It's The Pace Of Change That Kills You

In Part 1 of this article, author Chris Martenson describes how the accelerated pace of recent economic and ecological challenges is overwhelming our ability to deal with them. In Part 2, ALERT: Time To Relocate (premium content), he describes the factors compelling him to leave his community of 15+ years and lays out his relocation criteria.

If you prefer to listen to this article (read by the author), click the player here below:

| Download |

A treasured member of my family is in the process of dying right now. She has lived a full, rich life; but her passing is a sad affair for us.

I’ve spent a lot of time recently with hospice workers. I’ve learned that they’re often asked by their patients, “How much time do I have left?”

While sometimes loathe to offer an answer, hospice staff can predict the timing of the end pretty accurately.

They do so by measuring by the changes they see. Or, more accurately, the pace of change in those changes.

Could a patient pick a book up off the floor in June, but not in July? If not, then their remaining time is likely to be measured in months.

Could they raise themselves out of a chair last week but not today? If not, then it may be only weeks until the end.

Are they losing function every day? Then death is likely just days away.

And so on, right through hours, minutes and seconds.

It is the pace of change that matters. Tracking the pace of change is as important as the actual changes themselves.

Both provide critical information about what’s going on, but it’s the pace that informs our timing predictions.

This is equally true for larger systems like economies and ecosystems.

Ecological Volatility: The Pace Is Accelerating All Around Us

Losing a certain population of a given species over a million years is a very different proposition from losing the same number within just 40 years. Or even yearly, as now appears to be the case.

The years 2016, 2017, 2018 and 2019 each saw one or more Cat 5 hurricanes form in the Atlantic. This is the longest such stretch of years in the record books.

Dorian was absolutely brutal to the Bahamas; the damage was unprecedented and extreme. I simply cannot imagine the sustained horror of being pinned down by a Cat 5 for 36 hours as it brutally dismantled my home.

Like slow-moving Hurricane Harvey (not a Cat 5, but hugely damaging) Dorian just parked itself over the Bahamas and laid waste to all that lay beneath, churning like a massive blender.

Are monster storms that move slowly a new meteorological trend? Or has it simply been ‘bad luck’ to experience so many of late?

We don’t know yet. But there have only been 35 Cat 5 hurricanes in the past 100 years. However, at our current pace, there will be 125 such storms over the next century. That’s four times as many vs the past.

Economic Instability: Negative Rates Multiplying At A Staggering Rate

Financially, the latest and most head-spinning change concerns the explosive proliferation of debts with negative interest rates.

Unheard of since the Mesopotamian invention of debt in 2,400 BC, negative interest rates have suddenly appeared on the financial landscape like a new mutant species, an invader without natural predators, gaining a sudden foothold and then spreading rapidly.

It’s as if a virulent chestnut blight landed in a virgin forest of corporate and sovereign debt.

From literally ‘none’ ten years ago, to more than $17 trillion now. And up from a ‘mere’ $6 trillion in the past ten months alone:

<img class=“aligncenter” src=“” alt="“chart of growth in negative interest rate government debt” width=“650” height=“287” />

Is this a new, permanent trend? We don’t know yet.

But the pace of change is sure intensifying.

First, Switzerland gave negative rates a tentative go. Then Denmark timidly followed. But eventually, the entire Euro complex followed with gusto, with most countries’ rates crossing below the 0%-boundary in late 2014:

<img class=“aligncenter” src=“” alt="“timeline of negative market interest rates” width=“600” height=“401” />

Whatever the final repercussions are, one fact is clear: the world’s central banks are completely, 100% responsible for these bizarro-world negative interest rates.

They try to pretend that the $20+ trillion money printing spree they engineered after 2008 isn’t a root cause. Instead, they claim “the markets” are responsible. But this is as weak a defense as Ted Bundy claiming his victims all killed themselves. It’s just not a credible defense.

Emboldened by seeing that nothing terribly bad happened in the early years of negative rates, the ECB went on an absolute tear of a printing spree in 2016 and 2017. It went so far as to buy corporate debt via private placement, meaning that the debt was never issued to the bond market. The ECB just conjured up the necessary billions of euros and directly credited corporate accounts while taking their bonds onto its books.

Again, it’s worth noting just how unusual this all is. It has never been done before.

5,000 years of accumulated knowledge is being chucked out the window by activist central bankers who assume they know best.

But do they? And what will be the repercussions if they don’t?

Economic And Social Vandalism

The financial media is working very, very hard to defuse concerns about negative rates and sell them as a talisman against anything that could hurt the economy.

They dutifully scribe down what the central bankers say, and then pitch it to us as gospel.

Instead, I propose that now is the time to ask stiff questions of the central bankers, and to not let them avoid answering. And to keep asking until we either receive reasonable responses, or clarify that they have no good answers to give.

Here are questions I would love to hear posed to Chairmen Powell, Draghi or Kuroda:

  • “Your actions were designed to spike the prices of stocks and bonds and you’ve succeeded. This has led to an enormous wealth gap. What’s ‘too far’ in your view? Right now 5 people have as much wealth as the bottom half, by which we mean 3.8 billion humans. Is ‘too far’ when those same five individuals own as much as the bottom 75%? The bottom 90%? Or is it your aim that these top five individuals should actually possess everything in the world with everyone in their debt?”
  • “5,000 years of financial trial and error has firmly established that saved capital deserves a positive rate of return. You are now certain that negative interest rates are what the world needs. What empirical data do you rely on to make that assessment? What happens if you're wrong?”
  • “All investment decisions depend upon an assumed rate of return. Pensions, for example, require matching future liabilities with current assets and an assumed rate of return. Now that central banks are certain that negative yielding debt is just what the doctor ordered, and under the principle of "you break, it you buy it", we’re wondering what responsibilities the central banks are prepared to assume here for broken pensions?”
  • “Same question as above, but for savers and endowments.”
  • “Money is not actual wealth, but a claim on real wealth. More importantly, it's a social contract. Central bankers are monkeying with that social contract and the effects are obvious. Corporations are incentivized to make returns by financially engineering their balance sheets and rigging their share counts instead of taking actual risks, hiring more people, and investing in R&D. Can we not just take this all the way to the end and propose eliminating risk for everyone and just give everybody money without anyone performing any work at all? Obviously not, but we’re also obviously somewhere along that path. The question is, how far is ‘too far’ and what criteria are you using to determine that?”
  • “Endless growth is not possible on a finite planet. Your policies are all geared towards stoking the fastest economic growth possible. Do central banks have any responsibility to future generations and leaving behind a world worth inheriting?”
We deserve to know the answers to these -- and a dozen other -- questions. Why nobody in the press or Congress is asking any of them is a different story for another day.

While it’s possible that central bankers are competent, benevolent experts doing their best, it’s equally possible they are the largest economic and social vandals in all of history.

Given that possibility, the Overton Window really needs to be smashed wider, and quickly, so that we can get answers to those ‘impolite’ but necessary questions above. If it turns out that the central bankers have thoughtful, intelligent responses to them, then fine. We can debate the assumptions and data.

If, on the other hand, they get snippy and affronted by being challenged, then it will mean they have no good answers. It will unveil that they’re merely ‘winging it’ when literally everything is on the line.

It will mean, for the sake of ease and expediency, they’re basically dismantling a cultural heritage site as they scavenge for handy building materials. Turning architectural splendors into crude stone huts.

In other words, they’d be unmasked as economic and social vandals. Wrecking the infrastructure of financial knowledge and thousands of years of cultural arrangements simply because they are too intellectually lazy or too emotionally weak to do otherwise.

We Have To Be Our Own Rescuers

The Powers That Be, like central bankers and politicians, are just humans. They err. They have to operate with imperfect information.

But they are also mostly untrained in systems thinking, resource limits, and other such necessary fields – which they could correct for if they cared or dared.

But they aren’t. And because of this, the pace and the scope of the changes happening are beyond their powers of comprehension, let alone their powers to fix.

So many things are changing. And the rate of change is speeding up, too. It’s barely possible to fashion a comprehensive plan for what to do about it. It’s probably too much to expect that anyone in power would have the necessary broad-based systems thinking required to concoct a reasonable plan forward.

Someday we’ll begin to run out of fossil fuels, and we have no plan for that. We haven’t a clue what to do about the rapidly intensifying weather. Nobody knows how we’re going to grow enough food for 9 billion people when the phosphate runs out.

But instead of planning for these certain challenges, what are our leaders doing instead?

The central bankers are continuing to lower interest rates. Politicians squabble about marginal, ultimately unimportant distractions. And universities enforce spaces safe from micro-aggressions so that nobody is ever offended (leaving them woefully unprepared for what’s coming next).

Everybody is still busy doing the very same things that have moved us away from what has served us well for 5,000 years: positive interest rates and a stable climate.

The rate of change is accelerating. Things are speeding up. That’s how exponential systems behave. It’s not surprising to those who understanding it, but it’s shocking to behold.

It’s dead simple at this point to conclude that we’re on course for a massive financial accident. And a major ecological upheaval that will make it difficult, if not impossible, to feed everyone, too.

If we don’t change direction, dramatically and soon, those eventualities are about as close to guaranteed outcomes as you can get.

Will society make the necessary change in time? I doubt it. Don’t you?

Our signposts along the way for timing the arrival of the next crisis will come from closely tracking the pace of change in developments from here.

And for me, recent events have accelerated to the point that I’m no longer comfortable residing in my current location.

In Part 2, ALERT: Time To Relocate, I explain the factors compelling me to leave my community of 15+ years for a safer, more resilient and liberty-respecting location. And I share the qualities I’ve prioritized highest when evaluating the new property to relocate to.

Those who have followed me for years know that I very rarely issue Alerts. I only do so when I arrive at important conclusions that cause me to take major action in my own life.

The pace of change in world developments is now high enough for me to undertake big life change like this.

How about for you?

Click here to read Part 2 of this report (free executive summary, enrollment required for full access).

This is a companion discussion topic for the original entry at

Since it’s all ultimately about control for the elite, and control is achieved through power and money, they are obviously seeking to consolidate and centralize power and accumulate ever greater amounts of money extracted from the masses. One of the best ways to exert control on a population is to control and restrict their food supply and their money. If food resources dwindle due to climate change and the masses have even less money to buy ever more expensive food, it stands to reason, all these circumstances will benefit the elite’s control of the masses.
The Book of Revelation, a prophetic book of the Bible which reveals the end times, states in Chapter 6, Verse 6, “A quart of wheat for a denarius, and three quarts of barley for a denarius.” What that means is that a day’s wages (a denarius) will be needed to obtain a day’s food (a quart of wheat or 3 quarts of the cheaper barley). In other words, we will be relegated to a hand-to-mouth existence day-by-day. Do you think that will happen? I do.
Do I think we’ll have a one world currency? Yep, you can see how all the different crypto-currencies are test versions of what is to come. Control the currency and you control everything. With a government issued crypto-currency, they can track and control EVERYTHING. No cash, silver, or gold will slip between the cracks. No taxes will be circumvented. If you have a garage sale, you’ll pay tax on the sales and maybe even have to pay a tax to have the sale in the first place. And the currency may well have an expiration date as Martin Armstrong has recently discussed. That’s an even better way than negative rates to force you to spend your cash. With negative rates, you can at least park your cash someplace else. With an expiring digital currency, you won’t be able to park it anyplace safe and untaxed. You’ll have to spend it … all of it.
Do you think we won’t be able to buy or sell if we don’t comply with the system (as discussed in Revelation). I do. Obviously, the Chinese are already well into applying their social credit system to control the actions of their population and other governments will begin to adopt this system as well, just like other governments have been increasingly adopting negative interest rates.
Do you think we’ll have one world government. I do. Isn’t it interesting how governments all around the world, of different geographical locations, races, ethnicities, etc. are behaving very similar. Isn’t it interesting how division is being created between liberals and conservatives, poor and rich, socialist/communist and capitalist, young and old, male and female, hetero- and homosexual, trans- and cis-gender, white and brown, Judao-Christian and Muslim, etc., etc. Create tension. Create conflict. Create fear. Create hate. And eventually the people will cry out to stop it all and cede their liberty for their security. And a one world government will come to be.
You can see the chess game unfolding, the plays occurring, and the plays to come. You can see the dominoes falling into place. I’m always reminded of this scene.
I like to have control of things in my life. That illusion provides some level of comfort. But I know it’s only an illusion. Ultimately, I have nothing of a physical nature that can’t be taken from me by government, if they so choose. It’s a frightening thought I’d rather not contemplate at its fullest implications yet I may well be forced to face it some day, like it or not.
Individuals stripped of all their physical comforts and possessions and stripped of all control of their life by a corrupt and oppressive government tend to demonstrate a few stereotypical responses. Those responses include dying. Not my favorite choice but sometimes unavoidable. Another response includes complying with control which usually means going along with evil (with appropriate rationalization of your actions so you can live with yourself, for a while at least). Definitely not a choice I want to make. Another is to resist or submit (albeit without complying) and suffer as a consequence. Again, not my preference but this option has an unexpected benefit. Examining the lives of certain individuals who were in the Nazi concentration camps or certain individuals in the Hanoi Hilton or other comparably horrendous circumstances, it can be found that enduring this terrible suffering with the right attitude did have a positive side. They grew spiritually in a way that they never would have achieved if life was all unicorns and rainbows. My personal belief is that this is what this is all about … progressively being stripped of everything of a material and temporal nature so we ultimately come to a full realization of what is spiritual and eternal. YMMV.

Chris, I think it’s a good idea to relocate out of the Northeast if that is your plan. I’d be very interested in hearing where you are planning on moving but I’m not a subscriber. I’ve moved to a place which I think will be better than most areas when TSHTF and yet, it has its problems too. Every place does.
Since 2012, we’ve been traveling extensively, both for enjoyment and for looking around the world for a place that may be a safe haven in the times to come. We’ve been to Europe, Central America, South America, and New Zealand, Australia, and Tasmania. We will also be visiting 10 countries in Asia this year. It’s a big beautiful world filled with (mostly) wonderful people but every place has its problems. Unfortunately, we came to the stark realization that there is no place one can go and be sure to be safe.
We happened to visit the Falkland Islands, among other places, one of the most remote places on the planet. It has more penguins than people and would not seem to have any great strategic significance. It’s a quiet, sleepy, and surprisingly charming backwater or at least that was my impression (although the weather is generally harsh except, fortuitously, for the brief time we were there due to its proximity to Antarctica). Yet war came to this place in 1982 and we were told there were still 60 active mine fields remaining as of the time of our visit a few years ago. We learned the British had “imported” cheap Zimbabwean labor to dispose of the mines. Sad what economic desperation in their home country will drive people to do.
I’m also reminded of the story of a couple (and I don’t know if this is a true story or just a legend) who saw the handwriting on the wall in the late 1930s. They could see war was coming to the world and wanted to get as far away from it as possible. They decided on a remote tropical location, far from any population or industrial centers that one would think would be involved in a war. They decided on a place called Guadalcanal.

Interesting heads up Chris. I’ve no idea if we are reaching some breaking point. But I’ve read your stuff for years and years. Enough to give your opinions a lot of weight.
One thing I know for sure is that I will be surprised as things play out. I was as ready as could be in 2008. And I was absolutely shocked at how that was handled. Heck, I thought a lot of what they did was illegal. I’ve learned not to underestimate the lengths they’ll go to in order to preserve the status quo.

I know we need to move, but, I also know it is very important to weigh the relative risk of doing so. For example, will it strain you financially? Out of the pan and into the fire? Very important consideration; you don’t want the everyday to kick you in the teeth whilst you’re planning for big change on an uncertain timeline.;time_continue=171

Like many I’ve considered relocating out of Saint Louis and into something more rural (an remote) but in the end decided not to. Along with the expense and time involved to do it, it would also mean leaving behind my friends and family.
What I did do though is review just how much I would be at risk for unlikely emergencies and the changes that I expect will come as civilization collapses. Would there be riots or thievery? Active policing or not. A sense of community? Ability to handle food shortages or power outages? Weather?
That for me means moving out of my current rental. This part of town that is more transitory and has little in the way of “community” spirit. There is always a few “For Rent” signs up and people moving in and out. I often get veggies stolen out of my small side garden, which I doubt is people really hungry but more likely just kids. If we did see major disruptions to the food supply I expect my garden would disappear one night.
I’m going to move in with my sister this coming year, who owns her own home. Its in an older part of town of all single family homes. Her house is small but on a good size parcel and has room enough for a sizable garden in her back yard with a privacy fence. She does know several of her neighbors, though the homes on either side of her are currently vacant. One is a rental, the other was bought as an “investment” but the owner isn’t actively trying to sell it. Might be one or two other vacancies but for the most part the homes are all owned by families with kids. There is even a small park in the middle of the block.
The local township council is a big question and I’m going to start attending council meetings and find out who is my representative. Like many small towns has a “lawn cop” who will ticket you if your grass is too high, so they do keep an eye out on property values. First thing will be to see if they allow chickens in the backyard and if not, then work to get that changed.
I am going to see about insulating and weatherizing her home. Replacement windows are planned. Its poorly suited for solar electric but I am thinking at least a battery backup system in case of short term power outages.
Over all, I’m going to spend the money I would have used to relocate, into making her home more resilient.

We agree, but the solution is money with real meaning that can be transferred privately instantly. The first cryptocurrencies like bitcoin were just toys based on nothing, without real meaning like gold and with many technical problems. But know that we have a cryptocurrency designed to take away the power of elites and put the power of money creation in the hands of citizens, that’s UnityCoin. The decision is yours, to be an active supporter who leads the rebellion or to be a passive defender of the elites, the future is in your hands.
Subscribe to our mailing list, pass the message and finance us. our social pact

Central banks and policies haven’t been following the 5000 year old wisdom for some time now. The classic wisdom was that asking interest is usury and will always give trouble in society. Even then, reconciling debt and debt jubilees were needed to keep things from getting out of hand. (source: David Graeber, Debt the first 5000 years) So it’s really not surprising to see them doubling down on unorthodox solutions and taking it to the extreme.
Also infinite growth is just baked into the system. You can’t have good interest rates and no growth. Return on investment needs growth of that investment. How can it otherwise be? If that growth needs destruction on a planetary scale, then that’s what they’ll do.
The flip side of taking things to negative interest is that it can be a solution according to some (Bernard Lietaer, co-designer of the Euro). It would totally change the economic dynamic and can seriously shift power balances. That’s something the privileged classes don’t like. So now we’re stuck between the old way and the new way with around zero interest rates.

I wonder how much the huge disparities in intangible wealth really matter in a world of declining resources. Fully internalizing the message that paper wealth is completely imaginary was second only to the realization that fossil fuels are the source of all the prosperity, population growth and innovation of the last 250 years. What do Bezos billions really mean? It means he gets a top position of consumption while the system still exists. The total quantity of available goods is going to decline with fossil fuels. The lower classes will suffer with less until the system fails. When that happens intangible wealth will cease to have meaning, and wealth will constitute those tangible things you can possess and defend.
Ultimately, I see a return to feudalism.

It always intrigues me how often people use the book of Revelation to develop scenarios about perfectly ghastly future life on Earth. I was going to say future civilisations, but ao’s version (above) is hardly civil. I don’t have a word for it, maybe kakocracy. And I do agree: what we see depicted there is utterly ghastly.
But so often these writers don’t read Revelation through to the end and pass on to us what it finally says. Do so and you find that God rescues us from ourselves, defeats the powers of evil and darkness, moves to this planet and establishes Universal HQ here.
I recall someone somewhere writing that if you’re going through hell, don’t stop. The way through is often the only way out.

…I thought Revelations was a warning from an island bound disciple to the Jewish Christians to get outa Jerusalem Romans coming to burn em torture em start the diaspora…

I’m happy to hear you are making a move Chris. From the recent conversation you had with Paul W. one of the things you mentioned was that you lived on a 1/2 acre or so property. The first thing that came to my mind was that was too small of a plot. There is lots one can do on that size lot, but a 1/2 acre is not enough to grow food for two people without a lot of outside inputs. Which as you know will be harder to come by. Personally I love the climate resiliency of the PNW, lots of year round rain and a mild climate(not much snow to shovel). Good luck with the move.

I have heard Mr. Martenson say that not only he, but many other smart and informed people were “surprised” that the economic/monetary system could continue for as long as it has. At the same time Mr. Martenson says that the Fed/Central Banks are idiots, they are fools, they don’t know what they are doing, etc. To think that Central Bankers don’t understand the exponential function, is to be the fool. The Central Bankers represent the ownership class, and you, me, we and us aren’t in it. They are in affect a tribe, and are doing what is ever best for their tribe. The sh*t that is going on now is the result of what started over a century ago. They, like most people, figured that things will get sorted out eventually. The ownership (avaricious) class isn’t immune from self deception. Now that it’s the end game, and everything is too far gone down the rabbit hole, they are doing the best they can. An analogy is that we/us, and them are all on the Titanic. The Avaricious Class have the very best cabins/suites on the ship. The iceberg has struck, the ship starts taking on water, it is confirmed the ship is soon to be on the bottom of the ocean but the information is “classified”. As the Avaricious Class and the ships officers accept the inevitability of it, they loot the pantry, empty the Purser’s Office, and load up the life rafts via a subterfuge of bread and circuses below decks. Their plan is to live the high life until the very last moment before abandoning the ship. Most of the people on board must die in any event, so it might as well be them, the clever, deserving, better bred that live to propagate. It’s only a conformation of Darwinian Evolution right?

We could live for about 3 to 4 months, before we go back to hand to mouth living ! how could we move if we had to? Making the best of this.

…or our politicians know it or not, nature is party to all our deals and decisions, and she has more votes, a longer memory, and a sterner sense of justice than we do.( Wendell Berry)
settle your mare, our hubris isn’t edible, cuz alotta folk gonna go hungry,American Express ain’t gonna be welcome. (When do the dueling banjos start?)

We could live for about 3to 4 months before we go back to hand to mouth living.How do move if we had to? Making the best of this!

Finding scapegoats is not the sort of thing I like doing, lazy thinking, so I try to find other explications. So here is my takeoon negative interest rates.
Negative interest rates are signalling peak World GDP. Let me explain my reasoning. When interest rates are positive, it means that the principal plus interest can be paid in the future - the future is bigger than today. By the same logic, negative interest rates means the future will be smaller than today.

By the same logic, negative interest rates means the future will be smaller than today.
If that's what negative interest rates mean to you, now extend that same line of thinking to equities. Given the highly leveraged balance sheets of corporations, coupled to the idea of a shrinking future, what sorts of price behaviors would you expect to see over there in equity land? I'd "expect" falling equities but we see the exact opposite. So...ever higher prices for both equities and bonds...what's that consistent with? That's right, ever-higher amounts of liquidity - or "easing" - or expectations of either/both. Which is, in fact, what we see today: Last question - who is it again that controls the amount of liquidity in the system and sets the tone for current and future easing? This isn't about "finding scapegoats," or being lazy, as you suggested, it's very simple observation of the system as it is configured and being operated. The financial ""markets"" don't just happen, like gravity or the tides, they are a 100% human constructed environment. They are also subject to the massive distortions of interventionist central bankers who have so madly and wildly distorted the financial environment that they are now the vast majority of the 'signal' and things like 'fundamentals' and 'quality' have become quite literally indistinguishable from noise. If you find yourself with a few moments, and not wanting to succumb to laziness, then I can highly recommend this article by Ben Hunt called The Three Body Problem. This tells all:
What is the “problem”? Imagine three massive objects in space … stars, planets, something like that. They’re in the same system, meaning that they can’t entirely escape each other’s gravitational pull. You know the position, mass, speed, and direction of travel for each of the objects. You know how gravity works, so you know precisely how each object is acting on the other two objects. Now predict for me, using a formula, where the objects will be at some point in the future. Answer: you can’t. In 1887, Henri Poincaré proved that the motion of the three objects, with the exception of a few special starting cases, is non-repeating. This is a chaotic system, meaning that the historical pattern of object positions has ZERO predictive power in figuring out where these objects will be in the future. There is no algorithm that a human can possibly discover to solve this problem. It does not exist. To visualize the Three-Body Problem, here’s a simulation of the orbits of green, blue, and red objects with random starting conditions, each exerting a gravitational pull on the others. What Poincaré proved is that there is no formula where you can plug in the initial information and get the right answer for where any of the objects will be at any future point in time. No human can predict the future of this system. But a computer can. Not by using an algorithm, which is how biological brains — human and bee alike — evolved to make sense of the world, but by brute force calculations. Remember, you know everything about these three objects … none of the physics here is a mystery. If you can do the calculation quickly enough, you can compute where all three objects will be one second from now. And one second from then. And one second from then. And so on and so on. With enough processing power (and this can require a LOT of processing power) you can calculate where the three objects will be 100 years from now, even though it is impossible to solve for this outcome. It’s a hard concept to wrap your head around, this difference between calculating the future and predicting the future, but it will change the way you see the world. And your place in it. (...) What if I told you that algorithms and derivatives are as much at the heart of how humans prepare for their financial future as they are for bees preparing for their seasonal future? What if I told you that the dominant strategies for human discretionary investing are, without exception, algorithms and derivatives? And what if I told you that these algorithms and derivatives were perhaps “evolved” under a “benign” configuration of the Three-Body Problem that not only might never repeat, but in fact is certain to never repeat because it is a chaotic system? I’ll give you two examples of influential investment algorithms/derivatives. There are many more. GOOD COMPANIES => GOOD STOCKS GOOD COUNTRIES => GOOD GOVERNMENT BONDS These are the central tenets of stock-picking and sovereign bond-picking, respectively. In both cases, goodness (like beauty) is in the eye of the beholder, so I’m not saying that there is some single standard for what makes a “good” company or what makes a “good” set of macroeconomic policies. What I’m saying is that everyone reading this note (including me!) believes that there is a direct relationship between the quality of a company or an economy (however you define quality) and the future price of whatever stocks or bonds are connected to that company or economy. What I’m saying is that everyone reading this note believes that tracking the measurable quality of a company or an economy (the derivative) according to some standardized and repeatable process (the algorithm) will, over time, have a predictive correlation with the future price of the related stock and bond securities (the underlying). What stocks do we want to own? Why, the stocks of high quality companies, of course … companies with stellar management teams, fortress balance sheets, and wonderful products or services that everyone wants to buy. Ditto for government bonds and currencies and broad market indices and the like. Maybe it will take some time for this faith in Quality to pay off, but we all believe that it WILL pay off. It’s only natural, right? As natural as spring following winter. As natural as flowers blooming in May and snow falling in December. Maybe the flowers will bloom a few weeks late and maybe the snows will fall a few weeks early, but that’s just basis risk, and we can manage for that. But what if spring doesn’t follow winter anymore? Look, I’m not asking us to abandon our faith in Quality. One of the key corollaries of the Three-Body Problem is that we don’t have to reject our belief that Objects 1 and 2 exist. We don’t have to deny our faith that the Quality-of-Companies is an actual thing and that it has a big gravitational pull on the price of stocks. We don’t have to deny our faith that the Quality-of-Governments is an actual thing and that it has a big gravitational pull on the price of government bonds. What we have to accept is that there is an Object 3 that has moved into a position such that its gravity absolutely swamps the impact of Objects 1 and 2. This Object 3, of course, is extraordinary monetary policy, specifically the purchase of $20 TRILLION worth of financial assets by the Big 4 central banks — the Fed, the ECB, the BOJ, and the PBOC. $20 trillion is a lot of mass. $20 trillion is a lot of gravity. Here’s the impact of all that gravity on the Quality-of-Companies derivative investment strategy. The green line below is the S&P 500 index. The white line below is a Quality Index sponsored by Deutsche Bank. They look at 1,000 global large cap companies and evaluate them for return on equity, return on invested capital, and accounting accruals … quantifiable proxies for the most common ways that investors think about quality. Because the goal is to isolate the Quality factor, the index is long in equal amounts the top 20% of measured companies and short the bottom 20% (so market neutral), and has equal amounts invested long and short in the component sectors of the market (so sector neutral). The chart begins on March 9, 2009, when the Fed launched its first QE program. Over the past eight and a half years, Quality has been absolutely useless as an investment derivative. You’ve made a grand total of not quite 3% on your investment, while the S&P 500 is up almost 300%. This is not a typo. (Source)
I know I excerpted a lot, but had trouble even then deciding where to cut and paste. I would implore everyone to read, and then re-read, this article until it sinks in. It's that important. Yes, it's possible that negative interest rates are sending some important signal about the future. Or maybe it's even more possible that they are the derivative of the massive impact of having a $20 trillion death star blob enter the financial solar system. Unlike the times, which can be predicted, nothing can be predicted or modeled about the future of this new gravitational force. We can only calculate the next few moves...  

…to send a message to anyone (and any government) in the world, I wonder if anything is “remote” any more. Maybe I should ask the locals in Brazil. Whether we recognize it or not there are no “answers” to this problem. At least not the kind of answers you find at the end of a students hand, a computer’s program, or a soldiers gun. And in the end, it may not be a “problem”…not in any other way we’ve used the word in our small existence on this big planet. This “situation,” for lack of a better word, demands more than “answers.” It demands questions about our very existence, our very purpose and our identity. And when I say this I don’t mean to sound like the nuns in my catholic school. Instead, I hope to sound like friend or like a family member trying to hold each other up.