard at the national and local level. The huddling and kissy-kissy talk was gut curdling, to say the least, and no hard questions on the validity of how Australia’s emissions cuts would make a dent anywhere. No questions were raised on why carbon was the bad guy in the debate, or the economic impact as a result of implementing all those stupid green policies he discussed.
Needless to say, I felt sick enough hearing this bile that I just switched channels.
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Louis Hissink:
The two uses to which money is put:
1) universal medium of exchange. Most people understand this one quite well. I sell my labour to you for what amounts to a promisery note, which I exchange for goods and services I require and/or want.
2) To keep score. That is, the more money you have, the more “wealth” you have.
Because of this second use, money itself becomes an asset. And because money is really only an idea or concept, it is in fact intellectual property only – there is no tangible good to back it (any more). By “floating” currencies and by allowing derivatives and such tactics as “short selling”, we see people make a profit when things lose value, and we have the situation where the “trade” in money and the future value of real assets is massively larger than the value of those assets. It’s not sustainable, and it tends to push a larger and larger percentage of the worlds “wealth” towards those who are already wealthy, which destabilises economies – like eco-systems, economies thrive on diversity, niches and change. Like life itself, the economy needs a certain amount of chaos to flourish – and that chaos is reduced by the homogenisation of economies by corporate giants squeezing out the little guy. Which, oddly enough, is self defeating in the end – innovation always comes from the “little guy”.
Ultimately, the only sustainable, long term way to “fix” this is to decouple the concept of money from the concept of wealth. And the only way to do that is to ensure that the longer you keep money, the less it is worth. That encourages people to spend money rather than keep it for “a rainy day”, and it ensures that real assets (real estate, businesses etc) are the basis of how much we are “worth”. Of course, because this is such a radical departure from the current system, it is only really possible to do this in a depression, so hopefully we will not see it happen anytime soon.
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From the “I’ve got a baaaad feeling about this” department, the parallels with 1931 are rather spooky right now.
I recently found out why the US $ is holding up, despite us tossing $TRILLIONS in the fire each month.
While the Feds are busy printing money and T-Bills like crazy, they have mandated that the banks “have more capital”. Due to the expansion of money in the fractional reserve banking system (or contractive multiple when tightening reserves) the net effect is a small reduction in total money supply. But also a drying up of credit to anyone NOT the government…
This will NOT lead to economic recovery (though it does hold the dollar up as the Feds print and spend more buckets). Basically, it crushes the private sector to the gain of the government sector.
That then makes the US$ look more ‘stable’ in comparison to the Euro, which adds to the Euro weakness (that floods more money from reserves in Euros into reserves in US$) and continues to increase US$ strength.
But this game can only run a short time. Once banks achieve capital levels, the artificial support of dollar values evaporates. As private enterprise continues to falter, even more dollar weakness. Repeat. I expect that cycle to start in about 6 months. It will be made even worse when 2010 ends and we get a massive tax increase from the expiration of the “Bush Tax Cuts”. That sucking sound is the sound of $Billions to $Trillions being sucked off to Washington D.C. to be consumed.
So, for now, the US$ may be the most virtuous whore in the whorehouse, but this virtue will be short lived…
I’m mostly trading non-US stocks and gold / silver / oil at the moment with occasional holdings of US$, but expect to abandon the US$ Really Fast once the inevitable inflation picks up.
FWIW, I got an Econ degree back in the early ’70s when it was only modestly liberally infested and was a sort of a business degree. We looked a lot at the problem of “Guns or Butter” (as a metaphor for spending on defense or on human welfare needs). It seems to me the more pertinent question would have two more terms:
Guns or Butter OR machine shops or farms.
The original form gives a choice between two forms of government driven CONSUMPTION spending. The reality is that the money for consumption is pulled via taxes from investments in the machine shops to make tools and guns and from the farms that make the butter.
Increasing the ‘cut’ that goes to through the government inevitably reduces the productive capacity of the nation. Doing that now is the worst of all possible times. So in addition to sending our machine shops to China, we are planning to eat our seed corn, burn the barn for fuel, cook the cows, and send our financial capital to the politicians for ‘safe keeping’.
Rarely have I seen more manifest ignorance of the damage folks are doing in the name of ‘good’ via this rush to consumption on the national credit cards. The only good thing is that Greece, Italy, and Spain are getting there first so I can vainly hope we can learn by watching and change our ways…
E.M.Smith
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BTW, one of the common jokes in the Econ department was that:
“An Econ degree is a degree in deciding questions of the form: Given these conclusions what assumptions can I draw?”
My other favorite Econ joke:
If you laid all the Economists in the world end to end, you still could not reach a conclusion.
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