Timeandtide: My point, though, is that the economy is not Wall St or the central bank. The economy is the people.
I was going to say something more on this thread, but you’ve said everything I wanted to, only said it better. Thanks!
The only point I might add: immigrants keep pouring into the US. Why? Because they find it very easy to get ahead here. The last 36 years has been a time of peace and prosperity. Anyone could have got rich and/or had a large and prosperous family just by working hard.
Granted, it’s getting much harder today than the 1960s when all you needed to get ahead was a Frisbee. But it’s not yet impossible today. To put it another way: Americans have become fat and spoiled and then we complain it’s not fair. Well, that’s true. It’s not fair. The elites always screw the underclass. The solution: expect it and work harder.
If I were a millennial, im not sure I would choose to buy into the system as it is, and is ever becoming. How many more turns of the screw should young people buy into?
As JMG (I think) says, collapse now and avoid the rush
Wise words MKI. I don’t think that we can avoid a very serious recession or perhaps a depression. In some ways we have been in a smouldering recession for a decade judging by the very low growth figures and high unemployment for most of this period. The figures are looking slightly better at the moment but the amount of money printed over the last year by Japan, Europe, China and the US dwarfs anything that has gone before. Of course the central banks have not run out of ammunition - printing money out of thin air could go on forever. However, despite what we might think of the those with their hands on the monetary levers, they are humans subject to the same impulses of optimism and pessimism as the rest of us. Their resolve to do whatever it takes is fading. They are not complete idiots and they are bankers after all. They cannot but notice that they have driven themselves into a narrowing canyon. There is no room left to turn round and such is their momentum that they have wedged themselves.
All we can do is get rid of as much debt as we can as fast as we can. Debt is lethal in a deflation because the debt grows as the monetary unit gains more purchasing power with the drop in prices due to the deflation.
This will hit the elite very hard too. Buy backs have been the favoured financial engineering tool over the last few years and it has mostly been done with borrowed money. Double whammy of trouble here - first buying into over-priced stocks and secondly using debt to do it. No need to worry about the billionaires though. A 90% loss on a billion still leaves a handy $100 million!
Regarding immigrants - the US has been built into the amazing economic and cultural leader that it is today as a result of several centuries of diverse immigrant input. My own country, Australia, is much younger but has benefited hugely from immigration. Yet in both countries there are powerful anti-immigrant forces at work led by reactionary populists. These things will pass but they are a powerful sign of the times and the encroaching negativity and pessimism.
The world has to get its accounts back in order to move forward again. That will be a messy process but there is so much technological creativity simmering away in the background that there is plenty of reason for optimism. This recent post in Forbes is encouraging:
https://www.forbes.com/sites/richkarlgaard/2018/02/09/why-technology-pro…
I don’t think millennials (or anyone for that matter) have that much choice - we are the system whether we actively take part or not. The problem is that too few are buying into the system. The system is there for us to buy into and use the democratic process. We might not have the money but we have the numbers and we have the internet.
Its not just millennials, we all need to wake up from the smothering fog of complacency that has enveloped us and start asking questions of those who represent us and keep at it. Don’t accept anything at face value. Yes, there will always be elites but the people came a long way in the last 400 years. A king was executed in England, there was a revolution in the US and in France. Another revolution in Russia lost the plot but progress was made. We don’t need or have to have those sort of violent revolutions but without a revolution in their mindset people will continue to enslave themselves.
Life is not fair. There is no point in envy. If you want something you do your best to get it without trampling over others. Trouble is we do tend to trample over others or we try to take shortcuts. Debt, as it has come to be used, is a classic example of a shortcut. Housing debt has become a Ponzi scheme. It is not self-liquidating except by capital gain and that capital gain is not by added value but by the Ponzi effect of new money constantly entering the market.
Student debt at $1.5 trillion will never be paid back. What a waste to have so many kids with degrees flipping burgers or waiting on people. Why is it that HR demands a stupid piece of paper before they will employ someone? A degree tells you nothing about the person except that they got a degree. I guess it’s partly laziness and mostly a misplaced idea that a company will save money by letting someone else pay for the education or training. Just another aspect of the cynical approach taken by the financial engineers and accountants to “Other people’s money”.
Most kids would be better off getting a job in their teens and working up from there and doing short bouts of training every as and when required.
Wealth and success in the West has made everyone lazy. We take democracy for granted. We let someone else do it for us. In particular we have let money and the corporations and institutions with lots of it take over the democratic process via the hordes of lobbyists encamped around the parliaments of the world.
We could all be Tibetans
You are so right Mohammed Mast. Being other than oneself is just too awful to contemplate!
T&T: All we can do is get rid of as much debt as we can as fast as we can. Debt is lethal in a deflation because the debt grows as the monetary unit gains more purchasing power with the drop in prices due to the deflation. This will hit the elite very hard too.
Points to consider:
- Most of the elite are too smart to get involved with debt. So debt has become a class thing, with the elite exploiting the poor who are too ignorant, desperate, or uncaring to know the difference. Much like the indentured servants of early America. Expect a backlash with economic repercussions. Not good.
- Expect social implosion/riots in Europe and the US (can’t speak to oz). We’ve never seen this uncontrolled of movement of people in the history of humanity. In the US: no longer a melting pot, everyone is racially divided and live & vote this way (blacks voted 90% for Obama, for example, and if whites had not voted? Hillary would have won every single state. If the US was the same racial composition as 1960 Trump would have overwhelmingly won every single state). This isn’t a democracy. In the 1960s the US was 80% European heritage. Now it’s about 50% and falling and segregating. Fact: democracy doesn’t work without a melting pot, it’s rather a civil war. This will have economic consequences soon enough.
- Family breakdown will have economic consequences. In 1960 80% of children were raised in stable families. Today, children are not raised in stable families on the whole and look at the health consequences alone for economic issues (metabolic syndrome, for example).
- Prosperity due to technology: masking all the above is the unbelievable growth of wealth due to modern technology. The internet and mobile phones are bigger than the printing press, allowing the cognitive elite to leap ahead of the proles with no end in sight. The rich will keep getting richer, and the poor will have few jobs or hope. I can’t see this ending well except for the elite.
Points:
- I think you will find that the elite are just as partial to debt as anyone else, if only to mitigate their taxation obligations.
- The uncontrolled movement of people is nothing new. The idea of controlled/uncontrolled movement suggests that you think the powers-that-be are losing control. Is that really true or has fear and pessimism twisted people's ideas to the extent that they now fear migrants. Are there more people now trying to cross the border than ever before? Has much really changed or are these fearful imaginings stoked by a populist politician and a sensationalist media? Is lack of control the end result of a historical process of cause and effect? Think of the incursions into the Roman Empire and its eventual collapse. Think Ghengis Khan. Think of the US invasion of Afghanistan and Iraq. Think of the aftermath of the Second World War. Think of Syrian refugees in Europe - 1 million to Germany alone. Think of partition on the Indian sub-continent.
- I think you are jumping to an unproven conclusion about why 90% of blacks voted for Obama. Sure, it was something that had always seemed impossible - probably more impossible than a white female President - but Obama was voted in during the worst stockmarket collapse since 1929. If you go through the Presidencies you will find that there is always a winning vote for the opposite party during or shortly after significant stockmarket falls (see Robert Prechter's book: Socionomic Causality in Politics). Also, white voters overwhelmingly voted him in.
- I don't understand your statement that Democracy does not work without a melting pot. I do think it would work a lot better if corporate and private donations were limited and voting (as in Australia) was compulsory.
- Yes, I do expect that there will be significant social unrest. What else do you expect? We do not live in a Utopia. More change takes place than ever before at the hand of the legislators pen but, as President Trump so aptly put it, the Washington swamp needs draining. There are political and bureaucratic swamps all over the world. They cost too much money and they favour special interests (none of which is new) but if they have gone too far, people will kick up a ruckus. That's humans for you. It's what makes history. Of course it will have economic consequences. You can't make an omelette without breaking eggs.
- I think prosperity is a result of great technology which is a result of creativity and the enquiring mind. It takes capitalism to support creativity and turn it into something that adds value and creates wealth. So much of the apparent wealth of stocks like Facebook, Amazon, Apple ,Netflix and Google is due to the massive amount of debt money which has demolished the purchasing power of most currency units. The real wealth is there of course but it may not be there tomorrow. The creation of the personal computer and the internet was as epochal as the printing press. Mobile phones are fantastic examples of personal tech which have essentially ensured that many people have gone in to debt to indulge in narcissistic behaviour. I am sure, though, that mobile phones have brought greater benefits to Africans, Bangladeshis and many other poorer peoples of the world than they have to most westerners because they had no phones at all.
- The opportunities sprouted by the internet through the "gig economy" are surely more useful to ordinary people than the rich and an enormous opportunity for more people than ever to take the bull by the horns and be independent by working for themselves.
I don’t understand your statement that Democracy does not work without a melting pot.
Bosnia. 'Nuff said.
Is that really true or has fear and pessimism twisted people’s ideas to the extent that they now fear migrants. Are there more people now trying to cross the border than ever before?
Yes. Air travel and modern technology has allowed people to move rapidly without the longer time necessary to get to know each other and adust to the native culture. And yes, it’s a flood if not restricted. If the US were to open her boarders, it would be civil war in a decade. Oz, too, but I note they are shooting boats instead…
Your point on Rome is exactly my point. Rapid immigration is THE sign of a collapsing empire. That’s the West today. Regarding Afghanistan, that’s just military attack and then going away, not a replacement of a people, like natives in America or Oz were displaced (or Anglos are being displaced in CA, or Romans were displaced). Look at the economics of CA for an economic and political future of the US. This is your original point: it’s people that make up the nation, not pols.
The opportunities sprouted by the internet through the “gig economy” are surely more useful to ordinary people than the rich and an enormous opportunity for more people than ever to take the bull by the horns and be independent by working for themselves.
Only for the cognitive elite. The fast majority of humanity is not like this. They just want a nice job where they are told what to do and it pays the bills. They want and expect US 1950-1970, not the modern welfare state.
Hey I agree the world isn’t perfect and never has been. But the world is also tribal in nature, and I think this is a major blind spot for the West, especially the demographically older who haven’t had a lot of experience with immigration and other cultures who are not ideological, so much as tribal. They vote race, us vs them, period. There are economic consequences to this cultural disunity, methinks, and that’s going to play out a lot bigger than corporate malfeasance. I hope I’m wrong. Good convo, regardless.
Wealth and success in the West has made everyone lazy. We take democracy for granted. We let someone else do it for us. In particular we have let money and the corporations and institutions with lots of it take over the democratic process via the hordes of lobbyists encamped around the parliaments of the world.
Timeandtide -- who are you? Your comments are breathtaking. I am inspired. After decades of observation, I am right there with you: it's not helpful to oversimplify and blame someone. We have to get to the point where we can think through the 'chaff' that is generated by all the 'influence peddling' and take the long view. The internet will eventually allow the truth to shine through and good people can figure out the way forward. Meanwhile, I offer this video for comfort:. Who says globalization is a bad thing?
Hi Jennifer - Thank you for your kind comments and the video of the Leningrad Cowboys. A lot of fun and tongue in cheek irony going on there! Globalization is what defines the modern world yet it is coming in for criticism and stands accused of taking jobs from rich countries and transferring them to China and elsewhere. Many of these jobs are not exactly the most thrilling ways to earn a crust - vast assembly lines and so on - but they do present problems to governments in some of the rich countries. Loss of wage tax revenue and escalating social welfare costs. The answer cannot be to crack down on free trade which has always been associated with the periods of greatest wealth creation. Unfortunately, we seem headed in that direction and it will hurt everyone.
Who am I? No one in particular. My name is Nick Marshall and I run a small internet business in Cairns, Australia. We list holiday homes so we are a kind of microscopic AirBnB. No grand delusions of dominating the world. No pretensions to scale. Just a local business helping other local business run by humans rather than algorithms. You can read more about it here: http://www.cairnsholidayhomes.com.au/about-us.html
My world view has been strongly influenced by the work of Robert Prechter, the founder of Elliott Wave International and his unique way of seeing and understanding what it is that drives humans and human society. He calls this Socionomics. I have been a stock market trader for 30+ years and seeing the market from an Elliott Wave perspective has been a huge help. I have mostly avoided the market for the last few years preferring to remain in the safer realm of cash. Now I am back on the short side.
The name I use, timeandtide, is a reflection of my interest in Elliott Waves and also that great line from Brutus in Shakespeare’s Julius Caesar: “There is a tide in the affairs of men / Which, taken at the flood, leads on to fortune.”
I have worked for myself since my early 20s. It is a more precarious way of life as I only had myself to rely on until I was married. Apart from the obvious advantage of not being beholden to anyone the great long term advantage is that you are always thinking ahead. With no guaranteed income I have always been in the habit of thinking about where the next quid will come from and being suitably cautious with what I have saved in the knowledge that I may have to stretch it out longer than I hope to. On the other hand, you cannot work for yourself without having an entrepreneurial mindset which implies a willingness to take calculated risk. Nothing ventured, nothing gained but a willingness to pull the plug quickly if the plan is not working out. There is never any point in crying over spilt beans or blaming others. Caveat emptor is a sensible approach to life. Everyone makes mistakes - learn from them rather than agonise over them.
I began using the internet in the 90s. At that time I was running a wilderness lodge in North Queensland and had been without a phone for 4 years as we were too remote. Of course when we were connected I very quickly bought my first PC and started exploring the internet. My hard drive was a whopper of 200Mb!
Our hardest job without a phone (the nearest one was a public one 5km away outside a pub called The Lion’s Den) was advertising ourselves. At that time we used to take out a very expensive ad in the national paper (The Australian) twice a month and my nearest neighbour who had a phone would take enquiries, call me on the 2 way and I would trot down to the pub to call the enquirer back. It might seem a rather quaint and exotic way to do business but it worked. So, when I got the phone and the internet I thought that I had stumbled into communications nirvana. In many ways it was brilliant until the gate-keepers arrived and began subjecting us to the tolls that are a huge cost on business. I was lucky with my holiday home listing site. I got a good domain name and we started early (2005) so we have always managed to be seen on google. I did rather naively once think that the internet would level the playing field and lower marketing costs for small businesses. It did for a while. The global reach of the internet is a big step-up from the reach of a national newspaper but, like most small business, most of my customers are just national or local. I spend as much on marketing as I always did, I just pay a different set of gate-keepers.
Globalization has its benefits but I think it has also resulted in a concentration of the gate-keepers. For example, I read recently that 80% of worldwide travel expenditure has its ticket clipped by Priceline and Expedia. That seems a bit of an exaggeration but the point about monopolization remains. Crushing competition is the opposite of the evolutionary process which thrives on competition.
Small business and the middle class is the well-spring of wealth creation where money goes round and round providing incentive, reward and innovation. In a monopolistic world, money is simply syphoned out of the economy and hoarded or (thanks to the genius of the financial engineers) spent on share buybacks and cancellation of shares to artificially raise the earnings per share. It would be better spent on real investment which creates jobs and new wealth.
The knotty problem and one of the reasons why corporations have been reluctant to invest in organic growth is that their customers are so tapped out with housing debt, student debt, you-name-it debt. We have eaten into the future. Until that debt is wiped off the slate by bankruptcies and/or forgiven, we are in an economic quagmire. One way or another it will be cleared and it will be messy. Let’s hope that the lesson will be learned about debt. Too much debt is like too much weight, it drags you down.
Here are a couple of Ted talks from the plutocrat side of the fence who are not immune to the problems facing us:
https://www.ted.com/talks/nick_hanauer_beware_fellow_plutocrats_the_pitc…
https://www.ted.com/talks/paul_tudor_jones_ii_why_we_need_to_rethink_cap…
Hi New_Life,
Thank you for your kind comment.
Elliott Wave International have been following the bitcoin waves for a while. Yes, they do show classic 5 wave form before making a top. I have no interest in bitcoin. I don’t really understand it and have no desire to. The distributed ledger technology behind bitcoin and ethereum is way more interesting and possibly points a way forward to a more secure internet but it does seem to be extremely dependent on a lot of computer processing power and power to run it.